As filed with the Securities and Exchange Commission on February 10, 2000
Registration No. 333-80743
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CITIBANK CREDIT CARD ISSUANCE TRUST
(Issuer of the Notes)
CITIBANK CREDIT CARD MASTER TRUST I
(Issuer of the Collateral Certificate)
CITIBANK (SOUTH DAKOTA), N.A. CITIBANK (NEVADA), NATIONAL ASSOCIATION
(Originators of Citibank Credit Card Issuance Trust and
Citibank Credit Card Master Trust I) (Exact Name of
Registrants as Specified in Their Charters)
United States of America United States of America
(State or Other Jurisdiction of (State or Other Jurisdiction of
Organization) Organization)
46-0358360(I.R.S. Employer 88-0202961(I.R.S. Employer
Identification Number) Identification 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.
Deputy General Counsel
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. STEVEN J. GAROFALO
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>
Title of Amount to be Proposed maximum Proposed Amount of
securities registered aggregate price maximum registration fee
to be registered (a)(b)(c) per Note (d) aggregate
offering
<S> <C> <C> <C> <C>
Notes $1,000,000 100% $1,000,000 $278
</TABLE>
<PAGE>
2
Collateral
Certificate (f) $1,000,000 -- -- --
(a) With respect to any securities 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 securities 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 security 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.
(e) Previously paid.
(f) No additional consideration will be paid by the purchasers of the Notes
for the Collateral Certificate, which is pledged as security for the Notes.
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>
3
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 of a multiple issuance series; and
o a form of prospectus supplement to the base prospectus relating
to the offering by Citibank Credit Card Issuance Trust of a
single issuance series of asset-backed notes.
<PAGE>
[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 FEBRUARY 10, 2000
Prospectus
Dated ,
CITIBANK CREDIT CARD ISSUANCE TRUST
Class A Notes
Class B Notes
Class C Notes
CITIBANK (SOUTH DAKOTA), N.A.
CITIBANK (NEVADA), NATIONAL ASSOCIATION
Originators of the Trust
We will provide the specific terms of the notes in supplements to this
prospectus. You should read this prospectus and the applicable supplement to
this prospectus carefully before you invest.
Principal payments on the Class B notes of a series are subordinated to
payments on the Class A notes of that series. Principal payments on the Class
C notes of a series are subordinated to payments on the Class A notes and
Class B notes of that series.
You should review and consider the discussion under "Risk Factors" beginning
on page 14 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.
Citibank Credit Card Issuance Trust is the issuer of the notes. 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 Citibank Credit Card Issuance Trust 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
Page
PROSPECTUS SUMMARY......................................................... 5
RISK FACTORS...............................................................14
Only some of the assets of the issuer are available for payments
on any class of notes................................................14
Cardholder payment patterns and credit card usage may affect
the timing and amount of payments to you..............................14
You may receive principal payments earlier or later than the
expected principal payment date ......................................15
Reductions in the nominal liquidation amount could reduce payment
of principal to you...................................................15
Allocations of charged-off receivables in the master trust could
reduce payments to you................................................15
Reset of interest rate on credit card receivables in the master
trust may reduce the
amount of
finance charge collections available for interest payments on the
notes.................................................................16
Citibank (South Dakota)'s ability to change terms of the credit
card accounts could alter payment patterns............................16
Addition of accounts to the master trust may affect credit quality
and lessen the issuer's ability to make payments to you...............17
Citibank (South Dakota) and Citibank (Nevada) may not be able to
designate new accounts to the master trust when required by the pooling
and servicing agreement...............................................17
Class B notes and Class C notes bear losses before Class A notes...17
You may not be able to reinvest any early redemption proceeds in a
comparable security...................................................18
Your ability to resell notes may be limited..........................18
If the ratings of the notes are lowered or withdrawn, their market
value could decrease..................................................19
Issuance of additional notes or investor certificates may affect
the timing and amount of payments to you..............................19
Legal aspects could affect the timing and amount of payments to you...19
Competition in the credit card industry could affect the timing and
amount of payments to you.............................................22
You may have limited control of actions under the indenture and the
pooling and servicing agreement.......................................22
Your remedies upon default may be limited.............................23
THE ISSUER.................................................................24
The Owners............................................................24
USE OF PROCEEDS............................................................25
THE NOTES..................................................................25
Interest..........................................................26
Principal.........................................................27
Stated Principal Amount, Outstanding Dollar Principal Amount
and Nominal Liquidation Amount of Notes...........................27
Subordination of Principal........................................31
Redemption and Early Redemption of Notes..........................32
Issuances of New Series and Classes of Notes....................33
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Required Subordinated Amount......................................36
Payments on Notes; Paying Agent...................................37
Denominations.....................................................37
Record Date.......................................................37
Governing Law.....................................................37
Form, Exchange, and Registration and Transfer of Notes .........38
Book-Entry Notes..................................................38
Replacement of Notes..............................................43
Acquisition and Cancelation of Notes by the Issuer and the Banks.43
SOURCES OF FUNDS TO PAY THE NOTES..........................................44
The Collateral Certificate........................................44
Derivative Agreements.............................................46
The Trust Accounts ...............................................46
Limited Recourse to the Issuer; Security for the Notes............48
The Indenture Trustee.............................................48
DEPOSIT AND APPLICATION OF FUNDS...........................................48
Allocation of Finance Charge Collections to Accounts..............49
Allocation of Principal Collections to Accounts...................49
Targeted Deposits of Finance Charge Collections and
Reallocated Principal Collections to the Interest Funding
Account.........................................................50
Payments Received from Derivative Counterparties for Interest.....51
Deposit of Principal Funding Subaccount Earnings in Interest
Funding Subaccounts; Principal Funding Subaccount Earnings
Shortfall.......................................................51
Deposits of Withdrawals From the Class C Reserve Account to
the Interest Funding Account......................................52
Allocation to Interest Funding Subaccounts........................52
Withdrawals from Interest Funding Account.........................53
Targeted Deposits of Principal Collections to the Principal
Funding Account...................................................54
Payments Received from Derivative Counterparties for Principal....55
Deposits of Withdrawals from the Class C Reserve Account to the
Principal Funding Account.........................................55
Deposits of Proceeds of the Sale of Credit Card Receivables.......55
Allocation of Funds on Deposit in the Principal Funding
Subaccounts....................................................56
Withdrawals from Principal Funding Account........................57
Limit on Reallocations of Principal Collections from Subordinated
Classes to Senior Classes of Single Issuance Series............58
Limit on Reallocations of Principal Collections from
Subordinated Classes to Senior Classes of Multiple Issuance
Series.........................................................59
Limit on Repayments of Subordinated Classes of Single Issuance
Series.........................................................61
Limit on Repayments of Subordinated Classes of Multiple Issuance
Series.........................................................62
Limit on Allocations of Principal Collections of All Classes or
Subclasses of Notes............................................63
Targeted Deposits to the Class C Reserve Account ..............63
Withdrawals from the Class C Reserve Account.....................63
Pro Rata Payments Within a Class or Subclass.....................64
Final Payment of the Notes........................................64
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COVENANTS, EVENTS OF DEFAULT AND
EARLY REDEMPTION EVENTS....................................................65
Issuer Covenants..................................................65
Events of Default.................................................65
Early Redemption Events...........................................68
MEETINGS, VOTING AND AMENDMENTS............................................69
Meetings..........................................................69
Voting............................................................70
Amendments to the Pooling and Servicing Agreement.................70
Amendments to the Indenture.......................................71
Amendments to the Trust Agreement.................................72
Tax Opinions for Amendments.......................................72
NOTICES AND REPORTS........................................................73
Addresses for Notices.............................................73
Issuer's Annual Compliance Statement..............................73
Indenture Trustee's Annual Report.................................73
List of Noteholders...............................................73
Reports...........................................................73
THE MASTER TRUST...........................................................74
Master Trust Assets...............................................74
The Servicer......................................................78
Master Trust Issuances; Sellers' Interest.........................79
Allocation of Collections, Losses and Fees........................79
Early Amortization Events.........................................80
Optional Termination; Final Payment of Investor Certificates......81
TAX MATTERS................................................................81
Tax Characterization of the Notes.................................82
Tax Characterization of the Issuer................................82
U.S. and Non-U.S. Noteholders....................................82
Tax Consequences to U.S. Noteholders..............................83
Tax Consequences to Non-U.S. Noteholders..........................85
BENEFIT PLAN INVESTORS.....................................................87
Prohibited Transactions...........................................87
Potential Prohibited Transactions from Investment in Notes........88
Investment by Benefit Plan Investors..............................89
Tax Consequences to Benefit Plans.................................89
PLAN OF DISTRIBUTION.......................................................89
LEGAL MATTERS..............................................................90
WHERE YOU CAN FIND ADDITIONAL INFORMATION..................................91
GLOSSARY OF DEFINED TERMS..................................................92
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<PAGE>
ANNEX I
THE CREDIT CARD BUSINESS OF CITIBANK (SOUTH DAKOTA).......................A-1
General .........................................................A-1
Acquisition and Use of Credit Cards .............................A-1
Collection of Delinquent Accounts ...............................A-3
4
<PAGE>
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. The accompanying
supplement to this prospectus may update or supplement disclosure in this
prospectus.
There is a glossary beginning on page 92 where you will find the definitions
of some 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 Bankers Trust Company, as
trustee.
The notes will be issued in series. Each series of notes is
expected to 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 single issuance
series will all be issued at the same time. The classes of a
multiple issuance series may be issued at the same time or at
different times, but no Class A notes or Class B notes of a
multiple issuance series may be issued unless sufficient
subordinated Class B notes and/or Class C notes of that series
are outstanding. See "The Notes--Issuances of New Series and
Classes of Notes."
ISSUER Citibank Credit Card Issuance Trust, a Delaware statutory
business trust, is the issuer of the notes. The issuer's
principal place of business is located at . Its
phone number is
------------.
INDENTURE TRUSTEE Bankers Trust Company, a New York banking corporation, is
the trustee under the indenture.
INTEREST PAYMENTS Each class of notes, other than zero-coupon discount
notes, will bear interest from the date and at the rate
set forth or as determined in a supplement to this
prospectus. Interest on the notes will be paid on the
interest payment dates specified in a supplement to this
prospectus.
PRINCIPAL PAYMENTS The issuer expects to pay the stated principal amount of
each note in one payment on that note's expected principal
payment date, and the issuer is obligated to do so if
funds are available for that purpose.
The expected principal payment date of a note is two years
before its legal maturity date. The legal maturity date is the
date on which a note is legally required to be fully paid. The
expected principal payment date and legal maturity date for a
note will be specified in a supplement to this prospectus.
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<PAGE>
STATED PRINCIPAL AMOUNT,
OUTSTANDING DOLLAR
PRINCIPAL AMOUNT AND
NOMINAL LIQUIDATION
AMOUNT OF NOTES Each note has a stated principal amount, an outstanding
dollar principal amount and a nominal liquidation amount.
o STATED PRINCIPAL AMOUNT. The stated principal amount
of a note is the amount that is stated on the face of
the note to be payable to the holder. It can be
denominated in U.S. dollars or a foreign currency.
o OUTSTANDING DOLLAR PRINCIPAL AMOUNT. For U.S. dollar
notes, the outstanding dollar principal amount will
be the same as the stated principal amount, less
principal payments to noteholders. For foreign
currency notes, the outstanding dollar principal
amount will be the U.S. dollar equivalent of the
stated principal amount of the notes, less dollar
payments to derivative counterparies with respect to
principal. For discount notes, the outstanding dollar
principal amount will be an amount stated in, or
determined by a formula described in, the applicable
supplement to this prospectus.
o NOMINAL LIQUIDATION AMOUNT. The nominal liquidation
amount of a note is a U.S. dollar amount based on the
outstanding dollar principal amount of the note, but
after deducting
- all reallocations of principal of that note to pay
interest on senior classes of notes of that series;
- allocations of that note's proportionate share of
the charge-offs of principal receivables in the
master trust;
- all payments of principal of that note, and
amounts on deposit in the applicable principal
funding subaccount;
and adding back all reimbursements of those
deductions from excess finance charge collections
allocated to that note. Excess finance charge
collections are the finance charge collections that
remain after the payment of interest and other
required payments under the master trust and with
respect to the notes. For more information, see the
definition of "Excess Finance Charge Collections" in
the glossary.
The nominal liquidation amount of a class of notes
corresponds to the portion of the invested amount of
the collateral certificate that is allocated to
support that class of notes.
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<PAGE>
The aggregate nominal liquidation amount of all of
the notes is equal to the invested amount of the
collateral certificate, issued by Citibank Credit
Card Master Trust I, which is the issuer's primary
source of funds to make payments on the notes. The
invested amount of the collateral certificate
corresponds to the amount of principal receivables in
the master trust that is allocated to support the
collateral certificate. For a more detailed
discussion, see "Invested Amount" in the glossary.
Anything that increases or decreases the invested
amount of the collateral certificate will also
increase or decrease the aggregate nominal
liquidation amount of the notes.
The nominal liquidation amount of a class of notes
will be reduced as principal of that class is
deposited into the principal funding account or paid
to noteholders or derivative counterparties. However,
reductions in the nominal liquidation amount of a
class of notes can also result from reallocations of
principal of that class to pay interest on a senior
class of notes of the same series, or as a result of
charge-offs of principal receivables in the master
trust.
For a detailed discussion of nominal liquidation
amount, see "The Notes--Stated Principal Amount,
Outstanding Dollar Principal Amount and Nominal
Liquidation Amount."
SUBORDINATION OF
PRINCIPAL Principal payments on the Class B notes of a series are
subordinated to payments on the Class A notes of that
series. Principal payments on the Class C notes of a
series are subordinated to payments on the Class A notes
and Class B notes of that series. See "The
Notes--Subordination of Principal" and "Deposit and
Application of Funds."
SOURCES OF FUNDS TO PAY
THE NOTES The issuer will have the following sources of funds
available to pay principal and interest on the notes:
o THE COLLATERAL CERTIFICATE ISSUED BY CITIBANK CREDIT
CARD MASTER TRUST I. The collateral certificate is an
investor certificate issued by the master trust to
the issuer. 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
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<PAGE>
(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. If collections of receivables allocable
to the collateral certificate are less than expected,
payments of principal of and interest on the notes
could be delayed or remain unpaid.
o DERIVATIVE AGREEMENTS. Some classes of 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 to
manage interest rate or currency risk relating to
those notes. Citibank (South Dakota), Citibank
(Nevada) or any of their affiliates may be
counterparties to a derivative agreement. A
description of the specific terms of each derivative
agreement and each counterparty to a derivative
agreement will be included in the applicable
supplement to this prospectus.
o 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 certificate.
The issuer has also established a principal funding
account, an interest funding account and a Class C
reserve account. Each one of those accounts will have
subaccounts for a class or subclass of notes of a
series. Also, 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
certificate 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, to
payments under any applicable derivative agreements,
and to the other purposes as specified in "Deposit
and Application of Funds" 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.
The issuer will be required to fund the Class C
reserve account if the finance charge collections
generated by the master trust fall below a level
specified in the applicable
8
<PAGE>
supplement to this prospectus. The Class C reserve
account would be funded from monthly finance charge
collections from the collateral certificate after
payment of fees and expenses of the indenture
trustee, required interest deposits and other
payments described under "Deposit and Application of
Funds--Targeted Deposits to the Class C Reserve
Account."
Supplements to this prospectus relating to Class C
notes will include provisions for funding the Class C
reserve account.
Funds on deposit 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. Funds on deposit in the Class C reserve
account will also be available to holders of Class C
notes on any day when principal is payable, but only
to the extent that the nominal liquidation amount of
the Class C notes plus funds on deposit in the Class
C principal funding account is less than the
outstanding dollar principal amount of the Class C
notes.
Only the holders of Class C notes will have the
benefit of the Class C reserve account. See "Deposit
and Application of Funds--Withdrawals from the Class
C Reserve Account."
LIMITED RECOURSE TO THE
ISSUER Only the portion of the principal collections and finance
charge collections received by the issuer under the
collateral certificate and allocated to a class of notes,
funds in the applicable trust accounts, and payments
received under any applicable derivative agreement provide
the source of payment for principal of or interest on that
class of notes. 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.
SECURITY FOR THE
NOTES The notes of all series are secured by a shared security
interest in the collateral certificate and the collection
account, but each class of notes is entitled to the
benefits of only that portion of those assets allocated to
it under the indenture. Each class of notes is also
secured by a security interest in the applicable principal
funding subaccount, the applicable interest funding
subaccount, in the case of classes of Class C notes, the
applicable Class C reserve subaccount, any applicable
supplemental account, and by a security interest in any
applicable derivative agreement.
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
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<PAGE>
will indicate who will have that right of redemption as
well as the terms of that 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 funds
have been allocated to the collateral certificate and to
the class of notes to be redeemed. 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:
o for any note, the occurrence of the expected principal
payment date of that note;
o each of the early amortization events applicable to the
collateral certificate, as described under "The Master
Trust--Early Amortization Events";
o mandatory prepayment of the entire collateral certificate
resulting from a breach of a representation or warranty by
Citibank (South Dakota) or Citibank (Nevada) under the
pooling and servicing agreement;
o some events relating to the performance of the credit card
receivables owned by the master trust as described under
"Covenants, Events of Default and Early Redemption
Events--Early Redemption Events"; and
o any additional early redemption events specified in a
supplement to this prospectus.
This list summarizes only some of the early redemption
events. See "Covenants, Events of Default and Early
Redemption Events--Early Redemption Events" for a
description of the early redemption events and their
consequences to holders of 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 class of notes, and others
result in the right of the holders of the affected class of
notes to demand acceleration after an affirmative vote by
holders of 25% of the affected class of notes.
Events of default for any class of notes include the following:
o the issuer fails to pay interest on any note of that class
within five business days of its due date;
o the issuer fails to pay in full principal on any note of
that class on its legal maturity date;
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<PAGE>
o the issuer defaults on any covenant or breaches any
agreement under the indenture after applicable notice and
cure periods, and the default or breach is materially
adverse to noteholders;
o the occurrence of some events of bankruptcy, insolvency or
reorganization of the issuer; or
o any additional events of default specified in a supplement
to this prospectus.
This list summarizes only some of the events of default.
See "Covenants, Events of Default and Early Redemption
Events--Events of Default" for a description of the events
of default and their consequences to holders of notes.
It is not an event of default if the stated principal
amount 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 class
of notes, funds on deposit in the principal funding
account and the interest funding account for that class of
notes will be applied to pay principal of and interest on
those notes. Then, in each following month, 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.
If your notes are Class B notes, you will receive payment
of principal on those notes only if and to the extent
that, after giving effect to that payment, the required
subordinated amount will be maintained for Class A notes
in that series. If your notes are Class C notes, you will
receive payment of principal on those notes only if and to
the extent that, after giving effect to that payment, the
required subordinated amount will be maintained for Class
A notes and Class B notes of that series. See "Deposit and
Application of Funds--Limit on Repayments of Subordinated
Classes of Single Issuance Series" and "--Limit on
Repayments of Subordinated Classes of Multiple Issuance
Series."
If a class of notes is accelerated after an event of
default, the indenture trustee may, and at the direction
of the majority of the noteholders of that class will,
direct the master trust to sell credit card receivables in
an amount of up to 110% of the nominal liquidation amount
of the accelerated notes. However, this sale of
receivables may only occur if the conditions specified in
"Covenants, Events of Default and Early Redemption
Events--Events of Default" are satisfied. The proceeds of
a sale of credit card receivables will be deposited
directly to the principal funding subaccount for the
accelerated notes. Upon the deposit
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<PAGE>
of those proceeds to the principal funding subaccount for
the accelerated notes, the nominal liquidation amount of
those notes will be reduced to zero.
For accelerated Class B or Class C notes, the amounts
otherwise payable as principal, including the proceeds of
a sale of credit card receivables, will be retained in the
principal funding subaccount for those subordinated notes
to the extent and for so long as they are required to
provide the required subordinated amount for the
outstanding senior classes of notes of that series. These
amounts may be reallocated to the senior classes of notes
of that series. If a subordinated class of notes has been
accelerated at a time when the senior classes of the same
series have not been accelerated, and if principal amounts
or proceeds of the sale of credit card receivables have
been deposited into the principal funding account of the
accelerated subordinated class, accumulation of principal
collections in the principal funding subaccounts for the
Class A notes and, if applicable, the Class B notes of
that series will begin and will continue as long as
necessary to permit funds in the principal funding
subaccount for accelerated notes to be released to the
noteholders. See "Deposit and Application of
Funds--Targeted Deposits of Principal Collections to the
Principal Funding Account --Prefunding of the Principal
Funding Account of Senior Classes."
LIMIT ON REPAYMENT
OF ALL NOTES If the nominal liquidation amount of your notes has been
reduced from charge-offs of principal receivables in the
master trust and reallocations of principal collections to
pay interest on senior classes of notes, and has not been
reimbursed from excess finance charge collections, you may
not receive repayment of all of your principal. See
"Deposits and Allocations of Funds--Final Payment of the
Notes."
REGISTRATION, CLEARANCE
AND SETTLEMENT The notes offered by this prospectus will be registered in
the name of The Depository Trust Company or its nominee,
and purchasers of notes will not 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
Clearstream, Luxembourg, formerly known as 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 as to whether a purchase of notes by the plan
is permitted by ERISA and the Internal Revenue Code.
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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 Citibank (South Dakota) and
Citibank (Nevada) for federal, state and local income and
franchise tax purposes.
DENOMINATIONS The notes offered by this prospectus 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--If the ratings of
the notes are lowered or withdrawn, their market value
could decrease."
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RISK FACTORS
The following is a summary of the material risks that apply to an
investment in the notes. The remainder of this prospectus and the attached
supplement provide much more detailed information about these risks. You
should consider the following risk factors in deciding whether to purchase the
notes.
There is a glossary beginning on page 92 where you will find the
definitions of some terms used in this prospectus.
ONLY SOME OF THE ASSETS OF THE ISSUER ARE AVAILABLE FOR PAYMENTS ON ANY CLASS
OF NOTES
The assets of the issuer consist primarily of:
o the collateral certificate;
o derivative agreements that the issuer has entered into to
manage interest rate or currency risk relating to some classes
of notes; and
o the trust accounts.
The issuer does not expect to have any other significant assets.
Only the portion of the principal collections and finance charge
collections received by the issuer under the collateral certificate and
allocated to any class of notes, the applicable trust accounts for that class
of notes, and payments received under any applicable derivative agreement for
that class of notes provide the source of payment for principal of or interest
on any class of the notes. As a result, you must rely only on the particular
allocated assets as security for your class of notes for repayment of the
principal of and interest on your notes. You will not have recourse to any
other assets of the issuer or any other person for payment of your notes. See
"Sources of Funds to Pay the Notes."
CARDHOLDER PAYMENT PATTERNS AND CREDIT CARD USAGE MAY AFFECT THE TIMING AND
AMOUNT OF PAYMENTS TO YOU
The amount of principal collections available to pay your notes 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 of credit card balances by cardholders,
which may be earlier or later than expected;
o the extent of credit card usage by cardholders, and the
creation of additional receivables in the accounts designated
to the master trust; and
o the rate of default by cardholders, which means that
receivables may not be paid at all.
Changes in payment patterns and credit card usage 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 "-- Legal aspects could affect the timing and amount of payments
to you" below. The availability of incentive or other award programs may also
affect cardholders' actions. We
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cannot predict how these or other factors will affect repayment patterns or
card use and, consequently, the timing and amount of payments on your notes.
YOU MAY RECEIVE PRINCIPAL PAYMENTS EARLIER OR LATER THAN THE EXPECTED
PRINCIPAL PAYMENT DATE
There is no assurance that the stated principal amount of your notes
will be paid on its expected principal payment date.
The effective yield on the credit card receivables owned by the
master trust could decrease due to, among other things, a change in periodic
finance charges on the accounts, an increase in the level of delinquencies or
increased convenience use of the card whereby cardholders pay their credit
card balance in full each month and incur no finance charges. A significant
decrease in the amount of credit card receivables in the master trust for any
reason could result in an early redemption event and could result in early
payment of your notes as well as decreased protection to you against defaults
on the accounts. If surplus finance charge collections calculated using a
three-month moving average decreases below the required surplus finance charge
amount, an early redemption event will occur and could result in an early
payment of your notes. See "Covenants, Events of Default and Early Redemption
Events--Early Redemption Events." For a discussion of surplus finance charge
collections and required surplus finance charge amount, see "Surplus Finance
Charge Collections" and "Required Surplus Finance Charge Amount" in the
glossary.
If, for any reason, cardholders make payments on their credit card
accounts later than expected or default on the payments on their credit card
accounts the allocations of principal collections to the collateral
certificate and to the notes may be reduced, and the principal of the notes
may be paid later than expected or not paid at all.
REDUCTIONS IN THE NOMINAL LIQUIDATION AMOUNT COULD REDUCE PAYMENT OF PRINCIPAL
TO YOU
If the nominal liquidation amount of your notes has been reduced
from charge-offs of principal receivables in the master trust and, if your
notes are Class B or Class C notes, reallocations of principal collections to
pay interest on senior classes of notes, and has not been reimbursed from
excess finance charge collections, you may not receive repayment of all of
your principal. See "Deposit and Application of Funds--Final Payment of the
Notes." For a discussion of nominal liquidation amount, see "The Notes--Stated
Principal Amount, Outstanding Dollar Principal Amount and Nominal Liquidation
Amount of Notes."
ALLOCATIONS OF CHARGED-OFF RECEIVABLES IN THE MASTER TRUST COULD REDUCE
PAYMENTS TO YOU
Citibank (South Dakota), as servicer of the master trust, will
charge off the receivables arising in the accounts in the master trust
portfolio if the receivables become uncollectible or are otherwise more than
184 days delinquent. The collateral certificate will be allocated a portion of
these charged-off receivables. If the amount of charged-off receivables
allocated to the collateral certificate exceeds the amount of funds available
for reimbursement of those charge-offs, the issuer, as the holder of the
collateral certificate, may not receive a
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sufficient amount under the collateral certificate to pay the full stated
principal amount of your notes. See "The Master Trust Receivables and
Accounts--Loss and Delinquency Experience" in Annex I to the supplement to
this prospectus, "Sources of Funds to Pay the Notes--The Collateral
Certificate," "Deposit and Application of Funds--Allocation of Principal
Collections to Accounts," "--Targeted Deposits of Principal Collections to the
Principal Funding Account," "--Allocation to Principal Funding Subaccounts"
and "--Final payment of the Notes."
RESET OF INTEREST RATE ON CREDIT CARD RECEIVABLES IN THE MASTER TRUST MAY
REDUCE THE AMOUNT OF FINANCE CHARGE COLLECTIONS AVAILABLE FOR INTEREST
PAYMENTS ON THE NOTES
A majority of the credit card receivables in the master trust bear
interest at the prime rate plus a margin. The notes generally bear interest at
a fixed or floating rate. If the prime rate declines, the amount of
collections of finance charge receivables on the accounts in the master trust
may be reduced while the interest payments on fixed rate notes required to be
funded out of those collections will remain constant.
Changes in the interest rate indices applicable to floating rate
notes might not be reflected in the prime rate, resulting in an increase or
decrease in the difference between the amount of collections of finance charge
receivables on the accounts in the master trust and the amount of interest
payable on the floating rate notes.
In addition, a decrease in the difference between collections of
finance charge receivables and those collections allocated to make interest
payments on the notes could cause an early redemption event which could result
in early payment of your notes. See "Covenants, Events of Default and Early
Redemption Events--Early Redemption Events."
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 fees, periodic finance charges including the interest rate index
used to compute periodic finance charges, 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. See "Covenants, Events of Default
and Early Redemption Events--Early Redemption Events." Also, changes in
account terms could affect payment patterns on the credit card receivables,
which could cause principal on the notes to be paid earlier or later than
anticipated.
Citibank (South Dakota) has agreed generally to avoid taking actions
that would
o reduce the portfolio yield of the receivables in the master
trust below specified levels;
o change the terms of the credit card accounts designated to the
master trust, unless it is
o 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
the occurrence of an early redemption event resulting from
surplus finance charge collections being less than the required
surplus finance charge amount.
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For a discussion of portfolio yield, surplus finance charge collections and
required surplus finance charge amount, see "Portfolio Yield," "Surplus
Finance Charge Collections" and "Required Surplus Finance Charge Amount" in
the glossary.
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.
ADDITION OF ACCOUNTS TO THE MASTER TRUST MAY AFFECT CREDIT QUALITY AND LESSEN
THE ISSUER'S ABILITY TO MAKE PAYMENTS TO YOU
The assets of the master trust, and therefore the assets allocable
to the collateral certificate held by the issuer, change every day. Citibank
(South Dakota) and Citibank (Nevada) may choose, 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 on the
notes could be adversely affected. See "The Master Trust--Master Trust
Assets."
The issuer's ability to make payments on the notes will be impaired
if sufficient new credit card receivables are not generated by Citibank (South
Dakota) and Citibank (Nevada). 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.
CITIBANK (SOUTH DAKOTA) AND CITIBANK (NEVADA) MAY NOT BE ABLE TO DESIGNATE NEW
ACCOUNTS TO THE MASTER TRUST WHEN REQUIRED BY THE POOLING AND
SERVICING AGREEMENT
The pooling and servicing agreement provides that Citibank (South
Dakota) and Citibank (Nevada) must add additional credit card receivables to
the master trust if the total amount of principal receivables in the master
trust falls below specified percentages of the total invested amounts of
investor certificates in the master trust. There is no guarantee that Citibank
(South Dakota) and Citibank (Nevada) will have enough receivables to add to
the master trust. If Citibank (South Dakota) and Citibank (Nevada) 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 certificate. This would constitute an early redemption event and
could result in an early payment of your notes. See "The Master Trust--Master
Trust Assets" and "--Early Amortization Events" and "Covenants, Events of
Default and Early Redemption Events--Early Redemption Events."
CLASS B NOTES AND CLASS C NOTES BEAR LOSSES BEFORE CLASS A NOTES
Class B notes of a series are subordinated in right of payment of
principal to Class A notes of that series, and Class C notes of a series are
subordinated in right of payment of principal to Class A notes and Class B
notes of that series. In general, interest payments on a class of notes are
not subordinated in right of payment to interest payments on any other class
of notes.
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For a single issuance series, in general no payment of principal on
Class B notes of that 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 that 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. See "The Notes--Subordination of Principal" and "Deposit
and Application of Funds--Limit on Repayments of Subordinated Classes of
Single Issuance Series."
For a multiple issuance series, in general payment of principal may
be made on Class B notes or on Class C notes of that series before payment in
full of senior classes of notes of that series but only if after giving effect
to the proposed principal payment there is still a sufficient principal amount
of subordinated notes to support the outstanding senior notes of that series.
See "The Notes--Subordination of Principal" and "Deposit and Application of
Funds-- Limit on Repayments of Subordinated Classes of Multiple Issuance
Series."
If principal collections allocated to the collateral certificate are
reallocated to make interest payments on a series of notes, the full stated
principal amount of Class C notes and Class B notes of that series may not be
repaid.
If there is a sale of the credit card receivables owned by the
master trust due to an insolvency event of either Citibank (South Dakota) or
Citibank (Nevada) or a sale or repurchase of the interest represented by the
collateral certificate after a default by the servicer of the master trust,
the net proceeds of the sale allocable to principal payments with respect to
the collateral certificate will generally 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 - - the applicable Class C reserve account - - 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 - the applicable Class C notes - - is not
enough to pay the Class B notes in full.
YOU MAY NOT BE ABLE TO REINVEST ANY EARLY REDEMPTION PROCEEDS IN A COMPARABLE
SECURITY
If your notes are redeemed at a time when prevailing interest rates
are relatively low, you may not be able to reinvest the redemption proceeds in
a comparable security with an effective interest rate as high as that of your
notes.
YOUR ABILITY TO RESELL NOTES MAY BE LIMITED
It may be difficult for you to resell your notes at the time and at
the price you desire. We expect that the underwriters of and agents for the
notes will make a market in the notes, but no underwriter or agent will be
required to do so. Even if a secondary market does develop, it may not provide
you with liquidity for the notes, and it may not continue until the maturity
of the notes.
In addition, some notes have a more limited trading market and
experience more price volatility because they were designed for specific
investment objectives or strategies. There may be a limited number of buyers
when you decide to sell those notes. This may affect the price you receive for
the notes or your ability to sell the notes at all. You should not purchase
notes unless you understand and know you can bear the investment risks.
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IF THE RATINGS OF THE NOTES ARE LOWERED OR WITHDRAWN, THEIR MARKET VALUE COULD
DECREASE
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 and Early Redemption Events--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 OR INVESTOR CERTIFICATES MAY AFFECT THE TIMING
AND AMOUNT OF PAYMENTS TO YOU
The issuer expects to issue notes from time to time, and the master
trust may issue new investor certificates from time to time. New notes and
investor certificates may be issued without notice to existing noteholders,
and without their consent, and may have different terms from outstanding notes
and investor certificates. For a description of the conditions that must be
met before the issuer can issue new notes, see "The Notes--Issuances of New
Series and Classes of Notes." The issuance of new notes or investor
certificates could adversely affect the timing and amount of payments on
outstanding notes. For example, if notes issued after your notes have a higher
interest rate than your notes, the result could be that there is a smaller
amount of finance charge collections available to pay interest on your notes.
Also, when new notes or investor certificates are issued, the voting rights of
your notes may be diluted. See "Risk Factors--You may have limited control of
actions under the indenture and the pooling and servicing agreement."
LEGAL ASPECTS COULD AFFECT THE TIMING AND AMOUNT OF PAYMENTS TO YOU
TRANSFER OF CREDIT CARD RECEIVABLES COULD BE A SECURITY INTEREST
Although Citibank (South Dakota) and Citibank (Nevada) sell credit
card receivables to the master trust, it is possible that a court could treat
those sales as an assignment of collateral for the benefit of the holders of
the investor certificates in the master trust, including the collateral
certificate, instead of as a sale. If the 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 Citibank (South Dakota)
or Citibank (Nevada) 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 Citibank (South Dakota)
or Citibank (Nevada) , its administrative expenses may also
have priority over the master trust's interest, and therefore
the issuer's interest, in the receivables.
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INSOLVENCY OR BANKRUPTCY OF CITIBANK (SOUTH DAKOTA) OR CITIBANK (NEVADA) COULD
ADVERSELY AFFECT YOU
If the FDIC were appointed a conservator or receiver for either
Citibank (South Dakota) or Citibank (Nevada), then an early amortization event
would occur under the pooling and servicing agreement, thus causing an early
redemption event for the notes. Under the terms of the 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
certificate, Citibank (South Dakota), unless it is insolvent, Citibank
(Nevada), unless it is insolvent, 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 certificate, thus causing an early payment of the
notes; and
o you would have a loss if proceeds from the sale of the credit
card receivables allocable to the collateral certificate were
insufficient to pay your notes 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
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 Citibank (South Dakota) and Citibank
(Nevada) 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 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
certificateholders from appointing a new servicer under the pooling and
servicing agreement.
We believe that the FDIC, acting as a receiver or conservator of
Citibank (South Dakota) or Citibank (Nevada), 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
insolvency of the bank and was neither taken in contemplation
of its insolvency nor with the intent to hinder, delay or
defraud the bank or its creditors; and
o the 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.
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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 Citibank (South
Dakota) or Citibank (Nevada),
as the case may be; or
o repudiate the 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.
CHANGES IN CONSUMER PROTECTION LAWS MAY IMPEDE CITIBANK (SOUTH DAKOTA)'S
COLLECTION EFFORTS
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 for Citibank (South Dakota), as
servicer, and could decrease the amount of finance charge receivables received
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 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 redemption event and a possible early
payment of the notes.
Citibank (South Dakota) and Citibank (Nevada) 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 made for the benefit of
the holders of investor certificates under the master trust, and are not made
for your benefit. 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 Citibank (South Dakota) or Citibank (Nevada), and you will have
no other remedy. A breach of the representations and warranties by Citibank
(South Dakota) or Citibank (Nevada) relating to the credit card receivables
and accounts generally results in the sellers' interest being reduced by the
amount of the reassigned receivables. However, a breach of some
representations and warranties results in Citibank (South Dakota) and Citibank
(Nevada) paying a reassignment price for the receivables generally equal to
the aggregate invested amount of all series of investor certificates,
including the collateral certificate, issued by the master trust, plus accrued
and unpaid interest on those certificates. See "The Master Trust--Master
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Trust Assets." A breach of these representations and warranties could result
in a possible early payment of the notes.
COMPETITION IN THE CREDIT CARD INDUSTRY COULD AFFECT THE TIMING AND AMOUNT OF
PAYMENTS TO YOU
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. Citibank (South Dakota), Citibank (Nevada) 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, Citibank (South Dakota) and Citibank (Nevada) 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, Citibank (South Dakota) and Citibank
(Nevada) may be required to designate additional accounts to the master trust,
or an early amortization event with respect to the collateral certificate
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.
YOU MAY HAVE LIMITED CONTROL OF ACTIONS UNDER THE INDENTURE AND THE
POOLING AND SERVICING AGREEMENT
Under the indenture, noteholders holding a specified percentage of
the aggregate outstanding dollar principal amount of notes of a series, class
or subclass or all the notes may take some actions, or may direct the
indenture trustee to take some actions, including accelerating the payment
of principal of the notes or consenting to amendments relating to the
collateral certificate. In the case of votes by series or votes by holders of
all of the notes, the Class A outstanding dollar principal amount will
generally be substantially greater than the Class B or Class C outstanding
dollar 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.
Similarly, under the pooling and servicing agreement, investors
holding a specified percentage of the aggregate outstanding principal amount
of investor certificates of a series, or all the investor certificates, may
take some actions, or may direct the master trust to take some actions,
including causing the early amortization of the investor certificates or
consenting to amendments relating to the pooling and servicing agreement. In
the case of votes by holders of all of the investor certificates, the
outstanding principal amount of the collateral certificate is and may continue
to be substantially smaller than the outstanding principal amount of the other
series of investor certificates. The holders of the
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investor certificates other than the collateral certificate will therefore
generally have the ability to determine whether and what actions should be
taken. The noteholders, in exercising their voting powers under the collateral
certificate, will generally need the concurrence of the holders of the other
investor certificates to cause actions to be taken.
YOUR REMEDIES UPON DEFAULT MAY BE LIMITED
Your remedies may be limited if an event of default under your class
of notes occurs. After an event of default and the acceleration of your class
of notes, any funds in the principal funding account and the interest funding
account with respect to that class of notes will be applied to pay principal
of and interest on those notes or allocated to make deposits for the benefit
of senior classes of notes. Then, in each following month, principal
collections and finance charge collections allocated to those notes will
either be deposited into the applicable principal or interest funding
subaccount, and applied to make monthly principal and interest payments on
those notes or reallocated or retained for the benefit of senior classes of
notes until the earlier of the date those notes are paid in full or the legal
maturity date of those notes.
Any funds in the applicable principal funding subaccount that are
not reallocated to other classes of that series, any funds in the applicable
interest funding subaccount, and in the case of Class C notes, any funds in
the applicable Class C reserve account, will be available to pay principal of
and interest on that class of Notes. However, if your notes are Class B notes
or Class C notes , you will receive payment of principal on those notes only
if and to the extent that, after giving effect to that payment, the required
subordinated amount will be maintained for the senior classes of notes in that
series.
Holders of notes will have the ability to cause the sale of
receivables by the master trust if an event of default and acceleration of
those notes occurs. So long as the conditions specified in "Covenants, Events
of Default and Early Redemption Events--Events of Default" are satisfied,
credit card receivables in an amount of up to 110% of the nominal liquidation
amount of the accelerated class of notes will be sold to pay the principal of
and interest on those notes. However, if your notes are Class B or Class C
notes, even if receivables are sold, the proceeds of that sale will be
retained in the principal funding account for those notes to the extent and
for so long as they are required to provide the required subordinated amount
for the outstanding senior notes of that series. If receivables are sold with
respect to a subordinated class, principal collections allocable to that
series will be accumulated, if necessary, in the principal funding account for
the senior notes of that series to permit funds in the principal funding
account for the accelerated notes to be released to noteholders. See "Deposit
and Application of Funds--Targeted Deposits of Principal Collections to the
Principal Funding Account --Prefunding of the Principal Funding Account of
Senior Classes." This accumulation may result in a delay of principal payments
to holders of affected notes. We cannot assure that the proceeds of the sale
of credit card receivables will be enough to pay unpaid principal of and
interest on the accelerated notes. The risk of a shortfall is increased if the
nominal liquidation amount of the accelerated notes has been reduced and not
reimbursed.
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THE ISSUER
Citibank Credit Card Issuance Trust is the issuer of the notes. It
is a Delaware statutory business trust
formed by Citibank (South Dakota) and Citibank (Nevada) on , .
The issuer exists for the exclusive purposes of:
o acquiring and holding the collateral certificate and other
trust assets, including the proceeds of these assets;
o issuing series of notes;
o making payments on the notes; and
o engaging in other activities that are necessary or incidental
to accomplish these limited purposes.
The issuer is operated pursuant to a trust agreement among Citibank
(South Dakota), Citibank (Nevada) and ________________, as trustee. 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:
o the collateral certificate;
o derivative agreements that the issuer has entered into to
manage interest rate or currency risk relating to some classes
of notes; and
o the trust accounts.
The issuer does not expect to have any other significant assets.
THE OWNERS
Citibank (South Dakota), N.A. and Citibank (Nevada), National
Association are the sole owners of the beneficial interests in the issuer.
Citibank (South Dakota) and Citibank (Nevada) are sometimes referred to
as the "Banks" in this prospectus and the supplements to this prospectus.
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.
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USE OF PROCEEDS
The issuer will pay the net proceeds from the sale of a class of
notes to Citibank (South Dakota) and Citibank (Nevada).
THE NOTES
The notes will be issued pursuant to the indenture. The indenture
does not limit the aggregate stated principal amount of notes that may be
issued.
The notes will be issued in series. Each series of notes is expected
to 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 a "class" of notes is referred to in this prospectus or
any supplement to this prospectus, it also includes all subclasses of that
note, unless the context otherwise requires.
The issuer 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 a sufficient amount of
subordinated Class B notes and/or Class C notes of that series have previously
been issued and are outstanding. See "-- Required Subordinated Amount." 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 sharing of
principal collections and/or finance charge collections.
The issuer may offer notes denominated in any foreign currency. We
will describe the specific terms of any note denominated in a foreign currency
in the applicable 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. We will
describe any derivative agreement for the benefit of a class and the financial
institution that provides it in the applicable supplement to this
prospectus. Citibank (South Dakota), Citibank (Nevada) or any of their
affiliates may be counterparties to a derivative agreement.
The issuer 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 certificate 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 of that class, you
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 those 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
collections and/or finance charge collections, the manner and
extent to which each series in the group will participate in
those reallocations;
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o the stated 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;
o the required subordinated amount, if any, for that class of
notes;
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 those redemption provisions;
o the rate per annum at which the notes will bear interest, if
any, or the formula or index on which that rate will be
determined, including the relevant definitions, and the date
from which interest will accrue;
o the interest payment dates, if any, for the notes;
o if the notes are discount notes or foreign currency notes, the
initial outstanding dollar principal amount of those notes, and
the means for calculating the outstanding dollar principal
amount of those notes;
o whether or not application will be made to list the notes on
any stock exchange;
o any additional events of default or early redemption events for
the notes;
o if the notes have the benefit of a derivative agreement, the
terms of that agreement and a description of the counterparty
to that agreement; and
o any other terms of the notes consistent with the provisions of
the indenture.
Holders of notes of any outstanding class or series will not have
the right to prior review of, or consent to, any subsequent issuance of notes.
INTEREST
Each note, except zero-coupon discount notes, will bear interest at
either a fixed rate or a floating 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. For each issuance of
floating rate notes, we will designate in a supplement to this prospectus the
interest rate index or other formula on which the interest is based. A
discount note will be issued at a price significantly lower than the stated
principal amount payable on that note's expected principal payment date. Until
the expected principal payment date for a discount note, accreted interest
will be capitalized as part of the principal of the note and reinvested in the
collateral certificate. The applicable supplement to this prospectus will
specify the interest rate to be borne by a discount note after an event of
default or after its expected principal payment date.
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Each payment of interest on a note will include all interest accrued
from the preceding interest payment date -- or, for the first interest period,
from the issuance date -- through the day preceding the current interest
payment date, or any 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.
If finance charge collections allocable to the collateral
certificate are less than expected, principal collections allocable to a
series of notes under the collateral certificate may be used to pay interest
on the senior classes of notes of that series. However, this reallocation of
principal would reduce the Invested Amount of the collateral certificate, as
well as the nominal liquidation amount of the subordinated classes of notes of
that series, and thus reduce later principal collections and finance charge
collections allocable to the collateral certificate, unless the principal
reduction is reimbursed from excess finance charge collections. See "Deposit
and Application of Funds--Allocation of Principal Collections to Accounts."
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 and Early Redemption Events--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 stated principal amount of each note
in one payment on that note's expected principal payment date, and the issuer
is obligated to do so if funds are available for that purpose. It is not an
event of default if the principal of a note is not paid on its expected
principal payment date.
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 and Early Redemption Events--Early Redemption Events."
Principal of a note may be paid later than its expected principal
payment date if sufficient funds are not allocable from the master trust to
the collateral certificate, or are not allocable under the collateral
certificate to the series and class of the note to be paid. Each note will
have a legal maturity date two years after its expected principal payment date
. If the stated principal amount 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 and Early Redemption Events--Events of Default."
See "Risk Factors--You may receive principal payments earlier or
later than the expected principal payment date" for a discussion of factors
that may affect the timing of principal payments on the notes.
STATED PRINCIPAL AMOUNT, OUTSTANDING DOLLAR PRINCIPAL AMOUNT AND NOMINAL
LIQUIDATION AMOUNT OF NOTES
In order to understand the subordination of the different classes of
notes and the allocations of funds to different classes of notes, an investor
needs to understand three concepts:
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o the stated principal amount of the notes;
o the outstanding dollar principal amount of the notes; and
o the nominal liquidation amount of the notes.
Each class of notes has a stated principal amount, an outstanding dollar
principal amount and a nominal liquidation amount.
The stated principal amount of a class of notes is the amount that
is stated on the face of the notes to be payable to the holder. It can be
denominated in U.S. dollars or in a foreign currency.
For U.S. dollar notes, the outstanding dollar principal amount will
initially be the same as the stated principal amount, less principal payments
to the noteholders. However, for foreign currency notes, the outstanding
dollar principal amount will be the U.S. dollar equivalent of the stated
principal amount of the notes, less dollar payments to derivative
counterparties with respect to principal. For discount notes, the outstanding
dollar principal amount will be an amount stated in, or determined by a
formula described in, the applicable supplement to this prospectus. The
outstanding dollar principal amount of a discount note will increase over time
as principal accretes, and the outstanding dollar principal amount of any note
will decrease as a result of each payment of principal of the note.
The nominal liquidation amount of a class of notes is a U.S. dollar
amount based on the outstanding dollar principal amount of that class of
notes, but after deducting all reallocations of principal of that class of
notes to pay interest on senior classes of notes of that series and
allocations of that class of notes' proportionate share of the charge-offs of
principal receivables in the master trust, all payments of principal of that
class of notes, as well as amounts on deposit in the applicable principal
funding subaccount, and adding all reimbursements of those deductions from
Excess Finance Charge Collections allocated to that note. In effect, the
aggregate nominal liquidation amount of all of the notes will be equal to the
Invested Amount of the collateral certificate, and the nominal liquidation
amount of a class of notes corresponds to the portion of the Invested Amount
of the collateral certificate that would be allocated to that class of notes
if the master trust were liquidated. If there are no reallocations of
principal collections to pay interest on senior classes of notes in that
series and no charge-offs of principal receivables in the master trust, the
nominal liquidation amount of a class of notes will be the same as the
outstanding dollar principal amount of that class of notes less amounts on
deposit in its principal funding subaccount.
The nominal liquidation amount is used to calculate the maximum
amount of funds that may be reallocated from a class of notes to pay interest
on a senior class of notes of the same series, and to calculate the amount of
principal collections that can be allocated for payment to a class of notes,
or paid to the counterparty to a derivative agreement, if applicable. This
means that if the nominal liquidation amount of a class of notes has been
reduced by charge-offs of principal receivables in the master trust or by
reallocations of principal collections to pay interest on senior classes of
notes, the holders of notes with the reduced nominal liquidation amount may
receive less than the full stated principal amount of their notes, either
because the amount of U.S. dollars allocated to pay them is less than the
outstanding dollar principal amount of the notes, or because the amount of
U.S. dollars allocated to pay the counterparty to a derivative agreement is
less than the amount necessary to obtain enough of the applicable foreign
currency for payment of their notes in full.
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While the aggregate nominal liquidation amount of all notes will be
equal to the Invested Amount of the collateral certificate, if there are
charge-offs of principal receivables in the master trust or reallocations of
principal of a subordinated class of notes to pay interest on a senior class
of notes, then the aggregate nominal liquidation amount of all notes plus any
amounts on deposit in the principal funding account will be less than the
outstanding dollar principal amount of the notes. Unless that deficiency is
reimbursed through the reinvestment of Excess Finance Charge Collections in
the collateral certificate, the stated principal amount of some notes will not
be paid in full.
The nominal liquidation amount of a class of notes may be reduced as
follows:
o If there are charge-offs of principal receivables in the master
trust, the portion of charge-offs allocated to the collateral
certificate will reduce the Invested Amount of the collateral
certificate. The reduction allocated to the collateral
certificate will then be reallocated among the series of notes
pro rata based on the outstanding dollar principal amount of
all notes in the series. Within each series, the reductions
will initially be allocated pro rata to each class of notes
based on the outstanding dollar principal amount of that class.
The reductions initially allocated to the Class A notes of that
series will be reallocated, first, to the Class C notes of that
series, and second, to the Class B notes of that series. The
reductions initially allocated to the Class B notes of that
series will be reallocated to the- Class C notes of that
series.
However, these reallocations will be made from a senior class
to a subordinated class only to the extent that the senior
class has not used all of its required subordinated amount. For
a single issuance series, the usage limit is the same as the
limit described in "Deposit and Application of Funds--Limit on
Reallocation of Principal Collections from Subordinated Classes
to Senior Classes of Single Issuance Series," and for multiple
issuance series, the same as the limit described in "Deposit
and Allocation of Funds--Limit on Reallocation of Principal
Collections from Subordinated Classes to Senior Classes of
Multiple Issuance Series." Reductions that cannot be
reallocated to a subordinated class will reduce the nominal
liquidation amount of the class to which the reductions were
initially allocated.
o If there are reallocations of principal collections from a
subordinated class of notes of a series to pay interest on the
senior classes of notes of that series, the nominal liquidation
amount of the subordinated notes of that series will be reduced
by the amount of the reallocations. The amount of the
reallocation of principal collections to pay interest on Class
A notes will be applied first, to reduce the nominal
liquidation amount of Class C notes of the same series to the
extent of the required subordinated amount of Class C notes for
that class of Class A notes, and second, to reduce the nominal
liquidation amount of Class B notes of the same series to the
extent of the required subordinated amount of Class B notes for
that class of Class A notes. The amount of the reallocation of
principal collections to pay interest on Class B notes will be
applied to reduce the nominal liquidation amount of Class C
notes of the same series to be extent of the required
subordination amount of Class C notes for that class of Class B
notes. No principal of Class A notes may be reallocated to pay
interest. In a multiple issuance series, these reductions will
be allocated to each outstanding subclass of the series, based
on the nominal liquidation amount of each subclass.
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o The nominal liquidation amount of a class of notes will also be
reduced by payments of principal and by amounts on deposit in
the applicable principal funding subaccount, after giving
effect to all deposits, payments and reallocations of funds.
Until a class of notes has reached its legal maturity date, it is
possible for a nominal liquidation amount that has been reduced -- even
reduced to zero -- to be increased by allocations of finance charge
collections. There are three ways in which the nominal liquidation amount of a
note can be increased.
o For a class of discount notes, the nominal liquidation amount
of that class will increase over time as principal accretes, to
the extent that finance charge collections are allocated to
that class for that purpose.
o If Excess Finance Charge Collections are available and are
allocated to the collateral certificate, those Excess Finance
Charge Collections will be applied until the legal maturity
date of any class of notes to reimburse earlier reductions in
the nominal liquidation amount of that class from charge-offs
of principal receivables in the master trust, or from
reallocations of principal collections from subordinated
classes to pay interest on senior classes. Excess Finance
Charge Collections which are allocated to the collateral
certificate will increase the Invested Amount of the collateral
certificate. This increase in the Invested Amount of the
collateral certificate will be allocated to each series that
has a class of notes with a nominal liquidation amount lower
than its outstanding dollar principal amount pro rata based on
the amounts of those deficiencies. Within each series, the
increases in the Invested Amount will be allocated first, to
any Class A notes with a deficiency in their nominal
liquidation amount, second, to any Class B notes with a
deficiency in their nominal liquidation amount, and third, to
any Class C notes with a deficiency in their nominal
liquidation amounts. In multiple issuance series, the increases
will be allocated to each subclass of a class pro rata based on
the deficiency in the nominal liquidation amount in each
subclass.
o If the nominal liquidation amount of a subordinated class of
notes has been reduced to zero following the deposit of the
proceeds of sale of credit card receivables into the principal
funding account of that class, as described in "Deposit and
Allocation of Funds--Final Payment of Notes" or "Covenants,
Events of Default and Early Redemption Events--Events of
Default," and all or any part of those proceeds are reallocated
to the principal funding account of a senior class of notes of
that series, the nominal liquidation amount of the subordinated
class of notes will be increased by the amount of that
reallocation.
If the nominal liquidation amount of your notes has been reduced
from charge-offs of principal receivables in the master trust and
reallocations of principal collections to pay interest on senior classes of
notes, and has not been reimbursed from Excess Finance Charge Collections, you
may not receive repayment of all of your principal. See "Deposits and
Allocations of Funds--Final Payment of the Notes."
The nominal liquidation amount of a class of notes may not be
reduced below zero, and may not be increased above the outstanding dollar
principal amount of that class of notes, less any amounts on deposit in the
applicable principal funding subaccount.
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If a note held by the Banks, the issuer or any of their affiliates
is canceled, the nominal liquidation amount of that note is automatically
reduced to zero, with a corresponding automatic reduction in the Invested
Amount of the collateral certificate.
For a single issuance series, the cumulative amount of reductions of
the nominal liquidation amount of any class of notes due to reallocation of
principal collections to pay interest on senior classes of notes and
charge-offs of principal receivables in the master trust cannot exceed the
outstanding dollar principal amount of that class. See "Deposit and
Application of Funds--Limit on Reallocations of Principal Collections from
Subordinated Classes to Senior Classes of Single Issuance Series."
For Class B notes and Class C notes of a multiple issuance series,
the reductions in the nominal liquidation amount due to reallocation of
principal collections to pay interest on senior classes of notes and
charge-offs of principal receivables in the master trust may be allocated to a
subclass of Class C notes and Class B notes only to the extent that principal
of that series is available as described in "Deposit and Application of
Funds--Limit on Reallocations of Principal Collections from Subordinated
Classes to Senior Classes of Multiple Issuance Series."
Because reductions to the nominal liquidation amount are limited as
described in the prior two paragraphs, it is possible that the nominal
liquidation amount of a subordinated class will be greater than zero, but no
further reductions will be allocated to that class, and any further reductions
will be allocated to the next senior class in that series. This can occur, for
example, when the nominal liquidation amount of a class of Class C notes of a
series has been reduced to zero as a result of the allocation of charge-offs
of principal receivables in the master trust to that class and the
reallocation of principal collections from that class to pay interest on
senior classes of notes, but the reduction in the Class C nominal liquidation
amount is later reimbursed from Excess Finance Charge Collections. Because the
Class C nominal liquidation amount has been reduced to zero, the Class A notes
and Class B notes of that series have received the full benefit of the
subordination of the Class C notes, and no further reductions will be
allocated to the Class C notes, even if the Class C notes later have a
positive nominal liquidation amount from reimbursements. However, in the case
of multiple issuance series, reimbursements of reductions in the nominal
liquidation amount of subordinated classes of notes may be counted toward the
required subordinated amount of senior classes of that series, but only for
subclasses that are issued after the date of reimbursement. See
"--Subordination of Principal."
Allocations of charge-offs of principal receivables in the master
trust and reallocations of principal collections to senior classes of notes
reduce the nominal liquidation amount of outstanding notes only, and do not
affect notes that are issued afterwards.
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 of a series provides credit enhancement for
Class A notes of that series.
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 of a series provides credit enhancement for the Class A notes
and Class B notes of that series.
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In a single issuance series, no principal payments will be made on a
subordinated class of notes of a series until all principal then due and
payable on the senior classes of notes of that series has been paid in full.
However, there are three exceptions to this rule. The first exception is if
the nominal liquidation amount of a subordinated class has been reduced as a
result of an allocation of charge-offs of principal receivables to that class
or reallocation of principal collections from that class to pay interest on a
senior class, and that reduction is later reimbursed from Excess Finance
Charge Collections. The amount of that reimbursement is no longer subordinated
to the senior classes of that series and may be paid to the holders of the
subordinated class while notes of senior classes are still outstanding. See
"The Notes--Subordination of Principal." The second exception occurs when the
principal funding accounts of the senior classes of notes have been prefunded
as described in "Deposit and Application of Funds--Targeted Deposits of
Principal Collections to the Principal Funding Account--Prefunding of the
Principal Funding Account of Senior Classes." The third exception occurs when
Class C notes are paid with funds available from the applicable Class C
reserve subaccount. See "Deposit and Application of Funds--Withdrawals from
the Class C Reserve Account."
In a multiple issuance series, payment of principal may be made on a
subordinated class of notes of that series before payment in full of each
senior class of notes of that series but only if after giving effect to the
proposed principal payment there is still a sufficient principal amount of
subordinated notes to support the outstanding senior notes of that series. See
"Deposit and Application of Funds--Limit on Repayment of Multiple Issuance
Series." For example, if a subclass of Class A notes has matured and been
repaid, this generally means that at least some Class B notes and Class C
notes may be repaid, even if other subclasses of Class A notes are outstanding
and require reallocation of principal collections from subordinated classes.
Also, if the nominal liquidation amount of a subordinated class has been
reduced as a result of allocation of charge-offs of principal receivables in
the master trust to that class or reallocation of principal collections from
that class to pay interest on a senior class, and that reduction is later
reimbursed from Excess Finance Charge Collections, then the amount of that
reimbursement is no longer subordinated to the senior classes of notes of that
series that were outstanding before the date of reimbursement and may be paid
to the holders of the subordinated class while those notes of senior classes
are still outstanding. However, that reimbursed amount of a subordinated class
of notes is subordinated to the senior classes of notes that are issued on or
after the date of the reimbursement.
In addition, subordinated classes of notes of a multiple issuance
series may be paid before senior classes of notes of that series if the
principal funding accounts of the senior classes of notes have been prefunded
as described in "Deposit and Application of Funds--Targeted Deposits of
Principal Collections to the Principal Funding Account--Prefunding of the
Principal Funding Account of Senior Classes," and Class C notes may be paid
with funds available from the applicable Class C reserve subaccount. See
"Deposit and Application of Funds--Withdrawals from the Class C Reserve
Account."
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 discount note, the accreted
principal of that note corresponding to capitalized interest will be senior or
subordinated to the same extent that principal is senior or subordinated.
REDEMPTION AND EARLY REDEMPTION OF NOTES
Each class of notes will be subject to mandatory redemption on its
expected principal payment date, which will be two years before its legal
maturity date.
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If we specify in a supplement to this prospectus the issuer may, at
its option, redeem the notes of any class before its expected principal
payment date. The supplement will indicate at what times the issuer may
exercise that right of redemption and if the redemption may be made in whole
or in part as well as any other terms of the redemption. The issuer 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 the redemption may be
made in whole or in part as well as any other terms of the redemption.
In addition, if an early redemption event occurs, the issuer will be
required to redeem each class of affected notes before the note's expected
principal payment date. The issuer will give notice to holders of the affected
notes before an early redemption date. See "Covenants, Events of Default and
Early Redemption Events--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 a class of notes before
its legal maturity date, it will do so only if funds are allocated to the
collateral certificate and to that class of notes. 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 the failure to
redeem under these circumstances will not be an event of default.
ISSUANCES OF NEW SERIES AND CLASSES 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 fourth business day before a new issuance of
notes, the issuer gives the indenture trustee and the rating
agencies notice of the issuance;
o the issuer has delivered to the indenture trustee a certificate
stating 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 event of default,
(2) adversely affect the amount or timing of payments to
holders of notes of any series or (3) adversely affect the
security interest of the indenture trustee in the collateral
securing the outstanding notes;
o the issuer has delivered to the indenture trustee and the
rating agencies an opinion of counsel that for Federal and
South Dakota income and franchise tax purposes (1) the new
issuance will not adversely affect the characterization as debt
of any outstanding series or class of investor certificates
issued by the master trust, other than the collateral
certificate, (2) the new issuance will not cause a taxable
event to holders of investor certificates and (3) following the
new issuance, the master trust will not be an association, or
publicly traded partnership, taxable as a corporation;
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
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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 of those notes;
o as of the date of the new issuance and after giving effect to
the issuance, the weighted average rate of interest accruing --
or accreting -- and payable by the issuer with respect to all
classes of notes, after giving effect to all payments to be
received under Performing derivative agreements, will not be
greater than ___% per annum;
o at the time of the new issuance, the ratings condition
described in "Prospectus Summary--Ratings" is satisfied;
o no early amortization event with respect to the collateral
certificate has occurred and is continuing as of the date of
the new issuance;
o in the case of an issuance of a class of foreign currency notes
or floating rate notes with an interest rate based on an index
other than LIBOR or the [ ] rate, the issuer has obtained
confirmation from the applicable rating agencies that the
issuance of those notes will not result in a reduction or
withdrawal of the rating of any outstanding notes rated by that
rating agency; 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 multiple issuance series, so long as the conditions
of issuance are met. These conditions include:
o on or before the fourth 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 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 event of
default, (2) adversely affect the amount or timing of payments
to holders of notes of any series or (3) adversely affect the
security interest of the indenture trustee in the collateral
securing the outstanding notes;
o if the initial outstanding dollar principal amount of the
newly-issued notes equals or exceeds $[ ] million, or if any
condition to issuance is waived, the issuer has delivered to
the indenture trustee and the rating agencies an opinion of
counsel that for Federal and South Dakota income and franchise
tax purposes (1) the new issuance will not adversely affect the
characterization as debt of any outstanding series or class of
investor certificates issued by the master trust, other than
the collateral certificate, (2) the new issuance will not cause
a taxable event to holders of investor certificates and (3)
following the new issuance, the master trust will not be an
association, or publicly traded partnership, taxable as a
corporation;
o if the initial outstanding dollar principal amount of the
newly-issued notes equals or exceeds $[ ] million, or if any
condition to issuance is waived, the
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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 characterization of the notes of any other series or
class as debt and will not cause a taxable event to holders of any of those
notes;
o as of the date of the new issuance and after giving effect to
the issuance, the weighted average rate of interest accruing --
or accreting -- and payable by the issuer with respect to all
classes of notes, after giving effect to all payments to be
received under Performing derivative
agreements, will not be greater than ___% per annum;
o at the time of the new issuance, the ratings condition
described in the "Prospectus Summary--Ratings" is satisfied;
o no early amortization event with respect to the collateral
certificate has occurred and is continuing as of the date of
the new issuance;
o in the case of an issuance of a class of foreign currency notes
or floating rate notes with an interest rate based on an index
other than LIBOR or the [ ] rate, the issuer has obtained
confirmation from the applicable rating agencies that the
issuance of those notes will not result in a reduction or
withdrawal of the rating of any outstanding notes rated by that
rating agency; and
o any other conditions specified in any supplement to this
prospectus are satisfied.
In addition to the conditions set forth in the prior paragraph, no
Class A notes or Class B notes of a multiple issuance series may be issued
unless the required subordinated amount of subordinated classes for that class
of notes is available at the time of its issuance, as described in the
following two paragraphs.
In order to issue Class A notes of a multiple issuance series, the
issuer must calculate the available amount of Class B notes and Class C notes
of that series. The issuer will first calculate the subordinated amount of
Class B notes required for Class A notes. This is done by computing the
following:
o the aggregate nominal liquidation amount of all outstanding
Class B notes of that series, plus all funds on deposit in the
applicable principal funding subaccounts of Class B notes of
that series, on that date, after giving effect to any
allocations to issuances , deposits, allocations or payments of
Class B notes to be made on that date;
o plus , the amount of Class A usage of Class B required
subordinated amount, as described in "Deposit and Allocation of
Funds--Limit on Allocation of Principal Collections from
Subordinated Classes to Senior Classes of Multiple Issuance
Series"; and
o minus, the aggregate amount of the Class A required
subordinated amount of Class B notes for all other Class A
notes of that series which are outstanding
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on that date after giving effect to any issuances or repayments
in full of any Class A notes to be made on that date.
The calculation in the prior paragraph will also be made in the same
manner for calculating the subordinated amount of Class C notes required for
Class A notes and the subordinated amount of Class C notes required for Class
B notes.
However, if the issuer obtains confirmation from each rating agency
that has rated any outstanding notes that the new series, class or subclass of
notes to be issued will not cause a reduction or withdrawal of the ratings of
any outstanding notes rated by that rating agency then the following
conditions to issuance may be
waived:
o as of the date of the new issuance and after giving effect to
the issuance, the weighted average rate of interest accruing --
or accreting -- and payable by the issuer with respect to all
classes of notes, after giving effect to all payments to be
received under Performing derivative
agreements, will not be greater than ___% per annum; and
o at the time of the new issuance, the ratings condition
described in the "Prospectus Summary--Ratings" is 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.
REQUIRED SUBORDINATED AMOUNT
The required subordinated amount of a senior class of notes of a
multiple issuance series means the amount of a subordinated class that is
required to be outstanding on the date when the senior class of notes is
issued. It is also used to determine whether a subordinated class of a
multiple issuance series of notes may be repaid while senior classes of notes
of that series are outstanding.
Unless specified otherwise in the applicable supplement to this
prospectus for a series of notes, on the date of issuance of Class A notes of
a multiple issuance series, the required subordinated amount for Class B notes
will be % and for Class C notes %, in each case expressed as a percentage
of the initial outstanding dollar principal amount of Class A notes, and on
the date of issuance of Class B notes of a multiple issuance series, the
required subordinated amount for Class C notes will be %, expressed as a
percentage of the initial outstanding dollar principal amount of Class B
notes. For discount notes of a senior class, the method of calculating the
required subordinated amount will be set forth in the applicable supplement to
this prospectus.
The issuer may change these subordination levels at any time without
the consent of any noteholders so long as the issuer has received
o 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; and
o an opinion of counsel that for Federal and South Dakota income
and franchise tax purposes (1) the change will not adversely
affect the characterization as debt of any outstanding series
or class of investor certificates issued by the master
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trust, other than the collateral certificate, (2) the change will not cause a
taxable event to holders of investor certificates and (3) following the
change, the master trust will not be an association, or publicly traded
partnership, taxable as a corporation.
o an opinion of counsel that for Federal and Delaware income and
franchise tax purposes (1) following the change, the issuer
will not be an association, or publicly traded partnership,
taxable as a corporation, (2) any new notes will be properly
characterized as debt and (3) the change 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
those notes.
PAYMENTS ON NOTES; PAYING AGENT
The notes will be issued in book-entry form and payments of
principal of and interest on the notes will be made in U.S. dollars as
described under "--Book-Entry Notes" unless the stated principal amount of the
notes is 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 that note, whether or not the 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 entities 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.
After notice by publication, all funds paid to a paying agent for
the payment of the principal of or interest on any note of any series which
remains unclaimed at the end of two years after the 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 that principal or interest.
DENOMINATIONS
The notes offered by this prospectus 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.
GOVERNING LAW
The laws of the State of New York will govern the notes and the
indenture.
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FORM, EXCHANGE, AND REGISTRATION AND TRANSFER OF NOTES
The notes offered by this prospectus will be issued 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."
A holder of notes may exchange those notes for other notes of the
same class of any authorized denominations and of the same aggregate stated
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
note 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 note 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 note registrar for
the notes. The issuer also may at any time designate additional transfer
agents for any series or class of notes. 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 series or class of
notes.
BOOK-ENTRY NOTES
The notes offered by this prospectus will be in book-entry form.
This means that, except under the limited circumstances described in this
subheading under "Definitive Notes," purchasers of 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 and will be registered in the name of its
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.
Purchasers of notes in the United States can hold interests in the
global notes only through DTC, either directly, if they are participants in
that system -- such as a bank, brokerage house or other institution that
maintains securities accounts for customers with DTC
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or its nominee -- or otherwise indirectly through a participant in DTC.
Purchasers of notes in Europe can hold interests in the global notes only
through Clearstream, Luxembourg, or through Morgan Guaranty Trust Company of
New York, Brussels Office, as operator of the Euroclear system.
Because DTC will be the only registered owner of the global notes,
Clearstream, Luxembourg 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 Clearstream,
Luxembourg, 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 those participants;
and
o all transfers between these 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 notes are issued to the beneficial owners as
described in this subheading under "Definitive Notes," all references to
"holders" of notes means 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.
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, Clearstream,
Luxembourg or Euroclear. If the beneficial owner is not a participant in that
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
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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.
CLEARSTREAM, LUXEMBOURG
Clearstream, Luxembourg is registered as a bank in Luxembourg and is
regulated by the Banque Centrale du Luxembourg, the Luxembourg Central Bank,
which supervises Luxembourg banks. Clearstream, Luxembourg holds securities
for its customers and facilitates the clearance and settlement of securities
transactions by electronic book-entry transfers between their accounts.
Clearstream, Luxembourg provides various services, including safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream, Luxembourg also deals with
domestic securities markets in over 30 countries through established
depository and custodial relationships. Clearstream, Luxembourg has
established an electronic bridge with Euroclear in Brussels to facilitate
settlement of trades between Clearstream, Luxembourg and Euroclear.
Clearstream, Luxembourg currently accepts over 110,000 securities issues on
its books.
Clearstream, Luxembourg's customers are worldwide financial
institutions including underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations. Clearstream, Luxembourg's U.S.
customers are limited to securities brokers and dealers, and banks. Currently,
Clearstream, Luxembourg has approximately 2,000 customers located in over 80
countries, including all major European countries, Canada, and the United
States. Indirect access to Clearstream, Luxembourg is available to other
institutions that clear through or maintain a custodial relationship with an
account holder of Clearstream, Luxembourg.
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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, known as 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. For this
reason, it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the
Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System, and applicable
Belgian law. 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
securities 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.
This information about DTC, Clearstream, Luxembourg 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 stated principal amount of the global note as
shown on the records of DTC. Payments by participants to beneficial owners of
book-entry
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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
Clearstream, Luxembourg will be credited to cash accounts of Clearstream,
Luxembourg 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 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.
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 Clearstream, Luxembourg participants and/or
Euroclear participants will occur in the ordinary way in accordance with the
applicable rules and operating procedures of Clearstream, Luxembourg 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
Clearstream, Luxembourg 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,
cross-market transactions of this type will require delivery of instructions
to the relevant European international clearing system by the counterparty in
that 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. Clearstream, Luxembourg participants and
Euroclear participants may not deliver instructions directly to DTC.
Because of time-zone differences, credits to notes received in
Clearstream, Luxembourg 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. The
credits to or any transactions in the notes settled during processing will be
reported to the relevant Euroclear or Clearstream, Luxembourg participants on
that business day. Cash received in Clearstream, Luxembourg or Euroclear as a
result of sales of notes by or through a Clearstream, Luxembourg 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 Clearstream,
Luxembourg or Euroclear cash account only as of the business day following
settlement in DTC.
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Although DTC, Clearstream, Luxembourg and Euroclear have agreed to
these procedures in order to facilitate transfers of notes among participants
of DTC, Clearstream, Luxembourg and Euroclear, they are under no obligation to
perform or continue to perform these procedures and these procedures may be
discontinued at any time.
DEFINITIVE NOTES
Beneficial owners of book-entry notes may exchange those notes for
definitive notes registered in their name only if:
o DTC is unwilling or unable to continue as depository for the
global notes or ceases to be a registered "clearing agency" and
the issuer 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
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 outstanding dollar 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 stated 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.
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 CANCELATION OF NOTES BY THE ISSUER AND THE BANKS
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 canceled and notes so canceled will no longer be
outstanding. However, any cancelation of notes will observe the same
limitations for payments of subordinated classes as described in "Deposit and
Application of Funds--Limit on Repayments of Subordinated Classes of
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Single Issuance Series" and "--Limit on Repayments of Subordinated Classes of
Multiple Issuance Series."
SOURCES OF FUNDS TO PAY THE NOTES
THE COLLATERAL CERTIFICATE
The primary source of funds for the payment of principal of and
interest on the notes is the collateral certificate issued by the master trust
to the issuer. For a description of the master trust and its assets, see
"The Master Trust."
All of the finance charge collections allocated to the collateral
certificate will be deposited every month by the master trust into the
issuer's collection account. Finance charge collections allocated to the
collateral certificate are not shared with or reallocated to any other series
of investor certificates issued by the master trust.
Each month, the issuer will request the master trust to deposit into
the collection account the amount of principal collections the issuer needs to
reallocate to the interest funding accounts and for deposits into the
principal funding account. To the extent principal collections are allocable
to the collateral certificate, the master trust will deposit the requested
amount of principal collections into the collection account.
The collateral certificate 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* revolving
credit card accounts that 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 certificate has a fluctuating Invested Amount,
representing the investment of that certificate in credit card receivables.
The Invested Amount of the collateral certificate will be the same as the
total nominal liquidation amount of the outstanding notes. For a discussion of
Invested Amount, see "Invested Amount" in the glossary.
The collateral certificate has no specified interest rate. The
issuer, as holder of the collateral certificate, 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 in this
paragraph, 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 MasterCard and VISA are registered trademarks of MasterCard
International Incorporated and VISA U.S.A., Inc., respectively.
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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 monthly collections of finance
charge receivables and principal receivables available to the collateral
certificate, to other series of investor certificates issued by the master
trust and to the sellers' 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 certificate, pro rata based on the
Invested Amount of each series; and
o second, following the allocation to each series, collections of
finance charge receivables and principal receivables are
further allocated between the holders of each series of
investor certificates under the master trust and the Banks pro
rata based on the aggregate Invested Amount of the investor
certificates and the principal receivables allocable to the
sellers' interest.
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 charge-offs of principal receivables in the master trust
allocated to those investors, principal payments made to those investors and
deposits made to any principal funding account for the series. The sellers'
interest, which is owned by Citibank (South Dakota) and Citibank (Nevada),
represents the interest in the principal receivables in the master trust at
the end of the relevant monthly period not represented by any series of
investor certificates.
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 sellers'
interest generally in the same manner as finance charge collections.
Each month, the master trust will allocate collections of finance
charge receivables and principal receivables as well as the servicing fee and
losses to the investor certificates outstanding under the master trust,
including the collateral certificate. The master trust deducts the collateral
certificate's share of the servicing fee from its share of the collections of
finance charge receivables, and deducts the collateral certificate'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 for each
monthly period based on the invested amount of each investor certificate under
the master trust, including the collateral certificate, and the principal
receivables allocable to the sellers' interest.
For example, if the total principal receivables in the master trust at the end
of the monthly period is 500, the invested amount of the collateral
certificate is 100, the invested amounts of the other investor certificates
are 200 and the sellers' interest is 200, the collateral certificate is
entitled, in general, to 1/5 -- or 100/500 -- of the cash received each month.
There is an exception to the pro rata allocations described in the
preceding paragraph. In the master trust, when the principal amount of an
investor certificate other than the collateral certificate begins to amortize,
a special allocation procedure is followed. In this case, collections of
principal receivables continue to be allocated
as if the invested amount of the
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investor certificates had not been reduced by principal collections deposited
to a principal funding account or paid to investors. Allocations of principal
collections are based on the invested amount of the amortizing investor
certificates "fixed" at the time immediately before the first deposit of
principal collections into a principal funding account or the time immediately
prior to the first payment of principal collections to investors but only
until the invested amount of that series is paid in full. Because some of the
classes of notes which derive their source of payments from funds allocated to
the collateral certificate may be amortizing while other classes are not, the
special allocation procedure is followed for the collateral certificate to the
extent that underlying classes of notes are amortizing. Distributions of
ongoing collections of finance charge receivables, however, are not allocated
on this fixed basis.
If principal collections allocated to the collateral certificate 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 certificate
will be reallocated to other series of investor certificates which have
principal collection shortfalls -- which does not reduce the Invested Amount
of the collateral certificate -- or reinvested in the master trust to maintain
the Invested Amount of the collateral certificate. If the collateral
certificate 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 certificate and deposited into the issuer's
collection account -- which reduces the Invested Amount of the collateral
certificate --.
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 to manage interest rate or currency risk relating to those
notes. Citibank (South Dakota), Citibank (Nevada) or any of their affiliates
may be counterparties to a derivative agreement. 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 applicable supplement to this
prospectus for those notes. We refer to the agreements described in this
paragraph as "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 certificate.
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 certificate and 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, to payments under any applicable derivative
agreements, and to the other purposes as specified in "Deposit and Application
of Funds" or in a supplement to this prospectus. However, for so long as
Citibank
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(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 commingle
funds received from the collateral certificate until the business day before
the payment date of a class of notes,
instead of immediately depositing those funds into the trust 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.
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 stated principal amount 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 class to be held until the expected principal
payment date of that note. If the earnings on funds in the principal funding
subaccount are less than the yield payable on the applicable class of notes
- --after giving effect to net payments and receipts under any derivative
agreements -- additional funds will be deposited in the interest funding
subaccount as described under "Deposit and Application of Funds--Deposit of
Principal Funding Subaccount Earnings in Interest Funding Subaccounts;
Principal Funding Subaccount Earnings 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 interest
payment is due and deposit those funds into the interest funding subaccount
for that note to be held until the interest is due. See "Deposit and
Application of Funds--Targeted Deposits of Finance Charge Collections and
Reallocated Principal Collections to the Interest Funding Account."
The issuer will be required to fund the Class C reserve subaccounts
if the finance charge collections generated by the master trust fall below a
level specified in the applicable supplement to this prospectus. The Class C
reserve subaccounts would be funded from monthly finance charge collections
from the collateral certificate after payment of fees and expenses of the
indenture trustee, required interest deposits and other payments described
under "Deposit and Application of Funds--Targeted Deposits to the Class C
Reserve Account." A supplement to this prospectus relating to Class C notes
will include provisions for funding the Class C reserve subaccounts.
Funds on deposit 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. Funds on deposit in the Class C reserve account will also be
available to holders of Class C notes on any day when principal is payable,
but only to the extent that the nominal liquidation amount of the Class C
notes plus funds on deposit in the Class C principal funding account is less
than the outstanding dollar principal amount of the Class C notes.
Only the holders of Class C notes will have the benefit of the Class
C reserve account. See "Deposit and Application of Funds--Withdrawals from the
Class C Reserve Account."
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The accounts described in this section 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 class of notes will be applied to make interest payments on
that class of notes. Investment earnings on funds in the other trust accounts
will be allocated as described under "Deposit and Application of
Funds--Allocation of Finance Charge Collections to Accounts." Any loss
resulting from the investment of funds in the trust accounts will be charged
to the trust subaccount incurring the loss.
LIMITED RECOURSE TO THE ISSUER; SECURITY FOR THE NOTES
Only the allocable portion of finance charge collections and
principal collections under the collateral certificate, the applicable trust
accounts and any applicable derivative agreement provide the source of payment
for principal of or interest on any class of notes. 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.
The notes of all series are secured by a shared security interest in
the collateral certificate and the collection account, but each class of notes
is entitled to the benefits of only that portion of those assets allocated to
it under the indenture. Each class of notes is secured by a security interest
in the applicable principal funding subaccount, the applicable interest
funding subaccount, in the case of classes of Class C notes, the applicable
Class C reserve subaccount, any applicable supplemental account, and by a
security interest in any applicable derivative agreement.
THE INDENTURE TRUSTEE
Bankers Trust Company is the trustee under the indenture. Its
principal corporate trust office is located at Four Albany Street, 10th Floor,
New York, New York 10006.
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.
DEPOSIT AND APPLICATION OF FUNDS
The indenture specifies how finance charge collections and principal
collections allocated to the collateral certificate and payments received from
counterparties under derivative agreements will be deposited into the 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.
Following are summaries of those provisions.
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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 certificate and investment
earnings on funds in the trust accounts other than the principal funding
account as follows:
o first, to pay the fees and expenses of the indenture trustee;
o second, to make the targeted deposit to the interest funding
account to fund the payment of interest on the notes;
o third, to make the targeted deposit to the Class C reserve
account, if any;
o fourth, to the issuer, to make a reinvestment in the collateral
certificate if the Invested Amount of the collateral
certificate plus the aggregate amount on deposit in the
principal funding account is less than the outstanding dollar
principal amount of all of the notes; and
o 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 certificate as follows:
o first, to the interest funding account to the extent there is a
shortfall in finance charge collections available to make the
targeted deposit to the interest funding account, except that
no reallocation of principal collections which would result in
a reduction of the nominal liquidation amount of any class of
notes will be used (1) to pay interest on any note of that
class or a subordinated class, (2) to make a payment on a
derivative agreement entered into with respect to interest on
any note of that class or a subordinated class or (3) to fund
an increase in the Invested Amount of the collateral
certificate required by accretion of interest on a discount
note of that class or a subordinated class;
o second, to make the targeted deposits to the principal funding
account; and
o third, to the master trust, to be reinvested in the collateral
certificate.
The amount of principal collections that may be allocated to pay
interest is limited as described below under "Deposit and Application of
Funds--Limit on Reallocations of Principal Collections from Subordinated
Classes to Senior Classes of Single Issuance Series" and "--Limit on
Reallocations of Principal Collections from Subordinated Classes to Senior
Classes of Multiple Issuance Series."
The Invested Amount of the collateral certificate will be reduced by
the amount of principal collections used to make deposits into the interest
funding account and deposits into the principal funding account. If the
Invested Amount of the collateral certificate is reduced because principal
collections have been used to make deposits into the interest funding account,
the amount of finance charge collections and principal collections allocated
to the collateral certificate will be reduced in later months unless the
reduction in the Invested Amount is reimbursed from Excess Finance Charge
Collections.
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TARGETED DEPOSITS OF FINANCE CHARGE COLLECTIONS AND REALLOCATED
PRINCIPAL COLLECTIONS TO THE INTEREST FUNDING ACCOUNT
The aggregate deposit targeted to be made to the interest funding
account with finance charge collections and reallocated principal collections
allocated to the collateral certificate in each month will be equal to the sum
of the interest funding account deposits required to be made for each class or
subclass of notes. A single class or subclass of notes may be entitled to more
than one of the following deposits in a month. For example, a class of notes
with a monthly interest payment date and an interest rate cap would be
entitled to a deposit from the issuer up to the amount of the capped interest,
as well as a deposit from the derivative counterparty for interest above the
capped amount. These requirements are set forth below. The deposit targeted
for any month will also include any shortfall in the targeted deposit from any
prior month.
(1) SPECIFIED DEPOSITS. If the applicable supplement to this
prospectus for any class or subclass of notes specifies a
deposit to be made , the deposit targeted for that class or
subclass each month is the specified amount.
(2) INTEREST PAYMENTS NOT COVERED BY A DERIVATIVE AGREEMENT. If a
class or subclass of notes provides for interest payments that
are not covered -- or only partially covered -- by a derivative
agreement, the deposit targeted for that class or subclass of
notes for any month will be equal to the amount of interest
accrued on the outstanding dollar principal amount of that
class or subclass after deducting any amounts on deposit in the
applicable principal funding subaccount, during the period from
the prior Monthly Interest Date -- or the date of issuance of
that class or subclass for the determination for the first
Monthly Interest Date -- to the first Monthly Interest Date
after the end of the month. In the case of a class of notes
with an interest rate cap, this targeted deposit applies to the
uncapped portion of the interest on that class of notes.
(3) U.S. DOLLAR NOTES WITH PERFORMING DERIVATIVE AGREEMENTS. If a
class or subclass of U.S. dollar notes or foreign currency
notes has a Performing derivative agreement for interest that
provides for monthly payments to the applicable derivative
counterparty, the deposit targeted for that class or subclass
of notes is equal to the amount required to be paid to the
applicable derivative counterparty on the payment date
following the end of that month.
If a class or subclass of U.S. dollar notes or foreign currency
notes has a Performing derivative agreement for interest that
provides for payments less frequently than monthly to the
applicable derivative counterparty, the deposit targeted for
that class or subclass of notes for each month is equal to the
amount required to be paid to the applicable derivative
counterparty on the next payment date following the end of that
month taking into account the applicable interest rate and day
count convention, but allocated pro rata to that month as
provided in the derivative agreement, or as otherwise provided
in the applicable derivative agreement.
(4) U.S. DOLLAR NOTES WITH NON- PERFORMING DERIVATIVE AGREEMENTS.
If a class or subclass of U.S. dollar notes has a non-
Performing derivative agreement for interest, the deposit
targeted for that class or subclass for each month unless
otherwise provided in the applicable derivative agreement will
be equal to the amount of interest accrued on the outstanding
dollar principal
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amount of those notes, after deducting any amounts on deposit
in the applicable principal funding subaccount, during the
period from the prior Monthly Interest Date to the first
Monthly Interest Date after the end of that month to the extent
which that interest would have been covered by the
non-Performing derivative agreement.
(5) FOREIGN CURRENCY NOTES WITH NON- PERFORMING DERIVATIVE
AGREEMENTS.
If a class or subclass of foreign currency notes has a non-
Performing derivative agreement for interest, then the
calculation of the targeted deposit is made with reference to
the amount of U.S. dollars that is or would have been payable
to the applicable derivative counterparty during that period if
the derivative agreement were Performing, or as otherwise
provided in the applicable derivative agreement.
(6) DISCOUNT NOTES. In the case of a class or subclass of discount
notes, the deposit targeted for that class or subclass of notes
for any month, in addition to any applicable stated interest as
determined under items (1) - (5) above, is the amount of
accretion of principal of that class or subclass of notes from
the prior Monthly Principal Date -- or in the case of the first
Monthly Principal Date, from the date of issuance of that class
or subclass -- to the first Monthly Principal Date after the
end of the month.
Each deposit to the interest funding account will be made on the
applicable Monthly Interest Date, or as much earlier as necessary to make
timely deposit or payment to the applicable interest funding subaccount or
derivative counterparty.
PAYMENTS RECEIVED FROM DERIVATIVE COUNTERPARTIES FOR INTEREST
Payments received under derivative agreements for interest on notes
payable in U.S. dollars will be deposited into the applicable interest funding
subaccount. Payments received under derivative agreements for interest on
foreign currency notes will be made directly to the applicable paying agent
for payment to the holders of those notes, or as otherwise specified in the
applicable supplement to this prospectus.
DEPOSIT OF PRINCIPAL FUNDING SUBACCOUNT EARNINGS IN INTEREST FUNDING
SUBACCOUNTS; PRINCIPAL FUNDING SUBACCOUNT EARNINGS SHORTFALL
The issuer will notify the master trust from time to time of the
aggregate amount on deposit in the principal funding account. Whenever there
is any amount on deposit in any principal funding subaccount, the master trust
will designate an equal amount of the sellers' interest, and the finance
charge collections allocable to the designated portion of the sellers'
interest will be applied as follows: On each Monthly Interest Date, the issuer
will calculate the targeted amount of principal funding subaccount earnings
for each class or subclass of notes, which will be equal to the amount that
the funds on deposit in each principal funding subaccount would earn at the
interest rate payable by the issuer on the related class or subclass of notes.
If the amount actually earned on the funds on deposit is less than the
targeted amount of earnings, then the shortfall will be made up from the
finance charge collections allocated to the corresponding designated portion
of the sellers' interest.
If the amount of principal funding subaccount earnings for any class
or subclass of notes for any month is greater than the targeted principal
funding subaccount earnings for that month, the amount of the excess will be
paid to the Banks , as owners of the sellers' interest.
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DEPOSITS OF WITHDRAWALS FROM THE CLASS C RESERVE ACCOUNT TO THE INTEREST
FUNDING ACCOUNT
Withdrawals made from any Class C reserve subaccount will be
deposited into the applicable interest funding account to the extent described
under "--Withdrawals from the Class C Reserve Account."
ALLOCATION TO INTEREST FUNDING SUBACCOUNTS
The aggregate deposit of finance change collections and reallocated
principal collections made to the interest funding account in each month will
be allocated, 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 TARGETED AMOUNTS. If the aggregate amount of
finance charge collections available for deposit to the
interest funding account is equal to the sum of the deposits of
finance charge collections targeted by each class or subclass
of notes, then that targeted amount is deposited in the
interest funding subaccount established for each class or
subclass.
(2) DEPOSITS ARE LESS THAN TARGETED AMOUNTS. If the aggregate
amount of finance charge collections available for deposit to
the interest funding account is less than the sum of the
deposits of finance charge collections targeted by each class
or subclass of notes, then the amount available to be deposited
into the interest funding account will be allocated to each
series of notes pro rata based on the outstanding dollar
principal amount of notes in that series.
o For all series of notes identified as "Group 1" series,
the allocation of finance charge collections is
reaggregated into a single pool, and reallocated to each
series, class or subclass of notes in Group 1 pro rata
based on the amount of the deposit targeted by that
series, class or subclass and not based on the outstanding
dollar principal amount of notes in that series, class or
subclass.
o 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.
(3) OTHER FUNDS NOT REALLOCATED. Funds on deposit in an interest
funding subaccount from earlier months, funds representing
interest on amounts in deposit in the related principal funding
subaccount, and payments received from derivative
counterparties in the current month will not be reallocated to
other interest funding subaccounts. These funds remain in the
interest funding subaccount into which they were deposited
until they are withdrawn to be paid to the applicable
noteholder or derivative counterparty.
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 targeted by that class or subclass.
However, these deposits are limited to the extent described under "Deposit and
Application of Funds--Limit on Reallocations of Principal Collections from
Subordinated Classes to Senior Classes of Single Issuance Series" and "--Limit
on Reallocations of Principal Collections from Subordinated Classes to Senior
Classes of Multiple Issuance Series."
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WITHDRAWALS FROM INTEREST FUNDING ACCOUNT
After giving effect to all deposits and reallocations of funds in
the interest funding account in a month, the following withdrawals from the
applicable interest funding subaccount will be made, but in no event more than
the amount on deposit in the applicable interest funding subaccount. A class
or subclass of notes may be entitled to more than one of the following
withdrawals in a particular month:
(1) WITHDRAWALS FOR U.S. DOLLAR NOTES. On each applicable interest
payment date for each class or subclass of U.S. dollar notes,
an amount equal to interest due on the applicable class or
subclass of notes on the applicable interest payment date will
be withdrawn from that interest funding subaccount and paid to
the applicable paying agent, or as otherwise provided in the
applicable supplement to this prospectus.
(2) WITHDRAWALS FOR DISCOUNT NOTES. On each applicable Monthly
Principal Date, with respect to each class or subclass of
discount notes, an amount equal to the amount of the accretion
of principal of that class or subclass of notes from the prior
Monthly Principal Date, or in the case of the first Monthly
Principal Date, the date of issuance of that class or subclass,
to the applicable Monthly Principal Date will be withdrawn from
that interest funding subaccount and invested in the collateral
certificate, or as otherwise provided in the applicable
supplement to this prospectus.
(3) WITHDRAWALS FOR NOTES WITH PERFORMING DERIVATIVE AGREEMENTS FOR
INTEREST. On each date on which a payment is required under the
applicable derivative agreement, or a date specified in the
applicable supplement to this prospectus, with respect to any
class or subclass of notes which has a Performing derivative
agreement for interest, an amount equal to the amount of the
payment to be made under the applicable derivative agreement
will be withdrawn from that interest funding subaccount and
paid to the applicable derivative counterparty, or as otherwise
provided in the applicable supplement to this prospectus.
(4) WITHDRAWALS FOR NOTES WITH NON- PERFORMING DERIVATIVE
AGREEMENTS FOR INTEREST IN U.S. DOLLARS. On each interest
payment date, or a date specified in the applicable supplement
to this prospectus, for a class or subclass of U.S. dollar
notes that has a non- Performing derivative agreement for
interest, an amount equal to the amount of interest payable on
that interest payment date will be withdrawn from that interest
funding subaccount and paid to the applicable paying agent, or
as otherwise provided in the applicable supplement to this
prospectus.
(5) WITHDRAWALS FOR NOTES WITH NON- PERFORMING DERIVATIVE
AGREEMENTS FOR FOREIGN CURRENCY INTEREST. On each interest
payment date with respect to a class or subclass of foreign
currency notes that has a non- Performing derivative agreement
for interest, or a date specified in the applicable supplement
to this prospectus, an amount equal to the amount of U.S.
dollars necessary to be converted at the applicable exchange
rate to pay the foreign currency interest due on that class or
subclass of notes on the interest payment date will be
withdrawn from that interest funding subaccount and converted
to the applicable foreign currency at the applicable exchange
rate and paid to the applicable paying agent. Any excess U.S.
dollar amount will be retained on deposit in the
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applicable interest funding subaccount to be applied to make interest payments
on later interest payment dates, or as otherwise provided in the applicable
supplement to this prospectus.
If the aggregate amount available for withdrawal from an interest
funding subaccount is less than all withdrawals required to be made from that
subaccount in a month after giving effect to all deposits and allocations,
then the amounts on deposit in the interest funding account will be withdrawn
and applied to the interest funding subaccounts pro rata based on the amounts
of the withdrawals required to be made.
Upon payment in full of any class or subclass of notes, any amount
on deposit in the applicable interest funding subaccount will be treated as
finance charge collections.
TARGETED DEPOSITS OF PRINCIPAL COLLECTIONS TO THE PRINCIPAL FUNDING
ACCOUNT
The aggregate amount targeted to be deposited into the principal
funding account in any month will be the sum of the following amounts. If a
single class or subclass of notes is entitled to more than one of the
following deposits in any month, the deposit targeted for that month will be
the highest of the targeted amounts for that month, plus any shortfall in the
targeted deposit from any prior month, but not more than the nominal
liquidation amount of that class of Notes. These requirements are set forth
below:
(1) EXPECTED PRINCIPAL PAYMENT DATE. With respect to the last month
before the expected principal payment date of a class or
subclass of notes, and each following month, the deposits
targeted for that class or subclass of notes with respect to
that month is equal to the aggregate nominal liquidation amount
of that class or subclass of notes.
(2) BUDGETED DEPOSITS. Each month beginning with the twelfth month
before the expected principal payment date of a class or
subclass of Class A notes, the deposit targeted to be made into
the principal funding subaccount for that class or subclass
will be the monthly accumulation amount for that class or
subclass specified in the applicable supplement to this
prospectus, equal to, in the case of a single issuance series,
one-eleventh, and in the case of a multiple issuance series,
one-twelfth, of the outstanding dollar principal amount of that
class or subclass of notes as of its expected principal payment
date , after deducting any amounts already on deposit in the
applicable principal funding sub-account.
The issuer may postpone the date of the targeted deposits under
the previous sentence. If the issuer and the master trust
determine that less than eleven months or twelve months, as
applicable, would be required to accumulate the principal
collections necessary to pay a class of notes on its expected
principal payment date, using conservative historical
information about payment rates of principal receivables under
the master trust, and after taking into account all of the
other expected payments of principal of investor certificates
and notes to be made in the next eleven months or twelve
months, as applicable, then the start of the accumulation
period may be postponed each month by one month, with
proportionately larger accumulation amounts for each month of
postponement.
(3) PREFUNDING OF THE PRINCIPAL FUNDING ACCOUNT OF SENIOR CLASSES.
If the issuer determines that any expected principal payment
date, early redemption event, event of default or other date on
which principal is payable because of a
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mandatory or optional redemption with respect to any class or subclass of
Class C notes will occur at a time when the payment of all or part of that
class or subclass of Class C notes would be prohibited because it would cause
a deficiency in the required subordinated amount of the Class A notes or Class
B notes of the same series, the targeted deposit amount for the Class A notes
and Class B notes of that series will be an amount equal to the portion of the
nominal liquidation amount of the Class A notes and Class B notes that would
have to cease to be outstanding in order to permit the payment of that tranche
of Class C notes.
If the issuer determines that any expected principal payment
date, early redemption event, event of default or other date on
which principal is payable because of a mandatory or optional
redemption with respect to any Class B notes will occur at a
time when the payment of all or part of that class or subclass
of Class B notes would be prohibited because it would cause a
deficiency in the required subordinated amount of the Class A
notes of that series, the targeted deposit amount for the Class
A notes of that series will be an amount equal to the portion
of the nominal liquidation amount of the Class A notes that
would have to cease to be outstanding in order to permit the
payment of that tranche of Class B notes.
If a later issuance of a class or subclass of Class B notes or
Class C notes restores the required subordinated amount of a
senior class or subclass of notes of any series, prefunding
deposits made in the principal funding account of a senior
class or subclass may be withdrawn from the principal funding
account and reinvested in the collateral certificate.
(4) EVENT OF DEFAULT , EARLY REDEMPTION EVENT OR OTHER OPTIONAL OR
MANDATORY REDEMPTION. If any class or subclass of notes has
been accelerated after the occurrence of an event of default
during that month, or if any class or subclass of notes is
required to be redeemed following an early redemption event or
other optional or mandatory redemption, the deposit targeted
for that class or subclass of notes with respect to that month
is equal to the nominal liquidation amount of that class or
subclass of notes.
PAYMENTS RECEIVED FROM DERIVATIVE COUNTERPARTIES FOR PRINCIPAL
It is unlikely that any class or subclass of U.S. dollar notes will
have a derivative agreement for principal . Payments received under derivative
agreements for principal of foreign currency notes will be made directly to
the applicable paying agent for payment to the holders of the applicable class
or subclass of notes, or as
otherwise specified in the applicable supplement to this prospectus.
DEPOSITS OF WITHDRAWALS FROM THE CLASS C RESERVE ACCOUNT TO THE PRINCIPAL
FUNDING ACCOUNT
Withdrawals from any Class C reserve sub-account will be deposited
into the applicable principal funding sub-account to the extent described
under "--Withdrawals from the Class C Reserve Account."
DEPOSITS OF PROCEEDS OF THE SALE OF CREDIT CARD RECEIVABLES
The net proceeds of the sale of any credit card receivables by the
master trust which are received by the issuer will be deposited into the
applicable principal funding
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sub-account. See "--Final Payment of the Notes" and " Covenants, Events of
Default and Early Redemption Events--Events of Default."
ALLOCATION OF FUNDS ON DEPOSIT IN THE PRINCIPAL FUNDING SUBACCOUNTS
Funds on deposit in the principal funding account each month will be
allocated, 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 TARGETED AMOUNTS. If the aggregate deposit to
the principal funding account is equal to the sum of the
deposits targeted by each class or subclass of notes, then the
targeted amount is deposited in the principal funding
subaccount established for each
class or subclass.
(2) DEPOSITS ARE LESS THAN TARGETED AMOUNTS. If the amount on
deposit in any principal funding subaccount for a class of
Class A notes of a series is less than the sum of the deposits
targeted with respect to that class, other than the amount
targeted for deposit with respect to an optional redemption of
that class to the extent specified in the applicable supplement
to this prospectus, then amounts on deposit or to be deposited
in the principal funding subaccounts established for Class B
notes and Class C notes for that series will be reallocated to
make the targeted deposit into the Class A principal funding
subaccount, to be made first from the Class C principal funding
subaccount in that series and second from Class B principal
funding subaccount in that series. If more than one subclass of
Class A note of a series needs to use amounts on deposit in the
principal funding subaccount of the Class B notes and the Class
C notes of that series, then withdrawals will be allocated pro
rata based on the nominal liquidation amounts of the classes or
subclasses of Class A notes that require funding.
If the amount on deposit in any principal funding subaccount
for a class of Class B notes of a series is less than the sum
of the deposits targeted with respect to that class, other than
the amount targeted for deposit with respect to an optional
redemption of that class to the extent specified in the
applicable supplement to this prospectus, then amounts on
deposit or to be deposited in the principal funding subaccount
established for Class C notes of that series will be
reallocated to make the targeted deposit into the Class B
principal funding subaccount. If more than one subclass of
Class B notes of a series needs to use amounts on deposit in
the principal funding subaccount of the Class C notes of that
series, then withdrawals will be allocated pro rata based on
the outstanding dollar principal amounts of the classes or
subclasses of Class B notes that require funding.
(3) OTHER FUNDS NOT REALLOCATED. Funds on deposit in a principal
funding subaccount from withdrawals from the Class C reserve
account or payments received from derivative counterparties
will not be reallocated to other principal funding subaccounts.
These funds remain in the principal funding subaccount into
which they were deposited until they are paid to the applicable
noteholders.
Because the nominal liquidation amount of a class of notes is
reduced by amounts on deposit in that class's principal funding subaccount,
the deposit of principal collections into the principal funding subaccount of
a subordinated class of notes initially reduces the nominal liquidation amount
of that
subordinated class. However, if funds are reallocated
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from the principal funding subaccount of a subordinated class to the principal
funding subaccount of a senior class of the same series, the result is that
the nominal liquidation amount of the senior class, and not of the
subordinated class, is reduced by the amount of the reallocation.
If the nominal liquidation amount of a subordinated class of notes
has been reduced from charge-offs of principal receivables in the master trust
and reallocations of principal collections to pay interest on senior classes
of notes, and then reimbursed from Excess Finance Charge Collections, the
reimbursed portion is no longer subordinated to notes of the senior classes of
the same series that were outstanding on the date of that reimbursement. This
reimbursed amount will not be reallocated to any notes that were outstanding
before the date of that reimbursement. However, in a multiple issuance series,
the reimbursed amount is subordinated to any notes of the senior classes of
the same series that were issued after the date of that reimbursement, and may
be reallocated to those notes.
WITHDRAWALS FROM PRINCIPAL FUNDING ACCOUNT
After giving effect to all deposits and reallocations of funds in
the principal funding account in a month, the following withdrawals from the
applicable principal funding subaccount will be made, but in no event more
than the amount on deposit in the applicable principal funding subaccount. A
class or subclass of notes may be entitled to more than one of the following
withdrawals in a particular month:
(1) WITHDRAWALS FOR U.S. DOLLAR NOTES WITH NO DERIVATIVE AGREEMENT
FOR PRINCIPAL.
On each applicable principal payment date, or a date specified
in the applicable supplement to this prospectus, with respect
to each class or subclass of U.S. dollar notes which has no
derivative agreement for principal, an amount equal to the
principal due on the applicable class or subclass of notes on
the applicable principal payment date will be withdrawn from
the applicable principal funding subaccount and paid to the
applicable paying agent, or as otherwise provided in the
applicable supplement to this prospectus.
(2) WITHDRAWALS FOR NOTES WITH PERFORMING DERIVATIVE AGREEMENT FOR
PRINCIPAL. On each date on which a payment is required under
the applicable derivative agreement, or a date specified in the
applicable supplement to this prospectus, with respect to any
class or subclass of notes which has a Performing derivative
agreement for principal, an amount equal to the amount of the
payment to be made under the applicable derivative agreement
will be withdrawn from the applicable principal funding
subaccount and paid to the applicable derivative counterparty,
or as otherwise provided in the applicable supplement to this
prospectus.
(3) WITHDRAWALS FOR FOREIGN CURRENCY NOTES WITH NON- PERFORMING
DERIVATIVE AGREEMENTS FOR PRINCIPAL. On each principal payment
date with respect to a class or subclass of foreign currency
notes that has a non- Performing derivative agreement for
principal, or a date specified in the applicable supplement to
this prospectus, an amount equal to the amount of U.S. dollars
necessary to be converted at the applicable exchange rate to
pay the foreign currency principal due on that class or
subclass of notes on the applicable principal payment date will
be withdrawn from the applicable principal funding subaccount
and converted to the applicable foreign currency at the
prevailing spot exchange rate and paid to the applicable paying
agent, or as otherwise provided in the applicable supplement to
this prospectus. Any excess U.S. dollar
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amount will be retained on deposit in the applicable principal
funding subaccount to be applied to make principal payments on
later principal payment dates.
(4) WITHDRAWAL OF PREFUNDED AMOUNT. If a later issuance of a class
or subclass of Class B notes or Class C notes restores the
required subordinated amount of a senior class or subclass of
notes of any multiple issuance series, prefunding deposits
described under "--Targeted Deposits of Principal Allocations
to the Principal Funding Account" made in the principal funding
account of a senior class or subclass may be withdrawn from the
principal funding account and reinvested in the collateral
certificate.
Upon payment in full of any class or subclass of notes, any amount
on deposit in the applicable principal funding subaccount will be treated as
finance charge collections.
LIMIT ON REALLOCATIONS OF PRINCIPAL COLLECTIONS FROM SUBORDINATED CLASSES TO
SENIOR CLASSES OF SINGLE ISSUANCE SERIES
With respect to any Class A notes of a single issuance series, the
aggregate amount of
o all principal collections reallocated from Class C notes of
that series to the interest funding subaccounts of Class A
notes or Class B notes of that series; and
o all reductions in the nominal liquidation amount of the Class C
notes of that series from allocations of charge-offs of
principal receivables in the master trust
may not exceed the Class A required subordinated amount of Class C notes for
that series. Likewise the aggregate amount of
o all principal collections reallocated from Class B notes of
that series to the interest funding subaccounts of Class A
notes of that series; and
o all reductions in the nominal liquidation amount of the Class B
notes of that series from allocations of charge-offs of
principal receivables in the master trust
may not exceed the Class A required subordinated amount of Class B notes for
that series.
With respect to any Class B notes of a single issuance series, the
aggregate amount of
o all principal collections reallocated from Class C notes of
that series to the interest funding subaccounts of Class A
notes or Class B notes of that series; and
o all reductions in the nominal liquidation amount of the Class C
notes of that series from allocations of charge-offs of
principal receivables in the master trust
may not exceed the Class B required subordinated amount of Class C notes for
that series.
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LIMIT ON REALLOCATIONS OF PRINCIPAL COLLECTIONS FROM SUBORDINATED CLASSES TO
SENIOR CLASSES OF MULTIPLE ISSUANCE SERIES
LIMIT ON REALLOCATIONS TO A SUBCLASS OF CLASS A NOTES FROM CLASS C
NOTES. Principal collections that would otherwise have been allocated to the
Class C notes of a series may be reallocated to the interest funding
subaccount of a subclass of Class A notes of the same series only to the
extent, after giving effect to that reallocation, that the Class A usage of
the Class C subordinated amount is not greater than the required subordinated
amount of Class C notes for that subclass of Class A notes. For this purpose,
Class A usage of Class C subordinated amount is equal to the sum of the
following amounts:
o the cumulative sum of principal collections reallocated from
Class C notes of that series to the interest funding subaccount
of that subclass of Class A notes.
o plus, a portion of each reallocation of principal collections
from Class C notes of that series to the interest funding
subaccounts of Class B notes of that series while that subclass
of Class A notes is outstanding. These amounts will be treated
as usage of the Class A required subordinated amount of Class C
notes pro rata based on the ratio of the Class A required
subordinated amount of Class B notes to the aggregate
outstanding dollar principal amount of all Class B notes of
that series.
o plus, the portion of the charge-offs of principal receivables
in the master trust that is treated as usage of the Class A
required subordinated amount of Class C notes. This amount is
equal to the sum of the following amounts, and is calculated on
each day on which there is an allocation of charge-offs of
principal receivables in held in the master trust:
- the amount of charge-offs of principal receivables in the
master trust that are initially allocated to that subclass
of Class A notes but then reallocated to Class C notes of
that series.
- plus, a portion of the charge-offs of principal
receivables in the master trust that are initially
allocated to Class B notes of that series but then
reallocated to Class C notes of that series. These amounts
will be treated as usage of the Class A required
subordinated amount of Class C notes pro rata based on the
ratio of the Class A required subordinated amounts of
Class B notes to the aggregate outstanding dollar
principal amount of the Class B notes of that series.
- plus, a portion of the charge-offs of principal
receivables in the master trust that are initially
allocated to Class C notes of that series. These amounts
will be treated as usage of the Class A required
subordinated amount of Class C notes pro rata based on the
ratio of the Class A required subordinated amounts of
Class C notes to the aggregate outstanding dollar
principal amount of the Class C notes of that series.
LIMIT ON REALLOCATIONS TO A SUBCLASS OF CLASS A NOTES FROM CLASS B
NOTES. Principal collections that would otherwise have been allocated to the
Class B notes of a series may be reallocated to the interest funding account
of a subclass of Class A notes of the same series only to the extent, after
giving effect to that reallocation, that the Class A usage of the Class B
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subordinated amount is not greater than the required subordinated amount of
Class B notes for that subclass of Class A notes. For this purpose, Class A
usage of Class B subordinated amount is equal to the sum of the following
amounts:
o the cumulative sum of principal collections reallocated
from Class B notes of that series to the interest funding
subaccount of that subclass of Class A notes.
o plus, the portion of the charge-offs of principal
receivables in the master trust that is treated as usage
of the Class A required subordinated amount of Class B
notes. This amount is equal to the sum of the following
amounts, and is calculated on each day on which there is
an allocation of charge-offs of principal receivables in
held in the master trust:
- the amount of charge-offs of principal receivables in
the master trust that are initially allocated to that
subclass of Class A notes but then reallocated to
Class B notes of that series.
- plus, a portion of the charge-offs of principal
receivables in the master trust that are initially
allocated to Class B notes of that series and not
reallocated to Class C notes of that series. These
amounts will be treated as usage of the Class A
required subordinated amount of Class B notes pro
rata based on the ratio of the Class A required
subordinated amounts of Class B notes to the
aggregate outstanding dollar principal amount of the
Class B notes of that series.
LIMIT ON REALLOCATIONS TO A SUBCLASS OF CLASS B NOTES FROM CLASS C
NOTES. Principal collections that would otherwise have been allocated to the
Class C notes of a series may be reallocated to the interest funding account
of a subclass of Class B notes of the same series only to the extent, after
giving effect to that reallocation, that the Class B usage of the Class C
subordinated amount is not greater than the required subordinated amount of
Class C notes for that subclass of Class B notes. For this purpose, Class B
usage of Class C subordinated amount is equal to the sum of the following
amounts:
o the cumulative sum of principal collections reallocated from
Class C notes of that series to the interest funding subaccount
of that subclass of Class B notes.
o plus, a portion of each reallocation of principal collections
from Class C notes of that series to the interest funding
subaccounts of Class A notes of that series while that subclass
of Class B notes is outstanding. These amounts will be treated
as usage of the Class B required subordinated amount of Class C
notes pro rata based on the ratio of the outstanding dollar
principal amount of that subclass of Class B notes to the
aggregate outstanding dollar principal amount of all Class B
notes of that series.
o plus, the portion of the charge-offs of principal receivables
in the master trust that is treated as usage of the Class B
required subordinated amount of Class C notes. This amount is
equal to the sum of the following amounts, and is calculated on
each day on which there is an allocation of charge-offs of
principal receivables in held in the master trust:
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- the amount of charge-offs of principal receivables in
the master trust that are initially allocated to that
subclass of Class B notes but then reallocated to
Class C notes of that series.
- plus, a portion of the charge-offs of principal
receivables in the master trust that are initially
allocated to Class A notes of that series but then
reallocated to Class C notes of that series. These
amounts will be treated as usage of the Class B
required subordinated amount of Class C notes pro
rata based on the ratio of the outstanding dollar
principal amount of that subclass of Class B notes to
the aggregate outstanding dollar principal amount of
the Class B notes of that series.
- plus, a portion of the charge-offs of principal
receivables in the master trust that are initially
allocated to Class C notes of that series. These
amounts will be treated as usage of the Class B
required subordinated amount of Class C notes pro
rata based on the ratio of the Class B required
subordinated amounts of Class C notes to the
aggregate outstanding dollar principal amount of the
Class C notes of that series.
LIMIT ON REPAYMENTS OF SUBORDINATED CLASSES OF SINGLE ISSUANCE SERIES
In the case of a single issuance series, no principal collections on
deposit in a principal funding subaccount will be applied to pay principal of
any Class B note of that series or to make a payment under a derivative
agreement with respect to principal for any Class B note of that series, and
no Class B note of that series held by the issuer, the Banks or their
affiliates will be canceled, unless, immediately before giving effect to that
payment or cancelation, no Class A notes of that series are outstanding,
except to the extent that reductions in the nominal liquidation amount of the
Class B notes due to a reallocation of principal collections to pay interest
on senior classes and charge-offs of principal receivables in the master trust
has been reimbursed from Excess Finance Charge Collections, or the Class A
principal funding account has been prefunded as described in "Deposit and
Application of Funds--Targeted Deposits of Principal Collections to the
Principal Funding Account--Prefunding of the Principal Funding Account of
Senior Classes."
In the case of a single issuance series, no principal collections on
deposit in a principal funding subaccount will be applied to pay principal of
any Class C note of that series or to make a payment under a derivative
agreement with respect to principal for any Class C note of that series, and
no Class C note of that series held by the issuer, the Banks or their
affiliates will be canceled, unless, immediately before giving effect to that
payment or cancelation, no Class A notes or Class B notes of that series are
outstanding, except to the extent that reductions in the nominal liquidation
amount of the Class C notes due to a reallocation of principal collections to
pay interest on senior classes and charge-offs of principal receivables in the
master trust has been reimbursed from Excess Finance Charge Collections , or
the Class A and Class B principal funding account has been prefunded as
described in "Deposit and Application of Funds--Targeted Deposits of Principal
Collections to the Principal Funding Account--Prefunding of the Principal
Funding Account of Senior Classes," or funds are available in the applicable
Class C reserve subaccount.
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LIMIT ON REPAYMENTS OF SUBORDINATED CLASSES OF MULTIPLE ISSUANCE SERIES
In the case of a multiple issuance series, no principal collections
on deposit in a principal funding subaccount will be applied to pay principal
of any note of a subordinated class of that series or to make a payment under
a derivative agreement with respect to principal for any note of a
subordinated class of that series, and no note of a subordinated class of that
series held by the issuer, the Banks or their affiliates will be canceled,
unless, following that payment or cancelation, the remaining available
subordinated amount of notes of that subordinated class of that series is at
least equal to the required subordinated amount for the outstanding notes of
the senior classes of that series. See "The Notes--Required Subordinated
Amount" and "Deposit and Application of Funds--Targeted Deposits of Principal
Collections to the Principal Funding Account--Prefunding of the Principal
Funding Account of Senior Classes."
For determining whether Class B notes may be repaid or canceled
while Class A notes of the same series are outstanding, the remaining
available subordinated amount of Class B notes is equal to the sum of:
o the aggregate nominal liquidation amount of all Class B
notes of that series that will remain outstanding after
giving effect to the repayment or cancelation of the Class
B notes to be repaid or canceled in that month;
o plus, the amount of Class A usage of Class B required
subordinated amount in that series, as described in
"Deposit and Allocation of Funds--Limit on Reallocations
of Principal Collections from Subordinated Classes to
Senior Classes of Multiple Issuance Series."
For determining whether Class C notes may be repaid or canceled
while Class A notes of the same series are outstanding, the remaining
available subordinated amount of Class C notes is equal to the sum of:
o the aggregate nominal liquidation amount of all Class C
notes of that series that will remain outstanding after
giving effect to the repayment or cancelation of the Class
C notes of that series to be repaid or canceled in that
month;
o plus, the amount of Class A usage of Class C required
subordinated amount in that series, as described in
"Deposit and Allocation of Funds--Limit on Reallocations
of Principal Collections from Subordinated Classes to
Senior Classes of Multiple Issuance Series."
For determining whether Class C notes may be repaid or canceled
while Class B notes of the same series are outstanding, the remaining
available subordinated amount of Class C notes is equal to the sum of:
o the aggregate nominal liquidation amount of all Class C
notes of that series that will remain outstanding after
giving effect to the repayment or cancelation of the Class
C notes of that series to be repaid or canceled in that
month;
o plus, the amount of Class B usage of Class C required
subordinated amount in that series, as described in
"Deposit and Allocation of Funds--Limit on Reallocations
of Principal Collections from Subordinated Classes to
Senior Classes of Multiple Issuance Series."
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The only exceptions to the limit on repayment of subordinated classes of a
multiple issuance series described in this subheading are when the senior
classes of notes have been prefunded as described in "Deposit and Application
of Funds--Targeted Deposits of Principal Collections to the Principal Funding
Account--Prefunding of the Principal Funding Account of Senior Classes," and
when Class C notes are paid with funds available from the applicable Class C
reserve subaccount as described in "Deposit and Application of
Funds--Withdrawals from the Class C Reserve Account."
LIMIT ON ALLOCATIONS OF PRINCIPAL COLLECTIONS OF ALL CLASSES OR SUBCLASSES
OF NOTES
No principal collections will be allocated to a class or subclass of
notes with a nominal liquidation amount of zero, even if the stated principal
amount of that class or subclass of notes has not been paid in full. However,
any funds in the applicable principal funding subaccount that are not
reallocated to other classes of that series, any funds in the applicable
interest funding subaccount, and in the case of Class C notes, any funds in
the applicable Class C reserve account, will still be available to pay
principal of and interest on that class of notes. In addition, if Excess
Finance Charge Collections are available, they can be applied until the legal
maturity date of that class of notes to reimburse reductions in the nominal
liquidation amount of that class resulting from reallocations of principal
collections to pay interest on senior classes of notes or from charge-offs of
principal receivables in the master trust.
TARGETED DEPOSITS TO THE CLASS C RESERVE ACCOUNT
The aggregate deposit to be made to the Class C reserve account in
each month will be the sum of Class C reserve account deposits targeted to be
made for each class or subclass of Class C notes. The amount of that deposit
and the circumstances that require that deposit to be made will be set forth
in the applicablevsupplement to this prospectus.
If the aggregate deposit made to the Class C reserve account is less
than the sum of the targeted deposits for each class of Class C notes, then
the amount available will first be allocated to each class that requires a
deposit pro rata based on the amounts of the targeted deposits. Then, amounts
allocated to Class C reserve accounts that are part of "Group 1" will be
reallocated among those accounts pro rata based on the amounts of the targeted
deposits. For Class C reserve accounts identified as in another group, the
reallocation will be based on a rule for that group set forth in a supplement
to this prospectus.
WITHDRAWALS FROM THE CLASS C RESERVE ACCOUNT
Withdrawals will be made from the Class C reserve subaccounts, but
in no event more than the amount on deposit in the applicable Class C reserve
subaccount, in the following order:
o INTEREST, PAYMENTS WITH RESPECT TO DERIVATIVE AGREEMENTS
FOR INTEREST AND ACCRETION ON DISCOUNT NOTES. If the
amount on deposit in the interest funding subaccount for
any class or subclass of Class C notes is insufficient to
pay in full the amounts for which withdrawals are
required, the amount of the deficiency will be withdrawn
from the applicable Class C reserve subaccount and
deposited into the applicable interest funding subaccount.
o PAYMENTS OF PRINCIPAL AND PAYMENTS WITH RESPECT TO
DERIVATIVE AGREEMENTS FOR PRINCIPAL. If the amount on
deposit in the principal funding subaccount for any class
or subclass of Class C notes is insufficient to pay in
full the amounts for
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which withdrawals are required, an amount equal to the
lesser of (i) the amount of the deficiency and (ii) the
amount by which the nominal liquidation amount of the
class or subclass of Class C
notes plus funds on deposit in the applicable Class C
principal funding subaccount is less than the outstanding
dollar principal amount of the subclass of Class C notes
will be withdrawn from the applicable Class C reserve
subaccount and deposited into the applicable principal
funding subaccount.
o AMOUNTS TREATED AS FINANCE CHARGE COLLECTIONS. Upon
payment in full of any class or subclass of Class C notes,
any amount on deposit in the applicable Class C reserve
subaccount will be treated as finance charge collections.
PRO RATA PAYMENTS WITHIN A CLASS OR SUBCLASS
With respect to single issuance series, all notes of a class will
receive payments of principal and interest pro rata based on the outstanding
dollar principal amount of each note in that class. With respect to multiple
issuance series, all notes of a subclass will receive payments of principal
and interest pro rata based on the
outstanding dollar principal amount of each note in that subclass.
FINAL PAYMENT OF THE NOTES
If the nominal liquidation amount of a class of notes is greater
than zero on its legal maturity date, the indenture trustee will cause the
master trust to sell credit card receivables in an amount of up to 110% of
that class's nominal liquidation amount. The net proceeds of the sale will be
deposited into the principal funding subaccount for the applicable class of
notes, and may be reallocated to the principal funding accounts of senior
classes of notes of the same series. Upon a sale of credit card receivables,
the nominal liquidation amount of the applicable class of notes will be
reduced to zero.
No amounts on deposit in the principal funding account will be
applied to pay principal of a class of notes or to make a payment under a
derivative agreement with respect to principal of any class of notes in excess
of the highest outstanding dollar principal amount of that class minus any
unreimbursed reductions in the nominal
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liquidation amount of that class from charge-offs of principal receivables in
the master trust and reallocations of principal collections to pay interest on
senior classes of notes, plus, in the case of classes of Class C notes, funds
in the applicable Class C reserve account. As an exception to this rule, the
proceeds of a sale of receivables in connection with an event of default of a
particular class of notes will be available to the extent necessary to pay the
highest outstanding dollar principal amount of that class.
If the nominal liquidation amount of a class of notes is zero on its
legal maturity date after giving effect to any sale of credit card receivables
by the master trust and the distribution of all funds allocable to that class
and on deposit in its principal funding subaccount, then the holders of those
notes will have no further right or claim, and the issuer will have no further
obligation or liability, with respect to those notes.
COVENANTS, EVENTS OF DEFAULT AND
EARLY REDEMPTION EVENTS
ISSUER COVENANTS
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,
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 collateral for the notes or proceeds thereof 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.
EVENTS OF DEFAULT
Each of the following events is an "event of default" for any class
of notes:
o the issuer's failure, uncured after five business days, to
pay interest on any note of that class when due;
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o the issuer's failure to pay the stated principal amount of
any note of that class on its legal maturity date;
o the issuer's default in the performance, or breach,
uncured 60 days after written notice by the indenture
trustee or by the holders of 10% of the aggregate
outstanding dollar principal amount of the outstanding
notes of the affected 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 that default or breach is
materially adverse to those noteholders;
o the occurrence of some events of bankruptcy, insolvency or
reorganization of the issuer; and
o any additional events of default specified in the
applicable supplement to this prospectus for that class.
Failure to pay the full stated 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.
An event of default as a result of the issuer's failure to pay the
stated principal amount of any note on its legal maturity date will result in
the automatic sale of receivables. See "Deposit and Application of Funds --
Final Payment of the Notes."
The occurrence of some events of default involving the bankruptcy or
insolvency of the issuer results in an automatic acceleration of all of the
notes. If other events of default occur and are continuing with respect to any
class, either the indenture trustee or the holders of at least 25% in
aggregate outstanding dollar principal amount of the notes of that 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 outstanding dollar principal amount of
outstanding notes of that class.
Upon the acceleration of a class of notes, the indenture trustee
may, and at the direction of the holders of a majority of aggregate
outstanding dollar principal amount of Notes of that class will, direct the
master trust to sell credit card receivables in an amount of up to 110% of the
nominal liquidation amount of the accelerated class of notes, but with the
following limitations:
o A sale of credit card receivables for an accelerated class
of notes would be permitted only if at least one of the
following conditions is met:
- 90% of the holders of the accelerated class of notes
consent; or
- the proceeds of the sale would be sufficient to pay
all outstanding amounts due on the accelerated class
of notes; or
- the indenture trustee determines that the funds to be
allocated to the accelerated class of notes, taking
into account finance charge collections and principal
collections allocable to the collateral certificate,
payments to be received under derivative agreements
and amounts on deposit in the applicable principal
funding subaccount and interest funding subaccount
and, in the case of Class C notes, the applicable
Class C reserve subaccount is not likely to be
sufficient to make payments on the accelerated notes
when due, and the holders of
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two-thirds of the aggregate outstanding principal
dollar amount of Notes of the accelerated class of
notes consent to the sale.
o In the case of an acceleration of a subordinated class of
notes, if net sale proceeds of the credit card receivables
would be less than the nominal liquidation amount of the
accelerated notes, prefunding of the principal funding
accounts of the senior classes will begin and continue
until the principal funding account has been prefunded to
the extent necessary to permit the sale of the applicable
credit card receivables and deposit of proceeds of the
sale to the principal funding subaccount of the
subordinated class. See "Deposit and Allocation of
Funds--Targeted Deposits of Principal Collections to the
Principal Funding Account--Prefunding of the Principal
Funding Account of Senior Classes." The sale of credit
card receivables will be delayed until the prefunding is
complete.
If a sale of credit card receivables does take place following an
acceleration of a class of notes, then:
o the proceeds of the sale will be retained in the
applicable principal funding account to the extent and for
so long as necessary to provide the required subordinated
amount for the senior classes of notes of that series;
o if payment to the accelerated class is not permitted by
the subordination provisions, accumulation of principal
collections for the senior class or classes will begin and
will continue as long as necessary to permit funds in the
principal funding account for the accelerated class to be
released to the noteholders; and
o while funds are in the principal funding account for the
accelerated class, those funds will be available for
reallocation for the benefit of senior classes of notes,
although Excess Finance Charge Collections can be applied
until the legal maturity date of the accelerated class to
reimburse any such reallocations.
If a sale of credit card receivables does not take place following
an acceleration of a class of notes, then:
o the issuer will continue to hold the collateral
certificate, and distributions on the collateral
certificate will continue to be applied in accordance with
the regular distribution provisions of the indenture;
o principal will be paid on the accelerated class of notes
to the extent funds are received from the master trust and
allocated to the accelerated class, and payment is
permitted by the subordination provisions of the
accelerated class;
o if payment to the accelerated class is not permitted by
the subordination provisions, funds payable to the
accelerated class will be accumulated in the principal
funding account for the accelerated class, and
accumulation of principal collections for the senior class
or classes will begin and will continue as long as
necessary to permit funds in the principal funding account
for the accelerated class to be released to the
noteholders;
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o while funds are accumulating in the principal funding
account for the accelerated class, those funds will be
available for reallocation for the benefit of senior
classes of notes, although Excess Finance Charge
Collections can be applied until the legal maturity date
of the accelerated class to reimburse any such
reallocations; and
o upon the legal maturity date of the accelerated notes, if
the notes have not been paid in full and if the notes have
a nominal liquidation amount in excess of zero, the
indenture trustee will direct the master trust to sell
credit card receivables as described under "Deposit and
Application of Funds--Final Payment of the Notes."
The holders of a majority in aggregate outstanding dollar principal
amount of any accelerated class of notes 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 be exercised only if the direction provided by the
noteholders does not conflict with applicable law or the indenture or have a
substantial likelihood of involving the indenture trustee in personal
liability.
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. 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.
The indenture trustee has agreed, 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 in whole or in part, to the extent
that funds are available for that purpose, 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 each of the early amortization events applicable to the
collateral certificate, as described
under "The Master Trust--Early Amortization Events";
o mandatory prepayment of the entire collateral certificate
resulting from a breach of a representation or warranty by
the Banks under the pooling and servicing agreement;
o the amount of Surplus Finance Charge Collections averaged
over any three consecutive months being less than the
Required Surplus Finance Charge Amount for the most recent
month;
o at any time when the issuer has requested the master trust
to make a payment of principal collections to the
principal funding subaccount of a class of notes, the
Portfolio Yield for any month, after giving effect to all
payments to be received under Performing derivative
agreements, will be less
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than the weighted average interest rates for all notes as
of the last day of the month;
o the issuer becoming an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
o with respect to any series, the aggregate nominal
liquidation amount of Class B notes of a series being
reduced to 1% or less of the initial nominal liquidation
amount of outstanding Class B notes of that series;
o if the notes of that class have the benefit of a
derivative agreement, any derivative counterparty
defaulting in any of its payment obligations under that
agreement and the default continuing
for the period established in that agreement; or
o any additional early redemption event specified in a
supplement to this prospectus.
The redemption price of a note so redeemed will be the outstanding
dollar principal amount of that note, plus accrued or accreted but unpaid
interest on that note to but excluding the date of redemption, which will be
the next Monthly Principal Date. If the amount of principal collections and
finance charge collections of credit card receivables allocable to the class
of notes to be redeemed, together with funds on deposit in the applicable
principal funding subaccount , interest funding subaccount and Class C reserve
account are insufficient to pay the redemption price in full on the next
Monthly Principal Date after giving effect to subordination and allocations to
any other notes ranking equally with that note, monthly payments on the notes
to be redeemed will thereafter be made on each Monthly Principal Date until
the stated 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.
No principal collections will be allocated to a class of notes with
a nominal liquidation amount of zero, even if the stated principal amount of
that class has not been paid in full. However, any funds in the applicable
principal funding subaccount that are not reallocated to other classes of that
series, and any funds in the applicable interest funding subaccount and Class
C reserve account will still be available to pay principal of and interest on
that class of notes. In addition, if Excess Finance Charge Collections are
available, they can be applied until the legal maturity date of a class of
notes to reimburse reductions in the nominal liquidation amount of that class
resulting from reallocations of principal collections to pay interest on
senior classes of notes, or from charge-offs of principal receivables in the
master trust.
Payments on redeemed notes will be made in the same priority as
described in "The Notes--Subordination of Principal." The issuer will give
notice to holders of the affected notes before an early redemption date.
MEETINGS, VOTING AND AMENDMENTS
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 outstanding
dollar principal amount of the outstanding
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notes of the series or class. In any case, a meeting will be called after
notice is given to holders of notes in accordance with "Notices and
Reports--Notices" above.
The quorum for a meeting is a majority of the holders of the
outstanding dollar principal amount of the notes, the series of notes or the
class of notes that is to have the meeting, as the case may be, unless a
higher percentage is specified for approving action taken at the meeting, in
which case the quorum is the higher percentage.
VOTING
Any action or vote to be taken by the holders of a majority or
larger specified percentage of the notes, any series of notes or any class of
notes may be adopted by the affirmative vote of the holders of a majority or
the applicable larger specified percentage in aggregate outstanding dollar
principal amount of the outstanding
notes, of that series or of that class, as the case may be.
Any action or vote taken at any meeting of holders of notes duly
held in accordance with the indenture will be binding on all holders of the
affected notes or the affected series or class of notes, as the case may be.
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.
AMENDMENTS TO THE POOLING AND SERVICING AGREEMENT
The Banks and the master trust trustee may amend the pooling and
servicing agreement and any supplement to that agreement 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. Accordingly,
neither the issuer nor any holder of any note will be entitled to vote on any
such amendment.
The pooling and servicing agreement and any supplement to that
agreement may also be amended with the consent of investor certificateholders
holding not less than 662/3% of the aggregate outstanding dollar principal
amount of the investor certificates of all adversely affected series for the
purpose of adding, changing or eliminating any provisions of the agreement or
any supplement or of modifying the rights of those investor
certificateholders. However, no amendment may
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 662/3% of the
aggregate outstanding dollar principal amount of that
series or class.
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For purposes of any vote or consent under the pooling and servicing agreement
o that requires the consent or vote of each holder of an
investor certificate, each holder of a note will be
treated as a holder of an investor certificate under the
pooling and servicing agreement;
o that requires the consent or vote of any series of
investor certificates, each series of notes will be
treated as a series of investor certificates under the
pooling and servicing agreement; and
o that requires the consent or vote of any class of investor
certificates, each class of notes of a single issuance
series and each subclass of notes of a multiple issuance
series will be treated as a class of investor certificates
under the pooling and servicing agreement.
AMENDMENTS TO THE 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 dollar 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 any date scheduled for the payment of interest
on any note, the expected principal payment date or legal
maturity date of any note, or the date determined for any
mandatory or optional redemption of any note;
o a reduction of the stated principal amount, outstanding
dollar principal amount or nominal liquidation amount of,
or interest rate on, any note;
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 outstanding dollar
principal amount of 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 is given 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
noteholders to cure ambiguities or to make minor corrections, to provide for
the issuance of notes and to do any other things
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that would not adversely affect, in any material effect, the interests of the
noteholders. In addition, without the consent of any noteholders, the issuer
may change the amount of subordination available for any class of notes of a
multiple issuance series 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 a majority in aggregate outstanding dollar principal
amount of the 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 a majority in aggregate outstanding dollar principal
amount of the 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 that cannot be
modified or amended without the consent of the holders of each outstanding
note of that class.
AMENDMENTS TO THE TRUST AGREEMENT
The Banks and the issuer trustee may amend the trust agreement
without the consent of the noteholders so long as the indenture trustee
receives an opinion of counsel that the amendment will not adversely affect in
any material respect the interests of the noteholders and the rating agencies
confirm that the amendment will not cause the rating assigned to any
outstanding series or class of notes to be withdrawn or reduced. Accordingly,
neither the indenture trustee nor any holder of any note will be entitled to
vote on any such amendment.
The trust agreement may also be amended with the consent of
noteholders holding not less than 662/3% of the aggregate outstanding dollar
principal amount of the notes of all adversely affected series for the purpose
of adding, changing or eliminating any provisions of the agreement or of
modifying the rights of those investor certificateholders.
TAX OPINIONS FOR AMENDMENTS
No amendment to the indenture, the pooling and servicing agreement
or the trust agreement will be effective unless the issuer has delivered to
the indenture trustee and the rating agencies an opinion of counsel that:
o for Federal and South Dakota income and franchise tax
purposes (1) the amendment will not adversely affect the
characterization as debt of any outstanding series or
class of investor certificates issued by the master trust,
other than the collateral certificate, (2) the amendment
will not cause a taxable event to holders of investor
certificates and (3) following the amendment, the master
trust will not be an association, or publicly traded
partnership, taxable as a corporation; and
o for Federal and Delaware income and franchise tax purposes
(1) following the amendment, the issuer will not be an
association, or publicly traded partnership, taxable as a
corporation, and (2) the amendment will not adversely
affect the characterization of the notes of any series or
class as debt and will not cause a taxable event to
holders of any notes.
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NOTICES AND REPORTS
ADDRESSES FOR NOTICES
Notices to holders of notes will be given by mail sent to the
addresses of the holders as they appear in the note 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.
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 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."
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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.
The master trust is operated pursuant to a pooling and servicing
agreement among Citibank (South Dakota), as seller and servicer, Citibank
(Nevada), as seller, and Bankers Trust Company, as 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 and servicing 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. Eligible accounts are credit
card accounts owned by Citibank (South Dakota) that
o are in existence and maintained by Citibank (South
Dakota),
o are payable in U.S. dollars,
o in the case of the initial accounts designated to the
master trust, have a cardholder with a billing address
located in the United States or its territories or
possessions or a military address,
o have a cardholder who has not been identified as being
involved in a voluntary or involuntary bankruptcy
proceeding,
o have not been identified as an account with respect to
which the related card has been lost or stolen,
o have not been sold or pledged to any other party,
o do not have receivables that have been sold or pledged to
any other party, and
o in the case of the initial accounts designated to the
master trust, are MasterCard or VISA revolving credit card
accounts.
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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 sellers' interest, 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 sellers' interest, which represents the beneficial interest
in the pool of receivables retained by the Banks and not sold to third party
investors.
The Banks may, at their option, designate additional credit card
accounts to the master trust, the receivables in which will be sold and
assigned to the master trust. This type of designation is referred to as a
"lump addition." Since the creation of the master trust, the Banks have made
lump additions 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 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 amount. A lump addition consists of
o credit card receivables arising in eligible accounts in
Citibank (South Dakota)'s credit card portfolio,
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
- -- or "new accounts" -- to be included as accounts, if they meet the
conditions in the pooling and servicing 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 have 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
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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 have 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 and servicing 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 Banks
reasonably believe that the removal will not (1) cause an
early amortization event or a reduction of the amount of
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.
Citibank (South Dakota), as owner of the credit card 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 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 Portfolio Yield
on the receivables in the master trust 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 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
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o as of the date of creation of any new receivable, that
receivable is an eligible receivable.
Eligible receivables are credit card receivables
o that have arisen under an eligible account,
o that were 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 their 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 have 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 in the
receivable and its proceeds,
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, except for
certain bankruptcy-related matters,
o that at the time of their transfer to the master trust,
have not been waived or modified except as permitted under
the pooling and servicing agreement,
o that are not at the time of their 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.
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
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will be reassigned to the Banks if the breach remains uncured after a
specified cure period. In general, the sellers'
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 and
servicing 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 equal to the aggregate invested
amount of all series of investor certificates, including the collateral
certificate, issued by the master trust, plus accrued and unpaid interest on
those certificates.
We cannot assure that all of the credit card accounts designated to
the master trust will continue to meet the eligibility requirements that were
satisfied upon their inclusion in the master trust throughout the life of the
master trust.
THE SERVICER
The pooling and servicing 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
those 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 and servicing
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 certificate, 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,
o plus, 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.
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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; SELLERS' INTEREST
The master trust is permitted 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 and
servicing agreement.
The collateral certificate -- which is the issuer's primary source
of funds for payments on the notes -- is a series of investor certificates.
The ability of the Banks to issue a new series is limited by 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 sellers' interest is 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 certificate and all
other investor certificates issued by the master trust. The sellers' interest
is owned by 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 certificate, and to the sellers' 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 certificate, pro rata
based on the invested amount of each series; and
o second, following the 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 in the
preceding paragraph. 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 sellers' interest as if the
invested amount of the series had not been reduced by principal collections
deposited to a principal funding account or paid to investors. Allocations of
principal collections between the investors in a series and the sellers'
interest is based on the invested amount of the series "fixed" at the time
immediately prior to the first deposit of principal collections into a
principal funding account or the time immediately before the first payment of
principal collections to investors. Distributions of ongoing collections of
finance charge receivables, as well as losses and expenses, however, are not
allocated on this type of a fixed basis.
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Principal collections that are allocated to any series of investor
certificates, including the collateral certificate, are first used to pay any
principal of those investor certificates, or in the case of the collateral
certificates, the notes, 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 certificate. Principal
collections that are not needed to pay investor certificates or notes are
generally reinvested in newly generated credit card receivables.
For the application of finance charge collections and principal
collections that are allocated to the collateral certificate, see "Deposit and
Application of Funds."
EARLY AMORTIZATION EVENTS
An early payout of principal to investor certificateholders of a
series, including the collateral certificate, will occur under the
circumstances specified in the pooling and servicing 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 and servicing 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 and servicing agreement or
series supplement, which failure has a material adverse
affect on investors and continues unremedied for 60 days
after notice;
o a breach of any representation or warranty made by the
Banks in the pooling and servicing agreement or related
series supplement which continues to be incorrect in any
material respect for 60 days after notice;
o the occurrence of some bankruptcy events relating to
either Bank, referred to as "insolvency events";
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, as
amended;
o the occurrence of a servicer default by Citibank (South
Dakota); and
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 Investor
Certificates." An early amortization event for the collateral certificate is
also an early redemption event for the notes. See "Covenants, Events of
Default and Early Redemption Events--Early Redemption Events."
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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, the master trust trustee will sell the credit card
receivables in the master trust in a commercially reasonable manner and on
commercially reasonable terms unless holders of 50% of the unpaid principal
amount of investor certificates of each class of each series including the
collateral certificate, 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. The proceeds of that sale or liquidation
will be applied to payments on the investor certificates.
OPTIONAL TERMINATION; FINAL PAYMENT OF INVESTOR CERTIFICATES
The Banks may repurchase the investor certificates of a series --
other than the collateral certificate -- 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 its legal maturity date, the master trust trustee will
sell credit cards receivables in an amount, generally, of up to 110% of the
invested amount. The net proceeds of the sale will be allocated to the
investor certificates. Sale proceeds allocable to the collateral certificate
will be treated as principal collections and allocated to the notes.
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 the
issuer might issue. For example, it does not cover notes
with an expected principal payment date within one year of
issuance, foreign currency notes, or notes which are not
to be characterized as debt for Federal income tax
purposes. 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 stated principal amount. More
precisely, the discussion applies only if the discount is
less than 1/4% times the number of full years from the
issue date to
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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.
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 the
Banks 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
Internal Revenue Service could disagree with portions of
this discussion.
Because of these limitations, and because of the uncertainties
described under "Other Possible Tax Characterizations," 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, referred to in this capacity as "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 have to pay
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
under "Other Possible Tax Characterizations."
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, whether federal or state; or (c) an estate or trust that must
pay
U.S. federal income tax on its worldwide income.
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A "non-U.S. noteholder" is a person or entity that is not a U.S.
noteholder.
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 in the next paragraph:
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 in the seventh bullet point
under "Tax Matters." This result could arise in two ways:
o Interest on your notes is not paid in full on a scheduled
payment date. Your notes might then be treated as having
OID from that date until their principal is fully paid.
o All notes might have OID from their date of issuance,
because interest is only payable out of specified cash
flows allocated to the collateral certificate. However,
the Banks intend to take the position that OID does not
arise under this rule.
If your note has OID, all interest on the note would be taxable in
accordance with the 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 stated 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, after taking
into account 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 Internal
Revenue Service:
o Assuming you hold your notes through a broker or other
securities intermediary, the intermediary must provide
information to the Internal Revenue Service 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 Internal
Revenue Service. If you are an individual, this is your
social security number. You are also required to comply
with other Internal Revenue Service requirements
concerning information reporting.
o If you are required to comply with 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 required to comply
with these requirements. Some U.S. noteholders, including
all corporations, tax-exempt
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organizations and individual retirement accounts, are
exempt from these requirements.
OTHER POSSIBLE TAX CHARACTERIZATIONS
Since we are not obtaining a ruling from the Internal Revenue
Service on the tax consequences of the notes, the Internal Revenue Service
could disagree with the intended tax consequences or with the opinions of tax
counsel described above under the headings "Tax Characterization of the Notes"
and "Tax Characterization of the Issuer." 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 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 -- no U.S. taxes are
required to be withheld from payments of principal and interest on the notes.
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 Internal Revenue Service 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.
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SALE OR RETIREMENT OF NOTES
If you sell a note or it is redeemed, you will not have to pay
federal income tax on any 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 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 taxable as income as if you
were a U.S. noteholder.
o If you are a corporation, you may be required to pay 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, no U.S. estate tax will apply to your note
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 the heading "Tax Consequences to U.S. Noteholders."
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, unless the recipient of the applicable form
knows that the form is false. However, interest payments
made to you will be reported to the Internal Revenue
Service 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. 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.
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OTHER POSSIBLE TAX CHARACTERIZATIONS
If the issuer or the master trust is treated as a taxable
corporation, 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 that income were
your U.S. business income. A corporate noteholder might
also be required to pay 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 required to comply with restrictions under the
Internal Revenue Code and the Employee Retirement Income Security Act of 1974,
known as ERISA. These restrictions include rules concerning prudence and
diversification of the investment of assets of a benefit plan - referred to as
"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 the 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 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.
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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.
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 transaction 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:
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.
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
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 as plan
assets, a prohibited transaction could result if the issuer or the master
trust itself engages in a transaction with a
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party in interest as to the benefit plan. For example, if the master trust
assets are treated as assets of a benefit plan and the master trust holds a
credit card receivable that is an obligation of a participant in that same
benefit plan, then there would be a prohibited extension of credit between the
benefit plan and a party in interest, the plan 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 prohibited transaction class exemptions 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 be required to comply with 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."
The issuer expects that all notes offered by this prospectus will be
indebtedness under local law. Likewise, although there is no authority
directly on point, the issuer believes 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" because of borrowings by the benefit plan itself.
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 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:
o directly to one or more purchasers;
o through agents; or
o through underwriters.
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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 some 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.
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
Katherine McG. Sullivan, 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. Sullivan beneficially owns, or has the right to acquire under Citigroup's
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employee benefit plans, an aggregate of less than 0.01% of Citigroup's
outstanding common stock.
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.
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GLOSSARY OF DEFINED TERMS
"EXCESS FINANCE CHARGE COLLECTIONS" means finance charge collections that are
initially allocated to a series of investor certificates under the master
trust, but are not needed in the month of allocation to be applied to the
payment of interest on investor certificates to which they were allocated, or
in the case of the collateral certificate, not needed to be applied to the
payment of the indenture trustee's fees and expenses or to be applied to the
payment of interest on the notes.
"INVESTED AMOUNT" of any investor certificate, including the collateral
certificate, is the fluctuating amount representing the investment of
investors, other than the Banks, in the pool of credit card principal
receivables in the master trust. The Invested Amount of the collateral
certificate is equal to
o the aggregate outstanding dollar principal amount of the
notes;
o minus the amount of charge-offs of principal receivables
in the master trust allocated to the collateral
certificate;
o minus the amount of reallocations of principal collections
on the collateral certificate that are applied to pay
interest on the notes;
o plus the amount of Excess Finance Charge Collections which
are allocated to the collateral certificate to reimburse
earlier charge-offs of principal receivables and to
reimburse reductions of the Invested Amount from
reallocations of principal collections to pay interest on
senior classes of notes; and
o minus the aggregate amount on deposit in the principal
funding account for the outstanding notes.
The Invested Amount of the collateral certificate will be increased by:
o the initial outstanding dollar principal amount of new
issuances of notes;
o accretions of principal on discount notes; and
o reimbursement of earlier reductions from Excess Finance
Charge Collections.
The Invested Amount of the collateral certificate will be decreased by:
o payments of principal collections to the issuer, including
both principal collections that are allocated to pay
principal of the notes and those reallocated to pay
interest on the notes; and
o charge-offs of principal receivables in the master trust
that are allocated to the collateral certificate.
The Invested Amount of the collateral certificate will always be equal to the
sum of the nominal liquidation amounts for all series and classes of notes.
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"MONTHLY INTEREST DATE" means, with respect to any class or subclass of notes:
o for any month in which interest is to be paid, the
scheduled interest payment date, and
o for any month in which no scheduled interest payment date
occurs, the date in that month corresponding numerically
to the next scheduled interest payment date for that class
or subclass of notes, or in the case of a class of
zero-coupon discount notes, the expected principal payment
date for that class; but
- if there is no numerically corresponding day in that
month, then the Monthly Interest Date will be the
last business day of the month, and
- if the numerically corresponding day is not a
business day with respect to that class or subclass,
the Monthly Interest Date will be the next following
business day, unless that business day would fall in
the following month, in which case the monthly
interest date will be the last business day of the
earlier month.
"MONTHLY PRINCIPAL DATE" means with respect to any class or subclass of notes:
o for any month in which the expected principal payment date
occurs, the expected principal payment date, or if that
day is not a business day, the next following business
day, and
o for any month in which no expected principal payment date
occurs, the date in that month corresponding numerically
to the expected principal payment date for that class or
subclass of notes; but
- if there is no numerically corresponding day in that
month, then the Monthly Principal Date will be the
last business day of the month, and
- if the numerically corresponding day is not a
business day with respect to that class or subclass,
the Monthly Principal Date will be the next following
business day, unless that business day would fall in
the following month, in which case the Monthly
Principal Date will be the last business day of the
earlier month.
"PERFORMING" means, with respect to any derivative agreement, that no payment
default or repudiation by the
derivative counterparty has occurred.
"PORTFOLIO YIELD" of the master trust receivables means, for any monthly
period, the annualized percentage equivalent of a fraction:
o the numerator of which is the amount of collections of
finance charge receivables during the immediately
preceding monthly period calculated on a cash basis after
subtracting the excess, if any, of the amount of principal
receivables which were charged off as uncollectible in
that monthly period over the aggregate amount of
recoveries on charged off principal receivables for that
monthly period; and
o the denominator of which is the total amount of principal
receivables as of the last day of the immediately
preceding monthly period.
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"REQUIRED SURPLUS FINANCE CHARGE AMOUNT" means, for any monthly period, an
amount equal to one twelfth of (1) the Invested Amount of the collateral
certificate 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 the change will not (x)
adversely affect the amount of funds available for distribution to noteholders
or the timing of the distribution of those funds, (y) result in an early
redemption event or event of default or (z) adversely affect the security
interest of the indenture trustee in the collateral securing the outstanding
notes.
"SURPLUS FINANCE CHARGE COLLECTIONS" means, for any monthly period, (a) the
amount of finance charge collections received by the issuer in respect of the
collateral certificate, plus (b) net earnings and other gain from amounts on
deposit in the trust accounts, other than the principal funding account for
the notes, minus (c) 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.
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ANNEX I
This annex forms an integral part of the prospectus.
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
Certificate 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 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 related 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.
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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 that 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 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
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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 party 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 that 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.
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[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 FEBRUARY 10, 2000
FORM OF PROSPECTUS SUPPLEMENT FOR
A SUBCLASS OF NOTES OF A MULTIPLE ISSUANCE SERIES
PROSPECTUS SUPPLEMENT DATED , [ ]
(to Prospectus dated , [ ])
Citibank Credit Card Issuance Trust
Citiseries
CLASS [ - ] NOTES
CITIBANK (SOUTH DAKOTA), N.A.
CITIBANK (NEVADA), NATIONAL ASSOCIATION
Originators of the Trust
The issuer will issue and sell
Class [ ] Notes
Principal amount.......................... $
Interest rate............................. % per annum
Interest payment dates.................... day of each , beginning
, [ ]
Expected principal payment date........... , 20
Legal maturity date....................... , 20
Expected issuance date.................... , 20
Price to public........................... $[...] (or [...]%)
Underwriting discount.................... $[...] (or [...]%)
Proceeds to the issuer ................... $[...] (or [...]%)
Principal payments on Class B notes of the Citiseries are
subordinated to payments on Class A notes of that series. Principal payments
on Class C notes of the Citiseries are subordinated to payments on Class A and
Class B notes of that series.
You should review and consider the discussion under "Risk Factors" beginning
on page 14 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 Citibank Credit Card Issuance Trust
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.
Underwriters of the Class [ - ] Notes
[ ]
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
Summary of Terms............................................................S-3
Underwriting................................................................S-9
Annex I: The Master Trust Receivables and Accounts..........................I-1
The table of contents for the prospectus begins on page 1 of that
document.
---------------------------
Information about the Class [ - ] notes is 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 [ - ] notes.
You should carefully read both the prospectus and the prospectus supplement
before you purchase any Class [ - ] notes.
This prospectus supplement may update or supplement disclosure in
the accompanying prospectus.
In deciding whether to purchase the Class [ - ] 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 [ - ] notes.
This prospectus supplement may be used to offer and sell the Class
[ - ] notes only if accompanied by the prospectus.
---------------------------
The Class [ - ] 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.
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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 [ -]
notes.
There is a glossary beginning on page 92 of the prospectus where
you will find the definitions of some terms used in this prospectus
supplement.
SECURITIES OFFERED $___________ ____% Class [ - ] notes
The Class [ - ] notes are a part of a
multiple issuance series of notes called
the Citiseries. The Citiseries consists of
Class A notes, Class B notes and Class C
notes. The Class __ [ - ] notes are a
subclass of Class __ notes.
The Class [ - ] 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--Issuances
of New Series and Classes of Notes" in the
prospectus.
INTEREST The Class [ - ] notes will accrue interest at
the rate of ____% per annum.
Interest on the Class [ - ] notes will
begin to accrue on ________ __, [ ] 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 [ - ] notes on the ____ day of
each __________, beginning _________ __, [ ].
Interest payments due on a day that is
not a business day in New York, South
Dakota or Nevada, will be made on the
following business day.
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 ssuer expects to pay the stated principal amount
of the Class [ - ] 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 the stated
principal amount of the Class [ - ] notes is
not paid in full on its expected against the issuer
until , 20 , the legal maturity
date of the Class [ - ] notes.
If the stated principal amount of the
Class [ - ] notes is not paid in full on
the expected principal payment date, then
[, subject
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to the principal payment rules described
below under "Subordination; Credit
Enhancement,"] principal and interest
payments on those notes will be made monthly
until they are paid in full or the legal
maturity date occurs, whichever is earlier.
However, if the nominal liquidation amount of
that class has been reduced, the amount of
principal collections and finance charge
collections available to pay principal of and
interest on the Class [ - ] notes will be
reduced. The nominal liquidation amount of a
class of notes corresponds to the portion of
the invested amount of the collateral
certificate that is allocable to support that
class of notes.
The initial nominal liquidation amount of
the Class [ - ] notes is $. If this amount
is reduced [by reallocations of principal
of the Class [ - ] notes to pay interest
on a senior class, or] as a result of
charge-offs to the principal receivables
in the master trust, and not reimbursed as
described in the prospectus, not all of
the principal of the Class [ - ] notes
will be repaid. For a more
detailed discussion of nominal liquidation
amount, see "The Notes--Stated Principal
Amount, Outstanding Dollar Principal
Amount and Nominal Liquidation Amount of
Notes" in the prospectus.
Principal of the Class [ - ] 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.
[OUTSTANDING DOLLAR Include only for discount notes and foreign currency
PRINCIPAL AMOUNT notes.]
SUBORDINATION[;CREDIT
ENHANCEMENT] No payment of principal will be made on any Class B
note in the Citiseries unless, following the payment,
the remaining available subordinated amount of Class B
notes in this series is at least equal to the 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 the payment, the remaining available
subordinated amount of Class C notes in this series is
at least equal to the required subordinated amounts for
the outstanding Class A notes and Class B notes in
this series. However, there are some exceptions to this
rule. See "The Notes--Subordination of Principal" and
"Deposit and Application of Funds--Limit on Repayments
of Subordinated Classes of Multiple Issuance Series"
in the prospectus.
[The maximum aggregate amounts of principal of Class B
notes and Class C notes in the Citiseries that may be
applied to payments on the Class A [ - ] notes are
$___________ and $_____________, respectively.] [This
language is only for issuances of Class A subclasses]
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<PAGE>
[The maximum aggregate amount of principal of Class C
notes in the Citiseries that may be applied to payments
on the Class B [ - ] 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 [ - ]
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, and the issuer has received
the tax opinions described in "The Notes--Required
Subordinated Amount" in the prospectus.]
See "Deposit and Application of Funds" 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 an unfunded Class C
reserve account to provide credit enhancement
solely for the holders of the Class C [ - ]
notes. The Class C reserve account will not
be funded unless and until excess finance
charge collections fall below the levels
described in the table below or an early
redemption event occurs and then the Class C
reserve account will be funded solely from
excess finance charge collections thereafter
available. Excess finance charge collections
are the finance charge collections that
remain after the payment of interest and
other required payments under the master
trust and with respect to the notes. For a
more detailed discussion of excess finance
charge collections, see the definition of
"Excess Finance Charge Collections" in the
glossary to the prospectus.
Any funds on deposit 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. Funds on
deposit in the Class C reserve account will
also be available to holders of Class C notes
on any day when principal is payable, but
only to the extent that the nominal
liquidation amount of the Class C notes plus
funds on deposit in the Class C principal
funding account is less than the outstanding
dollar principal amount of the Class C notes.
The nominal liquidation amount of a class of
notes corresponds to the portion of the
invested amount of the collateral certificate
that is allocable to support that class of
notes.
No funds will be deposited into the Class
reserve account on the date the Class C [ - ]
notes are issued. However, if the excess
finance charge collections fall below the
level specified in the table below, the
issuer will be
S-5
<PAGE>
required to fund the Class C reserve account from
excess finance charge collections to the level
specified in the table below.
Percentage of excess finance Percentage of principal
charge collections, amount of Class C [ - ]
averaged over three notes required to
most recent months be in reserve account
---------------------------- -----------------------
The amount targeted to be in the Class C reserve
account will be adjusted to the percentages specified
in the table as the excess finance charge collections
rise or fall. If an early redemption event occurs
with respect to the Class C [ - ] notes,the targeted
Class C reserve account amount will be ___% of the
outstanding dollar principal amount of the Class C
[ - ] notes.] See, "Deposit and Application of
Funds--Targeted Deposits to the Class C Reserve
Account" in the prospectus.
OPTIONAL REDEMPTION
BY THE ISSUER The issuer has the right, but not the obligation,
to redeem the Class [- ] notes in whole but not in
part on any day on or after the day on which the
aggregate nominal liquidation amount of the Class
[ - ] notes is reduced to less than 5% of its initial
outstanding dollar principal amount. This repurchase
option is referred to as a clean-up call.
If the issuer elects to redeem the Class [-] notes,
it will notify the registered holders of the
redemption at least 30 days prior to the redemption
date. The redemption price of a note so redeemed will
equal 100% of the outstanding dollar 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 [ - ]
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 [ - ] notes will be
applied to make the principal and interest
payments on those notes on the redemption
date.
SECURITY FOR THE NOTES The Class [ - ] notes are secured by a shared security
interest in the collateral certificate and the
collection account, but is entitled to the benefits of
only that portion of those assets allocated to it
under the indenture. The Class [ - ] notes are also
secured by a security interest in the applicable
principal
S-6
<PAGE>
funding subaccount, the applicable interest funding
subaccount [and the applicable Class C reserve
account]. See "Sources of Funds to Pay the Notes--The
Collateral Certificate" and "--The Trust Accounts" in
the prospectus.
LIMITED RECOURSE
TO THE ISSUER Only the portion of the principal collections and
finance charge collections received by the issuer
under the collateral certificate and allocated to the
Class [ - ]notes and funds in the applicable trust
accounts provide the source of payment for principal
of or interest on the Class [ - ] notes. Class
[ - ] 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.
MASTER TRUST ASSETS
AND RECEIVABLES The collateral certificate, which is the primary
source of funds for the payment of principal of and
interest on the Class [ - ] notes, is an
investor certificate issued by Citibank Credit Card
Master Trust I. The collateral certificate 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, annualmembership 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 , [ ] 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 [ - ] notes will be the subclass of notes
issued by theissuer and still outstanding in the
Citiseries. As of , [ ] the aggregate
outstanding principal amount of notes in the
Citiseries was approximately $ , consisting
of:
Class A notes $
Class B notes $
Class C notes $
S-7
<PAGE>
As of , [ ], 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 certificate
allocable to your notes.
As of , [ ], 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
aggregateoutstanding dollar principal amount of those
notes was approximately $ .
See "Deposit and Application of Funds--Allocation to
Interest Funding Subaccounts" in the prospectus.
[STOCK EXCHANGE
LISTING
The issuer will apply to list the Class [ - ]
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 [ - ] notes, 69, route
d'Esch, L- 2953 Luxembourg, phone number (352) 4590-1,
to determine whether the Class [ - ] notes have
been listed on the Luxembourg Stock Exchange.]
[NO LISTING The Class [ - ] notes will not be listed on any
stock exchange.]
RATINGS The issuer will issue the Class [ - ] 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--If the ratings of the notes are
lowered or withdrawn, their market value
could decrease" in the prospectus.
S-8
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement
for the Class [ - ] 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 [ - ] 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 [ - ] notes if any Class [ - ] notes are
purchased.
The underwriters have advised the issuer that the several
underwriters propose initially to offer the Class [ - ] 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 the 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 [ - ] 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
[ - ] 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 [ - ] 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 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.
S-9
<PAGE>
In connection with the sale of the Class [ - ] notes, the
underwriters may engage in:
o over-allotments, in which members of the syndicate
selling the Class [ - ] 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 [ - ] 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 [ - ] 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 [ - ]
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 [ - ] 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 [ - ] notes. The issuer's affiliates may act as principal or agent in
these market-making transactions. Market-making 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 [ - ] notes. This amount represents % of the principal amount of
those notes. The issuer will receive this amount net of the underwriting
discount of $ . The underwriting discount represents % of the principal amount
of those notes. Additional offering expenses are estimated to be $ .
S-10
<PAGE>
ANNEX I
This annex forms an integral part of the prospectus supplement.
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 table sets forth the loss experience for cardholder
payments on the credit card accounts for each of the periods shown. Losses
consist of write-offs of principal receivables. These losses are presented
below on a cash basis. If accrued finance charge receivables that have been
written off were included in losses, 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. Average Principal
Receivables Outstanding is the average of principal receivables outstanding
during the periods indicated. The percentage reflected for the months
ended , 199 is an annualized number. We can not provide any
assurance that the loss experience for the receivables in the future will be
similar to the historical experience set forth below.
Loss Experience for the Accounts
(Dollars in Thousands)
Months
Ended Year Ended December 31,
199_ 199 199
- - -
Average Principal Receivables
Outstanding.............................
Net Losses....................... .....
Net Losses as a Percentage of Average
Principal Receivables Outstanding.......
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.
The following table sets forth the delinquency experience for
cardholder payments on the credit card accounts for each of the periods shown.
The Delinquent Amount includes both principal receivables and finance charge
receivables. The percentages are the result of dividing the Delinquent Amount
by the average of principal and finance charge receivables outstanding during
the periods indicated. We can not provide any assurance that the delinquency
experience for the receivables in the future will be similar to the historical
experience set forth below.
I-1
<PAGE>
<TABLE>
<CAPTION>
Delinquencies as a Percentage of the Accounts
(Dollars in Thousands)
As of As of December 31,
, 199 199 199 199
Number of Delinquent Delinquent Delinquent Delinquent
Days Delinquent Amount Percentage Amount Percentage Amount Percentage Amount Percentage
- --------------- ------ --------- ------ ---------- ------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
35-64 days ...........
65-94 days............
95 days or more.......
Total............
</TABLE>
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. Average Revenue Yield is the result of
dividing Finance Charges and Fees Paid by Average Principal Receivables
Outstanding during the periods indicated. The percentage for the months ended
, 199 is an annualized number. 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.
<TABLE>
<CAPTION>
REVENUE EXPERIENCE FOR THE ACCOUNTS
(DOLLARS IN THOUSANDS)
Months Year Ended December 31,
Ended --------------------------------------------
,199 199_ 199 199
------ ----- ----
<S> <C> <C> <C> <C> <C>
Finance Charges and Fees Paid....... - - -
Average Revenue Yield...............
</TABLE>
The revenues from periodic finance charges and fees -- other than
anual 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 and servicing
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
I-2
<PAGE>
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 that 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.
<TABLE>
<CAPTION>
Cardholder Monthly Payment Rates for the Accounts
Months
Ended
, 199 Year Ended December 31,
------ --------------------------------------------
199_ 199 199
------ ----- ----
<S> <C> <C> <C> <C>
Lowest Month...........................
Highest Month..........................
Average of the Months in the Period....
</TABLE>
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 , [ ]there were accounts. Included within the
I-3
<PAGE>
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, or 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 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.
Credit balances presented in the following table are a result of
cardholder payments and credit adjustments applied in excess of a credit card
account's unpaid balance. Accounts which have a credit balance are included
because receivables may be generated in these accounts in the future. Credit
card accounts which have no balance are included because receivables may be
generated in these accounts in the future.
<TABLE>
<CAPTION>
Composition of Accounts by Account Balance
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Account Balance Accounts Accounts Outstanding Outstanding
- --------------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Credit Balance......................
No Balance..........................
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..........................
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
Composition of Accounts by Credit Limit
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Credit Limit Accounts Accounts Outstanding Outstanding
- ------------ -------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Less than or equal to $500.00........
$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...........................
</TABLE>
Accounts presented in the table below as "Current" include
accounts on which the minimum payment has not been received before the next
billing date following the issuance of the related bill.
<TABLE>
<CAPTION>
Composition of Accounts by Payment Status
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Payment Status Accounts Accounts Outstanding Outstanding
- -------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Current............................
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.........................
</TABLE>
<TABLE>
<CAPTION>
Composition of Accounts by Age
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Age Accounts Accounts Outstanding Outstanding
- --- --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Less than or equal to 6 months........
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............................
</TABLE>
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<PAGE>
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 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 the 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 the
statement.
The periodic finance charge assessed on balances in most credit card
accounts for 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 for purchases ranged from ____% to ____%. The periodic finance charge
assessed on balances in most credit card accounts for cash advances is
currently 19.99%. Citibank (South Dakota) may change the periodic finance
charge on accounts at any time by written notice to the cardholders.
Any increase in the 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 the 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.
I-6
<PAGE>
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 that account.
Payments by cardholders on the accounts are processed and applied to
all minimum amounts due, from the oldest to the most current, with respect to
the following items in the following order:
(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 [ - ] Notes
CITIBANK (SOUTH DAKOTA), N.A.
CITIBANK (NEVADA), NATIONAL ASSOCIATION
Originators of the Trust
Prospectus Supplement
Dated ____________ __, [ ]
Underwriters of the Class [ - ] 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 underwriter 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 FEBRUARY 10, 2000
FORM OF PROSPECTUS SUPPLEMENT FOR
A SINGLE ISSUANCE SERIES OF NOTES
PROSPECTUS SUPPLEMENT DATED __________ __, [ ]
(to Prospectus dated __________ __, [ ])
Citibank Credit Card Issuance Trust
Series [ - ] Notes
Citibank (South Dakota), N.A.
Citibank (Nevada), National Association
Originators of the Trust
The issuer will issue and sell
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Class A Notes Class B Notes Class C Notes
Principal amount...................$ ____________ $ ____________ $ ____________
Interest rate......................____% per annum ____% per annum ____% per annum
Interest payment dates.............__ day of each __ day of each __ day of each
_________, _________, beginning _________, beginning
beginning _____ __, [ ] ________ __, [ ]
-------- --, [ ]
Expected principal payment
date............................_________ __, 20__ _________ __, 20__ _________ __, 20__
Legal maturity date _________ __, 20__ _________ __, 20__ _________ __, 20__
Expected issuance 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.
You should review and consider the discussion under "Risk Factors" beginning
on page 14 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 Citibank Credit Card
Issuance Trust 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.
Underwriters of the Class A Notes
[ ]
Underwriters of the Class B Notes
[ ]
Underwriters of the Class C Notes
[ ]
S-1
<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 begins on page 1 of that
document.
---------------------------
Information about the Series [ - ] notes is in two separate
documents: a prospectus and a prospectus supplement. The prospectus provides
general information about the series of notes issued by Citibank Credit Card
Issuance Trust, some of which may not apply to the Series [ - ] notes. The
prospectus supplement provides the specific terms of the Series [ - ] notes.
You should carefully read both the prospectus and the prospectus supplement
before you purchase any Series[ - ] notes.
This prospectus supplement may update or supplement disclosure in
the accompanying prospectus.
In deciding whether to purchase the Series [ - ] 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 [ - ] notes.
This prospectus supplement may be used to offer and sell the Series
[ - ] notes only if accompanied by the prospectus.
---------------------------
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 [ -
] notes.
There is a glossary beginning on page 92 of the prospectus where
you will find the definitions of some terms used in this prospectus
supplement.
SECURITIES OFFERED $___________ ____% Class A notes, Series [ - ].
$___________ ____% Class B notes, Series [ - ].
$___________ ____% Class C notes, Series [ - ].
The Series [ - ] notes are issued by, and are obligations
of, Citibank Credit Card Issuance Trust. The Series [ - ]
notes are a single issuance series. 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 [ - ] notes will begin to accrue on
__________
[ ] 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 [ - ]
notes on the ____ day of each __________, beginning
_________ __, [ ]. Interest payments due on a day that is
not a business day in New York, South Dakota or Nevada,
will be made on the following business day.
The payment of accrued interest on a class of Series [ - ]
notes is not senior to or subordinated to payment of
interest on any other class of Series [ - ] notes.
PRINCIPAL The issuer expects to pay the stated principal
amount of the Class A, Class B and Class C notes
in one payment on ____________ __, 20__, which is
the expected principal payment date, and the
issuer is obligated to do so if funds are
available for that purpose. However, if the stated
principal amount of any class of Series [ - ]
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 the stated principal amount of the Class A, Class B or
Class C notes is not paid in full on the expected
principal payment date,
S-3
<PAGE>
then principal and interest payments on the Series [ - ]
notes will be made monthly until they are paid in full or
the legal maturity date occurs, whichever is earlier.
However, if the nominal liquidation amount of that class
has been reduced, the amount of principal collections and
finance charge collections available to pay principal of
and interest on the Series [ - ] notes will be reduced.
The nominal liquidation amount of a class of notes
corresponds to the portion of the invested amount of the
collateral certificate that is allocable to support that
class of notes.
The initial aggregate nominal liquidation amount of the
Series [ - ] notes is $____, consisting of:
Class A notes of $_________,
Class B notes of $_________, and
Class C notes of $_________.
If the nominal liquidation amount of a class of notes is
reduced by reallocations of principal of that class to pay
interest on a senior class, and as a result of charge-offs
to the principal receivables in the master trust and not
reimbursed as described in the prospectus, not all of the
principal of the notes of that class will be repaid. For a
more detailed discussion of nominal liquidation amount,
see "The Notes--Stated Principal Amount, Outstanding
Dollar Principal Amount and Nominal Liquidation Amount of
Notes" in the prospectus.
Principal of the Class A notes will generally be paid in
full before any principal of the Class B notes or Class C
notes is paid, and principal of the Class B notes will
generally be paid in full before any principal of the
Class C notes is paid. However, there are two exceptions
to this rule. See "The Notes--Subordination of Principal"
and "Deposit and Application of Funds--Limit on Repayments
of Subordinated Classes of Single Issuance Series" in the
prospectus.
Principal of a Series [ - ] 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.
[OUTSTANDING DOLLAR
PRINCIPAL AMOUNT Include only for OID notes and foreign currency notes.]
CLASS C RESERVE
ACCOUNT The issuer will establish an unfunded Class C reserve
account to provide credit enhancement solely for the
holders of the Class C notes. The Class C reserve account
will not be funded unless
S-4
<PAGE>
and until excess finance charge collections fall below the
levels described in the table below or an early redemption
event occurs and then the Class C reserve account will be
funded solely from excess finance charge collections
thereafter available. Excess finance charge collections
are the finance charge collections that remain after the
payment of interest and other required payments under the
master trust and with respect to the notes. For a more
detailed discussion of excess finance charge collections,
see the definition of "Excess Finance Charge Collections"
in the glossary to the prospectus.
Any funds on deposit 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.
Funds on deposit in the Class C reserve account will also
be available to holders of Class C notes on any day when
principal is payable, but only to the extent that the
nominal liquidation amount of the Class C notes plus funds
on deposit in the Class C principal funding account is
less than the outstanding dollar principal amount of the
Class C notes. The nominal liquidation amount of a class
of notes corresponds to the portion of the invested amount
of the collateral certificate that is allocable to support
that class of notes.
No funds will be deposited into the Class C reserve
account on the date the Class C notes are issued. However,
if the excess finance charge collections fall below the
level specified in the table below, the issuer will be
required to fund the Class C reserve account from excess
finance charge collections to the level specified in the
table below.
Percentage of excess finance Percentage of principal
charge collections, amount of Series [ - ]
averaged over three notes required to be
most recent months in reserve account
------------------------------ ----------------------------
The amount targeted to be in the Class C reserve account
will be adjusted to the percentages specified in the table
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 outstanding dollar principal amount of the
Series [ - ] notes. See "Deposit and Application of
Funds--Targeted Deposits to the Class C Reserve Account"
in the prospectus.
OPTIONAL REDEMPTION
BY THE ISSUER The issuer has the right, but not the obligation, to
redeem the Series [ - ] notes in whole but not in part on
any day on or after the day on which the aggregate nominal
liquidation
S-5
<PAGE>
amount of the Series [ - ] notes is reduced to less than
5% of its initial outstanding dollar principal amount.
This repurchase option is referred to as a clean-up call.
If the issuer elects to redeem the Series [ - ] notes, it
will notify the registered holders of the redemption at
least 30 days prior to the redemption date. The redemption
price of a Series [ - ] note so redeemed will equal 100%
of the outstanding dollar 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 [ - ] notes will thereafter be made until the
principal amount of the Series [ - ] 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 [ - ] note will be applied to make
the principal and interest payments on that note on the
redemption date. Principal payments on redeemed Series [ -
] 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 [ - ] notes are secured by a shared security
interest in the collateral certificate and the collection
account, but each class of notes is entitled to the
benefits of only that portion of those assets allocated to
it under the indenture. Each class of Series [ - ] notes
is also secured by a security interest in the applicable
principal funding subaccount, the applicable interest
funding subaccount and in the case of Class C notes, the
applicable Class C reserve account. See "Sources of Funds
to Pay the Notes--The Collateral Certificate" and "--The
Trust Accounts" in the prospectus.
LIMITED RECOURSE
TO THE ISSUER Only the portion of the principal collections and finance
charge collections received by the issuer under the
collateral certificate and allocated to the Series [ - ]
notes and funds in the applicable trust accounts provide
the source of payment for principal of or interest on any
class of the Series [ - ] notes. The Series [ - ]
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.
MASTER TRUST
ASSETS AND
RECEIVABLES The collateral certificate, 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 certificate
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
S-6
<PAGE>
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 __________ __, [ ] 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 [ - ] notes will be the __ series of notes
issued by the issuer and still outstanding. The Series [ -
] 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 certificate allocable to your notes.
As of ____________ __, [ ], 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 dollar principal
amount of those notes was approximately
$__________________.
See "Deposit and Application of Funds--Allocation to
Interest Funding Subaccounts" in the prospectus.
STOCK EXCHANGE
LISTING The issuer will apply to list the Series [ - ] notes on
the Luxembourg Stock Exchange. The issuer cannot guarantee
that the application for the listing will be accepted. You
should consult with Banque Internationale a Luxembourg,
the Luxembourg listing agent for the notes, 69, route
d'Esch, L- 2953 Luxembourg, phone number (352) 4590-1, to
determine whether the Series [ - ] notes have been listed
on the Luxembourg Stock Exchange.
S-7
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement
for the Class A notes, the issuer has agreed to sell to each of the
underwriters named below, and each of those underwriters has severally agreed
to purchase, the principal amount of Class A notes set forth opposite its
name:
Class A Notes
Principal
Class A Underwriters Amount
-------------------- ---------
Total...............................................................$
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 the 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 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 the principal amount.
S-8
<PAGE>
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 the 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 [ ]- 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 [ ]-
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 [ ]- 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
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.
S-9
<PAGE>
In connection with the sale of the Series [ ]- _ notes, the
underwriters may engage in:
o over-allotments, in which members of the syndicate selling
the Series [ ]- 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 [ ]- 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 [ ]- 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 [ ]-
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 [ ]- 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 [ - ] 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 [ - ] notes. The issuer's affiliates may act as principal or agent in
these market-making transactions.
Market-making 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 Series [ - ] notes. This amount 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. The
issuer will receive this amount net of the underwriting discount of
$__________. The underwriting discount 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
This annex forms an integral part of the prospectus supplement.
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 table sets forth the loss experience for cardholder
payments on the credit card accounts for each of the periods shown. Losses
consist of write-offs of principal receivables. These losses are presented
below on a cash basis. If accrued finance charge receivables that have been
written off were included in losses, 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. Average Principal
Receivables Outstanding is the average of principal receivables outstanding
during the periods indicated. The percentage reflected for the ____ months
ended _______ __, 199_ is an annualized number. We can not provide any
assurance that the loss experience for the receivables in the future will be
similar to the historical experience set forth below.
Loss Experience for the Accounts
(Dollars in Thousands)
<TABLE>
<CAPTION>
_____ Months
Ended Year Ended December 31,
------------- ----------------------------------
199_ 199_ 199_
------ ------ -----
<S> <C> <C> <C>
Average Principal Receivables Outstanding.............
Net Losses............................................
Net Losses as a Percentage of Average Principal
Receivables Outstanding...............................
</TABLE>
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.
The following table sets forth the delinquency experience for
cardholder payments on the credit card accounts for each of the periods shown.
The Delinquent Amount includes both principal receivables and finance charge
receivables. The percentages are the result of dividing the Delinquent Amount
by the average of principal and finance charge receivables outstanding during
the periods indicated. We can not provide any assurance that the delinquency
experience for the receivables in the future will be similar to the historical
experience set forth below.
I-1
<PAGE>
<TABLE>
<CAPTION>
Delinquencies as a Percentage of the Accounts
(Dollars in Thousands)
As of December 31,
As of ------------------
,199 199 199 199
----- ---- --- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Days Delinquent Delinquent Delinquent Delinquent
Delinquent Amount Percentage Amount Percentage Amount Percentage Amount Percentage
- ---------- ------ ---------- ------ ---------- ------ ---------- ------ ----------
35-64 days............
65-94 days............
95 days or more.......
Total............
</TABLE>
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. Average Revenue Yield is the result of
dividing Finance Charges and Fees Paid by Average Principal Receivables
Outstanding during the periods indicated. The percentage for the ____ months
ended _____________ __, 199_ is an annualized number. 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.
<TABLE>
<CAPTION>
REVENUE EXPERIENCE FOR THE ACCOUNTS
(DOLLARS IN THOUSANDS)
_____ Months
Ended Year Ended December 31,
------------- -----------------------------------
199_ 199_ 199_
------ ------ ------ -----
<S> <C> <C> <C> <C>
Finance Charges and Fees Paid.........................
Average Revenue Yield.................................
</TABLE>
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 and servicing
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.
I-2
<PAGE>
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 that 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
<TABLE>
<CAPTION>
_____ Months
Ended Year Ended December 31,
-----------------------
199_ 199_ 199_
------ ------ ------ -----
<S> <C> <C> <C> <C>
Lowest Month..........................................
Highest Month.........................................
Average of the Months in the Period...................
</TABLE>
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 _____________ __, [ ]
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,
I-3
<PAGE>
_____% 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 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.
Credit balances presented in the following table are a result of
cardholder payments and credit adjustments applied in excess of a credit card
account's unpaid balance. Accounts which have a credit balance are included
because receivables may be generated in these accounts in the future. Credit
card accounts which have no balance are included because receivables may be
generated in these accounts in the future.
<TABLE>
<CAPTION>
Composition of Accounts by Account Balance
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Account Balance Accounts Accounts Outstanding Outstanding
- --------------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Credit Balance......................
No Balance..........................
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......................
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
Composition of Accounts by Credit Limit
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Credit Limit Accounts Accounts Outstanding Outstanding
- ------------ -------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Less than or equal to
$500.00.............................
$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......................
</TABLE>
Accounts presented in the table below as "Current" include accounts
on which the minimum payment has not been received before the next billing
date following the issuance of the related bill.
<TABLE>
<CAPTION>
Composition of Accounts by Payment Status
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Payment Status Accounts Accounts Outstanding Outstanding
- -------------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Current.............................
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......................
</TABLE>
<TABLE>
<CAPTION>
Composition of Accounts by Age
Percentage Percentage
of Total of Total
Number of Number of Receivables Receivables
Age Accounts Accounts Outstanding Outstanding
- -------------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Current.............................
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......................
</TABLE>
I-5
<PAGE>
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 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 the 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 the
statement.
The periodic finance charge assessed on balances in most credit card
accounts for 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 for purchases ranged from ____% to ____%. The periodic finance charge
assessed on balances in most credit card accounts for cash advances is
currently 19.99%. Citibank (South Dakota) may change the periodic finance
charge on accounts at any time by written notice to the cardholders.
Any increase in the 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 the 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:
I-6
<PAGE>
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 that account.
Payments by cardholders on the accounts are processed and applied to
all minimum amounts due, from the oldest to the most current, with respect to
the following items in the following order:
(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 [ - ]
$_____________ ___% Class B Notes, Series [ - ]
$_____________ ___% Class C Notes, Series [ - ]
CITIBANK (SOUTH DAKOTA), N.A.
CITIBANK (NEVADA), NATIONAL ASSOCIATION
Originators of the Trust
---------------------------
Prospectus Supplement
Dated ____________ __, [ ]
Underwriters of the Class A Notes
[ ]
Underwriters of the Class B Notes
[ ]
Underwriters of the Class C Notes
[ ]
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. No
one has been authorized to provide you with different information.
The notes are not being offered in any state where the offer is not
permitted.
The issuer does not claim the accuracy of the information in this
prospectus supplement and the accompanying prospectus as of any date other
than the dates stated on their respective covers.
Until the date which is 90 days after the date of this prospectus
supplement, all dealers effecting transactions in the notes, whether or not
participating in this distribution, may be required to deliver a prospectus
supplement and prospectus. This is in addition to the obligation of dealers to
deliver a prospectus supplement and prospectus when acting as underwriters of
the notes and with respect to their unsold allotments or subscriptions.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder, other than underwriting discounts and commissions.
Registration Fee.........................................................$ 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.*
4.1 Form of Indenture for the Notes.**
4.2 Form of Series Supplement to the Pooling and Servicing
Agreement relating to the Collateral Certificate.**
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 Form of Trust Agreement of Citibank Credit Card Issuance
Trust.**
5.1 Opinion of Katherine McG. Sullivan, 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 Katherine McG. Sullivan, 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.**
25.1 Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of Bankers
Trust Company, as trustee under the Indenture.*
*To be filed by amendment.
**Previously Filed.
(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 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 each 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.
II-3
<PAGE>
(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.
(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, each
Registrant 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 Amendment to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in Sioux Falls,
South Dakota, on February 10, 2000.
CITIBANK (SOUTH DAKOTA), N.A.
as originator of
Citibank Credit Card Issuance
Trust and Co-Registrant
By: /s/ Eugene D. Rowenhorst
Eugene D. Rowenhorst, Senior Vice President
CITIBANK (SOUTH DAKOTA), N.A.
as originator of Citibank Credit Card
Master Trust I and Co-Registrant
and
as Servicer on behalf of Citibank Credit Card
Master Trust I as Co-Registrant
By: /s/ Eugene D. Rowenhorst
Eugene D. Rowenhorst, Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to Registration Statement has been signed on
February 10, 2000 by the following persons in the capacities indicated.
Signature Title
/s/ Kendall E. Stork Director and President
- ------------------------- (Principal Executive Officer)
Kendall E. Stork
/s/ Eugene D. Rowenhorst Director and Chief Financial Officer
- ------------------------- (Principal Financial Officer and
Eugene D. Rowenhorst Principal Accounting Officer)
- -------------------------
James R. Stojak Director
*
- -------------------------
Joachim M. Paladino Director
*
- -------------------------
Russell R. Greenfield Director
II-5
<PAGE>
- -------------------------
Jerry W. Johnson Director
- -------------------------
Donald Bender Director
______________________
* The undersigned, by signing his name hereto, does hereby sign this
Amendment to Registration Statement on behalf of each of the
above-indicated directors of Citibank (South Dakota), N.A. pursuant to
powers of attorney signed by such directors.
/s/ Eugene D. Rowenhorst
- --------------------------
Eugene D. Rowenhorst
Attorney-in-Fact
II-6
<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 Amendment to
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Las Vegas, Nevada, on February 10, 2000.
CITIBANK (NEVADA), NATIONAL ASSOCIATION
as originator of
Citibank Credit Card Issuance Trust
and Co-Registrant
By: /s/ Robert D. Clark
Robert D. Clark, Vice President
CITIBANK (NEVADA), NATIONAL ASSOCIATION
as originator of
Citibank Credit Card Master Trust I
and Co-Registrant
By: /s/ Robert D. Clark
Robert D. Clark, Vice President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to Registration statement has been signed on
February 10, 2000 by the following persons in the capacities indicated.
Signature Title
/s/ Steven J. Garofalo Director and President (Principal
- -------------------------- Executive Officer)
Steven J. Garofalo
/s/ Robert D. Clark Chief Financial Officer and
- -------------------------- Controller (Principal Financial Officer and
Robert D. Clark Principal Accounting Officer)
- -------------------------- Chairman of the Board and a Director
G. Daniel Clark
*
- --------------------------
Eugene D. Rowenhorst Director
- --------------------------
Joseph N. Crowley Director
*
- --------------------------
Francine A. Pulliam Director
*
- --------------------------
Russell W. Dorn Director
II-7
<PAGE>
- --------------------------
James R. Stojak Director
_________________
* The undersigned, by signing his name hereto, does hereby sign this
Amendment to Registration Statement on behalf of each of the
above-indicated directors of Citibank (Nevada), National Association
pursuant to powers of attorney signed by such directors.
/s/ Robert D. Clark
Robert D. Clark
Attorney-in-Fact
II-8
<PAGE>
EXHIBIT INDEX
1.1 Form of Underwriting Agreement for the Notes.*
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 Certificate.**
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 Form of Trust Agreement of Citibank Credit Card Issuance Trust.**
5.1 Opinion of Katherine McG. Sullivan, 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 Katherine McG. Sullivan, 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.**
25.1 Form T-1 Statement of Eligibility and Qualification unde the Trust
Indenture Act of 1939, as amended, of Bankers Trust Company, as
trustee under the Indenture.*
*To be filed by amendment.
**Previously Filed.
II-9
