<PAGE>
Pursuant to Rule 424(b)(5)
Reg.# 33-84840
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 6, 1994)
$950,000,000
AMERICAN EXPRESS MASTER TRUST
CLASS A FLOATING RATE ACCOUNTS RECEIVABLE TRUST CERTIFICATES,
SERIES 1996-1
---------------------
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION
TRANSFEROR
---------------------
[LOGO] AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
SERVICER
---------------------
Each of the Class A Floating Rate Accounts Receivable Trust Certificates,
Series 1996-1 (collectively, the 'Class A Certificates') offered hereby will
evidence an undivided interest in the American Express Master Trust (the
'Trust') created pursuant to a Master Pooling and Servicing Agreement among
American Express Receivables Financing Corporation, as transferor (the
'Transferor'), American Express Travel Related Services Company, Inc. ('TRS'),
as servicer (the 'Servicer'), and The Bank of New York, as trustee. The Trust
assets will include receivables (the 'Receivables') generated from time to time
in a portfolio of designated American Express Card, American Express Gold Card
and Platinum Card accounts (the 'Designated Accounts'), all monies due or to
(cover sheet continued on next page)
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH IN 'SPECIAL CONSIDERATIONS' ON PAGE S-11 HEREIN AND BEGINNING ON PAGE 15
IN THE PROSPECTUS.
---------------------
THE CLASS A CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY
AND DO NOT REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF AND ARE
NOT GUARANTEED BY THE TRANSFEROR, AMERICAN EXPRESS TRAVEL
RELATED SERVICES COMPANY, INC., AMERICAN EXPRESS
COMPANY OR ANY AFFILIATE THEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions Transferor (1)(2)
<S> <C> <C> <C>
Per Class A Certificate.................. 100% 0.35% 99.65%
Total.................................... $950,000,000 $3,325,000 $946,675,000
</TABLE>
(1) Plus accrued interest from September 18, 1996.
(2) Before deducting expenses payable by the Transferor, expected to be
approximately $768,829.
---------------------
The Class A Certificates are offered when, as and if delivered to and
accepted by the Underwriters, subject to prior sale, withdrawal or modification
of the offer without notice, the approval of counsel and other conditions. It is
expected that delivery of the Class A Certificates in book-entry form will be
made on or about September 18, 1996 through the facilities of The Depository
Trust Company, CEDEL S.A. and the Euroclear System against payment therefor in
immediately available funds.
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
UBS SECURITIES
September 9, 1996
<PAGE>
(continued from previous page)
become due in respect of the Receivables (including, without limitation,
amounts owing for the payment of merchandise and services, annual membership
fees and other administrative fees and charges, and recoveries on charged-off
Receivables), any Receivables in accounts added to the Trust from time to time,
moneys on deposit in certain accounts of the Trust and all of the right, title
and interest of the Transferor in the Receivable Purchase Agreement. See
'Description of the Certificates--General' in the Prospectus.
Concurrently with the issuance of the Class A Certificates, the Trust will
issue $77,027,027 aggregate initial amount of 7.30% Class B Accounts Receivable
Trust Certificates, Series 1996-1 (the 'Class B Certificates'; the Class A
Certificates and the Class B Certificates are herein collectively referred to as
the 'Certificates'). The right of the Class B Certificateholders to receive
interest payments on the Class B Certificates each month will be subordinated
under all circumstances to the right of the Class A Certificateholders to
receive monthly allocations of interest with respect to the Class A
Certificates, and the right of the Class B Certificateholders to receive
principal payments on the Class B Certificates will be subordinated under all
circumstances to the right of the Class A Certificateholders to receive all
payments of principal on the Class A Certificates. See Prospectus 'Summary--
Subordination of Class B Certificates' herein. The Transferor will initially own
the remaining interest in the Trust not allocable to the Certificates or other
outstanding series of certificates and the Servicer will be responsible for
servicing the Receivables. Only the Class A Certificates are being offered
hereby.
Interest will accrue on the Class A Certificates from September 18, 1996
(the 'Closing Date') through October 14, 1996 and from October 15, 1996 through
November 14, 1996 and with respect to each Interest Period (as defined herein)
thereafter, at the rate of 0.15% per annum above the London interbank offered
rate for one-month United States dollar deposits ('LIBOR'), determined as
described herein, prevailing on the related LIBOR Determination Date (as defined
herein) with respect to such period (the 'Class A Certificate Rate'). The
initial LIBOR Determination Date with respect to the Class A Certificates is
September 16, 1996. Interest with respect to the Certificates will be
distributed on November 15, 1996 and on the 15th day of each month thereafter
(or, if such 15th day is not a business day, the next succeeding business day)
(each a 'Distribution Date'). The principal of the Class A Certificates is
payable in full on September 15, 2003 (the 'Expected Final Payment Date'),
unless an Early Amortization Event has occurred, in which case it shall be paid
monthly to the extent available from Principal Collections. Although it is
anticipated that accumulated principal will be sufficient to pay all principal
due on the Class A Certificates on the Expected Final Payment Date, if such
accumulated principal is insufficient to make payment in full of the principal
due on the Class A Certificates, thereafter principal will be paid monthly to
the extent available from Principal Collections. In such a case, the actual
maturity of the Class A Certificates would be later than the Expected Final
Payment Date.
The Class A Certificates will be represented by one or more Class A
Certificates which will be registered in the name of Cede & Co., the nominee of
The Depository Trust Company. The interests of holders of beneficial interests
in the Class A Certificates ('Class A Certificate Owners') will be represented
by book-entries on the records of The Depository Trust Company and participating
members thereof. Definitive Certificates will be available to Class A
Certificate Owners only under the limited circumstances described herein. See
'Description of the Certificates--Definitive Certificates' in the Prospectus.
Application will be made to list the Class A Certificates on the Luxembourg
Stock Exchange.
There currently is no secondary market for the Class A Certificates and
there is no assurance that one will develop. The Underwriters expect, but are
not obligated, to make a market in the Class A Certificates. There is no
assurance that any such market, if one develops, will continue.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
CERTIFICATES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
------------------
The Class A Certificates offered hereby constitute a separate Series of
Certificates being offered by the Transferor from time to time pursuant to its
Prospectus dated October 6, 1994. This Prospectus Supplement does not contain
complete information about the offering of the Class A Certificates. Additional
information is contained in the Prospectus and investors are urged to read both
this Prospectus Supplement and the Prospectus in full. Non U.S. investors are
also urged to read the Global Prospectus Supplement. Sales of the Class A
Certificates may not be consummated unless the purchaser has received both this
Prospectus Supplement and the Prospectus.
S-2
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Certain capitalized terms which are used herein are
defined elsewhere in this Prospectus Supplement and the accompanying Prospectus.
See 'Glossary for Prospectus Supplement' and 'Glossary for the Prospectus.'
Unless the context otherwise requires, certain capitalized terms, when used
herein, only relate to the Certificates. Other Series issued pursuant to other
prospectus supplements or disclosure documents may also use such capitalized
terms in such prospectus supplements or documents. However, in such cases,
reference to such terms, unless the context otherwise requires, is made only in
the context of the issuance of such other Series.
<TABLE>
<S> <C>
TYPE OF SECURITY.................... Class A Floating Rate Accounts Receivable Trust Certificates, Series 1996-1
(the 'Class A Certificates').
ISSUER.............................. American Express Master Trust (the 'Trust') which was created pursuant to a
Master Pooling and Servicing Agreement, dated as of June 30, 1992, as
amended from time to time (together with any assignment of Receivables in
Additional Accounts entered into pursuant thereto, the 'Agreement') among
the Servicer, the Transferor and the Trustee. The Class A Certificates
and the Class B Certificates represent undivided interests in the Trust.
Only the Class A Certificates are being offered hereby. The Trust, as a
master trust, has previously issued six other series of certificates, and
concurrently with this offering is offering its Series 1996-2
Certificates. The Trust may issue additional series of certificates from
time to time (each such series and Series 1996-2, a 'Series'). See 'Annex
I' for a description of certain terms of the Series of Certificates
previously issued and the Series 1996-2 Certificates.
TRUSTEE............................. The Bank of New York (the 'Trustee').
THE RECEIVABLES..................... TRS has sold to the Transferor and the Transferor has conveyed to the Trust
all its right, title and interest in and to the Receivables existing as
of the close of business on June 30, 1992, August 31, 1993, June 30, 1994
and January 17, 1996 (each, a 'Cut Off Date') and arising from time to
time thereafter until termination of the Trust in the Accounts that were
designated on the related Account addition closing dates (the 'June 1992
Designated Accounts', the 'August 1993 Additional Accounts', the 'June
1994 Additional Accounts' and the 'January 1996 Additional Accounts',
respectively, and collectively, the 'Designated Accounts'). The June 1992
Designated Accounts met the criteria provided in the Agreement applied as
of the close of business on the cycle billing date for each Account
occurring in the period beginning on the close of business on March 1,
1992 and ending at the close of business on March 31, 1992 and, with
respect to certain selection criteria, as of the applicable Cut Off Date.
The August 1993 Additional Accounts met the criteria provided in the
Agreement applied as of the close of business on the cycle billing date
for each Account occurring in the period beginning on the opening of
business on July 1, 1993 and ending at the close of business on July 31,
1993 and, with respect to certain selection criteria, as of the
applicable Cut Off Date. The June 1994 Additional Accounts met the
criteria provided in the Agreement applied as of the close of business on
the cycle billing date for each Account occurring in the period beginning
on the opening of business on March 22, 1994 and ending at the close of
business on April 17, 1994 and, with respect to certain selection
criteria, as of the applicable Cut Off Date. The January 1996 Additional
Accounts met the criteria provided in the Agreement applied as of the
close of
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
business on the cycle billing date for each Account occurring in the
period beginning on the opening of business on November 1, 1995 and
ending at the close of business on November 30, 1995 and, with respect to
certain selection criteria, as of the applicable Cut Off Date.
The aggregate amount of Receivables in the Designated Accounts (excluding
Accounts charged off and Accounts closed at the Cardmembers' request) as
of June 30, 1996 (the 'Series Cut Off Date') was $6,216,473,123. All new
Receivables arising in the Designated Accounts (including in any
Additional Accounts) during the term of the Trust will be the property of
the Trust. Accordingly, the amount of Receivables will fluctuate as new
Receivables are generated and as existing Receivables are collected,
charged off as uncollectible or otherwise adjusted.
DESCRIPTION OF THE CLASS A
CERTIFICATES...................... Payments received on the Trust's assets will be allocated among the Class A
Certificateholders and the Class B Certificateholders (the
'Certificateholders' Interest'), the interest of the holders of other
outstanding Series and the interest of the Transferor (the last being
referred to as the 'Transferor Interest').
The Class A Certificates offered hereby will evidence undivided interests
in the Trust assets allocated to the Certificateholders' Interest and
will represent the right to receive from such Trust assets funds up to
(but not in excess of) the amounts required to make payments of interest
accruing from September 18, 1996 (the 'Closing Date') through October 14,
1996, and from October 15, 1996 through November 14, 1996 and with
respect to each Interest Period thereafter, at the rate of 0.15% per
annum above the London interbank offered rate for one-month United States
dollar deposits ('LIBOR'), determined as described herein, prevailing on
the related LIBOR Determination Date (such rate, the 'Class A Certificate
Rate') payable monthly on each Distribution Date. Unless an Early
Amortization Event shall have occurred, principal will be payable in full
on September 15, 2003 (or if such day is not a business day, on the next
succeeding business day) (the 'Expected Final Payment Date'). Principal
will be payable monthly to Class A Certificateholders prior to the
Expected Final Payment Date if an Early Amortization Event occurs, and,
together with interest as described below under 'Prospectus
Summary--Interest,' will be payable monthly to Class A Certificateholders
following the Expected Final Payment Date to the extent principal has not
been paid in full on the Expected Final Payment Date. In all
circumstances, principal is payable to the extent of the Class A Invested
Amount (which may be less than the aggregate unpaid principal balance of
the Class A Certificates, in certain circumstances, if the Investor
Default Amount exceeds available Yield Collections and the Class B
Invested Amount is zero).
The Class B Certificates will evidence undivided interests in the Trust
assets allocated to the Certificateholders' Interest and will represent
the right to receive from such Trust assets funds up to (but not in
excess of) the amounts required to make payments of interest on the Class
B Certificates accruing from the Closing Date through November 14, 1996
and, with respect to each Interest Period thereafter, at the rate of
7.30% per annum (such rate, the 'Class B Certificate Rate'), payable
monthly on each Distribution Date, and the payment of principal with
respect to the Class B Certificates following the final principal payment
</TABLE>
S-4
<PAGE>
<TABLE>
<S> <C>
with respect to the Class A Certificates. The Class B Certificates are
not being offered hereby.
The Certificateholders' Interest will include the right to receive (but
only to the extent needed to make required payments under the Agreement)
varying percentages of Yield Collections and Principal Collections during
each Due Period. Yield Collections and Defaulted Receivables will be
allocated at all times to the Certificateholders' Interest based on the
Floating Allocation Percentage applicable during the related Due Period.
During the Revolving Period, subject to certain limitations, all
Principal Collections allocable to the Certificateholders' Interest will
generally be reinvested in the Trust or otherwise used to maintain the
Certificateholders' Interest. During the Accumulation Period and any
Early Amortization Period, Principal Collections will be allocated to the
Certificateholders' Interest based on the Fixed Allocation Percentage.
See 'Description of the Class A Certificates and the Agreement--
Allocation Percentages' and '--Early Amortization Events.' The Floating
Allocation Percentage and the Fixed Allocation Percentage are sometimes
referred to collectively herein as the 'Invested Percentage.'
The Class A Certificates represent undivided interests in the Trust only
and do not represent interests in or recourse obligations of and are not
guaranteed by the Transferor, the Servicer, American Express Company or
any affiliate thereof.
INTEREST............................ Interest on the Class A Certificates for each Interest Period will be
distributed on November 15, 1996, and on the 15th day of each month
thereafter, or if such day is not a business day, on the next succeeding
business day (each, a 'Distribution Date'), in an amount equal to the
product of (i) the actual number of days in the related Interest Period
divided by 360 and (ii) the Class A Certificate Rate and (iii) the
outstanding principal balance of the Class A Certificates as of the
preceding Record Date (or in the case of the first Distribution Date, as
of the Closing Date). Interest on the Class A Certificates for any
Distribution Date due but not paid on such Distribution Date will be
payable on the next succeeding Distribution Date, together with
additional interest on such amount at the applicable Certificate Rate
plus 2% per annum. The 'Interest Period,' with respect to any
Distribution Date, will be the period from and including the previous
Distribution Date (or in the case of the first Distribution Date, from
and including the Closing Date) through the day preceding such
Distribution Date. See 'Description of the Class A Certificates and the
Agreement--General' and '--Distributions from the Collection Account.'
PRINCIPAL........................... Unless an Early Amortization Event shall have occurred, no payment of
principal will be made on the Class A Certificates until the Expected
Final Payment Date, when principal on the Class A Certificates will be
payable in full. To the extent that principal on the Class A Certificates
is not paid in full on the Expected Final Payment Date, the total amount
of any such principal remaining to be paid on the Class A Certificates
after the Expected Final Payment Date will be payable monthly until all
principal on the Class A Certificates has been paid in full. Beginning in
the month following the occurrence of an Early Amortization Event,
principal of the Class A Certificates will be payable monthly until paid
in full. See 'Description of the Class A Certificates and the
Agreement--Distributions to Class A Certificateholders.'
</TABLE>
S-5
<PAGE>
<TABLE>
<S> <C>
REGISTRATION OF THE CLASS A
CERTIFICATES...................... The Class A Certificates will be issued in book-entry form only in the
initial principal amount of $950,000,000 (the 'Class A Initial Invested
Amount') and will initially be represented by one or more Class A
Certificates registered in the name of Cede as the nominee of The
Depository Trust Company ('DTC'). As used herein, the term 'Class A
Certificateholders' refers to registered holders of the Class A
Certificates, the term 'Class B Certificateholders' refers to registered
holders of the Class B Certificates and the term 'Certificateholders'
refers to the Class A Certificateholders and the Class B
Certificateholders collectively.
A Class A Certificate Owner will not be entitled to receive a definitive
certificate representing such person's interest, except in the event that
Definitive Certificates are issued under the limited circumstances
described herein. In such event, interests in the Class A Certificates
will be available in denominations of $1,000 and in integral multiples
thereof. All references herein to Class A Certificateholders shall refer
to Class A Certificate Owners, except as otherwise specified herein. See
'Description of the Certificates--Definitive Certificates' in the
Prospectus.
RECORD DATE......................... The last business day of the calendar month immediately preceding each
Distribution Date or Special Payment Date ('Record Date').
REVOLVING PERIOD.................... No principal will be payable to the Class A Certificateholders until the
Expected Final Payment Date or, upon the occurrence of an Early
Amortization Event as described herein, on the first Special Payment
Date. No principal will be payable to the Class B Certificateholders
until the final principal payment has been made to the Class A
Certificateholders. For each Due Period during the period beginning on
September 1, 1996 and ending on the day prior to the day on which the
earlier of the Accumulation Period or the Early Amortization Period
commences (the 'Revolving Period'), all Principal Collections otherwise
allocable to the Certificateholders' Interest generally will be
reinvested in the Trust or otherwise used to maintain the
Certificateholders' Interest. See 'Description of the Class A
Certificates and the Agreement--Early Amortization Events' for a
discussion of the events which might lead to the termination of the
Revolving Period prior to its scheduled ending date. In addition, the
Servicer, based on the payment rate of the Receivables and the amount of
principal distributable to Certificateholders of all outstanding Series,
may postpone the commencement of the Accumulation Period and therefore
extend the length of the Revolving Period.
ACCUMULATION PERIOD AND EXPECTED
FINAL PAYMENT DATE................ The aggregate principal amount of the Class A Certificates will be payable
on the Expected Final Payment Date, but may be distributable earlier on a
monthly basis upon the occurrence of an Early Amortization Event and the
commencement of an Early Amortization Period as described herein. See
'Description of the Class A Certificates and the Agreement--Early
Amortization Events.' Unless and until an Early Amortization Event shall
have occurred, for each Due Period beginning at the close of business on
June 30, 2003, and ending on August 31, 2003 (the 'Accumulation Period'),
on each related Distribution Date all Principal Collections allocable to
the Certificateholders' Interest plus Excess Principal Collections, if
any, from other Series allocable to the Certificates plus certain other
amounts comprising Class A Monthly
</TABLE>
S-6
<PAGE>
<TABLE>
<S> <C>
Principal up to the Controlled Deposit Amount, will be deposited in a
trust account to be established in the name of the Trustee for the
benefit of the Class A Certificateholders (the 'Principal Funding
Account'). Any Principal Collections allocated to the Certificateholders'
Interest in excess of amounts required to be deposited in the Principal
Funding Account during the Accumulation Period will be treated as Excess
Principal Collections. See 'Description of the Class A Certificates and
the Agreement--Distributions from the Collection Account.' Unless and
until an Early Amortization Event has occurred, or unless the
commencement of the Accumulation Period has been postponed, all amounts
in the Principal Funding Account will be invested from the date of
deposit to the Expected Final Payment Date by the Trustee at the
direction of American Express Credit Corporation (the 'Investment
Provider') in certain eligible investments pursuant to a Guaranteed Rate
Agreement among the Servicer, the Trustee and the Investment Provider
(the 'Guaranteed Rate Agreement'), which provides that the Investment
Provider will guarantee a rate of return on such amounts equal to the
Class A Certificate Rate and will be entitled to receive any net
investment income in excess of such guaranteed return. The Investment
Provider currently does not meet the criteria set forth in the Guaranteed
Rate Agreement. If it does not meet such criteria no later than 60 days
prior to the beginning of the Accumulation Period, the Servicer will be
required to arrange for a successor Investment Provider to enter into a
Substitute Guaranteed Rate Agreement or to establish other arrangements
satisfactory to the Rating Agencies. On each Distribution Date with
respect to the Accumulation Period, all investment income in the
Principal Funding Account (other than any amounts in excess of the Class
A Certificate Rate) will be withdrawn from the Principal Funding Account
and deposited into the Collection Account. See 'Description of the Class
A Certificates and the Agreement--Principal Funding Account.' For a
description of the circumstances under which the commencement of the
Accumulation Period may be postponed, see 'Description of the Class A
Certificates and the Agreement--Postponement of the Accumulation Period.'
The funds on deposit in the Principal Funding Account will be available to
pay the Class A Invested Amount on the Expected Final Payment Date. Even
if the funds available for distribution to the Class A Certificateholders
on the Expected Final Payment Date are insufficient to pay the Class A
Invested Amount in full, all such funds will be distributed to the Class
A Certificateholders at such time. Thereafter, principal and interest
payments will be made to Class A Certificateholders monthly on each
Special Payment Date.
During either the Accumulation Period or the Early Amortization Period, the
amount of Principal Collections allocable to the Class A
Certificateholders will equal the product of (a) the Principal
Collections during the related Due Period and (b) a fraction, the
numerator of which is the Invested Amount as of the end of the last day
of the Revolving Period and the denominator of which is the greater of
(i) the product of the total amount of Receivables in the Trust as of the
last day of the prior Due Period and one minus the Yield Factor (the
'Trust Principal Component') and (ii) the sum of the numerators used to
calculate the Invested Percentage with respect to Principal Collections
for all Series of certificates outstanding for the current Distribution
Date.
</TABLE>
S-7
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<TABLE>
<S> <C>
EARLY AMORTIZATION PERIOD........... During the period beginning on the day on which an Early Amortization Event
occurs or is deemed to have occurred to the earlier of the date on which
the Class A Invested Amount and the Class B Invested Amount have been
paid in full or the Final Series 1996-1 Termination Date (the 'Early
Amortization Period'), Principal Collections allocable to the
Certificateholders' Interest will no longer be reinvested in the Trust or
otherwise used to maintain the Certificateholders' Interest or held in
the Principal Funding Account, but instead will be distributed as
principal payments to the Class A Certificateholders and, following the
final principal payment to the Class A Certificateholders, to the Class B
Certificateholders, monthly on each Distribution Date beginning with the
first Special Payment Date (which will be the first Distribution Date
following the Due Period in which an Early Amortization Event occurs or
is deemed to have occurred). See 'Description of the Class A Certificates
and the Agreement--Early Amortization Events' for a discussion of the
events which might lead to the commencement of an Early Amortization
Period. Principal payments with respect to the Class B Certificates will
not be made until the final principal payment has been made to the Class
A Certificateholders.
APPLICATION OF YIELD
COLLECTIONS....................... Yield Collections allocable to the Certificateholders' Interest for any Due
Period will be applied in the following order of priority: (i) an amount
equal to Class A Monthly Interest and any overdue Class A Monthly
Interest (with interest thereon) will be paid to Class A
Certificateholders; (ii) an amount equal to Class B Monthly Interest and
any overdue Class B Monthly Interest (with interest thereon) will be paid
to Class B Certificateholders; (iii) an amount equal to the Monthly
Servicing Fee plus any accrued Monthly Servicing Fee that was due but not
paid on any prior Distribution Date will be distributed to the Servicer;
(iv) an amount equal to unreimbursed Class A Investor Charge-Offs will be
reinvested in the Trust or otherwise used to reinstate the
Certificateholders' Interest during the Revolving Period or deposited in
the Principal Funding Account and included in Class A Monthly Principal
during the Accumulation Period or paid to Class A Certificateholders
during any Early Amortization Period; (v) an amount equal to the Investor
Default Amount will be reinvested in the Trust or otherwise used to
maintain the Certificateholders' Interest during the Revolving Period or
deposited in the Principal Funding Account and included in Class A
Monthly Principal during the Accumulation Period or paid to Class A
Certificateholders during any Early Amortization Period; (vi) an amount
equal to the unpaid accrued interest (with interest thereon) on the
outstanding aggregate principal amount of the Class B Certificates will
be paid to Class B Certificateholders; (vii) an amount equal to
unreimbursed Class B Investor Charge-Offs will be reinvested in the Trust
or otherwise used to reinstate the Certificateholders' Interest during
the Revolving Period or deposited in the Principal Funding Account and
included in Class A Monthly Principal during the Accumulation Period or
paid to Class A Certificateholders during any Early Amortization Period;
and (viii) the remainder will be distributed to the Transferor.
SUBORDINATION OF CLASS B
CERTIFICATES...................... If Yield Collections allocable to the Certificateholders' Interest for any
Due Period are insufficient to pay the Investor Default Amount for such
Due Period in accordance with the priorities listed above under
'Application of Yield Collections', then the Class B Invested Amount
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S-8
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<S> <C>
will be reduced by an amount equal to such insufficiency. If the Class B
Invested Amount is reduced to zero, any further insufficiency will reduce
the Class A Invested Amount, but not in excess of the Investor Default
Amount for such Due Period, and the Class A Certificateholders will bear
directly the credit and other risks associated with their undivided
interest in the Trust. The Class B Invested Amount will initially be
equal to $77,027,027 (the 'Class B Initial Invested Amount') and will be
decreased or reinstated under certain circumstances as described herein.
See 'Description of the Class A Certificates and the
Agreement--Allocation Percentages.' Principal payments with respect to
the Class B Certificates will not be made until the final principal
payment has been made to the Class A Certificateholders. Interest
payments with respect to the Class B Certificates will be made monthly on
each Distribution Date to the extent of funds available from Yield
Collections for the related Due Period after the payment of Class A
Monthly Interest. See 'Description of the Class A Certificates and the
Agreement--Distributions from the Collection Account.'
PRINCIPAL COLLECTIONS; CERTAIN
ALLOCATIONS....................... Principal Collections for any Due Period will be allocated on the basis of
the Invested Percentage with respect to Principal Collections. Under the
Agreement, such collections will generally be reinvested in the Trust or
otherwise used to maintain the Certificateholders' Interest during the
Revolving Period, or deposited in the Principal Funding Account with
excess amounts, if any, reinvested in the Trust or otherwise used to
maintain the Certificateholders' Interest during the Accumulation Period
or paid to the holders of the Class A Certificates in respect of the
Class A Invested Amount during any Early Amortization Period.
Other Series offered by the Trust may or may not have accumulation periods
like the Accumulation Period, or amortization periods like the Early
Amortization Period for the Class A Certificates, and such periods may
have different lengths and begin on different dates than such
Accumulation Period or Early Amortization Period. Thus, certain Series
may be in their revolving periods, while others are in periods in which
Principal Collections are distributed to or accumulated for such Series.
Under certain circumstances, one or more Series may be in their
amortization periods, while other Series are not. In addition, other
Series may allocate Principal Collections based upon different invested
percentages. See 'Description of the Certificates--Exchanges' in the
Prospectus for a discussion of the potential terms of other Series. See
Annex I for a description of the terms of Series 1992-1, Series 1992-2,
Series 1993-1, Series 1994-1, Series 1994-2, Series 1994-3 and Series
1996-2 Certificates.
FINAL PAYMENT OF PRINCIPAL;
TERMINATION OF THE TRUST.......... The Class A Certificates will be subject to optional repurchase by the
Transferor on any Distribution Date on or after which the Invested Amount
is reduced to an amount less than or equal to $102,702,703 (10% of the
sum of the Class A Initial Invested Amount and the Class B Initial
Invested Amount), unless certain events of bankruptcy, insolvency or
receivership have occurred with respect to the Transferor. The repurchase
price will be equal to the sum of the Class A Invested Amount plus
accrued and unpaid interest on the Class A Certificates and the Class B
Invested Amount plus accrued and unpaid interest on the Class B
Certificates through the day preceding the Distribution Date
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
on which the repurchase occurs. In any event, the final payment of the
principal of and interest on the Class A Certificates will be no later
than the August 2004 Distribution Date (the 'Final Series 1996-1
Termination Date'). See 'Description of the Class A Certificates and the
Agreement--Final Payment of Principal; Termination of Trust.' After such
date, neither the Trust nor the Transferor will have any further
obligation to pay the principal of or interest on the Class A
Certificates.
TAX STATUS.......................... In the opinion of special tax counsel to the Transferor which is described
in the Prospectus, the Class A Certificates will be characterized as debt
for Federal income tax purposes. Under the Agreement, the Transferor, the
Servicer, the Class A Certificateholders and the Class A Certificate
Owners will agree to treat the Class A Certificates as debt for Federal,
state, and other tax purposes. See 'Tax Matters' in the prospectus for
additional information concerning the application of Federal income tax
laws.
ERISA CONSIDERATIONS................ Under the regulations issued by the Department of Labor, the Trust's assets
would not be deemed 'plan assets' of any employee benefit plan holding
interests in the Class A Certificates if certain conditions are met,
including that interests in the Class A Certificates be held by at least
100 independent persons upon completion of the public offering being made
hereby. The Underwriters expect, although no assurance can be given, that
interests in the Class A Certificates will be held by at least 100
independent persons, and it is anticipated that the other conditions of
the regulations will be met. If the Trust's assets were deemed to be
'plan assets' of such a plan, there is uncertainty as to whether existing
exemptions from the 'prohibited transaction' rules of the Employee
Retirement Income Security Act of 1974, as amended ('ERISA'), would apply
to all transactions involving the Trust's assets. Accordingly, employee
benefit plans contemplating purchasing Class A Certificates should
consult their counsel before making a purchase. See 'ERISA
Considerations' in the Prospectus.
RATING.............................. It is a condition to the issuance of the Class A Certificates that they be
rated in the highest rating category by at least one nationally
recognized rating agency. The rating of the Class A Certificates is based
primarily on the quality of the Receivables, the continued ability of TRS
to generate and transfer such Receivables and the terms of the
subordination of the Class B Certificates. See 'Special
Considerations--Rating of the Class A Certificates.'
</TABLE>
S-10
<PAGE>
SPECIAL CONSIDERATIONS
Investors should consider, among other things, the following factors in
connection with an investment in the Class A Certificates.
Limited Liquidity. There is currently no market for the Class A
Certificates and there can be no assurance that a secondary market for the Class
A Certificates will develop, or if it does develop, that it will provide Class A
Certificateholders with liquidity of investment or will continue for the life of
the Class A Certificates. The Underwriters intend, but are not obligated, to
make a market in the Class A Certificates.
Limited Subordination. The amount of credit enhancement provided by the
subordination of the Class B Certificates is limited. Payment of interest on the
Class B Certificates on each Distribution Date is subordinated to the payment of
interest on the Class A Certificates on such Distribution Date and the payment
in full of the Class B Certificates is subordinated to the payment in full of
the Class A Certificates. The Class B Invested Amount will be reduced on any
Distribution Date to the extent Yield Collections allocable to pay the Investor
Default Amount are insufficient therefor, which reduction will result in the
reduction of the amount of Yield Collections allocable to the
Certificateholders' Interest in future Due Periods. If the Class B Invested
Amount is reduced to zero, the Class A Certificateholders will bear directly the
credit and other risks associated with their undivided interest in the Trust and
the Class A Invested Amount may be reduced.
Rating of the Class A Certificates. It is a condition to the issuance of
the Class A Certificates that they be rated in the highest rating category by at
least one nationally recognized rating agency (the rating agency or rating
agencies selected by the Transferor to rate the Class A Certificates is herein
referred to as the 'Rating Agency'). The rating is based primarily on the
quality of the Receivables, the continued ability of TRS to generate and
transfer such Receivables and the terms of the subordination of the Class B
Certificates. There is no assurance that the rating will remain for any given
period of time or that the rating will not be lowered or withdrawn entirely by
the Rating Agency, if in its judgment circumstances in the future so warrant,
including a change in the ability of American Express Travel Related Services
Company, Inc. to generate and transfer Receivables or a reduction in the
financial strength of American Express Company or American Express Travel
Related Services Company, Inc. The rating is not a recommendation to purchase,
hold or sell Class A Certificates, inasmuch as such rating does not comment as
to market price or suitability for a particular investor. The rating of the
Class A Certificates does not address the possibility of the imposition of
United States withholding tax on non-U.S. persons or back-up withholding for
U.S. persons. The rating of the Class A Certificates addresses the likelihood of
the ultimate payment of principal and interest on the Class A Certificates.
However, the Rating Agency does not evaluate, and the rating of the Class A
Certificates does not address, the likelihood that the outstanding principal
amount of the Class A Certificates will be paid by the Expected Final Payment
Date.
Book-Entry Registration. The Class A Certificates initially will be
represented by Class A Certificates registered in the name of Cede, the nominee
for DTC, and will not be registered in the names of the Class A Certificate
Owners or their nominees. Because of this, unless and until Definitive
Certificates are issued, Class A Certificate Owners will not be recognized by
the Trustee as Class A Certificateholders, as that term is used in the
Agreement. Hence, until such time, Class A Certificate Owners will only be able
to receive payments from, and exercise the rights of Class A Certificateholders
indirectly through, DTC, CEDEL or Euroclear and their respective participating
organizations, and, unless a Class A Certificate Owner requests a copy of any
such report from the Trustee, will receive reports and other information
provided for under the Agreement only if, when and to the extent provided to
Class A Certificate Owners by DTC, CEDEL or Euroclear and their respective
participating organizations. In addition, the ability of Class A Certificate
Owners to pledge Class A Certificates to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
Class A Certificates, may be limited due to the lack of physical certificates
for such Class A Certificates. See 'Description of the Class A Certificates and
the Agreement--Book-Entry Registration' and '--Definitive Certificates' in the
Prospectus.
S-11
<PAGE>
TRS' DOMESTIC CONSUMER CHARGE CARD BUSINESS
PORTFOLIO EXPERIENCE
The following tables set forth the historical receivable turnover rate,
payment rate, loss experience, periodic yield computation and delinquency
experience for each of the periods shown for the entire Portfolio.
Because the Designated Accounts are only a portion of the Portfolio, actual
experience with respect to the Designated Accounts may have been different from
that of the Portfolio. Because the Designated Accounts have been selected from
the Portfolio in a manner not adverse to Certificateholders and represent a
sizable portion of the Portfolio, TRS and the Transferor believe that the
performance of the Portfolio reflected in the following tables is indicative of
the historical performance of the Designated Accounts. Because the Designated
Accounts are a fixed pool of Accounts, receivable turnover rate, payment rate,
loss experience, periodic yield computation, delinquency experience and the rate
of receivable growth with respect to the Designated Accounts may be different
from that of the Portfolio in the future.
Receivable Turnover Rate and Payment Rate Experience. The Accounts are
designed for use as a method of payment for the purchase of merchandise and
services. Account balances are due in full each month. Therefore, Accounts
cannot be used by Cardmembers for the purpose of financing these purchases. In
contrast to revolving credit plan products which do not require payment in full
each month, the requirement that Account balances be paid in full each month
creates a high monthly payment rate and Account balances which turn over rapidly
relative to charge volume. The following two tables illustrate this product
characteristic based on the historical Portfolio experience.
RECEIVABLE TURNOVER RATES FOR THE PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
SIX MONTHS ENDED -----------------------------------------
JUNE 30, 1996 1995 1994 1993
---------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Charge Volume and Fees(1)........................ $ 29,812,918 $57,792,171 $54,432,912 $51,785,742
Average Receivables Outstanding(2)............... $ 7,492,788 $ 7,287,351 $ 6,705,748 $ 6,273,892
Receivable Turnover Rate (3)(4).................. 7.96 7.93 8.12 8.25
</TABLE>
- ------------------
(1) Charge Volume and Fees is the sum of (a) amounts charged by Cardmembers for
merchandise and services for each period shown and (b) all membership and
administrative fees billed to Accounts for each period shown. Charge Volume
and Fees includes amounts billed under the Privileged Assets program, which
amounts are not material.
(2) Average Receivables Outstanding is the arithmetic average of the month end
Portfolio balances including the opening Portfolio balance for each period
shown.
(3) Receivable Turnover Rate is calculated by dividing Charge Volume and Fees by
Average Receivables Outstanding for each period shown.
(4) The rate for the six-month period ended June 30, 1996 is annualized.
S-12
<PAGE>
MONTHLY PAYMENT RATES FOR THE PORTFOLIO (1)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
SIX MONTHS ENDED -----------------------------
JUNE 30, 1996 1995 1994 1993
---------------- ------- ------- -------
<S> <C> <C> <C> <C>
Average Monthly Rate....................................... 75.97% 76.83% 75.14% 74.23%
Highest Monthly Rate....................................... 78.48% 81.20% 79.20% 78.87%
Lowest Monthly Rate........................................ 69.93% 68.10% 65.36% 64.67%
</TABLE>
- ------------------
(1) Monthly Payment Rate is calculated by dividing total collections received
(excluding recoveries on charged-off receivables) during each month by such
month's opening billed balance.
There can be no assurance that the receivable turnover rate and the monthly
payment rate, and thus the rate at which Certificateholders can expect principal
to be paid on and after the Principal Commencement Date, including on or
following the Expected Final Payment Date or during any Early Amortization
Period, will be similar to the historical Portfolio experience set forth above.
Periodic Yield Computation. Receivables originated under the Accounts,
consisting of amounts charged by Cardmembers for merchandise and services,
annual membership fees and certain other administrative fees billed to
Cardmembers on the Accounts, are not subject to a monthly finance charge. As a
result, in order to provide yield to the Trust on such Receivables, pursuant to
the Agreement a portion of the Collections on the Receivables in the Designated
Accounts received in any Due Period equal to the product of Collections and the
Yield Factor will be treated as Yield Collections and the remainder of such
Collections will be treated as Principal Collections.
The dollar amounts representing Computed Yield in the table below have been
derived by applying a Yield Factor of 3.0% (which is the initial Yield Factor
under the Agreement) to historical monthly collections of receivables (excluding
recoveries on charged-off receivables) in the Accounts for each period shown.
Each of those dollar amounts is divided by Charge Volume and Fees for the
appropriate period to produce a Computed Yield for the Portfolio. To the extent
that Charge Volume and Fees did not equal collections for any given period,
there is a difference between the Computed Yield as a Percentage of Charge
Volume and Fees and the assumed Yield Factor of 3.0%.
PERIODIC YIELD COMPUTATION FOR THE
PORTFOLIO ASSUMING A 3.0% YIELD FACTOR
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
SIX MONTHS ENDED --------------------------------------
JUNE 30, 1996 1995 1994 1993
---------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Computed Yield(1).................................... $935,896 $1,757,635 $1,633,372 $1,548,988
Computed Yield as a Percentage of
Charge Volume and Fees(2).......................... 3.14% 3.04% 3.00% 2.99%
</TABLE>
- ------------------
(1) Computed Yield is the dollar amount equal to the product of the 3.0% assumed
Yield Factor and collections (excluding recoveries on charged-off
receivables) for each period shown.
(2) Computed Yield as a Percentage of Charge Volume and Fees may not equal the
3.0% assumed Yield Factor because Charge Volume and Fees may not equal
collections (excluding recoveries on charged-off receivables) for the
periods shown.
There can be no assurance that the yield experience for Receivables in
Designated Accounts will be similar to the periodic yield computation for the
Portfolio set forth in the table. The actual yield experience will vary month to
month due to variations in receivable turnover rates, payment rates and
Cardmember charge activity. The actual yield experience will also be affected by
any changes to the Yield Factor. Pursuant to the Agreement, without notice to or
the consent of certificateholders, the Transferor has the ability to change the
Yield Factor; the Transferor may not, however, reduce the Yield Factor below
3.0% or increase it above 5.0%. Further, the Transferor may not change the Yield
Factor if an Early Amortization Event has occurred and is continuing, or, as a
result of such change, its reasonable expectation is that an Early Amortization
Event would occur. See 'Special Considerations--Ability to Change Yield Factor'
in the Prospectus.
S-13
<PAGE>
Loss Experience. The following table sets forth the Portfolio's historical
gross loss, recovery and net loss experience for the periods shown. Due to the
Portfolio's Receivable Turnover Rate and Monthly Payment Rate, gross losses,
recoveries and net losses are expressed as a percentage of Charge Volume and
Fees.
LOSS EXPERIENCE FOR THE PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
SIX MONTHS ENDED --------------------------------
JUNE 30, 1996 1995 1994 1993
---------------- -------- -------- --------
<S> <C> <C> <C> <C>
Gross Losses.............................................. $219,836 $429,761 $425,581 $513,747
Gross Losses as a Percentage of Charge Volume and Fees.... 0.74% 0.74% 0.78% 0.99%
Recoveries................................................ $ 48,842 $101,988 $107,685 $114,506
Recoveries as a Percentage of Charge Volume and Fees...... 0.16% 0.18% 0.20% 0.22%
Net Losses................................................ $170,994 $327,773 $317,896 $399,240
Net Losses as a Percentage of Charge Volume and Fees...... 0.57% 0.57% 0.58% 0.77%
</TABLE>
There can be no assurance that the loss experience for the Designated
Accounts in the future will be similar to the historical Portfolio experience
set forth above.
Periodic Net Yield Computation. Computed Net Yield is the dollar amount
equal to Computed Yield minus Net Losses. The table below sets forth the
Computed Net Yield for the periods shown.
PERIODIC NET YIELD COMPUTATION FOR
THE PORTFOLIO ASSUMING A 3.0% YIELD FACTOR
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
SIX MONTHS ENDED --------------------------------------
JUNE 30, 1996 1995 1994 1993
---------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Computed Net Yield................................... $764,901 $1,429,862 $1,315,476 $1,149,748
Computed Net Yield as a Percentage of
Charge Volume and Fees............................. 2.57% 2.47% 2.42% 2.22%
</TABLE>
The ability of the Trust to generate sufficient yield to pay interest to
Certificateholders and to pay the Monthly Servicing Fee with respect to each
Series depends upon the Monthly Payment Rate, the Yield Factor, Net Losses and
the generation of new Receivables. Based on the Portfolio experience described
in the foregoing tables, the following example illustrates how these variables
would interact to produce yield to the Trust. For the year ended December 31,
1995, the Computed Net Yield as a Percentage of Charge Volume and Fees was 2.47%
and the Receivable Turnover Rate (total Charge Volume and Fees divided by
Average Receivables Outstanding) was 7.93. The product of these two variables
results in a net yield as a percentage of Average Receivables Outstanding of
19.59% for the year ended December 31, 1995. There can be no assurance that the
experience for the Designated Accounts in the future will be similar to the
historical Portfolio experience set forth above.
S-14
<PAGE>
Delinquency Experience. The table below sets forth the Portfolio's
delinquency experience for the periods shown.
DELINQUENCY EXPERIENCE FOR THE PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AVERAGE OF TWELVE MONTHS ENDED DECEMBER 31,
-------------------------------------------------------
AVERAGE OF SIX MONTHS
ENDED JUNE 30, 1996 1995 1994
-------------------------- -------------------------- --------------------------
NUMBER OF DAYS DELINQUENT DELINQUENT DELINQUENT
DELINQUENT(1) AMOUNT PERCENTAGE(2) AMOUNT PERCENTAGE(2) AMOUNT PERCENTAGE(2)
- ---------------------------------------- ---------- ------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
30 to 59 days........................... $145,651 2.12% $139,161 2.16% $129,468 2.12%
60 to 89 days........................... 65,162 0.95 57,749 0.90 53,980 0.89
90 to 119 days.......................... 50,877 0.74 44,388 0.69 42,716 0.70
120 or more days........................ 188,195 2.74 171,706 2.67 165,294 2.71
---------- --- ---------- --- ---------- ---
Total(3)................................ $449,885 6.55% $413,003 6.42% $391,457 6.42%
---------- --- ---------- --- ---------- ---
---------- --- ---------- --- ---------- ---
<CAPTION>
1993
--------------------------
NUMBER OF DAYS DELINQUENT
DELINQUENT(1) AMOUNT PERCENTAGE(2)
- ---------------------------------------- ---------- -------------
<S> <C> <C>
30 to 59 days........................... $132,078 2.26%
60 to 89 days........................... 58,495 1.00
90 to 119 days.......................... 47,401 0.81
120 or more days........................ 187,351 3.20
---------- ---
Total(3)................................ $425,324 7.27%
---------- ---
---------- ---
</TABLE>
- ------------------
(1) Delinquency is measured as the number of days after a charge is first
included within an unpaid 'Previous Balance' on any monthly billing
statement and is determined by reference to the payment status of each
Account as of the cycle billing date occurring during the applicable month.
(2) Percentage is calculated by dividing delinquent amounts by the arithmetic
average of the month-end billed aggregate balances, inclusive of the opening
billed aggregate balance, for the appropriate period. Delinquent amounts are
the arithmetic average of the month-end billed delinquencies by category,
inclusive of the opening billed delinquent amount for the appropriate
period.
(3) Delinquent Amounts and Percentages may not total due to rounding.
S-15
<PAGE>
THE DESIGNATED ACCOUNTS
GENERAL
As of June 30, 1996 (the 'Series Cut Off Date'), the Designated Accounts
(excluding Accounts charged off and Accounts closed at the Cardmembers' request)
consisted of 11,554,656 Accounts. The Receivables in the Designated Accounts as
of the Series Cut Off Date totaled $6,216,473,123 and the average Designated
Account Receivables balance was $538. As of the Series Cut Off Date,
approximately 77% of the Designated Accounts by Receivable balance had been in
existence for at least five years. By Receivable balance, 14.62%, 13.85%, 9.09%,
8.31% and 6.92% of the Designated Accounts have Cardmember billing addresses in
New York, California, Texas, Florida and New Jersey, respectively. The remainder
of the Designated Accounts have billing addresses in the remaining states of the
United States (including certain of its territories and possessions), none of
which represents more than 3.78% by Receivable balance of the Designated
Accounts. The following tables summarize the Designated Accounts by various
criteria as of the Series Cut Off Date. Data presented below for the Designated
Accounts does not include (i) Accounts charged-off and (ii) Accounts closed at
the Cardmembers' request.
COMPOSITION OF DESIGNATED ACCOUNTS BY ACCOUNT BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF TOTAL NUMBER RECEIVABLES TOTAL RECEIVABLES
ACCOUNT BALANCE RANGE ACCOUNTS OF ACCOUNTS OUTSTANDING(1) OUTSTANDING
- ----------------------------------- ---------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Credit Balance..................... 184,596 1.60% $ (43,429,674) -0.70%
No Balance......................... 4,523,922 39.15 0 0.00
$1 - $500.......................... 4,099,219 35.48 734,729,641 11.82
$501 - $1,000...................... 1,152,100 9.97 824,350,310 13.26
$1,001 - $2,000.................... 848,422 7.34 1,192,558,777 19.18
$2,001 - $3,000.................... 317,813 2.75 773,602,441 12.44
$3,001 - $5,000.................... 241,337 2.09 919,777,533 14.80
Greater than $5,000................ 187,247 1.62 1,814,884,095 29.19
---------- ------------- -------------- -------
Total(2)...................... 11,554,656 100.00% $6,216,473,123 100.00%
---------- ------------- -------------- -------
---------- ------------- -------------- -------
</TABLE>
- ------------------
(1) Receivables Outstanding include amounts billed under the Privileged Assets
program, which amounts are not material.
(2) Percentages and Receivables Outstanding may not total due to rounding.
COMPOSITION OF DESIGNATED ACCOUNTS BY PAYMENT STATUS
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF TOTAL NUMBER RECEIVABLES RECEIVABLES
PAYMENT STATUS(1) ACCOUNTS(2) OF ACCOUNTS OUTSTANDING(3) OUTSTANDING
- ----------------------------------- ----------- ------------- -------------- ------------------
<S> <C> <C> <C> <C>
Current and less than 30 days
delinquent....................... 11,164,357 96.62% $5,832,423,430 93.82%
30 to 59 days delinquent........... 189,610 1.64 114,805,317 1.85
60 to 89 days delinquent........... 54,976 0.48 49,417,946 0.79
90 to 119 days delinquent.......... 31,746 0.27 38,630,796 0.62
120 or more days delinquent........ 113,967 0.99 181,195,634 2.91
----------- ------------- -------------- -------
Total(4)...................... 11,554,656 100.00% $6,216,473,123 100.00%
----------- ------------- -------------- -------
----------- ------------- -------------- -------
</TABLE>
- ------------------
(1) Delinquency is measured as the number of days after a charge is first
included within an unpaid 'Previous Balance' on any monthly billing
statement and is determined by reference to the payment status of each
Designated Account as of the cycle billing date occurring during June, 1996.
(2) The payment status of each Designated Account is based on the oldest balance
in such Account.
(3) Receivables Outstanding include amounts billed under the Privileged Assets
program, which amounts are not material.
(4) Percentages and Receivables Outstanding may not total due to rounding.
S-16
<PAGE>
COMPOSITION OF DESIGNATED ACCOUNTS BY AGE
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF TOTAL NUMBER RECEIVABLES TOTAL RECEIVABLES
AGE(1) ACCOUNTS OF ACCOUNTS OUTSTANDING(2) OUTSTANDING
- ----------------------------------- ---------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Less than 12 months................ 227,273 1.97% $ 120,897,104 1.94%
12-23 months....................... 485,423 4.20 286,119,204 4.60
24-35 months....................... 749,110 6.48 372,734,042 6.00
36-47 months....................... 592,871 5.13 298,349,888 4.80
48-59 months....................... 743,737 6.44 325,672,324 5.24
Greater than 59 months............. 8,756,242 75.78 4,812,700,561 77.42
---------- ------------- -------------- -------
Total(3)...................... 11,554,656 100.00% $6,216,473,123 100.00%
---------- ------------- -------------- -------
---------- ------------- -------------- -------
</TABLE>
- ------------------
(1) Determined by reference to date of initial Cardmembership.
(2) Receivables Outstanding include amounts billed under the Privileged Assets
program, which amounts are not material.
(3) Percentages and Receivables Outstanding may not total due to rounding.
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be paid to the
Transferor. The Transferor will pay such proceeds to an affiliate in exchange
for a reduction of such affiliate's interest in the Exchangeable Transferor
Certificate.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
The Agreement provides that the Class A Invested Amount is payable on the
Expected Final Payment Date (but may be distributable earlier upon the
occurrence of an Early Amortization Event) to the extent funds are available
therefor in the Principal Funding Account. Although it is anticipated that
accumulated principal will be sufficient to pay the Class A Invested Amount on
the Expected Final Payment Date, no assurance can be given in that regard. If
such amounts are insufficient to pay the Class A Invested Amount on the Expected
Final Payment Date, thereafter the Class A Certificateholders will receive
distributions of Class A Monthly Principal and Class A Monthly Interest on each
Special Payment Date until the earlier of the date on which the Class A Invested
Amount has been paid in full or the Final Series 1996-1 Termination Date. Even
if the funds on deposit in the Principal Funding Account are insufficient to pay
the Class A Invested Amount in full, all such funds will be distributed to the
Class A Certificateholders on the Expected Final Payment Date.
Deposits of Class A Monthly Principal will be made to the Principal Funding
Account on each Distribution Date with respect to the Accumulation Period, in an
amount equal to the lesser of (a) the Controlled Deposit Amount and (b) the sum
of (i) the Fixed Allocation Percentage of all Principal Collections received
during the Due Period immediately preceding such Distribution Date, (ii) the
amount of any Series Undistributed Principal Collections on deposit in the
Collection Account on such Distribution Date and (iii) amounts available to pay
the Investor Default Amount and reimburse Class A Investor Charge-Offs and Class
B Investor Charge-Offs with respect to such Distribution Date. Additionally,
Excess Principal Collections allocable to the Certificates may also be used to
pay the Controlled Deposit Amount. Assuming that: (a) the annualized Receivable
Turnover Rate for the Designated Accounts is not less than 4.70, (b) the Yield
Factor equals 3.0% (the initial Yield Factor), (c) no other Series issued prior
to or currently with this Series with a revolving period which ends after the
Revolving Period for the Class A Certificates enters into an amortization period
prior to the Expected Final Payment Date and all Excess Principal Collections
are allocable to the Certificates, (d) Receivables remain constant at the amount
outstanding as of the Series Cut Off Date and (e) an Early Amortization Event
does not occur during the Accumulation Period, the Transferor expects that on
the Expected Final Payment Date there will be sufficient funds on deposit in the
Principal Funding Account to pay the Class A Invested Amount in full. The
annualized receivable turnover rate described above is less than the lowest
receivable turnover rate shown in the 'Receivable Turnover Rates for the
Portfolio' table shown under 'TRS' Domestic Consumer Charge Card
Business--Portfolio Experience.' However, there can be no assurance that any
other Series issued prior to or currently with this Series with a revolving
period which ends after the Revolving Period for the Class A Certificates will
not enter into an amortization period prior to the Expected Final Payment Date.
Further, the actual rate of accumulation and payment of principal will depend,
among other factors, on the rate of repayment,
S-17
<PAGE>
the timing of the receipt of such repayments, the Yield Factor, the Receivable
Turnover Rate and the rate of default by Cardmembers.
In the event of the occurrence of an Early Amortization Event, the Early
Amortization Period will begin on the day on which such Early Amortization Event
occurs or is deemed to have occurred. During the Early Amortization Period,
distributions of principal to Class A Certificateholders will not be limited by
the Controlled Deposit Amount. In the event of a sale, disposition or other
liquidation of the Receivables following an insolvency event as described under
'Description of the Class A Certificates and the Agreement--Early Amortization
Events' or in connection with the Final Series 1996-1 Termination Date, Class A
Monthly Principal will be payable to Certificateholders on the following
Distribution Date. Although the Transferor believes that the likelihood of an
Early Amortization Event occurring is remote, there can be no assurance that an
Early Amortization Event will not occur. See 'Description of the Class A
Certificates and the Agreement--Early Amortization Events.'
The amount of collections of Receivables may vary from month to month due
to seasonal variations, general economic conditions and payment habits of
individual Cardmembers. There can be no assurance that Principal Collections
with respect to the Trust Portfolio, and thus the rate at which the
Certificateholders could expect to receive or accumulate payments of principal
on their Certificates during an Early Amortization Period or the Accumulation
Period, or on the Expected Final Payment Date, as applicable, will be similar to
any historical experience set forth herein. If an early amortization event
occurs with respect to another Series, the average life and maturity of the
Class A Certificates could be significantly affected.
In addition, since the Trust, as a master trust, has previously issued six
Series, is concurrently issuing one additional Series and may issue additional
Series from time to time, there can be no assurance that the issuance of
additional Series or the Principal Terms of any additional Series might not have
an impact on the timing and amount of payments received by Class A
Certificateholders. Further, if an Early Amortization Event occurs, the average
life and maturity of the Class A Certificates could be significantly reduced.
Because there may be a slow-down in the payment rate with respect to the
Designated Accounts or an Early Amortization Event may occur which would
initiate an Early Amortization Period, there can be no assurance that the final
payment of the Class A Invested Amount will occur on the Expected Final Payment
Date. There can be no assurance that future Cardmember monthly payment rate
experience will be similar to historical experience. See 'Special
Considerations' in the Prospectus.
DESCRIPTION OF THE CLASS A
CERTIFICATES AND THE AGREEMENT
The Certificates will be issued pursuant to the Agreement and the Series
1996-1 Supplement to the Agreement (the 'Series 1996-1 Supplement') entered into
between the Transferor, as the transferor of the Receivables, TRS, as Servicer
of the Designated Accounts and the Receivables and The Bank of New York, as
Trustee for the Certificateholders, substantially in the form filed as exhibits
to the Registration Statement of which the accompanying Prospectus is a part.
Pursuant to the Agreement, the Transferor may execute further Supplements
thereto between the Transferor and the Trustee in order to issue additional
Series. See 'Description of the Certificates--Exchanges' in the Prospectus. The
Trustee will provide a copy of the Agreement (without exhibits or schedules),
including any Supplements, to Class A Certificateholders without charge upon
written request. The following summary describes certain terms of the Agreement
and the Series 1996-1 Supplement and is qualified in its entirety by reference
to the Agreement and the Series 1996-1 Supplement.
GENERAL
The Class A Certificates will represent undivided interests in the Trust,
including the right to receive the Invested Percentage of all Collections
received with respect to the Receivables in the Trust up to (but not in excess
of) amounts required to make payments of interest at the Class A Certificate
Rate and the Class A Invested Amount on the Expected Final Payment Date, or
earlier or later in certain circumstances. The property of the Trust consists of
the Receivables generated under the Designated Accounts and under any Additional
Accounts subsequently designated to the Trust, all funds to be collected from
Cardmembers in respect of Receivables (including Recoveries), all of the
Transferor's right, title and interest under the Receivable Purchase Agreement,
all moneys on deposit in the Collection Account, the Principal Funding Account
or any other
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accounts established for the benefit of any other Series (which other accounts
will not be available to Certificateholders), benefits of the Guaranteed Rate
Agreement and payments made in respect of Enhancements issued with respect to
any other Series (the drawing on or payment of such Enhancement not being
available to Certificateholders). The term 'Enhancement' is defined in the
Agreement as any letter of credit, guaranteed rate agreement, maturity guaranty
facility, cash collateral account or guaranty, tax protection agreement,
interest rate swap or other contract or agreement for the benefit of any Series
issued by the Trust. The Trust does not include the Receivables from any Removed
Accounts. On the date of issuance of the Certificates (the 'Closing Date'), the
Trustee will authenticate the Class A Certificates and the Class B Certificates
and deliver such Class A Certificates to the Transferor which will in turn
deliver them to the Underwriters against payment of the net proceeds of the sale
of the Class A Certificates. The Trustee will also deliver the Class B
Certificates and the reissued Exchangeable Transferor Certificate to the
Transferor. The Transferor will initially retain the Class B Certificates but
may transfer them under certain circumstances specified in the Series 1996-1
Supplement. As of the Closing Date, the Class A Invested Amount was $950,000,000
and the Class B Invested Amount was $77,027,027.
Interest will accrue on the Class A Certificates at the Class A Certificate
Rate from the Closing Date. Interest will be distributed on November 15, 1996
and on each Distribution Date thereafter to Class A Certificateholders in an
amount equal to the product of (i) the actual number of days in the related
Interest Period divided by 360, (ii) the Class A Certificate Rate for the
related Interest Period, and (iii) the outstanding principal balance of the
Class A Certificates as of the preceding Record Date (or in the case of the
first Distribution Date, as of the Closing Date). Interest due on the Class A
Certificates but not paid on any Distribution Date will be payable on the next
succeeding Distribution Date together with additional interest on such amount at
the Class A Certificate Rate plus 2% per annum. Such additional interest shall
accrue on the same basis as interest on the Class A Certificates, and shall
accrue from the Distribution Date such overdue interest became due, to but
excluding the Distribution Date on which such additional interest is paid.
The Class A Certificates will bear interest from the Closing Date through
October 14, 1996, and from October 15, 1996 through November 14, 1996 and with
respect to each Interest Period thereafter, at the rate of 0.15% per annum above
LIBOR prevailing on the related LIBOR Determination Date with respect to each
such period (the 'Class A Certificate Rate').
The Trustee will determine LIBOR with respect to the Certificates on
September 16, 1996 for the period from the Closing Date through October 14, 1996
and on October 11, 1996 for the period from October 15, 1996 through November
14, 1996, and for each Interest Period thereafter, on the second business day
prior to the Distribution Date on which such Interest Period commences (each, a
'LIBOR Determination Date'). For purposes of calculating LIBOR, a business day
is any business day on which dealings in deposits in United States dollars are
transacted in the London interbank market.
'LIBOR' means, as of any LIBOR Determination Date, the rate for deposits in
United States dollars for a one-month period (commencing on the first day of the
relevant Interest Period) which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such LIBOR Determination Date. If such rate does not appear on
Telerate Page 3750, the rate for that LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a one-month period
(commencing on the first day of the relevant Interest Period). The Trustee will
request the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
for that LIBOR Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, the rate for that LIBOR
Determination Date will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Servicer, at approximately 11:00 a.m.
New York City time, on that day for loans in United States dollars to leading
European banks for a one-month period (commencing on the first day of the
relevant Interest Period).
'Telerate Page 3750' means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
'Reference Banks' means four major banks in the London interbank market
selected by the Servicer.
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The Class A Certificate Rate applicable to the then current and immediately
preceding Interest Periods may be obtained by telephoning the Trustee at its
Corporate Trust Office at (212) 815-2694.
No principal payments will be made to the Class A Certificateholders until
the Expected Final Payment Date or, upon the occurrence of an Early Amortization
Event as described herein, until the first Special Payment Date. See '--Early
Amortization Events.' No principal payments will be made to the Class B
Certificateholders until the final principal payment has been made to the Class
A Certificateholders. With respect to the Revolving Period, Principal
Collections allocable to the Certificateholders' Interest will either be (i)
allocated to one or more Series which are in amortization, early amortization or
accumulation periods to cover principal payments due to the investor
certificateholders of any such Series or (ii) if no such Series is then
amortizing or accumulating principal, paid to the Transferor to maintain the
Certificateholders' Interest or held as Undistributed Principal Collections.
Unless and until an Early Amortization Event shall have occurred, on each
Distribution Date with respect to the Accumulation Period on or prior to the
Expected Final Payment Date, all Principal Collections allocable to the
Certificateholders' Interest, certain other amounts comprising Class A Monthly
Principal and Excess Principal Collections allocated to the Certificates will no
longer be paid for the benefit of other Series or to the Transferor as described
above but instead an amount thereof up to the Controlled Deposit Amount will be
deposited in the Principal Funding Account. Any such Principal Collections in
excess of the Controlled Deposit Amount will be included as Excess Principal
Collections. The Controlled Accumulation Amount shall equal $475,000,000. The
funds deposited in the Principal Funding Account will be used to pay the Class A
Invested Amount on the Expected Final Payment Date. Amounts on deposit in the
Principal Funding Account will be invested at the direction of the Investment
Provider which will guarantee a rate of return equal to at least the Class A
Certificate Rate. Earnings in excess of the Class A Certificate Rate will be
paid to the Investment Provider. See '--Principal Funding Account.' Although the
Principal Funding Account will be held in a trust account in an Eligible
Institution and invested in Eligible Investments, the Class A Certificateholders
will bear the risk of loss of any amounts of principal on deposit therein. Prior
to the Expected Final Payment Date, the amount on deposit in the Principal
Funding Account subject to such risk could reach a maximum of $475,000,000. Even
if the funds on deposit in the Principal Funding Account at such time are
insufficient to pay the Class A Invested Amount in full, all such funds will be
distributed to the Class A Certificateholders on the Expected Final Payment
Date. On each Distribution Date thereafter the Class A Certificateholders will
receive distributions of Class A Monthly Principal and Class A Monthly Interest
until the Class A Invested Amount has been paid in full or until the Final
Series 1996-1 Termination Date.
Interest payments on the Class A Certificates will be made on each
Distribution Date and interest and principal payments on the Class A
Certificates will be made on the Expected Final Payment Date (or, if an Early
Amortization Event occurs, on each Special Payment Date) to the Class A
Certificateholders in whose names the Class A Certificates were registered
(expected to be Cede, as nominee of DTC) at the close of business on the Record
Date. The final payment on the Class A Certificates will be made only upon
presentation and surrender of the Class A Certificates. Distributions will be
made to DTC in immediately available funds.
The Class A Certificates will initially be represented by one or more Class
A Certificates registered in the name of the nominee of DTC except as set forth
below. The interests of holders of beneficial interests in the Class A
Certificates ('Class A Certificate Owners') will be available for purchase in
denominations of $1,000 (representing 1/950,000 of the undivided interest of the
Class A Certificateholders in the Trust) and integral multiples thereof in
book-entry form only. The Transferor has been informed by DTC that DTC's nominee
will be Cede. Accordingly, Cede is expected to be the holder of record of the
Class A Certificates. Unless and until Definitive Certificates are issued under
the limited circumstances described herein, no Class A Certificate Owner will be
entitled to receive a certificate representing such person's interest in the
Class A Certificates. All references herein to actions by Class A
Certificateholders shall refer to actions taken by DTC upon instructions from
its participating organizations (the 'Participants') and all references herein
to distributions, notices, reports and statements to Class A Certificateholders
shall refer to distributions, notices, reports and statements to DTC or Cede, as
the registered holder of the Class A Certificates, as the case may be, for
distribution to Class A Certificate Owners in accordance with DTC procedures.
See 'Description of the Certificates--Book-Entry Registration' and '--Definitive
Certificates' in the Prospectus.
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PRINCIPAL FUNDING ACCOUNT
The Trustee will establish and maintain, or cause to be established and
maintained for the benefit of the Certificateholders, in the name of the
Trustee, on behalf of the Trust, the Principal Funding Account (unless the
commencement of the Accumulation Period is postponed, in which case all
Principal Collections received with respect to the prior Due Period and
allocable to the Certificateholders' Interest plus Excess Principal Collections,
if any, from other Series allocable to the Certificates plus certain amounts
comprising Class A Monthly Principal will be distributed to the Class A
Certificateholders on the Expected Final Payment Date). If the commencement of
the Accumulation Period is not postponed, during the Accumulation Period Class A
Monthly Principal plus Excess Principal Collections, if any, from other Series
allocable to the Certificates will be deposited in the Principal Funding Account
on each Distribution Date as provided below under '--Distributions from the
Collection Account' and '--Distributions to Class A Certificateholders';
provided, that if an Early Amortization Event occurs during the Accumulation
Period, the amounts on deposit in the Principal Funding Account shall be paid to
the Class A Certificateholders on the first Special Payment Date. All amounts
deposited into the Principal Funding Account prior to the Expected Final Payment
Date will be invested by the Trustee at the direction of the Investment Provider
in certain eligible investments pursuant to the Guaranteed Rate Agreement, which
provides that the Investment Provider will guarantee a rate of return on such
amounts equal to the Class A Certificate Rate. It is expected that such amounts
will be invested in short-term debt obligations of an affiliate of TRS so long
as such obligations qualify as eligible investments pursuant to the Guaranteed
Rate Agreement. On each Distribution Date, all investment income earned (net of
losses and expenses) on amounts in the Principal Funding Account since the
preceding Distribution Date (other than amounts in excess of the Class A
Certificate Rate, which shall be paid to the Investment Provider, if applicable)
('Investment Earnings') will be withdrawn from the Principal Funding Account and
deposited into the Collection Account.
Unless the commencement of the Accumulation Period is postponed, if the
commercial paper rating or certificate of deposit rating of the Investment
Provider is below A-1+ or P-1 by the applicable Rating Agency, then by the later
of (a) the day which is 60 days prior to the beginning of the Accumulation
Period and (b) the day which is 60 days after a reduction below A-1+/P-1, the
Servicer will either (i) with the prior written assurance of the Rating Agency
that such action will not result in a reduction or withdrawal of the rating of
the Class A Certificates, cause the Investment Provider to pledge securities or
itself pledge securities, in a manner conferring on the Trustee a perfected
first lien in such securities, securing the Investment Provider's performance of
its obligations under the Guaranteed Rate Agreement, (ii) direct the Trustee to
terminate the Guaranteed Rate Agreement and to obtain a Substitute Guaranteed
Rate Agreement or (iii) establish any other arrangement satisfactory to the
applicable Rating Agency such that the Rating Agency will not reduce or withdraw
the rating of the Class A Certificates. American Express Credit Corporation, the
initial Investment Provider, is currently rated A-1/P-1. A 'Substitute
Guaranteed Rate Agreement' is defined to mean an agreement (i) which is
substantially similar to the original Guaranted Rate Agreement, (ii) the obligor
of which is an insurance company, trust company, commercial bank or other entity
which has a commercial paper or certificate of deposit rating of at least A-1+
or P-1 by the applicable Rating Agency and (iii) which provides for the payment
of interest on funds invested pursuant thereto at a rate per annum at least
equal to the Class A Certificate Rate. If the Servicer is unable to obtain a
Substitute Guaranteed Rate Agreement or a pledge of securities or otherwise
satisfy the applicable Rating Agency within the time periods set forth in the
Agreement and described above, an Early Amortization Event will occur. See
'--Early Amortization Events.'
ALLOCATION PERCENTAGES
Pursuant to the Agreement, during each Due Period the Servicer will
allocate among the Certificateholders' Interest, any other Series of
certificates issued by the Trust and the Transferor Interest all Yield
Collections, all Principal Collections and the amount of all Defaulted
Receivables. Yield Collections and the amount of Defaulted Receivables will be
allocated at all times and Principal Collections will be allocated during the
Revolving Period to the Class A Certificateholders and the Class B
Certificateholders based on the percentage equivalent of the ratio of the sum of
the Class A Adjusted Invested Amount and the Class B Invested Amount on the last
day of the immediately preceding Due Period to the Trust Principal Component on
the last day of the immediately preceding Due Period (the 'Floating Allocation
Percentage'). During the initial Due Period, the Floating Allocation Percentage
will equal the percentage equivalent of the ratio which the amount of the sum of
the Class A Initial Invested Amount and the Class B Initial Invested Amount
bears to the Trust Principal
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Component on the last day of the Due Period immediately preceding the Closing
Date. To maintain the Certificateholders' Interest during the Revolving Period,
subject to certain limitations, the Floating Allocation Percentage of all
Principal Collections will be reinvested in the Trust or treated as Excess
Principal Collections and applied as described below in '--Principal Collections
for all Series,' and the Transferor Percentage of such Principal Collections
will be paid to the Transferor. During and after the Due Period preceding the
Expected Final Payment Date and during any Early Amortization Period, all
Principal Collections will be allocated to the Class A Certificateholders based
on the percentage equivalent of the ratio which the sum of the Class A Invested
Amount and the Class B Invested Amount as of the last day of the Revolving
Period bears to the greater of (a) the Trust Principal Component on the last day
of the prior Due Period and (b) the sum of the numerators used to calculate the
Invested Percentage with respect to Principal Collections for all Series of
certificates outstanding for the current Distribution Date (the 'Fixed
Allocation Percentage'). The remainder of the Principal Collections will be
allocated to the holders of other Series, if any, and to the Transferor
Interest.
As used herein, (a) 'Class A Invested Amount' for any date means an amount
equal to (i) the initial principal balance of the Class A Certificates, minus
(ii) the amount of principal payments made to Class A Certificateholders prior
to such date, minus (iii) the aggregate amount of Class A Investor Charge-Offs
for the current and all prior Distribution Dates, and plus (iv) the aggregate
amount of Yield Collections and certain other amounts applied on all prior
Distribution Dates and to be applied on the current Distribution Date for the
purpose of reimbursing amounts deducted pursuant to the foregoing clause (iii);
(b) 'Class A Adjusted Invested Amount' for any date means an amount equal to the
Class A Invested Amount minus the aggregate principal amount on deposit in the
Principal Funding Account; (c) 'Class B Invested Amount' for any date means an
amount equal to (i) the initial principal balance of the Class B Certificates,
minus (ii) the amount of principal payments made to Class B Certificateholders
prior to such date, minus (iii) the aggregate amount of Class B Investor
Charge-Offs for the current and all prior Distribution Dates, and plus (iv) the
aggregate amount of Yield Collections applied on all prior Distribution Dates
and to be applied on the current Distribution Date for the purpose of
reimbursing amounts deducted pursuant to the foregoing clause (iii); (d)
'Invested Amount' means the sum of the Class A Invested Amount and the Class B
Invested Amount; and (e) 'Transferor Percentage' means (i) when used with
respect to Yield Collections and the amount of Defaulted Receivables, 100% minus
the sum of the applicable Floating Allocation Percentages with respect to all
Series of certificates then issued and outstanding and (ii) when used with
respect to Principal Collections during the Accumulation Period and any Early
Amortization Period, 100% minus the sum of the Fixed Allocation Percentages with
respect to all Series of certificates then issued and outstanding.
As a result of the Floating Allocation Percentage, Yield Collections and
the portion of Defaulted Receivables allocated to the Certificateholders'
Interest will change each Due Period based on the relationship of the sum of the
Class A Adjusted Invested Amount and Class B Invested Amount to the Trust
Principal Component on the last day of the immediately preceding Due Period. As
a result of the Fixed Allocation Percentage, the percentage of Principal
Collections allocable to the Certificateholders' Interest during the
Accumulation Period and any Early Amortization Period will exceed the percentage
of Principal Collections which would have been allocable using the Floating
Allocation Percentage.
PRINCIPAL COLLECTIONS FOR ALL SERIES
Principal Collections for any Due Period allocated to the
Certificateholders' Interest will first be used to cover, with respect to the
Accumulation Period, required deposits to the Principal Funding Account or, with
respect to any Early Amortization Period, payments to the Certificateholders.
The Servicer will determine the amount of Principal Collections for any Due
Period allocated to the Certificateholders' Interest remaining after covering
required deposits to the Principal Funding Account and payments to the
Certificateholders and any similar amount remaining for any other Series
('Excess Principal Collections'). During the Revolving Period, all Principal
Collections allocable to the Certificateholders' Interest (including Yield
Collections that are deemed to be Principal Collections and treated as Excess
Principal Collections) will be treated as Excess Principal Collections. The
Servicer will allocate the Excess Principal Collections to cover any scheduled
or permitted principal distributions to certificateholders and deposits to
principal funding accounts for any Series which have not been covered out of the
Principal Collections allocable to such other Series and certain other amounts
for such Series ('Principal Shortfalls'). Excess Principal Collections will not
be used to cover investor charge-offs for any Series. If Principal Shortfalls
exceed Excess Principal Collections for any Due Period, Excess Principal
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Collections will be allocated pro rata among the applicable Series based on the
relative amounts of Principal Shortfalls. To the extent that Excess Principal
Collections exceed Principal Shortfalls, the balance will, subject to certain
limitations, be paid to the Transferor.
POSTPONEMENT OF THE ACCUMULATION PERIOD
Upon written notice to the Trustee, the Transferor and the applicable
Rating Agency, the Servicer may elect to postpone the commencement of the
Accumulation Period, and extend the length of the Revolving Period, subject to
certain conditions including those set forth below. On the Determination Date
immediately preceding the April 2003 Distribution Date and thereafter on each
Determination Date until the date the Accumulation Period begins, the Servicer
will determine the 'Accumulation Period Length' based on the lowest monthly
payment rate on the Receivables for the prior 12 months and the amount of
principal distributable to the certificateholders of all outstanding Series
which are not in their revolving period. If the Accumulation Period Length is
less than the length of the Accumulation Period initially provided under the
Agreement, the Servicer may, at its option, postpone the commencement of the
Accumulation Period such that the number of months included in the Accumulation
Period will be equal to or exceed the Accumulation Period Length. The effect of
the foregoing calculation is to permit the reduction of the length of the
Accumulation Period based on the invested amounts of certain other Series which
are scheduled to be in their revolving periods during the Accumulation Period
and on increases in the payment rate on the Receivables, which, if continued,
would result in a shorter Accumulation Period. The length of the Accumulation
Period will not be less than one month and will not be shorter than the period
determined as of the first date of determination unless the Trust has issued
another Series of Investor Certificates subsequent to that date and such Series
is in its revolving period. If the commencement of the Accumulation Period is
delayed in accordance with the foregoing, and if an Early Amortization Event
occurs after the date originally scheduled as the commencement of the
Accumulation Period, then it is probable that holders of Investor Certificates
would receive some of their principal later than if the Accumulation Period had
not been delayed.
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT
The Servicer shall apply or shall cause the Trustee to apply the funds on
deposit in the Collection Account with respect to each Distribution Date to make
the following distributions and allocations for such Distribution Date:
(a) An amount equal to the Floating Allocation Percentage of Yield
Collections deposited in the Collection Account for the Due Period immediately
preceding such Distribution Date plus, with respect to a Distribution Date
during the Accumulation Period, Investment Earnings will be allocated in the
following priority:
(i) an amount equal to Class A Monthly Interest for such Distribution
Date, plus the amount of any Class A Monthly Interest previously due but
not paid to Class A Certificateholders on a prior Distribution Date, plus
any additional interest at the Class A Certificate Rate plus 2% per annum
with respect to interest amounts that were due but not paid on a prior
Distribution Date, will be paid to Class A Certicateholders;
(ii) an amount equal to Class B Monthly Interest for such Distribution
Date plus the amount of any Class B Monthly Interest previously due but not
paid to the Class B Certificateholders on a prior Distribution Date, plus
any additional interest at the Class B Certificate Rate plus 2% per annum
with respect to interest amounts that were due but not paid on a prior
Distribution Date, will be paid to Class B Certificateholders;
(iii) an amount equal to the Monthly Servicing Fee for such
Distribution Date plus any Monthly Servicing Fee that was due but not paid
on a prior Distribution Date will be distributed to the Servicer (unless
such amount has been previously netted against deposits to the Collection
Account);
(iv) an amount equal to unreimbursed Class A Investor Charge-Offs, if
any, will be deemed to be Principal Collections and treated as Excess
Principal Collections during the Revolving Period and will be treated as
part of Class A Monthly Principal during the Accumulation Period or any
Early Amortization Period;
(v) an amount equal to the aggregate Investor Default Amount for such
Distribution Date will be deemed to be Principal Collections and treated as
Excess Principal Collections during the Revolving Period
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and will be treated as part of Class A Monthly Principal during the
Accumulation Period or any Early Amortization Period;
(vi) an amount equal to the amount of interest which has accrued with
respect to the outstanding aggregate principal amount of the Class B
Certificates at the Class B Certificate Rate but has not been paid to the
Class B Certificateholders either on such Distribution Date or on a prior
Distribution Date, plus any additional interest at the Class B Certificate
Rate plus 2% per annum with respect to such interest amounts that were due
but not paid to Class B Certificateholders on any previous Distribution
Date, will be paid to the Class B Certificateholders;
(vii) an amount equal to unreimbursed Class B Investor Charge-Offs, if
any, will be deemed to be Principal Collections and treated as Excess
Principal Collections during the Revolving Period and will be treated as
part of Class A Monthly Principal during the Accumulation Period or any
Early Amortization Period; and
(viii) any Yield Collections allocated to the Certificateholders'
Interest remaining after giving effect to the above described distributions
and allocations will be distributed to the Transferor.
(b) For each Distribution Date with respect to the Accumulation Period or
any Early Amortization Period and thereafter, the remaining funds on deposit in
the Collection Account with respect to such Distribution Date including, in the
case of clause (i) below, Excess Principal Collections, if any, from other
Series allocable to the Certificates will be allocated in the following
priority:
(i) an amount up to Class A Monthly Principal for such Distribution
Date, plus Excess Principal Collections, if any, from other Series
allocable to the Certificates will be deposited in the Principal Funding
Account;
(ii) an amount up to the Class B Invested Amount for any Distribution
Date on and after the Class A Certificates have been paid in full, plus
Excess Principal Collections, if any, from other Series allocable to the
Certificates, will be distributed to the holders of the Class B
Certificates; and
(iii) an amount equal to the balance of any such remaining funds on
deposit in the Collection Account will be treated as Excess Principal
Collections and distributed to other Series or to the Transferor as
provided in the Agreement.
Class A Monthly Interest with respect to any Distribution Date will equal
the product of (i) the Class A Certificate Rate for the related Interest Period,
(ii) the actual number of days in such Interest Period divided by 360 and (iii)
the outstanding principal balance of the Class A Certificates as of the related
Record Date; provided, however, with respect to the first Distribution Date,
Class A Monthly Interest will be equal to the interest accrued on the initial
outstanding principal balance of the Class A Certificates at the applicable
Class A Certificate Rate for the period from the Closing Date through November
14, 1996.
Class B Monthly Interest with respect to any Distribution Date will equal
one-twelfth of the product of (i) the Class B Certificate Rate and (ii) the
Class B Invested Amount as of the preceding Distribution Date (after giving
effect to any increase or decrease in the Class B Invested Amount on such
preceding Distribution Date) or, with respect to the first Distribution Date,
58/360ths of the product of (i) the Class B Certificate Rate and (ii) the Class
B Initial Invested Amount.
Class A Monthly Principal with respect to any Distribution Date relating to
the Accumulation Period or any Early Amortization Period or any Special Payment
Date will equal the sum of (i) an amount equal to the Fixed Allocation
Percentage of all Principal Collections received during the Due Period
immediately preceding such Distribution Date, Special Payment Date or, in the
case of the Distribution Date immediately following the occurrence of an Early
Amortization Event, received during the period from the day an Early
Amortization Event occurred to the end of such Due Period, (ii) the amount, if
any, equal to the product of (a) a fraction, the numerator of which is equal to
the sum of the Class A Adjusted Invested Amount and the Class B Invested Amount
and the denominator of which is equal to the sum of the invested amounts of all
Series then accumulating or amortizing principal (less any amounts on deposit in
any principal funding accounts) and (b) Undistributed Principal Collections on
deposit in the Collection Account on such Distribution Date or Special Payment
Date ('Series Undistributed Principal Collections') and (iii) the Investor
Default Amount with respect to such Distribution Date or Special Payment Date
and any reimbursements of unreimbursed Class A Investor Charge-Offs and Class B
Investor Charge-Offs; provided, however, that for each Distribution Date with
respect
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to the Accumulation Period (unless and until an Early Amortization Event shall
have occurred), Class A Monthly Principal may not exceed the Controlled Deposit
Amount for such Distribution Date; and provided further, that with respect to
any Distribution Date, Class A Monthly Principal will not exceed the Class A
Invested Amount.
Controlled Deposit Amount for any Distribution Date with respect to the
Accumulation Period shall mean an amount equal to the sum of the Controlled
Accumulation Amount and any existing Deficit Controlled Accumulation Amount.
Controlled Accumulation Amount means $475,000,000, or, if the Servicer
elects to postpone the commencement of the Accumulation Period, an amount
sufficient so that the sum of the Controlled Accumulation Amounts for each
Distribution Date during the Accumulation Period equals the Class A Invested
Amount as of the Expected Final Payment Date.
Deficit Controlled Accumulation Amount shall mean, on the first
Distribution Date with respect to the Accumulation Period, the excess, if any,
of the Controlled Accumulation Amount over the amount deposited in the Principal
Funding Account as Class A Monthly Principal for such Distribution Date and, on
each subsequent Distribution Date with respect to the Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount and any then existing
Deficit Controlled Accumulation Amount over the amount of Class A Monthly
Principal deposited in the Principal Funding Account on such Distribution Date.
Termination Payment Date shall mean the earlier of the Expected Final
Payment Date, the first Distribution Date following the liquidation or sale of
the Receivables as a result of an insolvency event as described under '--Early
Amortization Events' and the occurrence of the Final Series 1996-1 Termination
Date.
DISTRIBUTIONS TO CLASS A CERTIFICATEHOLDERS
Payments to Class A Certificateholders will be made from the Collection
Account with respect to interest and from the Principal Funding Account. In
addition to the amounts deposited in the Collection Account and Principal
Funding Account as described above, the following amounts will be deposited in
the Collection Account and Principal Funding Account, as applicable: (i)
Investment Earnings will be withdrawn from the Principal Funding Account and
deposited into the Collection Account on each Distribution Date with respect to
the Accumulation Period to be applied to payment of Class A Monthly Interest and
(ii) the portion of the proceeds of any optional repurchase of the Class A
Certificates by the Transferor deemed to be Principal Collections will be
withdrawn from the Collection Account and deposited in the Principal Funding
Account, on the Distribution Date on which such purchase occurs.
The Servicer shall instruct the Trustee or the Paying Agent to make the
following distributions:
(a) on each Distribution Date, on each Special Payment Date and on the
Expected Final Payment Date, all amounts on deposit in the Collection Account in
respect of Class A Monthly Interest shall be distributed to Class A
Certificateholders; and
(b) on each Special Payment Date and on the Expected Final Payment Date,
all amounts on deposit in the Principal Funding Account shall be distributed to
Class A Certificateholders up to a maximum amount on any such date equal to the
unpaid Class A Invested Amount on such date.
The Paying Agent shall have the revocable power to withdraw funds from the
Collection Account and the Principal Funding Account for the purpose of making
distributions to the Class A Certificateholders.
On each Distribution Date with respect to the Revolving Period, the
Servicer will pay to the Transferor any investment earnings (net of losses and
investment expenses) with respect to the Collection Account. On any Distribution
Date with respect to any Early Amortization Period, such investment earnings
(net of losses and investment expenses) will be considered Yield Collections
under the Agreement.
Distribution Date shall mean November 15, 1996, and the 15th day of each
calendar month thereafter, or, if such 15th day is not a business day, the next
succeeding business day.
Special Payment Date shall mean each Distribution Date with respect to any
Early Amortization Period and each Distribution Date following the Expected
Final Payment Date.
S-25
<PAGE>
INVESTOR CHARGE-OFFS
If on any Distribution Date, the Investor Default Amount, if any, for such
Distribution Date exceeds the amount of Yield Collections which are allocated
and available to fund such amount as described under clause (a)(v) of
'--Distributions from the Collection Account', then the Class B Invested Amount
shall be reduced by the aggregate amount of such excess, but not more than the
Investor Default Amount for such Distribution Date (a 'Class B Investor
Charge-Off'). The Class B Invested Amount will thereafter be increased (but not
in excess of the unpaid principal balance of the Class B Certificates) on any
Distribution Date by the amount of Yield Collections allocated and available for
that purpose as described under clause (a)(vii) of '--Distributions from the
Collection Account.'
In the event that any such reduction of the Class B Invested Amount would
cause the Class B Invested Amount to be a negative number, the Class B Invested
Amount will be reduced to zero, and the Class A Invested Amount will be reduced
by the amount by which the Class B Invested Amount would have been reduced below
zero, but not more than the Investor Default Amount for such Distribution Date
(a 'Class A Investor Charge-Off'), which will have the effect of slowing or
reducing the return of principal to the Class A Certificateholders. If the Class
A Invested Amount has been reduced by the amount of any Class A Investor
Charge-Offs, it will be increased on any Distribution Date (but not by an amount
in excess of the aggregate Class A Investor Charge-Offs) by the amount of Yield
Collections allocated and available for such purpose as described under clause
(a)(iv) of '--Distributions from the Collection Account.'
ADDITION OF ACCOUNTS
The Transferor will be required to designate the Receivables of Additional
Accounts and to transfer the Receivables in such Additional Accounts to the
Trust if, as of the end of any two consecutive Due Periods, the Transferor
Amount as a percentage of the Trust Principal Component (reduced, for the
purpose of this calculation, by the Privileged Assets Calculated Amount) is less
than 15% or if, as of the end of any Due Period, the Trust Principal Component
(reduced as aforesaid) is less than $1,104,500,000 (the 'Series Minimum Trust
Principal Component') plus any amounts established with respect to other
outstanding Series (the aggregate of the Series Minimum Trust Principal
Component and such amounts, the 'Minimum Trust Principal Component').
FINAL PAYMENT OF PRINCIPAL; TERMINATION OF TRUST
The Class A Certificates will be subject to optional repurchase by the
Transferor on any Distribution Date on or after which the Invested Amount is
reduced to an amount less than or equal to $102,702,703 (10% of the sum of the
Class A Initial Invested Amount and the Class B Initial Invested Amount), unless
certain events of bankruptcy, insolvency or receivership have occurred with
respect to the Transferor. The repurchase price will be equal to the sum of the
Class A Invested Amount plus accrued and unpaid interest on the Class A
Certificates and the Class B Invested Amount plus accrued and unpaid interest on
the Class B Certificates through the day preceding the Distribution Date with
respect to which the repurchase occurs.
Subject to prior termination as provided above, the Agreement provides that
the final distribution of principal and interest on the Certificates will be
made on August 16, 2004 (the 'Final Series 1996-1 Termination Date'). In the
event that the Invested Amount of the Certificates is greater than zero on the
Final Series 1996-1 Termination Date, the Trustee will sell or cause to be sold,
and apply the proceeds to the extent necessary to pay such remaining amounts to
all Certificateholders pro rata as final payment of the Certificates, an amount
of Receivables up to 110% of the Invested Amount of the Certificates at the
close of business on such date, but not more than the total amount of
Receivables allocable to the Certificates. The proceeds of any such sale will be
treated as collections on the Receivables and applied as provided above in
'Description of the Certificates--Application of Collections' in the
Prospectus. Such proceeds will be allocated first to pay amounts due to the
Class A Certificateholders.
Unless the Transferor instructs the Trustee otherwise, the Trust will only
terminate on the earlier to occur of: (a) the day following the day on which the
aggregate invested amounts of all Series is zero or (b) July 15, 2092 (the
'Final Termination Date'). Upon the termination of the Trust and the surrender
of the Exchangeable Transferor Certificate, the Trustee shall convey to the
Transferor all right, title and interest of the Trust in and to the Receivables
and other funds of the Trust (other than amounts in the accounts maintained by
the Trust for the final payment of principal and interest to
Certificateholders).
S-26
<PAGE>
EARLY AMORTIZATION EVENTS
The Revolving Period will continue through the end of the June 2003 Due
Period and the Accumulation Period will begin at such time, unless an Early
Amortization Event occurs or unless commencement of the Accumulation Period is
postponed. An Early Amortization Period will commence (i) on the day on which an
Early Amortization Event occurs or is deemed to occur or (ii) on the Expected
Final Payment Date if the Class A Invested Amount is not paid in full on such
date. An 'Early Amortization Event' with respect to the Certificates refers to
any of the following events:
(i) failure on the part of the Transferor or TRS (a) to make any
payment or deposit on the date required under the Agreement, the Series
1996-1 Supplement or the Receivable Purchase Agreement, as applicable (or
within the applicable grace period which will not exceed five business
days), (b) duly to observe or perform in any material respect the covenant
of the Transferor not to sell, pledge, assign or transfer to any person, or
grant any prohibited lien on, any Receivable, or (c) duly to observe or
perform in any material respect any other covenants or agreements of the
Transferor in the Agreement or, to the extent assigned to the Trust, in the
Receivable Purchase Agreement, which in the case of subclause (c) hereof,
continues unremedied for a period of 60 days after written notice to the
Transferor or TRS, as applicable, and continues to affect materially and
adversely the interests of the Certificateholders for such period (or, with
respect to a failure arising out of the creation of certain liens upon the
Receivables or the failure by the Transferor or the Servicer to comply with
certain covenants specified in the Agreement, immediately); provided,
however, that an Early Amortization Event described in clause (b) or (c)
shall not be deemed to occur if the Transferor has accepted the transfer of
the related Receivable during such period (or such longer period as the
Trustee may specify not to exceed an additional 60 days) in accordance with
the provisions of the Agreement;
(ii) any representation or warranty made by the Transferor in the
Agreement or the Series 1996-1 Supplement or any representation or warranty
made by TRS in the Receivable Purchase Agreement or any information
required to be given by the Transferor or the Servicer to the Trustee to
identify the Designated Accounts proves to have been incorrect in any
material respect when made and continues to be incorrect in any material
respect for a period of 60 days after written notice and as a result of
which the interests of the Certificateholders are materially and adversely
affected and which continues to materially and adversely affect the
interests of the Certificateholders for such period; provided, however,
that an Early Amortization Event described in this clause (ii) shall not be
deemed to occur if the Transferor has accepted the transfer of the related
Receivable or all such Receivables, if applicable, during such period (or
such longer period as the Trustee may specify not to exceed an additional
60 days) in accordance with the provisions of the Agreement;
(iii) certain events of bankruptcy or insolvency relating to the
Transferor or TRS;
(iv) there will have been three consecutive Distribution Dates on
which the Class B Invested Amount is less than the Initial Class B Invested
Amount;
(v) the Trust becomes an 'investment company' within the meaning of
the Investment Company Act of 1940, as amended;
(vi) after any applicable grace period, a failure by the Transferor to
convey Receivables in Additional Accounts to the Trust when required by the
Agreement;
(vii) any Servicer Default occurs which would have a material adverse
effect on the Certificateholders;
(viii) in the event the commercial paper rating or certificate of
deposit rating of the Investment Provider, if any, is below A-1+ or P-1 by
the applicable Rating Agency, the failure by the Servicer either to obtain
a Substitute Guaranteed Rate Agreement, to pledge securities in accordance
with the terms of the Agreement or to establish another arrangement
satisfactory to the applicable Rating Agency by the later of (a) the date
which is 60 days prior to the beginning of the Accumulation Period and (b)
the day which is 60 days after any decline below A-1+ or P-1;
(ix) the failure by the Investment Provider, if any, to make any
payment required by the terms of the Guaranteed Rate Agreement or a
Substitute Guaranteed Rate Agreement, as the case may be, on or before the
date occurring five business days after such payment is due;
(x) on any Determination Date (generally the 8th day of each month)
the Class B Invested Amount is less than 2% of the Class A Invested Amount;
or
S-27
<PAGE>
(xi) on any Determination Date the Transferor Amount as a percentage
of the Trust Principal Component as of the last day of the prior Due Period
(reduced, for the purpose of this calculation, by the Privileged Asset
Calculated Amount for such Due Period) was less than 3%.
In the case of any event described in clause (i), (ii) or (vii), an Early
Amortization Event will be deemed to have occurred with respect to any Series
only if, after any applicable grace period described in such clauses, either the
Trustee or certificateholders of such Series evidencing undivided interests
aggregating more than 50% of the invested amount of such Series, by written
notice to the Transferor and the Servicer (and to the Trustee, if given by such
certificateholders) declare that an Early Amortization Event has occurred as of
the date of such notice. In the case of any event described in clause (iii),
(v), (vi) or (xi) an Early Amortization Event with respect to all Series, and in
the case of any event described in clause (iv), (viii), (ix) or (x), an Early
Amortization Event with respect to only the Certificates, will be deemed to have
occurred without any notice or other action on the part of the Trustee or the
Certificateholders or all certificateholders, as appropriate, immediately upon
the occurrence of such event. The Early Amortization Period will commence on the
day on which an Early Amortization Event occurs or is deemed to occur. Monthly
distributions of principal to the Certificateholders will begin (if they have
not already) on the first Distribution Date following the Due Period in which an
Early Amortization Event occurs or is deemed to have occurred. Thus,
Certificateholders may begin receiving distributions of principal earlier than
they otherwise would have, which may shorten the final maturity of the
Certificates. If the only Early Amortization Event to occur is either the
insolvency of the Transferor or the appointment of a receiver or bankruptcy
trustee for the Transferor, the receiver or bankruptcy trustee for the
Transferor may have the power to delay or prevent commencement of the Early
Amortization Period.
In addition to the consequences of an Early Amortization Event discussed
above, if TRS or the Transferor voluntarily files a bankruptcy petition or goes
into liquidation or any person is appointed a receiver or bankruptcy trustee of
TRS or the Transferor, on the day of such appointment TRS will immediately cease
to sell Receivables to the Transferor under the Receivable Purchase Agreement
and promptly give notice to the Trustee of such appointment or if the Transferor
voluntarily files for bankruptcy or a receiver or bankruptcy trustee is
appointed for the Transferor, on the day of such appointment the Transferor will
immediately cease to transfer Receivables to the Trust and the Transferor will
promptly give notice to the Trustee of such appointment. Within 15 days, the
Trustee will publish a notice of the liquidation or the appointment stating that
the Trustee intends to sell, dispose of or otherwise liquidate the Receivables
in a commercially reasonable manner and to the best of its ability. Unless
otherwise instructed within 90 days of the publication of such notice by the
Certificateholders representing undivided interests aggregating more than 50% of
the aggregate principal amount of each of the Class A Certificates and the Class
B Certificates (other than any holder who is the subject of the bankruptcy or
insolvency that resulted in the Early Amortization Event) and by the holders
representing undivided interests aggregating more than 50% of the Transferor
Interest (other than any holder who is the subject of the bankruptcy or
insolvency which resulted in the Early Amortization Event), the Trustee will
sell, dispose of or otherwise liquidate the portion of the Receivables allocable
to the Certificates and to other Series that did not vote to continue the Trust
in accordance with the Agreement in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from the sale, disposition or
liquidation of the Receivables will be treated as Collections on the
Receivables. If the portion of such proceeds allocable to the
Certificateholders' Interest and the proceeds of any Collections in the
Collection Account are not sufficient to pay in full the remaining amount due on
the Class A Certificates, the Class A Certificateholders will suffer a
corresponding loss. If the Trustee is instructed not to sell the portion of the
Receivables allocable to the Certificateholders, as described above, then the
Trust shall continue with respect to the Series 1996-1 Certificates pursuant to
the terms of the Agreement and the Series 1996-1 Supplement. See 'Certain Legal
Aspects of the Receivables--Certain Matters Relating to Bankruptcy' in the
Prospectus.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities is a monthly
servicing fee (the 'Servicing Fee') in an amount, on any Distribution Date,
equal to the sum of, with respect to all Series, one-twelfth of the sum for each
Series of the product of (a) the applicable servicing fee percentages with
respect to each Series and (b) the sum of an allocable portion of the amount of
the Transferor Interest and the aggregate invested amount with respect to each
Series with respect to the related Due Period. The Servicing Fee will be
allocated among the Transferor Interest, the Certificateholders and
certificateholders of all of the other Series. The portion of the Servicing Fee
allocable to the Certificateholders' Interest on each Distribution Date (the
'Monthly Servicing Fee') generally will be equal to one-twelfth of the product
of 2% per annum and the amount of the Class A Adjusted Invested Amount and the
Class B Invested Amount, on the last day of the second preceding Due Period
S-28
<PAGE>
or, in the case of the first Distribution Date, 58/360ths of the product of 2%
per annum and the initial principal amount of the Class A Certificates and the
Class B Certificates. The remainder of the Servicing Fee, which will be
allocable to the Transferor Interest, will be paid directly by the holder of the
Exchangeable Transferor Certificate from Yield Collections allocated to the
Transferor Interest and neither the Trust nor the Certificateholders will have
any obligation to pay such portion of the Servicing Fee. The Monthly Servicing
Fee will be paid with respect to each Due Period from the Collection Account
(unless such amount has been netted against deposits to the Collection Account)
as described under '--Distributions from the Collection Account' above.
REPORTS TO CLASS A CERTIFICATEHOLDERS
On each Distribution Date, the Trustee will forward to each Class A
Certificateholder of record, a statement prepared by the Servicer setting forth
the items described under the second paragraph of 'Descriptions of the
Certificates--Reports to Certificateholders' in the Prospectus. In addition,
such statement will include certain information relating to the Class A
Certificate Rate and the Class A Monthly Interest with respect to the related
Interest Period.
TAX MATTERS
CHARACTERIZATION OF THE CERTIFICATES AS INDEBTEDNESS
Based on the application of existing law to the facts as set forth in the
Agreement and other relevant documents, Skadden, Arps, Slate, Meagher & Flom,
special counsel to the Transferor, has advised the Transferor based on the
analysis set forth in 'Tax Matters' in the Prospectus that the Certificates will
be treated as indebtedness for Federal income tax purposes. See 'Tax Matters' in
the Prospectus.
The following two paragraphs supersede the information in the second
paragraph under the caption 'Tax Matters--Taxation of Interest Income of
Certificateholders' in the Prospectus:
While it is not anticipated that the Certificates will be issued at a
greater than de minimis discount, under applicable Treasury regulations (the
'Regulations') the Certificates may nevertheless be deemed to have been issued
with original issue discount ('OID'). This could be the case, for example, if
interest payments for a Series are not treated as 'qualified stated interest'
because the Internal Revenue Service determines that (i) no reasonable legal
remedies exist to compel timely payment and (ii) the Certificates do not have
terms and conditions that make the likelihood of late payment (other than a late
payment that occurs within a reasonable grace period) or nonpayment a remote
contingency. Applicable regulations provide that, for purposes of the foregoing
test, the possibility of nonpayment due to default, insolvency, or similar
circumstances is ignored. Although this provision does not directly apply to the
Certificates (because they have no actual default provisions) the Transferor
intends to take the position that, because nonpayment can occur only as a result
of events beyond its control (e.g., loss rates and payment delays on the
Receivables substantially in excess of those anticipated), nonpayment is a
remote contingency.
Based on the foregoing, and on the fact that interest will accrue on the
Certificates at a 'qualified floating rate,' the Transferor intends to take the
position that interest payments on the Certificates constitute qualified stated
interest. If, however, interest payments on the Certificates were not classified
as 'qualified stated interest,' all of the taxable income to be recognized with
respect to the Certificates would be includible in income as OID but would not
be includible again when the interest is actually received.
The following two paragraphs supplement and in part supersede the
discussion under the caption 'Tax Matters--Future Legislation' in the
Prospectus:
Recently enacted provisions of the Code provide for the creation of a new
type of entity for federal income tax purposes, the 'financial asset
securitization investment trust' ('FASIT'). However, these provisions are not
effective until September 1, 1997, and many technical issues concerning FASITs
must be addressed by Treasury regulations that have yet to be drafted. Although
transition rules permit an entity in existence on August 31, 1997, such as the
Trust, to elect FASIT status, at the present time it is not clear how
outstanding interests of such an entity would be treated subsequent to such an
election. In particular, it is not clear whether Certificates of any Series
outstanding on August 31, 1997 would be treated as 'regular interests' in a
FASIT if the Transferor were to elect FASIT status for the Trust after that
date.
The Trust will be permitted to elect FASIT status if the Transferor
delivers an opinion of counsel acceptable to the Trustee to the effect that such
election will not (i) cause the Trust to be characterized for federal income tax
purposes as an association taxable as a corporation or (ii) otherwise have any
material adverse impact on the federal income taxation of any outstanding Series
of Certificates or any certificate owner. If a Certificate were a
S-29
<PAGE>
regular interest in a FASIT, a certificate owner, including a certificate owner
that ordinarily reports its income on the cash basis, would be required to
report income thereof on the accrual method.
LEGAL MATTERS
Certain legal matters relating to the Class A Certificates will be passed
upon for the Transferor by Richard M. Starr, Esq., counsel to the Transferor,
for the Servicer by Louise M. Parent, General Counsel to the Servicer and for
the Underwriters by Skadden, Arps, Slate, Meagher & Flom, New York, New York.
Certain federal income tax and other matters will be passed upon for the
Transferor and the Servicer by Skadden, Arps, Slate, Meagher & Flom. Skadden,
Arps, Slate, Meagher & Flom has from time to time represented the Servicer and
Credco and certain of their affiliates.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated as of September 9, 1996 (the 'Underwriting Agreement') between the
Transferor and the underwriters named below (collectively, the 'Underwriters'),
the Transferor has agreed to sell to each of the Underwriters named below, and
each of the Underwriters has severally agreed to purchase, the principal amount
of Class A Certificates as set forth opposite its name:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
CLASS A
UNDERWRITERS CERTIFICATES
- -------------------------------------------------------------------------------- --------------
<S> <C>
Lehman Brothers Inc............................................................. $ 184,400,000
Bear, Stearns & Co. Inc......................................................... 184,400,000
Goldman, Sachs & Co............................................................. 184,400,000
J.P. Morgan Securities Inc...................................................... 184,400,000
UBS Securities LLC.............................................................. 184,400,000
Banc One Capital Corporation.................................................... 4,000,000
BA Securities, Inc.............................................................. 4,000,000
Credit Lyonnais Securities (USA) Inc............................................ 4,000,000
First Union Capital Markets Corp................................................ 4,000,000
HSBC Securities, Inc............................................................ 4,000,000
NatWest Capital Markets Limited................................................. 4,000,000
Sumitomo Finance International plc.............................................. 4,000,000
--------------
Total...................................................................... $ 950,000,000
--------------
--------------
</TABLE>
The Transferor has been advised by the several Underwriters that the
several Underwriters propose initially to offer the Class A Certificates to the
public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of 0.250% of the principal amount of the Class A Certificates. Underwriters may
allow and such dealers may reallow a concession not in excess of 0.125% of such
principal amount. After the initial public offering, the public offering price
and such concessions may be changed.
Each Underwriter that is not a member of the National Association of
Securities Dealers, Inc. (the 'NASD') is a foreign broker or dealer not eligible
for membership in the NASD which has agreed not to make any sales within the
United States, its territories or possessions or to persons who are citizens
thereof or residents therein (other than certain sales made by the Underwriters
as a group) except that each such Underwriter shall be permitted to make sales
to the other Underwriters or to their United States affiliates provided that
such sales are made in compliance with applicable rules under the Exchange Act
and in conformity with the Rules of Fair Practice of the NASD.
Each of NatWest Capital Markets Limited and Sumitomo Finance International
plc, each a United Kingdom broker-dealer and a member of the Securities Futures
Authority Limited, has agreed that, as part of the distribution of the Class A
Certificates offered hereby and subject to certain exceptions, it will not offer
or sell any Class A Certificates within the United States, its territories or
possessions or to persons who are citizens thereof or residents therein. The
Underwriting Agreement does not limit the sale of the Series 1996-1 Certificates
offered hereby outside of the United States.
Each Underwriter has represented and agreed that (a) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Class A
S-30
<PAGE>
Certificates to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or who is a person to whom the document may otherwise lawfully be issued or
passed on, (b) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 of Great Britain with respect to anything done
by it in relation to the Class A Certificates in, from or otherwise involving
the United Kingdom and (c) if that Underwriter is an authorized person under the
Financial Services Act 1986, it has only promoted and will only promote (as that
term is defined in Regulation 1.02 of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991) to any person in the United Kingdom the
scheme described herein if that person is of a kind described either in Section
76(2) of the Financial Services Act 1986 or in Regulation 1.04 of the Financial
Services (Promotion of Unregulated Schemes) Regulations 1991.
The Underwriting Agreement provides that the Transferor will indemnify the
Underwriters against certain liabilities, including liabilities under applicable
securities laws, or contribute to payments the Underwriters may be required to
make in respect thereof.
S-31
<PAGE>
GLOSSARY FOR PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
TERM PAGE(S)
- --- -------
<S> <C>
Accumulation Period............................................................................. S-6
Accumulation Period Length...................................................................... S-23
Agreement....................................................................................... S-3
August 1993 Additional Accounts................................................................. S-3
Certificateholders.............................................................................. S-6
Certificateholders' Interest.................................................................... S-4
Certificates.................................................................................... cover
Class A Adjusted Invested Amount................................................................ S-22
Class A Certificate Rate........................................................................ cover, S-4, S-19
Class A Certificate Owners...................................................................... cover, S-20
Class A Certificateholders...................................................................... S-6
Class A Certificates............................................................................ cover, S-3
Class A Initial Invested Amount................................................................. S-6
Class A Invested Amount......................................................................... S-22
Class A Investor Charge-Off..................................................................... S-26
Class A Monthly Interest........................................................................ S-24
Class A Monthly Principal....................................................................... S-24
Class B Certificate Rate........................................................................ S-4
Class B Certificateholders...................................................................... S-6
Class B Certificates............................................................................ cover
Class B Initial Invested Amount................................................................. S-9
Class B Invested Amount......................................................................... S-22
Class B Investor Charge-Off..................................................................... S-26
Class B Monthly Interest........................................................................ S-24
Closing Date.................................................................................... cover, S-4, S-19
Controlled Accumulation Amount.................................................................. S-25
Controlled Deposit Amount....................................................................... S-25
Cut Off Date.................................................................................... S-3
Deficit Controlled Accumulation Amount.......................................................... S-25
Designated Accounts............................................................................. cover, S-3
Determination Date.............................................................................. S-27
Distribution Date............................................................................... cover, S-5, S-25
DTC............................................................................................. S-6
Early Amortization Event........................................................................ S-27
Early Amortization Period....................................................................... S-8
Enhancement..................................................................................... S-19
ERISA........................................................................................... S-10
Excess Principal Collections.................................................................... S-22
Expected Final Payment Date..................................................................... cover, S-4
FASIT........................................................................................... S-29
Final Series 1996-1 Termination Date............................................................ S-10, S-26
Final Termination Date.......................................................................... S-26
Fixed Allocation Percentage..................................................................... S-22
Floating Allocation Percentage.................................................................. S-21
Guaranteed Rate Agreement....................................................................... S-7
Interest Period................................................................................. S-5
Invested Amount................................................................................. S-22
Investment Earnings............................................................................. S-21
Invested Percentage............................................................................. S-5
Investment Provider............................................................................. S-7
January 1996 Additional Accounts................................................................ S-3
June 1992 Designated Accounts................................................................... S-3
June 1994 Additional Accounts................................................................... S-3
LIBOR........................................................................................... cover, S-4, S-19
LIBOR Determination Date........................................................................ S-19
</TABLE>
S-32
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE(S)
- ---- -------
<S> <C>
Minimum Trust Principal Component............................................................... S-26
Monthly Servicing Fee........................................................................... S-28
NASD............................................................................................ S-30
OID............................................................................................. S-29
Participants.................................................................................... S-20
Principal Funding Account....................................................................... S-7
Principal Shortfalls............................................................................ S-22
Rating Agency................................................................................... S-11
Receivables..................................................................................... cover
Record Date..................................................................................... S-6
Reference Banks................................................................................. S-19
Regulations..................................................................................... S-29
Revolving Period................................................................................ S-6
Series.......................................................................................... S-3
Series Cut Off Date............................................................................. S-4, S-16
Series Minimum Trust Principal Component........................................................ S-26
Series 1996-1 Supplement........................................................................ S-18
Series Undistributed Principal Collections...................................................... S-24
Servicer........................................................................................ cover
Servicing Fee................................................................................... S-28
Special Payment Date............................................................................ S-25
Substitute Guaranteed Rate Agreement............................................................ S-21
Telerate Page 3750.............................................................................. S-19
Termination Payment Date........................................................................ S-25
TRS............................................................................................. cover
Transferor...................................................................................... cover
Transferor Interest............................................................................. S-4
Transferor Percentage........................................................................... S-22
Trust........................................................................................... cover, S-3
Trust Principal Component....................................................................... S-7
Trustee......................................................................................... S-3
Underwriters.................................................................................... S-30
Underwriting Agreement.......................................................................... S-30
</TABLE>
S-33
<PAGE>
ANNEX I
OTHER ISSUANCES OF INVESTOR CERTIFICATES
The tables below set forth the principal characteristics of the other
Series previously issued by the Trust and the proposed terms of the Series
1996-2 Certificates, which are expected to be issued concurrently with the
issuance of the Certificates. For more specific information with respect to any
Series, a prospective investor should contact the Servicer at (212) 640-4405.
The Servicer will provide, without charge, to any prospective purchaser of the
Class A Certificates, a copy of the Disclosure Documents for any previous
publicly-issued Series.
1. American Express Master Trust Class A and Class B Accounts
Receivable Trust Certificates, Series 1992-1
<TABLE>
<S> <C>
Class A Invested Amount............................................. $500,000,000
Class B Invested Amount............................................. $ 29,100,529
Class A Certificate Rate............................................ 6.05% per annum
Class B Certificate Rate............................................ 6.25% per annum
Class A Expected Final Payment Date................................. July 15, 1997
Series Servicing Fee Rate........................................... 2.0% per annum
Series Termination Date............................................. June 15, 1998
Series Issuance Date................................................ August 3, 1992
Series Minimum Trust Principal Component............................ $569,000,000
</TABLE>
2. American Express Master Trust Class A and Class B Accounts
Receivable Trust Certificates, Series 1992-2
<TABLE>
<S> <C>
Class A Invested Amount............................................. $500,000,000
Class B Invested Amount............................................. $ 29,100,529
Class A Certificate Rate............................................ 6.60% per annum
Class B Certificate Rate............................................ 6.80% per annum
Class A Expected Final Payment Date................................. July 15, 1999
Series Servicing Fee Rate........................................... 2.0% per annum
Series Termination Date............................................. May 15, 2000
Series Issuance Date................................................ August 3, 1992
Series Minimum Trust Principal Component............................ $569,000,000
</TABLE>
3. American Express Master Trust Class A and Class B Accounts
Receivable Trust Certificates, Series 1993-1
<TABLE>
<S> <C>
Class A Invested Amount............................................. $600,000,000
Class B Invested Amount............................................. $ 34,920,635
Class A Certificate Rate............................................ 5.375% per annum
Class B Certificate Rate............................................ 5.50% per annum
Class A Expected Final Payment Date................................. September 15, 2000
Series Servicing Fee Rate........................................... 2.0% per annum
Series Termination Date............................................. July 15, 2001
Series Issuance Date................................................ September 22, 1993
Series Minimum Trust Principal Component............................ $682,500,000
</TABLE>
S-34
<PAGE>
4. American Express Master Trust Class A and Class B Accounts
Receivable Trust Certificates, Series 1994-1
<TABLE>
<S> <C>
Class A Invested Amount............................................. $300,000,000
Class B Invested Amount............................................. $ 17,460,317
Class A Certificate Rate............................................ 7.15%
Class B Certificate Rate............................................ 7.35%
Class A Expected Final Payment Date................................. September 15, 1998
Series Servicing Fee Rate........................................... 2.0% per annum
Series Termination Date............................................. August 16, 1999
Series Issuance Date................................................ September 23, 1994
Series Minimum Trust Principal Component............................ $341,000,000
</TABLE>
5. American Express Master Trust Class A and Class B Accounts
Receivable Trust Certificates, Series 1994-2
<TABLE>
<S> <C>
Class A Invested Amount............................................. $300,000,000
Class B Invested Amount............................................. $ 17,460,317
Class A Certificate Rate............................................ 7.60%
Class B Certificate Rate............................................ 7.75%
Class A Expected Final Payment Date................................. September 17, 2001
Series Servicing Fee Rate........................................... 2.0% per annum
Series Termination Date............................................. August 15, 2002
Series Issuance Date................................................ September 23, 1994
Series Minimum Trust Principal Component............................ $341,000,000
</TABLE>
6. American Express Master Trust Class A and Class B Accounts
Receivable Trust Certificates, Series 1994-3
<TABLE>
<S> <C>
Class A Invested Amount............................................. $300,000,000
Class B Invested Amount............................................. $ 17,460,317
Class A Certificate Rate............................................ 7.85%
Class B Certificate Rate............................................ 7.95%
Class A Expected Final Payment Date................................. September 15, 2004
Series Servicing Fee Rate........................................... 2.0% per annum
Series Termination Date............................................. August 15, 2005
Series Issuance Date................................................ September 23, 1994
Series Minimum Trust Principal Component............................ $341,000,000
</TABLE>
7. Proposed American Express Master Trust Class A and Class B Accounts
Receivable Trust Certificates, Series 1996-2*
<TABLE>
<S> <C>
Class A Invested Amount............................................. $300,000,000
Class B Invested Amount............................................. $ 24,324,324
Class A Certificate Rate............................................ One-Month LIBOR
plus 0.12% per annum
Class B Certificate Rate............................................ 7.10% per annum
Class A Expected Final Payment Date................................. September 17, 2001
Series Servicing Fee Rate........................................... 2.0% per annum
Series Termination Date............................................. August 15, 2002
Series Issuance Date................................................ September 18, 1996
Series Minimum Trust Principal Component............................ $348,500,000
</TABLE>
- ------------------
* All terms are subject to change.
S-35
<PAGE>
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<PAGE>
PROSPECTUS
AMERICAN EXPRESS MASTER TRUST
ACCOUNTS RECEIVABLE TRUST CERTIFICATES
---------------------
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION
TRANSFEROR
---------------------
[LOGO] AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
SERVICER
---------------------
The Accounts Receivable Trust Certificates, (collectively, the
'Certificates') described herein may be sold from time to time in one or more
Series (each, a 'Series'), in amounts, at prices and on terms to be determined
at the time of sale and to be set forth in a supplement to this Prospectus (a
'Prospectus Supplement'). The Certificates of each Series will evidence an
undivided interest in a specified American Express Master Trust (each, a
'Trust'). A Trust ('Trust I') has been formed pursuant to a Master Pooling and
Servicing Agreement among American Express Receivables Financing Corporation, as
transferor (the 'Transferor'), American Express Travel Related Services Company,
Inc. ('TRS'), as servicer (the 'Servicer'), and The Bank of New York, as
trustee. Additional Trusts (each, a 'New Trust') may be formed from time to
time, each pursuant to a pooling and servicing agreement to be entered into
between TRS or another designated servicer, the Transferor, and a Trustee
identified in the Prospectus Supplement relating to one or more Series of
Certificates representing interests in such Trust. The assets of Trust I
include, and the assets of each New Trust may include, receivables (the
'Receivables') generated from time to time in a portfolio of designated American
Express Card, American Express Gold Card and Platinum Card accounts, or other
card accounts (the 'Designated Accounts'), all monies due or to become due in
respect of the Receivables (including, without limitation, amounts owing for the
payment of merchandise and services and, unless
(cover sheet continued on next page)
---------------------
THE CERTIFICATES WILL REPRESENT BENEFICIAL INTERESTS IN THE RELATED TRUSTS
ONLY AND WILL NOT REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF
AND WILL NOT BE GUARANTEED BY THE TRANSFEROR, AMERICAN EXPRESS
TRAVEL RELATED SERVICES COMPANY, INC., AMERICAN
EXPRESS COMPANY OR ANY AFFILIATE THEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Certificates may be sold by the Transferor directly to purchasers, through
agents designated from time to time, through underwriting syndicates led by one
or more managing underwriters or through one or more underwriters acting alone.
If underwriters or agents are involved in the offering of the Certificates of
any Series offered hereby, the name of the managing underwriter or underwriters
or agents will be set forth in the related Prospectus Supplement. If an
underwriter, agent or dealer is involved in the offering of the Certificates of
any Series offered hereby, the underwriter's discount, agent's commission or
dealer's purchase price will be set forth in, or may be calculated from, the
related Prospectus Supplement, and the net proceeds to the Transferor from such
offering will be the public offering price of such Certificates less such
discount in the case of an underwriter, the purchase price of such Certificates
less such commission in the case of an agent or the purchase price of such
Certificates in the case of a dealer, and less, in each case, the other expenses
of the Transferor associated with the issuance and distribution of such
Certificates. See 'Underwriting.'
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF ANY SERIES OF
CERTIFICATES UNLESS ACCOMPANIED BY THE RELATED PROSPECTUS SUPPLEMENT.
October 6, 1994
<PAGE>
(continued from previous page)
otherwise specified in the related Prospectus Supplement, annual membership fees
and certain other administrative fees and charges, and recoveries on charged-off
Receivables), any Receivables in accounts added to the related Trust from time
to time, moneys on deposit in certain accounts of such Trust and all of the
right, title and interest of the Transferor in the related Receivable Purchase
Agreement. See 'Description of the Certificates and the Agreement--General.'
The Transferor will initially own the remaining undivided interest in each Trust
not represented by such Trust. Unless otherwise specified in the related
Prospectus Supplement, TRS will service the related Receivables.
The American Express(Registered) Card, American Express(Registered) Gold
Card and Platinum Card(Registered) are charge cards and not credit cards. Thus,
Receivables originated under the Designated Accounts in Trust I and, unless
otherwise specified in the related Prospectus Supplement, in each New Trust, are
payable in full each month and not subject to a monthly finance charge.
Therefore, unless otherwise specified in the related Prospectus Supplement, a
portion of the collections on the Receivables in the Designated Accounts
received in any Due Period equal to the product of the aggregate amount of such
collections and the Yield Factor will be treated as Yield Collections and will
be used, among other things, to pay interest on the Certificates. The remainder
of such collections will be treated as Principal Collections and will be used to
pay principal on the Certificates. The Yield Factor is equal to 3.0% under
Agreement I. The Transferor has the ability, with certain restrictions, to
change the Yield Factor. See 'Summary--Yield Factor; Collections.'
Each Series will consist of one or more classes of Certificates (each, a
'Class'), one or more of which may be fixed rate Certificates, floating rate
Certificates or other type of Certificates, as specified in the related
Prospectus Supplement. Each Certificate will represent an undivided interest in
the related Trust and the interest of the Certificateholders of each Class or
Series will include the right to receive a varying percentage of each month's
collections with respect to the Receivables of such Trust at the times, in the
manner and to the extent described herein and, with respect to any Series
offered hereby, in the related Prospectus Supplement. Interest and principal
payments with respect to each Series offered hereby will be made as specified in
the related Prospectus Supplement. One or more Classes of a Series offered
hereby may be entitled to the benefits of a letter of credit, a cash collateral
account or guaranty, a surety bond, guaranteed rate agreement, insurance policy,
a spread account, a reserve account, the use of cross support features, a
subordinated interest in the Receivables or certain cash flows in respect of the
Receivables or other form of enhancement as specified in the Prospectus
Supplement relating to such Series. In addition, any Series offered hereby may
include one or more Classes which are subordinated in right and priority to
payment of principal of, and/or interest on, one or more other Classes of such
Series or another Series, in each case to the extent described in the related
Prospectus Supplement. Each Series of Certificates or Class thereof offered
hereby will be rated in one of the four highest rating categories by at least
one nationally recognized rating organization.
While the specific terms of any Series in respect of which this Prospectus
is being delivered will be described in the related Prospectus Supplement, the
terms of such Series will not be subject to prior review by, or consent of, the
Certificateholders of any previously issued Series.
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION
SET FORTH IN 'SPECIAL CONSIDERATIONS.'
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series to be offered thereby and
hereby will, among other things, set forth with respect to such Series: (a) the
initial aggregate principal amount of each Class of such Series; (b) the
certificate interest rate (or method for determining it) of each Class of such
Series; (c) certain information concerning the Receivables allocated to such
Series; (d) the expected date or dates on which the principal amount of the
Certificates will be paid to holders of each Class of Certificates (the
'Certificateholders'); (e) the extent to which any Class within a Series is
subordinated to any other Class of such Series or any other Series; (f) the
identity of each Class of floating rate Certificates and fixed rate Certificates
included in such Series, if any, or such other type of Class of Certificates;
(g) the Distribution Dates for the respective Classes; (h) relevant financial
information with respect to the Receivables; (i) additional information with
respect to any Enhancement relating to such Series; and (j) the plan of
distribution of such Series.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly unaudited
reports, containing information concerning each Trust and prepared by the
Servicer, will be sent on behalf of such Trust to Cede & Co. ('Cede'), as
registered holder of the related Certificates, pursuant to the related
Agreement. See 'Description of the Certificates and the Agreement--Book-Entry
Registration,' '--Reports to Certificateholders' and '--Evidence as to
Compliance.' Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. Copies of such reports
may be obtained by owners of beneficial interests in the Certificates
('Certificate Owners') upon written request to the Trustee at The Bank of New
York, 101 Barclay Street, New York, New York 10286, Attention: Corporate Trust
Division. The Servicer will file with the Securities and Exchange Commission
(the 'Commission') such reports with respect to the Trust as are required under
the Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and the
rules and regulations of the Commission thereunder.
AVAILABLE INFORMATION
This Prospectus, which forms a part of the Registration Statement, omits
certain information contained in such Registration Statement pursuant to the
rules and regulations of the Commission. For further information, reference is
made to the Registration Statement and amendments thereof and exhibits thereto
and any reports and other documents incorporated herein by reference as
described below under 'Incorporation of Certain Documents by Reference', which
are available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, 13th Floor, New York, New York 10008; and Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661-2511. Copies of
the Registration Statement and amendments thereof and exhibits thereto may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference are American Express Receivables Financing
Corporation's ('RFC') Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 and Current Reports on Form 8-K dated January 10, 1994,
February 15, 1994, March 7, 1994, April 14, 1994, May 6, 1994, June 14, 1994,
July 12, 1994, July 15, 1994, August 15, 1994 and September 12, 1994 filed with
the Commission pursuant to Section 13 of the Exchange Act.
All documents subsequently filed by RFC pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act prior to the termination of the offering of the
Certificates shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing of each such document. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part of this
Prospectus, except as so modified or superseded. RFC will provide without charge
upon the written or oral request by any person to whom this Prospectus is
delivered a copy of any or all of the documents described above which have been
incorporated by reference in this Prospectus, other than exhibits to such
documents. Written or telephone requests for such documents should be directed
to American Express Receivables Financing Corporation, World Financial Center,
200 Vesey Street, New York, New York 10285, Attention: Secretary (telephone:
(212) 640-3975).
2
<PAGE>
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and in the
accompanying Prospectus Supplement. Certain capitalized terms which are used in
this summary are defined elsewhere in this Prospectus and in the accompanying
Prospectus Supplement. See 'Glossary for Prospectus' and 'Glossary for
Prospectus Supplement'. Unless the context otherwise requires, capitalized terms
used in this Prospectus and in the accompanying Prospectus Supplement refer only
to the particular Series being offered by such Prospectus Supplement.
<TABLE>
<S> <C>
TYPE OF SECURITY.................... Accounts Receivable Trust Certificates (the 'Certificates').
TRUSTS.............................. American Express Master Trust ('Trust I') which was created pursuant to a
Master Pooling and Servicing Agreement dated as of June 30, 1992, as
amended from time to time (together with any assignment of Receivables in
Additional Accounts entered into pursuant thereto, 'Agreement I') among
the Servicer, the Transferor and the Trustee. Additional Trusts (each, a
'New Trust') may be formed from time to time, each pursuant to a pooling
and servicing agreement (each such agreement, a 'New Agreement', and each
New Agreement and Agreement I, an 'Agreement') to be entered into between
TRS or another seller specified in the Prospectus Supplement relating to
the Series of Certificates representing interests in such Trust, as
seller, the Transferor, and a trustee identified in such Prospectus
Supplement (each trustee under an Agreement, a 'Trustee'). Trust I was,
and each New Trust will be, created as a master trust under which one or
more Series will be issued pursuant to a series supplement to the related
Agreement (a 'Series Supplement'). Any Series issued by a Trust may or
may not be a Series offered pursuant to this Prospectus. The Certificates
will represent undivided interests in the related Trust. Each Prospectus
Supplement will identify the related Trust and all Series previously
issued by such Trust.
TRANSFEROR.......................... American Express Receivables Financing Corporation, a Delaware corporation,
is the transferor of the Receivables and the originator of Trust I. The
Transferor is a wholly owned limited purpose subsidiary of American
Express Travel Related Services Company, Inc. ('TRS'), a New York
corporation and a wholly owned subsidiary of American Express Company.
The Receivables transferred to Trust I by the Transferor are purchased by
it from TRS.
TRUSTEE............................. The Bank of New York, unless otherwise specified in the related Prospectus
Supplement.
TRUST ASSETS........................ The assets of Trust I include, and the assets of each new Trust may
include, receivables consisting of amounts charged by cardmembers for
merchandise and services, and, unless otherwise specified in the related
Prospectus Supplement, all annual membership fees and certain other
administrative fees billed to Cardmembers (the 'Receivables') arising
from time to time in certain designated American Express(Registered)
Card, American Express(Registered) Gold Card and Platinum
Card(Registered)* Accounts or, if specified in a related Prospectus
Supplement, in certain other designated card accounts described in such
Supplement (the 'Designated Accounts'), funds collected or to be
collected from Cardmembers in
</TABLE>
- ------------------
* American Express and Platinum Card are registered trademarks of American
Express Company.
<PAGE>
<TABLE>
<S> <C>
respect of the Receivables (including recoveries on charged-off Receivables
('Recoveries')), moneys on deposit in certain accounts of the Trust, all of
the Transferor's right, title and interest in the related Receivable
Purchase Agreement, payments made in respect of any Enhancement issued with
respect to any particular Series or Class, or other assets, as described in
the related Prospectus Supplement. See 'TRS' Domestic Consumer Charge Card
Business.' The term 'Enhancement' means, with respect to any Series or
Class thereof, any letter of credit, guaranteed rate agreement, maturity
guaranty facility, cash collateral account or guaranty, tax protection
agreement, interest rate swap, surety bond, insurance, spread account,
reserve account, subordinated interest in the Receivables or certain cash
flows in respect of the Receivables or other contract or agreement for the
benefit of certificateholders of such Series or Class. Enhancement may also
take the form of subordination of one or more Classes of a Series to any
other Class or Classes of a Series or a cross-support feature which
requires collections on Receivables of one Series to be paid as principal
and/or interest with respect to another Series.
TRS has sold to the Transferor and the Transferor has conveyed to Trust I
all its right, title and interest in and to the Receivables existing and
arising in the Designated Accounts under Trust I from time to time until
the termination of Trust I and, when added, all its right, title and
interest in and to the Receivables arising in the Additional Accounts.
See 'Description of the Receivable Purchase Agreement.' At the time of
formation of each New Trust, the Transferor will convey to the related
Trust all Receivables existing in the Designated Accounts under such New
Trust and all Receivables arising under such Accounts from time to time
thereafter until termination of such New Trust.
THE DESIGNATED ACCOUNTS............. The Designated Accounts meet and will meet, as applicable, the criteria for
eligibility provided in the related Agreement applied as of the date
specified in such Agreement (the 'Selection Date'). Unless otherwise
specified in the related Prospectus Supplement, the Designated Accounts
include and will include all related accounts that are originated as a
result of (a) the Card with respect to a Designated Account being lost or
stolen or (b) the conversion of a Designated Account into another type of
Eligible Account, in each case which satisfies certain conditions set
forth in the Agreement.
In addition, Agreement I provides, and each New Agreement will provide,
that the Transferor has the right (subject to certain limitations and
conditions), and in some circumstances will be obligated, to designate
additional Eligible Accounts to be included as Designated Accounts (the
'Additional Accounts') and to convey to the related Trust all of the
Receivables in such Additional Accounts, whether such Receivables are
then existing or thereafter created.
Further, Agreement I provides, and each New Agreement will provide, that
the Transferor has the right (subject to certain limitations and
conditions) to accept removal of certain Designated Accounts designated
by the Transferor from the related Trust (the 'Removed Accounts') and
accept the conveyance of all of the Receivables in the Removed Accounts,
whether such Receivables are then existing or thereafter created.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
THE RECEIVABLES..................... The Receivables consist of amounts charged on the Designated Accounts for
merchandise and services and, unless otherwise specified in the related
Prospectus Supplement, all annual membership fees and certain other
administrative fees billed to the Designated Accounts as of a date (the
'Cut Off Date') specified in the related Prospectus Supplement. The
Designated Accounts have been and will be selected based on criteria
provided in the related Agreement and described in the related Prospectus
Supplement as applied on the Selection Date specified in the related
Prospectus Supplement and, with respect to Additional Accounts, if any,
on such subsequent dates specified in the related Agreement and described
in the related Prospectus Supplement.
All new Receivables arising in the Designated Accounts (including in any
Additional Accounts) during the term of the related Trust will be the
property of such Trust. Accordingly, the amount of Receivables in a Trust
will fluctuate as new Receivables are generated and as existing
Receivables are collected, charged off as uncollectible or otherwise
adjusted.
YIELD FACTOR; COLLECTIONS........... Unless otherwise specified in the related Prospectus Supplement, the
Receivables originated under the Designated Accounts are not subject to a
monthly finance charge, and therefore, it will be necessary to treat a
portion of the collections on the Receivables in the Designated Accounts
received in any calendar month (each, a 'Due Period') as 'yield' to the
related Trust. This yield will equal the product of the aggregate amount
of such collections (including any payments made by the Transferor in
respect of Ineligible Receivables or Adjustments and payments made by the
Servicer in connection with the breach by it of certain covenants) and
the Yield Factor. Such collections will be treated as Yield Collections.
The remainder of such collections will be treated as Principal
Collections (Principal Collections and Yield Collections are collectively
sometimes referred to herein as 'Collections'). Unless otherwise
specified in the related Prospectus Supplement, Recoveries will not be
considered Collections but will instead be utilized as an offset to
Defaulted Receivables. The Yield Factor will be specified in the related
Prospectus Supplement. The 'Yield Factor' of Trust I is currently equal
to 3.0% under Agreement I, and, subject to certain limitations, may be
changed from time to time thereafter by the Transferor. See 'Special
Considerations--Ability to Change Yield Factor.'
DESCRIPTION OF THE CERTIFICATES..... Payments received on a Trust's assets will be allocated among the
Certificateholders of all outstanding Series issued by such Trust (the
'Certificateholders' Interest') and the interest of the Transferor (the
'Transferor Interest').
Each Series of Certificates will evidence undivided interests in the assets
of the related Trust and will represent the right to receive from such
Trust assets payments of (i) interest at the specified rate or rates per
annum (each, a 'Certificate Rate'), which may be fixed, floating or
another type of rate and (ii) unless otherwise provided in the related
Prospectus Supplement, payments of principal during the Controlled
Amortization Period, the Early Amortization Period or the Rapid
Amortization Period (each, an 'Amortization Period') or the Accumulation
Period as specified in the related Prospectus Supplement.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Each Series of Certificates will consist of one or more Classes, one or
more of which may be Senior Certificates ('Senior Certificates') and one
or more of which may be Subordinated Certificates ('Subordinated
Certificates'). Each Class of a Series may evidence the right to receive
a specified portion of each distribution of principal or interest or
both. The Certificates of a Class may also differ from Certificates of
other Classes of the same Series in, among other things, the amounts
allocated to principal payments, priority of payments, payment dates,
maturity, interest rates, interest rate computation, and availability and
form of Enhancement.
The assets of each Trust will be allocated among the Certificateholders of
each Series and the holder of the Exchangeable Transferor Certificate.
With respect to a Trust, the aggregate principal amount of the interest
of the Certificateholders of a Series in such Trust is referred to herein
as the 'Invested Amount.' The aggregate principal amount of the interest
of the holder of the Exchangeable Transferor Certificate in a Trust is
referred to herein as the 'Transferor Amount.' See 'Description of the
Certificates--General.'
The Certificateholders' Interest will include the right to receive (but
only to the extent needed to make required payments under the related
Agreement and related Series Supplement and subject to any reallocation
of such amounts if the Series Supplement so provides) varying percentages
of Yield Collections and Principal Collections during each Due Period. In
addition, a varying percentage of Defaulted Receivables will be allocated
to the Certificateholders' Interest. Such varying percentages are
referred to collectively herein as the 'Invested Percentage.' The related
Prospectus Supplement will specify the Invested Percentages with respect
to the allocation of collections of Yield Collections, Principal
Collections and Defaulted Receivables during the Revolving Period, any
Amortization Period and the Accumulation Period, as applicable. If the
Certificates of a Series offered hereby include more than one Class of
Certificates, the assets of the related Trust allocable to the
Certificates of such Series may be further allocated among each Class in
such Series as described in the related Prospectus Supplement. See
'Description of the Certificates--Allocation Percentages' and '--Early
Amortization Events.'
The Certificates of each Series will represent undivided interests in the
related Trust only and will not represent interests in or recourse
obligations of and will not be guaranteed by the Transferor, the
Servicer, American Express Company or any affiliate thereof.
The principal amount of the Transferor Interest will fluctuate as the
amount of the Receivables held by the related Trust changes from time to
time. Further, the Transferor may tender the certificate which represents
the Transferor Interest (the 'Exchangeable Transferor Certificate') or,
if provided in the related Series Supplement, certificates representing
any Series of certificates and the Exchangeable Transferor Certificate,
to the related Trustee and, upon satisfying certain other terms and
conditions, cause the related Trustee to issue one or more new Series, as
described in 'Description of the Certificates--Exchanges.' Any Exchange
involving only the tender of the Exchangeable Transferor Certificate to
the related Trustee will have the effect of decreasing the Transferor
Interest.
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INTEREST............................ Interest on each Series of Certificates or Class thereof for each accrual
period (each, an 'Interest Period') specified in the related Prospectus
Supplement will accrue at a per annum rate equal to the Certificate Rate
specified in the related Prospectus Supplement and be distributed to
Certificateholders of such Series or Class thereof in amounts and on the
dates (which may be monthly, quarterly, semiannually or otherwise as
specified in the related Prospectus Supplement) (each an 'Interest
Payment Date'), specified in the related Prospectus Supplement. Interest
payments on each Distribution Date will be funded from Yield Collections
allocated to the Certificateholders' Interest during the preceding Due
Period, as described in the related Prospectus Supplement, and may be
funded from certain investment earnings on funds in certain accounts of
the related Trust and from any applicable Enhancement, if necessary, or
certain other amounts as specified in the related Prospectus Supplement.
If the Interest Payment Dates for payment of interest for a Series or
Class occur less frequently than monthly, such collections or other
amounts allocable to such Series or Class may be deposited in one or more
trust accounts pending distribution to the Certificateholders of such
Series or Class, all as described in the related Prospectus Supplement.
See 'Description of the Certificates--General' and '--Distributions from
the Collection Account.'
PRINCIPAL........................... The principal of the Certificates of each Series offered hereby will be
scheduled to be paid commencing on a date specified in the related
Prospectus Supplement (the 'Principal Commencement Date') either in
installments, in which case such Series may have a Controlled
Amortization Period, as described below, or in one full payment on an
expected date specified in the related Prospectus Supplement (the
'Expected Final Payment Date'), in which case such Series may have an
Accumulation Period, as described below, or on each Interest Payment Date
after the Principal Commencement Date to the extent of available
Principal Collections, in which case such Series will have a Rapid
Amortization Period as described below. If a Series has more than one
Class of Certificates, a different method of paying principal, and a
different Principal Commencement Date or Expected Final Payment Date may
be assigned to each Class. The payment of principal with respect to the
Certificates of a Series or Class may commence earlier than the
applicable Principal Commencement Date or Expected Final Payment Date if
an Early Amortization Event occurs and the Early Amortization Period
commences with respect to such Series or Class or under certain other
circumstances described in the related Prospectus Supplement. The final
principal payment with respect to the Certificates of a Series or Class
may also be made later than the Expected Final Payment Date.
RECEIVABLE PURCHASE AGREEMENT....... The Transferor, as purchaser, has entered into a Receivable Purchase
Agreement, dated as of June 30, 1992, as amended from time to time, with
TRS, as seller (together with any supplements thereto or assignments of
Receivables in Additional Accounts entered into pursuant thereto,
'Receivable Purchase Agreement I') and may enter into additional
Receivable Purchase Agreements with TRS or another seller of Designated
Accounts (each such Agreement, a 'New Receivable Purchase Agreement', and
each New Receivable Purchase Agreement and Receivable Purchase Agreement
I, a 'Receivable
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Purchase Agreement'). Pursuant to Receivable Purchase Agreement I and any
New Receivable Purchase Agreement with TRS, TRS has sold or will sell, as
applicable, to the Transferor all its right, title and interest in and to
the Receivables existing in the Designated Accounts referred to in such
Receivable Purchase Agreement on the Cut Off Date specified in such
Agreement and arising from time to time thereafter and, when added to the
related Trust assets, the Receivables existing in any Additional Accounts
on the cut off date designated by the Transferor to be applicable thereto
(each, an 'Additional Account Cut Off Date') and arising from time to
time thereafter. The Transferor in turn has transferred or will transfer,
as applicable, to the related Trust pursuant to the related Agreement
those Receivables purchased by it from TRS. The Transferor has assigned
or will assign to the related Trust its rights with respect to such
Receivables under the related Receivable Purchase Agreement. See
'Description of the Receivable Purchase Agreement.'
EXCHANGES........................... Agreement I authorizes, and each New Agreement will authorize, the Trustee
to issue two types of certificates: (i) one or more Series of
certificates which may be in one or more classes and which will be
transferable and have the characteristics described below and (ii) the
Exchangeable Transferor Certificate, which initially will be held by the
Transferor and which will be transferable only as provided in the related
Agreement. Pursuant to any one or more Series Supplements to the related
Agreement, the holder of the Transferor Certificate may tender the
Exchangeable Transferor Certificate or, if permitted by the applicable
Series Supplement, certificates representing any Series of certificates
(which may include Series offered pursuant to this Prospectus) and the
Exchangeable Transferor Certificate, to the Trustee in exchange for one
or more new Series (which may include Series offered pursuant to this
Prospectus) and a reissued Exchangeable Transferor Certificate (any such
tender, an 'Exchange'). Under each related Agreement, the Transferor may
define, with respect to any Series, the Principal Terms of the Series.
See 'Description of the Certificates--Exchanges'. The Transferor may
offer any Series to the public or other investors under a prospectus or
other disclosure document (a 'Disclosure Document') in offerings pursuant
to this Prospectus or in transactions either registered under the
Securities Act of 1933, as amended (the 'Act') or exempt from
registration thereunder, directly or through one or more underwriters or
placement agents, in fixed-price offerings or in negotiated transactions
or otherwise.
Unless otherwise specified in the related Prospectus Supplement, an
Exchange may occur only upon delivery to the Trustee of the following:
(i) a Series Supplement specifying the Principal Terms of such Series,
(ii) an opinion of counsel to the effect that the certificates of such
Series under existing law will be characterized either as indebtedness or
an interest in a partnership for Federal income tax purposes and that the
issuance of such Series will not materially adversely affect the Federal
income tax characterization of any outstanding Series, (iii) if required
by the related Series Supplement, a form of Enhancement and any related
agreement, (iv) written confirmation from the applicable Rating Agency
that the Exchange will not result in the Rating Agency reducing or
withdrawing its rating on any then outstanding Series rated by it, and
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(v) the existing Exchangeable Transferor Certificate and, if applicable,
the certificates representing the Series to be exchanged.
REGISTRATION OF THE CLASS A
CERTIFICATES...................... Unless otherwise specified in the related Prospectus Supplement, the
Certificates of each Series will be issued in book-entry form only and
will initially be represented by one or more Certificates registered in
the name of Cede as the nominee of The Depository Trust Company ('DTC').
A Certificate Owner will not be entitled to receive a definitive
certificate representing such person's interest, except in the event that
Definitive Certificates are issued under the limited circumstances
described herein. All references herein to Certificateholders shall refer
to Certificate Owners, except as otherwise specified herein. See
'Description of the Certificates--Definitive Certificates.'
CLEARANCE AND SETTLEMENT............ Unless otherwise provided in the related Prospectus Supplement, Certificate
Owners of each Series offered hereby may elect to hold their Certificates
through any of DTC (in the United States) or CEDEL or Euroclear (in
Europe). Transfers within DTC, CEDEL or Euroclear, as the case may be,
will be in accordance with the usual rules and operating procedures of
the relevant system. Cross-market transfers between persons holding
directly or indirectly through DTC, on the one hand, and counterparties
holding directly or indirectly through depositories for CEDEL or
Euroclear, on the other, will be effected in DTC through the relevant
depositaries of CEDEL and Euroclear. See 'Description of the Certificates
and the Agreement--Book-Entry Registration' and 'Annex I' hereto.
REVOLVING PERIOD.................... Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series and any Class thereof, no principal will be
payable to Certificateholders until the Principal Commencement Date or
the Expected Final Payment Date with respect to such Series or Class, as
described below or, upon the occurrence of an Early Amortization Event,
on the first Special Payment Date. For each Due Period during the period
beginning on the date of issuance of the related Series (the 'Closing
Date') and ending on the day prior to the day on which an Amortization
Period, the Accumulation Period or the Early Amortization Period
commences (the 'Revolving Period'), all Principal Collections otherwise
allocable to the Certificateholders' Interest generally will be
reinvested in the related Trust or otherwise used to maintain the
Certificateholders' Interest or treated as Excess Principal Collections
and paid to the holders of other Series of Certificates, as described
herein and in the related Prospectus Supplement. See 'Description of the
Certificates--Early Amortization Events' for a discussion of the events
which might lead to the termination of the Revolving Period prior to its
scheduled ending date.
CONTROLLED AMORTIZATION PERIOD...... If the Prospectus Supplement relating to a Series so specifies, unless and
until an Early Amortization Event shall have occurred with respect to
such Series, the Certificates of such Series or any Class thereof will
have an amortization period (the 'Controlled Amortization Period') during
which Principal Collections allocable to the Certificateholders' Interest
of such Series (and certain other amounts if so specified in the related
Prospectus Supplement) will be used on each Distribution Date to make
principal distributions in scheduled amounts to the
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Certificateholders of such Series or any Class of such Series then
scheduled to receive such distributions. The amount to be distributed on
any Distribution Date during the Controlled Amortization Period will be
limited to an amount (the 'Controlled Distribution Amount') equal to an
amount specified in the related Prospectus Supplement (the 'Controlled
Amortization Amount') plus any existing deficit controlled amortization
amount arising from prior Distribution Dates. If a Series has more than
one Class of Certificates, each Class may have a separate Controlled
Amortization Amount. In addition, the related Prospectus Supplement may
describe certain priorities among such Classes with respect to such
distributions. The Controlled Amortization Period will commence at the
close of business on a date specified in the related Prospectus
Supplement and continue until the earliest of (a) the commencement of the
Early Amortization Period, (b) payment in full of the Invested Amount of
such Series or Class and (c) the Series Termination Date with respect to
such Series.
ACCUMULATION PERIOD................. If the Prospectus Supplement relating to a Series so specifies, unless and
until an Early Amortization Event shall have occurred, the Certificates
of such Series will have an accumulation period (the 'Accumulation
Period') during which Principal Collections allocable to the
Certificateholders' Interest of such Series (and certain other amounts if
so specified in the related Prospectus Supplement) up to an amount (the
'Controlled Deposit Amount') equal to an amount specified in the related
Prospectus Supplement (the 'Controlled Accumulation Amount') plus any
existing controlled accumulation shortfall arising from prior
Distribution Dates, will be deposited on each Distribution Date in a
trust account to be established in the name of the related Trustee for
the benefit of the Certificateholders of such Series or Class (a
'Principal Funding Account'). Any Principal Collections allocated to the
Certificateholders' Interest in excess of amounts required to be
deposited in the Principal Funding Account during the Accumulation Period
may be treated as Excess Principal Collections. See 'Description of the
Certificates--Distributions from the Collection Account.' If a Series has
more than one Class of Certificates, each Class may have a separate
Principal Funding Account and Controlled Accumulation Amount. In
addition, the related Prospectus Supplement may describe certain
priorities among such Classes with respect to deposits of principal into
such Principal Funding Accounts. The Accumulation Period will commence at
the close of business on a date specified in the related Prospectus
Supplement and continue until the earliest of (a) the commencement of the
Early Amortization Period, (b) payment in full of the Invested Amount of
such Series or Class and (c) the Series Termination Date with respect to
such Series. If specified in the related Prospectus Supplement, the
Servicer may, based on the payment rate on the Receivables and the amount
of principal distributable to Certificateholders of all outstanding
Series issued by the related Trust, postpone the commencement of the
Accumulation Period.
Funds on deposit in any Principal Funding Account may be invested in
permitted investments or subject to a guaranteed rate or investment
contract or other arrangement intended to assure a minimum return on the
investment of such funds. Investment earnings on such funds may be
applied to pay interest on the related Series of Certificates. In order
to enhance the likelihood of payment in full of principal at the end of
an
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Accumulation Period with respect to a Series of Certificates, such Series
may be subject to a principal maturity guaranty or other similar
arrangement. See 'Description of the Certificates--Principal Payments.'
RAPID AMORTIZATION PERIOD........... If the Prospectus Supplement relating to a Series so specifies, during the
period from the Principal Commencement Date with respect to such Series
to the earliest of the date on which the Invested Amount of such Series
and the Enhancement Invested Amount, if any, with respect to such Series
have been paid in full or the related Series Termination Date (the 'Rapid
Amortization Period'), Principal Collections allocable to the
Certificateholders' Interest of such Series (and certain other amounts if
so specified in the related Prospectus Supplement) will be distributed as
principal payments to the Certificateholders of such Series monthly on
each Distribution Date with respect to such Series in the manner and
order of priority set forth in the related Prospectus Supplement. During
the Rapid Amortization Period with respect to a Series, distributions of
principal to Certificateholders will not be subject to any maximum
amount.
EARLY AMORTIZATION PERIOD........... During the period beginning on the day on which an Early Amortization Event
occurs or is deemed to have occurred with respect to a Series to the
earlier of the date on which the Invested Amount of such Series and the
Enhancement Invested Amount, if any, with respect to such Series, have
been paid in full or the related Series Termination Date (the 'Early
Amortization Period'), Principal Collections allocable to the
Certificateholders' Interest will no longer be reinvested in the Trust or
otherwise used to maintain the Certificateholders' Interest or held in
the Principal Funding Account, but instead will be distributed as
principal payments to the Certificateholders monthly on each Distribution
Date beginning with the first Special Payment Date (which will be the
first Distribution Date following the Due Period in which an Early
Amortization Event occurs or is deemed to have occurred). In addition,
unless otherwise specified in the related Prospectus Supplement, after
the occurrence of an Early Amortization Event with respect to a Series,
any funds on deposit in an Interest Funding Account or Principal Funding
Account will be paid to Certificateholders of such Series on the first
Special Payment Date. See 'Description of the Certificates--Early
Amortization Events' for a discussion of the events which might lead to
the commencement of an Early Amortization Period.
APPLICATION OF YIELD COLLECTIONS.... Yield Collections allocable to the Certificateholders' Interest for any Due
Period will be applied in the following order of priority, unless
otherwise specified in the related Prospectus Supplement: (i) to the
payment of interest accrued for the current month ('Monthly Interest')
and any overdue Monthly Interest (with interest thereon) on the
Certificates of such Series or Class; (ii) to the payment of the Monthly
Servicing Fee with respect to such Series or Class plus any accrued
Monthly Servicing Fee that was due but not paid on any prior Distribution
Date; (iii) to the reimbursement of unreimbursed Investor Charge-Offs
with respect to such Series or Class; (iv) to the Investor Default Amount
with respect to such Series or Class; and (v) to other amounts specified
in the related Prospectus Supplement.
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PRINCIPAL COLLECTIONS; CERTAIN
ALLOCATIONS....................... Principal Collections for any Due Period will be allocated to any Series or
Class on the basis of the Invested Percentage of such Series or Class
with respect to Principal Collections. Under the related Agreement, such
collections will generally be reinvested in the Trust or otherwise used
to maintain the Certificateholders' Interest during the Revolving Period,
paid to the Certificateholders during any Amortization Period or
deposited in the Principal Funding Account during the Accumulation Period
and paid to Certificateholders on the Expected Final Payment Date with
excess amounts, if any, reinvested in the related Trust or otherwise used
to maintain the Certificateholders' Interest.
During the Accumulation Period or an Amortization Period, as applicable,
the amount of Principal Collections allocable to the Certificateholders
of a Series issued by a Trust will, unless otherwise specified in the
related Prospectus Supplement, equal the product of (a) the Principal
Collections during the related Due Period and (b) a fraction, the
numerator of which is the Invested Amount as of the end of the last day
of the Revolving Period and the denominator of which is the greater of
(i) the product of the total amount of Receivables in the related Trust
as of the last day of the prior Due Period and one minus the Yield Factor
(the 'Trust Principal Component') and (ii) the sum of the numerators used
to calculate the Invested Percentage with respect to Principal
Collections for all Series of Certificates outstanding for the current
Distribution Date.
To the extent that Principal Collections and other amounts that are
allocated to the Certificateholders' Interest are available to be
reinvested in the Trust, they may be applied to cover principal payments
due to or for the benefit of investor certificateholders of another
Series, as specified in the related Prospectus Supplement. Any such
reallocation will not result in a reduction in the Certificateholders'
Interest. In addition, Principal Collections and certain other amounts
otherwise allocable to other Series, to the extent such collections are
available to be reinvested in the Trust, may be applied to cover
principal payments due to or for the benefit of the Certificateholders,
as specified in the related Prospectus Supplement. See 'Description of
the Certificates--Principal Collections for all Series.'
EXCESS PRINCIPAL COLLECTIONS........ If so specified in the related Prospectus Supplement, to the extent that
Principal Collections that are allocated to the Certificateholders'
Interest of any Series are not needed to make payments or deposits with
respect to such Series, such Collections ('Excess Principal Collections')
will be applied to cover principal payments due to or for the benefit of
Certificateholders of another Series. Any such reallocation will not
result in a reduction in the Certificateholders' Interest of the Series
to which such collections were initially allocated.
ENHANCEMENT......................... Enhancement with respect to a Series or any Class thereof may be provided
in the form or forms of subordination, a letter of credit, a cash
collateral guaranty or account, a surety bond, insurance policy, spread
account, reserve account, a subordinated interest in the Receivables or
certain cash flows in respect of the Receivables or other form of support
as specified in the related Prospectus Supplement. Enhancement may also
be provided to a Class or Classes of different Series by a cross-support
feature which requires that distributions of principal and/or
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interest be made with respect to Certificates of one or more Classes of a
particular Series before distributions are made to one or more Classes of
another Series.
The type, characteristics and amount of the Enhancement will be determined
based on several factors, including the characteristics of the
Receivables and Accounts included in the related Trust Portfolio as of
the Closing Date with respect to any Series, and will be established on
the basis of requirements of each Rating Agency rating the Certificates
of such Series. If so specified in the related Prospectus Supplement, any
such Enhancement will apply only in the event of certain types of losses
and the protection against losses provided by such Enhancement will be
limited. See 'Enhancement' and 'Special Considerations--Rating of the
Certificates.'
FINAL PAYMENT OF PRINCIPAL;
TERMINATION OF THE TRUST.......... Each Series of Certificates will be subject to optional repurchase by the
Transferor on any Distribution Date on or after which the Invested Amount
is reduced to an amount less than or equal to 10% of the initial Invested
Amount or such other amount specified in the related Prospectus
Supplement unless certain events of bankruptcy, insolvency or
receivership have occurred with respect to the Transferor. Unless
otherwise specified in the related Prospectus Supplement, the repurchase
price will be equal to the Invested Amount plus accrued and unpaid
interest on the Certificates through the day preceding the Distribution
Date on which the repurchase occurs. See 'Description of the
Certificates--Final Payment of Principal; Termination of Trust.'
SERVICING........................... Under the related Agreement, unless otherwise specified in the related
Prospectus Supplement, TRS, as Servicer, will be responsible for
servicing, managing and making collections on all Receivables in the
related Trust. Unless otherwise specified in the related Prospectus
Supplement, subject to certain conditions, the Servicer may use for its
own benefit and will not segregate collections of Receivables received in
each Due Period until the business day preceding the Distribution Date
succeeding such Due Period. During each Due Period, the Servicer will
allocate as described herein all Collections received with respect to
such Due Period to the Certificateholders' Interest, any other applicable
Series and the Transferor Interest. On the business day prior to the
Distribution Date, the Servicer will deposit the portion allocable to the
Certificateholders' Interest and the holders of certificates of any other
Series into a segregated trust account held in the name of the Trustee
for the benefit of certificateholders (the 'Collection Account'). See
'Description of the Certificates--Application of Collections.' In certain
circumstances, TRS may resign or be removed as Servicer, in which event
either the Trustee or another entity may be appointed as successor
Servicer (TRS or any such successor Servicer is referred to herein as the
'Servicer'). As servicing compensation from the related Trust, the
Servicer will receive a Servicing Fee from allocations of Yield
Collections based upon the outstanding principal amount, from time to
time, of certificates issued by such Trust and certain other amounts, as
described herein. See 'Description of the Certificates--Servicing
Compensation and Payment of Expenses.'
TAX STATUS.......................... Unless otherwise specified in the related Prospectus Supplement, it is
expected that, upon issuance of a Series of Certificates, special tax
counsel to the Transferor will render an opinion that, under existing
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law, the Certificates will be characterized as debt for Federal income
tax purposes. Under each Agreement, the Transferor, the Servicer, the
Certificateholders and the Certificate Owners will agree to treat the
Certificates as debt for Federal, state, and other tax purposes, unless
otherwise specified in the related Prospectus Supplement. See 'Tax
Matters' for additional information concerning the application of Federal
income tax laws.
ERISA CONSIDERATIONS................ Under the regulations issued by the Department of Labor, Trust I's assets
would not be deemed 'plan assets' of any employee benefit plan holding
interests in the Certificates if certain conditions are met, including
that interests in the Certificates be held by at least 100 independent
persons upon completion of the public offering being made hereby. Unless
otherwise specified in the related Prospectus Supplement, the
Underwriters expect, although no assurance can be given, that interests
in the Certificates will be held by at least 100 independent persons, and
it is anticipated that the other conditions of the regulations will be
met. If Trust I's assets were deemed to be 'plan assets' of such a plan,
there is uncertainty as to whether existing exemptions from the
'prohibited transaction' rules of the Employee Retirement Income Security
Act of 1974, as amended ('ERISA'), would apply to all transactions
involving Trust I's assets. Accordingly, employee benefit plans
contemplating purchasing Certificates should consult their counsel before
making a purchase. See 'ERISA Considerations.'
RATING.............................. It is a condition to the issuance of each Series of Certificates or Class
thereof offered hereby that they be rated in one of the four highest
rating categories by at least one nationally recognized rating agency.
The rating or ratings applicable to the Certificates of each Series or
Class thereof offered hereby will be set forth in the related Prospectus
Supplement. See 'Special Considerations--Rating of the Certificates.'
LISTING............................. If so specified in the Prospectus Supplement relating to a Series,
application will be made to list the Certificates of such Series, or all
or a portion of any Class thereof, on the Luxembourg Stock Exchange or
any other specified exchange.
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SPECIAL CONSIDERATIONS
Investors should consider, among other things, the following factors in
connection with an investment in the Certificates.
Limited Liquidity. It is anticipated that, to the extent permitted, the
underwriters of any Series of Certificates offered hereby will make a market in
such Certificates, but in no event will any such underwriter be under an
obligation to do so. There is no assurance that a secondary market will develop
with respect to the Certificates of any Series, or if it does develop, that it
will provide Certificateholders with liquidity of investment or will continue
for the life of such Certificates.
Non-Recourse Obligation. No Certificateholder will have recourse for
payment of its Certificates to any assets of any of the Transferor, TRS,
American Express Company or any affiliates thereof. Consequently,
Certificateholders must rely solely upon payments on the Receivables and the
related Enhancement for the payment of principal of and interest on the
Certificates. Furthermore, under the related Agreement, the Certificateholders
will have an interest in the Receivables and Collections only to the extent of
the Certificateholders' Interest. Should the Certificates not be paid in full on
a timely basis, Certificateholders may not look to any assets of any of the
Transferor, TRS, American Express Company or any affiliates thereof to satisfy
their claims.
Certain Legal Aspects. TRS warrants in Receivable Purchase Agreement I, and
as seller will warrant in any New Receivable Purchase Agreement, that the sale
by it of all its right, title and interest in and to the Receivables arising
under the Designated Accounts is a valid sale thereof to the Transferor, and the
Transferor warrants in Agreement I, and will warrant in any New Agreement, that
the transfer of such Receivables to the related Trust is either a valid transfer
and assignment of the Receivables to the related Trust or the grant to such
Trust of a security interest in the Receivables. TRS and the Transferor have
taken or will take all actions as are required under New York law to perfect
such Trust's interest in the Receivables and the Transferor warrants that if the
transfer by the Transferor to such Trust granted such Trust a security interest
in the Receivables, such security interest constitutes a first priority
perfected security interest therein and, with certain exceptions and for certain
limited periods of time, in proceeds thereof. Nevertheless, if the sale of
Receivables to the Transferor or the transfer of the Receivables to such Trust
is deemed to create a security interest therein under the New York Uniform
Commercial Code (the 'UCC'), a tax or government lien on property of the
Servicer or the Transferor arising before any Receivable comes into existence
may have priority over the Transferor's or such Trust's interest in such
Receivable. See 'Certain Legal Aspects of the Receivables--Transfer of
Receivables.'
In addition, while TRS is the Servicer, Collections held by TRS may,
subject to certain conditions, and unless specified otherwise in the related
Prospectus Supplement, be commingled and used for TRS's own benefit prior to
each Distribution Date and, in the event of the insolvency or receivership of
TRS or, in certain circumstances, the lapse of certain time periods, the related
Trust may not have a perfected interest in such Collections. Unless otherwise
agreed to by the applicable Rating Agency, if the short term debt rating of TRS
is reduced below A-1 or P-1 by the applicable Rating Agency, within two business
days thereafter TRS will begin depositing a portion of the Collections directly
into the Collection Account on the business day after the related transaction is
first output in written form under the Servicer's customary and usual servicing
practices from the Servicer's computer file of Accounts (without regard to the
effective date of such recordation). While the Servicer holds Collections and
payments made by the Transferor, including in respect of Ineligible Receivables,
the Certificateholders of Series issued by such Trust are subject to risk of
loss of such amounts in the event of the bankruptcy or insolvency of the
Servicer. See 'Description of the Certificates--Allocation of Collections;
Deposits in Collection Account.'
Insolvency-Related Matters. TRS has repurchased and will repurchase from
American Express Credit Corporation ('Credco') all Receivables owned by Credco
in the Designated Accounts under Trust I and in existence on the date specified
in Receivable Purchase Agreement I and in any assignments of Receivables in
Additional Accounts entered pursuant thereto. Credco, as seller, and TRS, as
purchaser, has treated and will treat the sale of Credco's right, title and
interest in and to such Receivables to TRS as an absolute transfer thereof to
TRS. In addition, TRS, as seller, and the Transferor, as purchaser, has treated
and will treat the sale of TRS' right, title and interest in and to such
Receivables to the Transferor as an absolute transfer thereof to the Transferor.
As a result of such absolute transfers, the Receivables would not be part of the
bankruptcy estate of Credco or TRS and would generally not be available to
creditors of Credco or TRS, respectively. However, in the event of the
insolvency of Credco or TRS, it is possible that the bankruptcy trustee of
Credco or TRS, or a creditor of Credco or TRS, or Credco or TRS as
debtor-in-possession, may argue that the transactions between
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Credco and TRS or TRS and the Transferor, as applicable, are pledges of such
Receivables rather than an absolute transfer. Such position, if accepted by a
court, could prevent timely payments of amounts due to Certificateholders. In a
1993 decision, Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir.
1993), the United States Court of Appeals for the 10th Circuit suggested that
even where a transfer of accounts from a seller to a buyer constitutes a 'true
sale,' the accounts would nevertheless constitute property of the seller's
estate in a bankruptcy of the seller. If Credco or TRS were to become subject to
a bankruptcy proceeding and a court were to follow the Octagon court's
reasoning, Certificateholders might experience delays in payment or possibly
losses on their investment in the Certificates. Counsel to the Transferor has
advised the Transferor that the facts of the Octagon case are distinguishable
from those in the sale transactions between Credco and TRS, and between TRS and
the Transferor and the reasoning of the Octagon case appears to be inconsistent
with established precedent and the Uniform Commercial Code. See 'The Transferor
and Related Parties--Insolvency-Related Matters.'
To the extent that the Transferor grants a security interest in the
Receivables to a Trust and that security interest is validly perfected prior to
any insolvency of the Transferor, and is not taken in contemplation of
insolvency, that security interest should not be subject to avoidance, and
payments to such Trust with respect to the Receivables should not be subject to
recovery by a creditor of or a bankruptcy trustee for the Transferor or the
Transferor as debtor-in-possession. If, however, a creditor of or a bankruptcy
trustee for the Transferor or the Transferor as debtor-in-possession were to
assert a contrary position, delays in payments on the Certificates and possible
reductions in the amount of those payments could occur. In the event of a
Servicer Default, if a receiver or bankruptcy trustee is appointed for the
Servicer, and no Servicer Default other than such bankruptcy or insolvency of
the Servicer exists, the receiver or bankruptcy trustee may have the power to
prevent either the Trustee or certificateholders from appointing a successor
Servicer. If certain events relating to the bankruptcy, insolvency or
receivership of the Transferor or TRS were to occur, causing an Early
Amortization Event with respect to all Series then outstanding, then pursuant to
Agreement I, and any New Agreement, new Receivables would not be transferred to
the Trust(s) and the Trustee would sell the portion of the Receivables of each
Trust allocable in accordance with the Agreement(s) to each Series of such Trust
(unless holders of more than 50% of the principal amount of each class of such
Series, other than the Transferor or TRS if the bankruptcy or insolvency of the
Transferor or TRS, as applicable, resulted in such Early Amortization Event, and
any other person specified in the related Prospectus Supplement instruct
otherwise), thereby causing a loss to Certificateholders of a Series if the net
proceeds allocable to certificateholders from such sale, if any, were
insufficient to pay such Certificateholders in full. However, upon the
occurrence of an Early Amortization Event that consists of the insolvency of the
Transferor or the appointment of a bankruptcy trustee or receiver for the
Transferor, the bankruptcy trustee or the receiver for the Transferor may have
the power to prevent the disposition of the Receivables transferred to the
Trust(s) and the occurrence of an Early Amortization Period. In addition, such
bankruptcy trustee or receiver may have the power to cause the early sale of the
Receivables and the early retirement of the Certificates notwithstanding
instructions from the Certificateholders directing the Trustee not to sell the
Receivables. See 'Certain Legal Aspects of the Receivables--Transfer of
Receivables.'
Consumer Protection Laws and Regulations. The Accounts and Receivables are
subject to numerous Federal and state consumer protection laws which impose
requirements on the extension and enforcement of consumer credit. Such laws, as
well as any new laws or rulings which may be adopted, may in the future
adversely affect the ability to collect on the Receivables or maintain the level
of fees and charges. Failure by TRS as owner of Accounts to comply with such
requirements could adversely affect the Servicer's ability to enforce the
Receivables. Pursuant to Agreement I, and any New Agreement, the Transferor or,
in some circumstances, the Servicer, covenants or will covenant, as applicable,
to accept the transfer of each Receivable that does not comply with all
applicable requirements of law the failure to comply with which would have a
material adverse effect on certificateholders if such Receivable is charged off
as uncollectible or if the proceeds of such Receivable are not available to the
Trust. In Agreement I, and in any New Agreement, the Transferor makes or will
make, as applicable, certain other covenants and warranties relating to the
validity and enforceability of the Designated Accounts and the Receivables. The
sole remedy, if any such covenant or warranty is not complied with and such
noncompliance continues beyond the applicable cure period and such Receivables
are charged off as uncollectible or the proceeds of such Receivables are not
available to the Trust, is that the Transferor will be obligated to accept
reassignment of such Receivables. The failure by the Transferor to make the
required payment in connection with any such reassignment may result in a loss
to Certificateholders and, in addition, may result in an Early Amortization
Event. See 'Description of the Certificates--Covenants, Representations and
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Warranties' and '--Servicer Covenants' and 'Certain Legal Aspects of the
Receivables--Consumer Protection Laws.'
Legislation. From time to time, there are proposed in the Congress and
certain state legislatures new laws and amendments to existing laws to regulate
further the consumer credit industry. The Transferor is unable to determine and
has no basis on which to predict whether or to what extent changes in laws or
regulations will affect charge use, payment patterns or revenues.
Payments and Maturity. The Receivables may be paid at any time and there is
no assurance that there will be additional Receivables created in the Designated
Accounts under a Trust or that any particular pattern of repayments will occur.
A significant decline in the amount of Receivables generated in the Designated
Accounts under a Trust could result in commencement of an Early Amortization
Period for any or all related Series. Agreement I provides that the Transferor
is required to designate Additional Accounts the Receivables of which will be
added to Trust I in the event that as of the end of any two consecutive Due
Periods the Transferor Amount as a percentage of the Trust Principal Component
(reduced by the Privileged Assets Calculated Amount) is not maintained at the
Minimum Transferor Percentage or the Trust Principal Component (reduced as
aforesaid) falls below the Minimum Trust Principal Component, and other
Agreements are expected to contain similar provisions. Receivable Purchase
Agreement I provides that, upon request of the Transferor, TRS may designate
Additional Accounts the receivables of which will be sold to the Transferor and
transferred to Trust I in such event. The Minimum Trust Principal Component for
any Trust may be increased by Series Supplements pursuant to which additional
Series are issued by such Trust, or decreased due to the retirement of any
Series issued by such Trust or if the Trustee receives written notice from the
applicable Rating Agency that such decrease will not result in a withdrawal or
reduction of its rating of the Certificates issued by such Trust. There can be
no assurance that TRS will have eligible Additional Accounts to so designate. If
Additional Accounts are not designated by the Transferor when required, an Early
Amortization Event may occur with respect to any related Series and an Early
Amortization Period for such Series would commence with respect to such Series.
A significant decrease in the rate of repayment by Cardmembers of the
outstanding balances or an increase in defaults or delinquencies of Designated
Accounts could delay the return of principal and could cause a loss of principal
to Certificateholders. See 'TRS' Domestic Consumer Charge Card Business' and
'Maturity and Principal Payment Considerations.'
Social, Legal, Economic and Other Factors. Changes in Card use and payment
patterns by Cardmembers whose Accounts are included in a Trust may result from a
variety of social, legal and economic factors. Economic factors including the
rate of inflation and unemployment will also be reflected in changes in consumer
spending and payment patterns, including increased risk of default by
Cardmembers. There can be no assurance as to what extent social, legal and
economic factors will affect future charge and repayment patterns.
Competition. TRS encounters substantial and increasingly intense
competition worldwide with respect to the American Express Card, American
Express Gold Card and Platinum Card (collectively, the 'Card' or the 'Cards')
from: general purpose cards issued under revolving credit plans, particularly
VISA(Registered) cards issued by members of VISA International Service
Association, Inc. or VISA USA, Inc. (collectively, 'VISA') and
MasterCard(Registered) cards issued by members of MasterCard International,
Incorporated ('MasterCard'), including cards sponsored by AT&T, General Electric
Company, General Motors Corporation and Ford Motor Company; the Discover Card, a
revolving credit card; and, to a lesser extent, charge cards such as Diners Club
and JCB. TRS also encounters competition from businesses that issue their own
cards or otherwise extend credit to their customers. Most U.S. banks issuing
credit cards under revolving credit plans charge annual fees in addition to
interest charges where permitted by state law. The issuer of the Discover Card,
as well as some issuers of VISA cards and MasterCard cards, charge no annual
fees. Certain issuers offer mileage credit to card holders under airline
frequent flier programs or other types of rewards programs or rebates. TRS also
offers a similar program, the Membership Miles (Service Mark) program, under
which eligible Cardmembers charging a purchase with an enrolled card can earn
miles that are convertible to awards on the frequent flyer programs of
participating airlines, as well as certain other awards. Cardmembers generally
also have access to a variety of special services, including Global Assist
(Service Mark) Hotline, Buyer's AssuranceSM Protection Plan, Car Rental Loss and
Damage Insurance Plan, Travel Accident Insurance Plan and Purchase ProtectionSM
Plan. Certain competing issuers offer premium cards with enhanced services or
lines of credit.
The principal competitive factors that affect TRS' Card business are (i)
the quality of the service and services, including rewards programs, provided to
Cardmembers and participating establishments; (ii) the number and
characteristics of Cardmembers; (iii) the quantity and quality of the
establishments that will accept the Card; (iv) the cost of Cards to Cardmembers
and Card acceptance to participating establishments; (v) the terms of
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payment available to Cardmembers and participating establishments; (vi) the
number and quality of other payment instruments available to Cardmembers and
participating establishments; and (vii) the success of marketing and promotion
campaigns.
TRS also issues a revolving credit card called the Optima(Service Mark)
Card. TRS expects to pursue a strategy of growing both its consumer charge card
and revolving credit card businesses by developing products that provide rate
structures, rewards, information reporting systems and services that are
customized to the particular needs of different segments of the existing and
prospective customer base.
If consumers choose to use competing sources of payment other than the
Card, the rate at which new Receivables are generated in the Designated Accounts
may be reduced and certain purchase and payment patterns with respect to
Receivables may be affected. Trust I and any New Trust consisting of Designated
Accounts owned by TRS will be dependent upon the continued ability of TRS to
generate new Receivables. If the rate at which new Receivables are generated
declines significantly and the Transferor does not add Additional Accounts, an
Early Amortization Event could occur, in which event an Early Amortization
Period would commence. A significant decrease in the usage of the Designated
Accounts could also delay the return of principal on or following the Expected
Final Payment Date and extend the period during which charged-off Receivables
may be allocated to the Certificates. See 'Description of the
Certificates--Investor Charge-Offs' and '--Early Amortization Events.'
Effect of Subordination. With respect to Certificates of a Series having a
Class or Classes of Subordinated Certificates, unless otherwise specified in the
related Prospectus Supplement, payments of principal in respect of the
Subordinated Certificates of a Series will not commence until after the final
principal payment with respect to the Senior Certificates of such Series. In
addition, if so specified in the related Prospectus Supplement, if Yield
Collections allocable to the Certificates of a Series are insufficient to cover
required amounts due with respect to the Senior Certificates of such Series, the
Invested Amount with respect to the Subordinated Certificates may be reduced,
resulting in a reduction of the portion of Yield Collections allocable to the
Subordinated Certificates in future periods and a possible delay or reduction in
principal and interest payments on the Subordinated Certificates. Moreover, if
so specified in the related Prospectus Supplement, in the event of a sale of
Receivables in a Trust due to the insolvency of the Seller or the appointment of
a conservator or receiver for the Seller, or due to the inability of the Trustee
to act as or find a successor Servicer after a Servicer Default, the portion of
the net proceeds of such sale allocable to pay principal to the Certificates of
a Series will be used first to pay amounts due to the Senior Certificateholders
and any remainder will be used to pay amounts due to the Subordinated
Certificateholders.
Ability to Change Terms of the Designated Accounts. Pursuant to Receivable
Purchase Agreement I, TRS has not transferred to the Transferor, and pursuant to
each New Receivable Purchase Agreement, TRS or any other seller will not be
transferring to the Transferor, and, pursuant to each Agreement, the Transferor
has not transferred and will not be transferring to the Trust, the Designated
Accounts but only the Receivables arising in the Designated Accounts. As owner
of the Accounts, TRS or any other seller has the right to determine the fees
which will be applicable from time to time to the Designated Accounts, to alter
the payment terms required under the Designated Accounts and to change various
other terms with respect to the Designated Accounts. In servicing the Designated
Accounts, the Servicer is required to exercise the same care and apply the same
policies that it exercises in handling similar matters for its own or other
comparable accounts. TRS has agreed not to change the terms of the Designated
Accounts under Trust I unless the change is also made applicable to the
comparable segment of its portfolio of accounts with characteristics similar to
the Designated Accounts. Except as specified above, there are no restrictions on
the ability of TRS to change the terms of the Designated Accounts under Trust I.
There can be no assurances that changes in the marketplace or prudent business
practice might not result in a determination by TRS to change payment or other
terms of the Designated Accounts under Trust I in the future. The Transferor has
the right and may be required from time to time to designate Additional Accounts
for inclusion in the Trust which Additional Accounts may not be of the same
credit quality as the initial Designated Accounts. See 'Description of the
Certificates--Addition of Accounts.'
Ability to Change Yield Factor. Unless otherwise specified in the related
Prospectus Supplement, the Receivables originated under the Designated Accounts
are not subject to a monthly finance charge. As a result, in order to provide
yield to a Trust on such Receivables, pursuant to each Agreement a portion of
Collections received in any period equal to the product of Collections and the
Yield Factor will be treated as 'Yield Collections' and the remainder of such
Collections will be treated as 'Principal Collections.' Recoveries will not be
considered Collections but will instead be utilized as an offset to Defaulted
Receivables. The Yield Factor is 3.0% under Agreement I. Any increase in the
Yield Factor would result in a higher yield on the Receivables
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originated under the Designated Accounts and a slower payment rate of Principal
Collections than otherwise would occur. Conversely, any decrease in the Yield
Factor would result in less yield on such Receivables and a faster payment rate
of Principal Collections than otherwise would occur. Pursuant to Agreement I,
without notice to or the consent of certificateholders, the Transferor has the
ability, after prior written notice to the Trustee, the Servicer and the Rating
Agencies, to change the Yield Factor applied to Collections; the Transferor may
not, however, reduce the Yield Factor at any time below 3.0%, nor may the
Transferor increase the Yield Factor above 5.0%. In addition, the Transferor may
not otherwise change the Yield Factor if an Early Amortization Event has
occurred and is continuing, or, as a result of such change, its reasonable
expectation is that an Early Amortization Event would occur. In the event that
the Servicer is not required to make daily deposits of Collections in the
Collection Account at the date of such change, the Transferor may specify either
the first day of the current Due Period or the first day of the next succeeding
Due Period as the effective date of such change. Under Agreement I, if the
Servicer is required to make daily deposits of Collections in the Collection
Account at the time of such change, the Transferor may specify that the date all
of the conditions specified in the Agreement regarding changing the Yield Factor
are met is the effective date of such change.
Master Trust Considerations. Trust I, as a master trust, previously has
issued Series of Certificates prior to the date of this Prospectus, and is
expected to issue additional Series from time to time. Each New Trust, as a
master trust, may issue Series from time to time. While the Principal Terms of
any Series will be specified in a related Series Supplement, the provisions of a
Series Supplement and, therefore, the terms of any additional Series, will not
be subject to the prior review or consent of certificateholders of any
previously issued Series. Such Principal Terms may include methods for
determining applicable investor percentages and allocating collections,
provisions creating different or additional security or other credit
enhancement, provisions subordinating such Series to another Series or other
Series (if the Series Supplement relating to such Series so permits) to such
Series, and any other amendment or supplement to the related Agreement which is
made applicable only to such Series. See 'Description of the
Certificates--Exchanges' and '--Addition of Accounts.' It is a condition
precedent to the issuance of any additional Series by a Trust that each Rating
Agency shall have advised the Trustee that the issuance of such Series will not
result in the reduction or withdrawal of their rating of any outstanding Series
previously issued by that Trust. There can be no assurance that the Principal
Terms of any Series issued from time to time will not have an impact on the
timing and amount of payments received by a Certificateholder of any other
Series of that Trust. In addition, certain remedies may require the consent of a
majority of the holders of all outstanding Series of certificates of a Trust,
and the interest of the holders of one Series of certificates may conflict with
the interest of another Series of certificates. See 'Description of the
Certificates--Exchanges.'
Rating of the Certificates. It is a condition to the issuance of the
Certificates of each Series or Class offered hereby that they be rated in one of
the four highest rating categories by at least one nationally recognized rating
agency (the rating agency or rating agencies selected by the Transferor to rate
the certificates of a Series is herein referred to as the 'Rating Agency'). The
rating will not be a recommendation to purchase, hold or sell Certificates,
inasmuch as such rating does not comment as to market price or suitability for a
particular investor. The rating of the Certificates will not address the
possibility of the imposition of United States withholding tax on non-U.S.
persons or back-up withholding for U.S. persons. The rating of the Certificates
will address the likelihood of the ultimate payment of principal and interest on
the Certificates. However, the Rating Agency will not evaluate, and the rating
of the Certificates will not address, the likelihood that the outstanding
principal amount of the Certificates will be paid by the Expected Final Payment
Date.
Book-Entry Registration. Unless otherwise specified in the related
Prospectus Supplement, the Certificates of each Series initially will be
represented by Certificates registered in the name of Cede, the nominee for DTC,
and will not be registered in the names of the Certificate Owners or their
nominees. Because of this, unless and until Definitive Certificates are issued,
Certificate Owners will not be recognized by the Trustee as Certificateholders,
as that term will be used in each Agreement. Hence, until such time, Certificate
Owners will only be able to receive payments from, and exercise the rights of
Certificateholders indirectly through, DTC, CEDEL or Euroclear and their
respective participating organizations, and, unless a Certificate Owner requests
a copy of any such report from the Trustee, will receive reports and other
information provided for under each Agreement only if, when and to the extent
provided to Certificate Owners by DTC, CEDEL or Euroclear and their respective
participating organizations. In addition, the ability of Certificate Owners to
pledge Certificates to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such Certificates, may be
limited due to the lack of physical certificates for such Certificates. See
'Description of the Certificates--Book-Entry Registration' and '--Definitive
Certificates.'
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TRS' DOMESTIC CONSUMER CHARGE CARD BUSINESS
GENERAL
Consumer charge card receivables are generated from transactions made by
residents of the United States (including certain of its territories and
possessions) holding American Express Card, American Express Gold Card and
Platinum Card accounts (each such person, a 'Cardmember;' each such card, a
'Card;' and each such account, an 'Account'). Cards issued by TRS are accepted
at approximately 3.7 million service establishments worldwide, and may be used
for the purchase of merchandise and services. The Accounts are owned by TRS and
are serviced primarily at TRS' facilities at several locations in the United
States.
The American Express Card was launched in 1958, the American Express Gold
Card in 1966, and the Platinum Card in 1984. There is no pre-set spending limit
on Accounts, though charges are subject to an approval process based on the
Cardmember's past spending and payment patterns and personal resources. Accounts
are designed for use as a method of payment and not as a means of financing
purchases of merchandise and services. Accordingly, an Account's full balance is
billed monthly, is due upon receipt of the billing statement and is not subject
to finance charge assessments. See 'Distinctions Between Accounts and Revolving
Credit Plan Products' and 'Billing and Fees' below.
The Prospectus Supplement will contain a description of other types of
accounts, if any, that generate receivables included in a Trust.
UNDERWRITING AND AUTHORIZATION PROCEDURES
Accounts are originated by TRS primarily through pre-approved, direct mail
solicitations (the 'pre-approved process') and through receipt of applications
available to the public through a variety of channels, including service
establishments, financial institutions, publications and over the telephone (the
'application process'). The pre-approved process involves determining in advance
that a person will qualify for an Account. TRS selects certain persons on the
basis of such persons' activities (e.g., holding credit cards, magazine or
newspaper subscriptions, club memberships, college enrollment). Typically, these
names are submitted to credit bureaus and TRS provides the bureaus with
screening criteria. These criteria were developed from TRS' proprietary risk and
profitability models and commercially available risk evaluation scores. Persons
who meet these criteria are solicited to become Cardmembers.
The application process is used for evaluation of unsolicited applications
and certain other categories of applicants. The primary sources of unsolicited
applications are the American Express 'Take-One' boxes located in a variety of
public establishments and the 'inbound' telemarketing program featuring the
1-800-THE-CARD telephone number. The application process entails receiving a
completed application, evaluating the application using proprietary scoring
models and credit bureau information, screening out prior delinquencies and
incidents of fraud with TRS or American Express Centurion Bank, an affiliate of
TRS, and verifying that the information on the application is both accurate and
provided by the true applicant. For some categories of applicants (e.g.,
undergraduate or graduate students), TRS requires less information and bases its
credit decision on individual and aggregate factors. TRS may also request less
information on certain Take-One applications. Where such information
supplemented by credit bureau data is insufficient for TRS to make a decision,
TRS requests further information from the applicant.
In addition to the credit review performed in connection with origination
of Accounts, utilization of the Accounts (for charges exceeding applicable
minimum amounts set for each merchant) is subject to authorization at the time
of such utilization based upon the Cardmember's past spending and payment
activity and personal resources. Certain utilizations, such as purchases
indicating out-of-pattern spending, initial utilizations on new accounts and
charges to non-current accounts, are subject to closer credit scrutiny.
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BILLING AND FEES
Each Cardmember is subject to an agreement governing the terms and
conditions of the Account. TRS reserves the right to change or terminate any
terms or conditions of the Account (including increasing or decreasing fees).
The ability of TRS to make such changes is subject to the requirements of
applicable laws and to certain limitations in each Agreement and Receivable
Purchase Agreement. Pursuant to Account agreements, Cardmembers are charged an
annual membership fee of $55 for the American Express Card, $75 for the American
Express Gold Card and $300 for the Platinum Card. In May, 1993, a new program
was introduced, called Senior Membership, under which Cardmembers aged over 62
enrolled in the program are charged an annual membership fee of $35 for the
American Express Card and $55 for the American Express Gold Card. No monthly
finance charges are assessed and the full balance is due upon receipt of each
month's billing statement. The Accounts are grouped into billing cycles for
purposes of administrative efficiency. In accordance with TRS' usual servicing
procedures the payment status of an Account is determined by reference to the
cycle billing date for such Account.
Unless otherwise specified in the related Prospectus Supplement, other fees
associated with the Accounts include (i) a fee of $30 for each additional
American Express Card ($20 if the Cardmember is over 62 years old and part of
the Senior Membership program), $35 for each additional American Express Gold
Card ($25 if the Cardmember is over 62 years old and part of the Senior
Membership program), and $150 for the first additional Platinum Card, (ii)
returned payment fees, and (iii) late fees, assessed when amounts billed on an
Account in excess of $50 remain unpaid 60 days past the date of the statement in
which a charge first appeared (the 'Original Billing Date'), generally equal to
the greater of (a) $20 and (b) 2 1/2% of the balance that is more than 30 days
past the Original Billing Date and when amounts billed on an Account in excess
of $50 remain unpaid 90 days past the Original Billing Date, the greater of (a)
$17 and (b) 2 1/2% of the balance that is more than 30 days past the Original
Billing Date. In addition, a late fee of $12 may be assessed on any amounts
billed on an Account in excess of $50 which remain unpaid 50 days past the
Original Billing Date but are paid prior to 60 days past the Original Billing
Date.
COLLECTION EFFORTS
TRS considers an Account delinquent after a charge first appears as part of
an unpaid 'Previous Balance' on any monthly billing statement. Efforts to
collect delinquent Account balances are made by TRS and collection agencies and
attorneys retained by such collection agencies and by TRS. Under current
practice, TRS includes a request for payment of any overdue amounts on all
billing statements following delinquency. TRS uses its proprietary risk and
profitability evaluation systems to determine the appropriate collection
strategy. Cardmembers considered to be high risk may be contacted by either a
letter or a telephone call when an Account becomes delinquent, or prior to
delinquency based on a number of factors, including the Cardmember's tenure with
TRS and the amount owed in relation to prior spending and payment behavior. If
TRS determines that the Cardmember may be unable to pay the outstanding balance,
the Account may be 'preempted'--i.e., the Account is cancelled, charge
privileges are revoked, and a more intensive collection action is initiated. For
all other Cardmembers with delinquent balances, charge privileges are generally
cancelled 90 days from the Original Billing Date. For both the preempted
Accounts and those reaching the 90 days status, attorney demand letters may also
be sent. If an Account remains delinquent, it may be sent to collection agencies
who continue with telephone calls and letters. Legal action may be instituted.
TRS may enter into arrangements with Cardmembers to extend or otherwise change
payment schedules to maximize collections.
Pursuant to each Agreement, the Receivables in the Designated Accounts will
be charged-off no later than the date when an Account remains unpaid 360 days
from the Original Billing Date, although charge-offs may be made earlier in some
circumstances. The credit evaluation, servicing, charge-off and collection
practices of the Servicer may change over time in accordance with its business
judgment and applicable law.
DISTINCTIONS BETWEEN ACCOUNTS AND REVOLVING CREDIT PLAN PRODUCTS
There are important distinctions between Accounts and revolving credit plan
products. Accounts have no pre-set spending limit and are designed for use as a
convenient method of payment for the purchase of merchandise and services.
Accounts cannot be used as a means of financing such purchases. Accordingly, the
full
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balance of a month's purchases is billed to Cardmembers and is due upon receipt
of the billing statement. By contrast, revolving credit plans allow customers to
make a minimum monthly payment and to borrow the remaining outstanding balance
from the credit issuer up to a predetermined limit. As a result of these payment
requirement differences, the Accounts have a high monthly payment rate and
balances which turn over rapidly relative to their charge volume when compared
to revolving credit plan products.
Another distinction between Accounts and revolving credit plan products is
that Account balances are not subject to monthly finance charges. As described
above, the full Account balance is billed monthly and is due upon receipt of the
billing statement. Cardmembers do not have the option of using their Accounts to
extend payment and to pay a finance charge on the remaining outstanding balance.
Revolving credit plan products, by contrast, do allow customers to pay a
specified minimum portion of an outstanding amount and to finance the balance at
a finance charge rate determined by the credit issuer. (Because Account balances
are not assessed finance charges, for the purpose of providing yield to Trust I
and any New Trust, a portion of Collections on Receivables in Designated
Accounts received in any Due Period equal to the product of Collections and the
Yield Factor will be treated as Yield Collections.)
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THE DESIGNATED ACCOUNTS
GENERAL
The Receivables conveyed to each Trust will consist of all Eligible
Receivables existing on the applicable Cut Off Date, or that arise thereafter,
in Eligible Accounts which were selected from the entire portfolio of Accounts
(the 'Portfolio') on the basis of criteria set forth in the related Agreement,
as applied on the applicable Selection Date and, in the case of (vii) below,
also on the applicable Cut Off Date and designated for inclusion in such Trust
(each, a 'Trust Portfolio'). In order to qualify as an 'Eligible Account,' each
such Account, in the case of Trust I was, and in the case of each New Trust,
unless otherwise described in the related Prospectus Supplement, will be, as of
the applicable Selection Date, among other things, (i) an American Express Card,
American Express Gold Card, Platinum Card, or other card account owned by TRS
and whose billed balances are payable in full each month; (ii) payable in United
States dollars; (iii) not an Account classified by TRS as fraudulent or reported
stolen or lost; (iv) created or purchased in accordance with or under
underwriting and credit standards no less stringent than those generally applied
by TRS; (v) not a corporate card account; (vi) not an Account which has been
identified by TRS in its computer files as having a deceased obligor or having
been cancelled due to the obligor's bankruptcy and (vii) not an Account
classified as having been charged-off (each Eligible Account the Receivables of
which have been selected for inclusion in a Trust, a 'Designated Account').
Unless otherwise specified in the Related Prospectus Supplement, the Designated
Accounts will include all related accounts that are originated as a result of
(a) the Card with respect to a Designated Account being lost or stolen or (b)
the conversion of a Designated Account into another type of Eligible Account, in
each case which satisfies certain conditions set forth in the Agreement. Unless
otherwise specified in the Related Prospectus Supplement, the Designated
Accounts are and will be selected through a random selection process applied to
Eligible Accounts within the Portfolio or in a manner not adverse to the
interests of the certificateholders.
Pursuant to each Agreement, the Transferor will have the right (subject to
certain limitations and conditions) and, in certain circumstances, will be
obligated to designate additional Eligible Accounts to be included as Designated
Accounts ('Additional Accounts') and to convey to the related Trust all
Receivables of such Additional Accounts, whether such Receivables are then
existing or thereafter created. These accounts must meet the eligibility
criteria set forth in the related Agreement, as of the date that the Transferor
designates such accounts as Additional Accounts. As of the Selection Date and
any date as of which Additional Accounts are selected pursuant to the related
Agreement (the 'Additional Account Selection Date'), the Transferor will
represent and warrant to the related Trust that the Receivables existing on the
Selection Date or the Additional Account Selection Date, as applicable, meet the
eligibility requirements specified in the related Agreement. In addition, on
each day on which any new Receivable is created, the Transferor shall be deemed
to represent and warrant to the related Trust that each Receivable created on
such day meets the eligibility requirements specified in the related Agreement.
See 'Description of the Certificates--Covenants, Representations and
Warranties.'
Further, pursuant to each Agreement, the Transferor will have the right
(subject to certain limitations and conditions discussed herein) to accept
removal of certain Designated Accounts designated by the Transferor from the
related Trust ('Removed Accounts') and accept the conveyance of all the
Receivables in the Removed Accounts, whether such Receivables are then existing
or thereafter created. Throughout the term of each Trust, the Designated
Accounts from which the Receivables conveyed to such Trust arise will be the
same Designated Accounts selected by the Transferor on the applicable Cut Off
Date plus any Additional Accounts and minus any Removed Accounts. See
'Description of the Certificates--Conveyance of Receivables.'
The Prospectus Supplement relating to each Series of Certificates will
provide certain information about the related Trust Portfolio as of the date
specified. Such information will include, but not be limited to, the range of
balances of the Accounts, the range of payment status of the Accounts, the range
of ages of the Accounts and the geographic distribution of the Accounts.
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THE TRANSFEROR AND RELATED PARTIES
THE TRANSFEROR
American Express Receivables Financing Corporation (the 'Transferor') was
incorporated under the laws of the State of Delaware on July 30, 1991. All of
its outstanding common stock is owned by American Express Travel Related
Services Company, Inc. ('TRS'). TRS is a wholly owned subsidiary of American
Express Company ('American Express'), a publicly-held corporation engaged
principally, through its subsidiaries, in providing travel related services,
investors diversified financial services and international banking services
throughout the world. The Transferor was organized for the limited purpose of
issuing securities of the type offered hereby, purchasing, holding, owning and
selling receivables and any activities incidental to and necessary or convenient
for the accomplishment of such purposes. Neither TRS, as stockholder of the
Transferor, nor the Transferor's board of directors, intends to change the
business purpose of the Transferor. The Transferor's executive offices are
located at American Express Tower, World Financial Center, New York, New York
10285.
TRS AND CREDCO
TRS is a wholly owned subsidiary of American Express. TRS, directly or
through subsidiaries, provides a variety of products and services, including the
Accounts, consumer lending, American Express(Registered) Travelers Cheques,
corporate and consumer travel products and services, magazine publishing,
database marketing and management and insurance. Credco is a wholly owned
subsidiary of TRS primarily engaged in the business of purchasing certain
cardmember receivables generated by TRS and its subsidiaries.
INSOLVENCY-RELATED MATTERS
Credco, as seller, and TRS, as purchaser, have treated the sale of the
Receivables in the Designated Accounts under Trust I in existence and owned by
Credco on the applicable Cut Off Date from Credco to TRS as an absolute transfer
of such Receivables to TRS. TRS, as seller, and the Transferor, as purchaser,
have treated and will treat the sale of such Receivables from TRS to the
Transferor as an absolute transfer of such Receivables to the Transferor. In
addition, Receivables in Additional Accounts under Trust I in existence as of
the applicable Additional Account Cut Off Date will be purchased by TRS from
Credco in a transaction which will be treated by Credco and TRS as an absolute
transfer of such Receivables to TRS, and the Transferor will purchase from TRS
all Receivables in such Additional Accounts (whether in existence on the
Additional Account Cut Off Date or arising thereafter) in a transaction which
will be treated by TRS and the Transferor as an absolute transfer of such
Receivables to the Transferor. In the event of an insolvency of either Credco or
TRS, such entity would be subject to Title 11 of the United States Code (the
'Bankruptcy Code'). As an absolute transfer to TRS, the Receivables sold by
Credco to TRS would not be part of the bankruptcy estate of Credco, and such
Receivables would not be available to creditors of Credco. In addition, as an
absolute transfer to the Transferor, such Receivables would not be part of the
bankruptcy estate of TRS, and such Receivables would not be available to
creditors of TRS. However, in the event of the insolvency of TRS or Credco, it
is possible that the bankruptcy trustee, a creditor of such insolvent entity or
such entity as debtor in possession may argue that the transactions between
Credco and TRS or between TRS and the Transferor, as the case may be, are
pledges of the receivables rather than absolute transfers. Such a position, if
accepted by a court, could prevent timely payments due to Certificateholders.
The Transferor will receive an opinion of counsel on the closing date of
the issuance of a Series of Certificates, with respect to TRS, concluding on the
basis of a reasoned analysis of analogous case law (although there is no
precedent based on directly similar facts) that subject to certain facts,
assumptions and qualifications specified therein (including matters set forth
under 'Certain Legal Aspects of the Receivables--Transfer of Receivables'), TRS,
or a creditor or bankruptcy trustee of TRS (such creditor or such bankruptcy
trustee being referred to hereinafter as an 'Adverse Party') would not have
valid legal grounds to cause a bankruptcy court to disregard the corporate forms
so as to consolidate the assets and liabilities of TRS with those of the
Transferor. However, if a court concluded otherwise, or a filing were made under
any bankruptcy or insolvency law by or against the Transferor, or if an attempt
were made to litigate any of the foregoing issues, delays or distributions on
the Certificates (and possible reductions of such distributions) could occur.
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In a 1993 decision, Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th
Cir. 1993), the United States Court of Appeals for the 10th Circuit suggested
that even where a transfer of accounts from a seller to a buyer constitutes a
'true sale,' the accounts would nevertheless constitute property of the seller's
bankruptcy estate in a bankruptcy of the seller. If TRS were to become subject
to a bankruptcy proceeding and a court were to follow the Octagon court's
reasoning, Certificateholders might experience delays in payment or possibly
losses on their investment in the Certificates. As part of the opinion of
counsel described above, counsel has advised the seller that the facts of the
Octagon case are distinguishable from those in the sale transaction between TRS
and the Transferor and that the reasoning of the Octagon case appears to be
inconsistent with established precedent and the Uniform Commercial Code. In
addition, because TRS, the Transferor and the transaction governed by Receivable
Purchase Agreement I do not have any particular link to the 10th Circuit, it is
unlikely that TRS would be subject to a bankruptcy proceeding in the 10th
Circuit. Accordingly, the Octagon case should not be binding precedent on a
court in a TRS bankruptcy proceeding.
THE TRUSTS
Trust I was formed, and each New Trust will be formed, for this and like
transactions pursuant to an Agreement and any Series Supplements thereto. Since
its formation, Trust I has not engaged, and no Trust will engage, in any
business activity other than to acquire and hold Receivables and the other
assets of such Trust and proceeds therefrom, issue Series of Certificates and
the related Exchangeable Transferor Certificate, make payments thereon and
engage in related activities. As a consequence, no Trust is expected to have any
need for, or source of, additional capital resources other than the assets of
such Trust.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
Unless otherwise specified in the related Prospectus Supplement, for each
Series, following the Revolving Period, Principal Collections are expected to be
distributed to the Certificateholders of such Series or any specified Class
thereof on each specified Distribution Date during the Controlled Amortization
Period or the Rapid Amortization Period, or are expected to be accumulated for
payment to Certificateholders of such Series or any specified Class thereof
during the Accumulation Period and distributed on an Expected Final Payment
Date; provided, however, that, if the Early Amortization Period commences,
Principal Collections will be paid to Certificateholders in the manner described
herein and in the related Prospectus Supplement. The related Prospectus
Supplement will specify the date on which the Controlled Amortization Period,
the Rapid Amortization Period or the Accumulation Period, as applicable, will
commence, the principal payments expected or available to be received or
accumulated during such Controlled Amortization Period, Rapid Amortization
Period or Accumulation Period, or on the Expected Final Payment Date, as
applicable, the manner and priority of principal accumulations and payments
among the Classes of a Series of Certificates, the payment rate assumptions on
which such expected principal accumulations and payments are based and the Early
Amortization Events which, if any were to occur, would lead to the commencement
of the Early Amortization Period.
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DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued in Series. Each Series will represent an
interest in the specified Trust other than the interests represented by any
other Series of Certificates issued by such Trust (which may include Series
offered pursuant to this Prospectus) and the Exchangeable Transferor
Certificate. Each Series will be issued pursuant to an Agreement and a Series
Supplement entered into between the Transferor, as the transferor of the
Receivables, TRS (or other specified entity), as Servicer of the Designated
Accounts and the Receivables and a Trustee for the Certificateholders specified
in the related Prospectus Supplement, substantially in the form filed as
exhibits to the Registration Statement of which this Prospectus is a part.
Pursuant to each Agreement, the Transferor may execute further Series
Supplements thereto between the Transferor and the Trustee in order to issue
additional Series. See '--Exchanges.' The Trustee will provide a copy of each
Agreement (without exhibits or schedules), including any Series Supplements, to
Certificateholders without charge upon written request. The Prospectus
Supplement for each Series will describe any provisions of the particular
Agreement filed as an Exhibit to the Registration Statement. The following
summary describes certain terms common to each Series of Certificates.
GENERAL
The Certificates of each Series will represent undivided interests in the
related Trust, including the right to receive the applicable Invested Percentage
of all Collections received with respect to the Receivables in the related Trust
up to (but not in excess of) amounts required to make payments of interest at
the Certificate Rate and the Invested Amount on the Expected Final Payment Date,
or earlier or later in certain circumstances. The property of Trust I consists
of, and unless otherwise specified in a related Prospectus Supplement, the
property of each New Trust will consist of, the Receivables generated under the
Designated Accounts and under any Additional Accounts subsequently designated to
such Trust, all funds to be collected from Cardmembers in respect of such
Receivables (including Recoveries), all of the Transferor's right, title and
interest under the related Receivable Purchase Agreement, all moneys on deposit
in the Collection Account, the Principal Funding Account, if any, and the
Interest Funding Account, if any, with respect to such Series, any other
accounts established for the benefit of any other Series issued by such Trust
and any other amounts specified in the related Prospectus Supplement, benefits
of any Enhancement and payments made in respect of Enhancements issued with
respect to any other Series issued by such Trust.
Each Series of Certificates may consist of one or more Classes, one or more
of which may be Senior Certificates and one or more of which may be Subordinated
Certificates. Each Class of a Series will evidence the right to receive a
specified portion of each distribution of principal or interest or both. The
Invested Amount with respect to a Series with more than one Class will be
allocated among the Classes as described in the related Prospectus Supplement.
The Certificates of a Class may differ from Certificates of other Classes of the
same Series in, among other things, the amounts allocated to principal payments,
maturity date, Certificate Rate and the availability of Enhancement.
For each Series of Certificates, the Transferor or a designated affiliate
initially will own the interest (the 'Transferor Interest') not represented by
the Certificates and any other Series of certificates to be issued. The
Transferor Interest will be evidenced by the Exchangeable Transferor Certificate
representing an undivided interest in each Trust, including the right to a
percentage (the 'Transferor Percentage'), which may vary from month to month, of
all Collections on the Receivables in the related Trust. If provided in the
related Agreement and Prospectus Supplement, the Exchangeable Transferor
Certificate may be transferred in whole or in part subject to certain
limitations and conditions contained therein.
For each Series of Certificates, payments of interest will be made on dates
(each, a 'Distribution Date') specified in the related Prospectus Supplement to
Certificateholders in whose names the Certificates were registered (or if
Definitive Certificates are issued, to holders of such Definitive Certificates)
on the record dates specified in the related Prospectus Supplement (each, a
'Record Date'). Interest will be distributed in the amounts, for the periods and
on the dates specified in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, during the Revolving Period, the amount
of the Invested Amount in the related Trust will remain constant except under
certain limited circumstances. See '--Defaulted Receivables; Recoveries;
Adjustments' and '--Investor
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Charge-Offs.' The amount of Principal Collections in each Trust, however, will
vary each day as new Receivables are created and others are paid. The amount of
the Transferor Interest will fluctuate each day, therefore, to reflect the
changes in the amount of Receivables in the Trust. When a Series is amortizing,
the Invested Amount of such Series will decline as Principal Collections are
distributed to the Certificateholders. As a result, the Transferor Interest will
generally increase each month to reflect the reductions in the Invested Amount
and will also change to reflect the variations in the amount of Principal
Collections. The Transferor Interest in each Trust may also be reduced as the
result of an Exchange. See '--Exchanges.'
Unless otherwise specified in the related Prospectus Supplement,
Certificates of each Series will initially be represented by certificates
registered in the name of the nominee of DTC (together with any successor
depository selected by the Transferor, the 'Depository') except as set forth
below. Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, beneficial interests in the Certificates
will be available for purchase in minimum denominations of $1,000 and integral
multiples thereof in book-entry form only. The Transferor has been informed by
DTC that DTC's nominee will be Cede. Accordingly, Cede is expected to be the
holder of record of each Series of Certificates. Unless and until Definitive
Certificates are issued for any Series under the limited circumstances described
herein, no Certificate Owner acquiring an interest in the Certificates will be
entitled to receive a certificate representing such person's interest in the
Certificates. All references herein to actions by Certificateholders shall refer
to actions taken by DTC upon instructions from its participating organizations
(the 'Participants') and all references herein to distributions, notices,
reports and statements to Certificateholders shall refer to distributions,
notices, reports and statements to DTC or Cede, as the registered holder of the
Certificates, as the case may be, for distribution to Certificate Owners in
accordance with DTC procedures. See '--Book-Entry Registration' and
'--Definitive Certificates.'
If so specified in the Prospectus Supplement relating to a Series,
application will be made to list the Certificates of such Series, or all or a
portion of any Class thereof, on the Luxembourg Stock Exchange or any other
specified exchange.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, Certificateholders may hold their
Certificates through DTC (in the United States) or CEDEL or Euroclear (in
Europe) if they are participants of such systems, or indirectly through
organizations which are participants in such systems.
Cede, as nominee for DTC, will hold the global Certificates. CEDEL and
Euroclear will hold omnibus positions on behalf of their participants through
customers' securities accounts in CEDEL's and Euroclear's names on the books of
their respective Depositaries which in turn will hold such positions in
customers' securities accounts in the Depositaries' names on the books of DTC.
Citibank, N.A. will act as depositary for CEDEL and Morgan Guaranty Trust
Company of New York will act as depositary for Euroclear (in such capacities,
the 'Depositaries'), unless otherwise specified in the related Prospectus
Supplement. Transfers between DTC participants will occur in the ordinary way in
accordance with DTC rules. Transfers between CEDEL Participants and Euroclear
Participants will occur in the ordinary way in accordance with their applicable
rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL or
Euroclear participants, on the other, will be effected in DTC in accordance with
DTC rules on behalf of the relevant European international clearing system by
its Depositary; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. CEDEL Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in CEDEL
or Euroclear as a result of a transaction with a DTC participant will be made
during subsequent securities settlement processing and dated the
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business day following the DTC settlement date. Such credits or any transactions
in such securities settled during such processing will be reported to the
relevant Euroclear or CEDEL participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following settlement
in DTC. For additional information regarding clearance and settlement procedures
for the Certificates, see Annex I hereto and for information with respect to tax
documentation procedures relating to the Certificates, see Annex I hereto and
'Tax Matters--Foreign Investors.'
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a 'clearing
corporation' within the meaning of the New York UCC, and a 'clearing agency'
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its Participants and facilitate the clearance
and settlement of securities transactions between Participants through
electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations (including the Underwriters).
Indirect access to the DTC system also is available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (the 'Indirect
Participants').
Certificate Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, Certificates may do so only through Participants and Indirect Participants.
In addition, Certificate Owners will receive all distributions of principal of
and interest on the Certificates from the Trustee, as paying agent, or its
successor in such capacity (the 'Paying Agent'), through the Participants who in
turn will receive them from DTC. Under a book-entry format, Certificate Owners
may experience some delay in their receipt of payments, since such payments will
be forwarded by the Paying Agent to Cede, as nominee for DTC. DTC will forward
such payments to its Participants which thereafter will forward them to Indirect
Participants or Certificate Owners. It is anticipated that the only
'Certificateholder' will be Cede, as nominee of DTC. Certificate Owners will not
be recognized by the Trustee as Certificateholders, as such term is used in the
Agreement or any Supplement, and Certificate Owners will only be permitted to
exercise the rights of Certificateholders indirectly through the Participants
who in turn will exercise the rights of Certificateholders through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Certificates and is required to
receive and transmit distributions of principal of and interest on the
Certificates. Participants and Indirect Participants with which Certificate
Owners have accounts with respect to the Certificates similarly are required to
make book-entry transfers and receive and transmit such payments on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess Certificates, Certificate Owners will receive payments and will
be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Certificate
Owner to pledge Certificates to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of such Certificates, may
be limited due to the lack of a physical certificate for such Certificates.
DTC has advised the Transferor that it will take any action permitted to be
taken by a Certificateholder under any related Agreement or any Supplement only
at the direction of one or more Participants to whose account with DTC the
Certificates are credited. Additionally, DTC has advised the Transferor that it
will take such actions with respect to specified percentages of the Invested
Amount only at the direction of and on behalf of Participants whose holdings
include undivided interests that satisfy such specified percentages. DTC may
take conflicting actions with respect to other undivided interests to the extent
that such actions are taken on behalf of Participants whose holdings include
such undivided interests.
CEDEL S.A. ('CEDEL') is incorporated under the laws of Luxembourg as a
professional depositary. CEDEL holds securities for its participating
organizations ('CEDEL Participants') and facilitates the clearance and
settlement of securities transactions between CEDEL Participants through
electronic book-entry changes in
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accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. CEDEL interfaces with domestic markets in several countries. As a
professional depositary, CEDEL is subject to regulation by the Luxembourg
Monetary Institute. CEDEL Participants are recognized financial institutions
around the world, including underwriters, securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations and may
include the Underwriters. Indirect access to CEDEL is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a CEDEL Participant, either directly or
indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ('Euroclear Participants') and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in any of 32
currencies, including United States dollars. The Euroclear System includes
various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. The Euroclear
System is operated by Morgan Guaranty Trust Company of New York, Brussels,
Belgium office (the 'Euroclear Operator' or 'Euroclear'), under contract with
Euroclear Clearance System S.C., a Belgian cooperative corporation (the
'Cooperative'). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear System on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to the Euroclear system is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the 'Terms and Conditions'). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawals of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants, and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Certificates held through CEDEL or Euroclear
will be credited to the cash accounts of CEDEL Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See 'Tax Matters.' The CEDEL or the Euroclear Operator, as the case may be, will
take any other action permitted to be taken by a Certificateholder under the
Agreement on behalf of a CEDEL Participant or Euroclear Participant only in
accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, CEDEL and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Class A Certificates among participants of
DTC, CEDEL and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
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DEFINITIVE CERTIFICATES
Unless otherwise specified in the related Prospectus Supplement, the
Certificates of each Series will be issued in fully registered, certificated
form to Certificate Owners or their nominees (the 'Definitive Certificates'),
rather than to DTC or its nominee, only if (i) the Transferor advises the
Trustee in writing that DTC is no longer willing or able to discharge properly
its responsibilities as depositary with respect to the Certificates, and the
Trustee or the Transferor is unable to locate a qualified successor, (ii) the
Transferor, at its option, elects to terminate the registration of the
Certificates on the book-entry system through DTC, or (iii) after the occurrence
of a servicer default, certificate owners representing in the aggregate more
than 50% (or such other percentage specified in the related Prospectus
Supplement) of the Invested Amount advise DTC through Participants in writing
that the continuation of a book-entry system with respect to the Certificates
through any depositary is no longer in the best interest of the Certificate
Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the Definitive Certificates representing the Certificates and instructions for
reregistration, the Trustee will issue the Certificates as Definitive
Certificates, and thereafter the Trustee will recognize the holders of such
Definitive Certificates as holders under the Agreement ('Holders').
Distribution of principal of and interest on the Certificates will be made
by the Paying Agent directly to Holders of Definitive Certificates in accordance
with the procedures set forth herein and in the related Agreement. Interest
payments and any principal payments on each Distribution Date will be made to
Holders in whose names the Definitive Certificates were registered at the close
of business on the related Record Date. Distributions will be made by check
mailed to the address of such Holder as it appears on the certificate register.
The final payment on any Certificate (whether Definitive Certificates or the
Certificate registered in the name of DTC's nominee), however, will be made only
upon presentation and surrender of such Certificate at the office or agency
specified in the notice of final distribution to Certificateholders. The Trustee
will provide such notice to registered Certificateholders not later than the
fifth day of the month of such final distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the Transfer Agent and Registrar, which shall initially be the
Trustee. No service charge will be imposed for any registration of transfer or
exchange, but the Transfer Agent and Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
INTEREST PAYMENTS
For each Series of Certificates and Class thereof, interest will accrue
from the relevant Closing Date on the applicable Invested Amount at the
applicable Certificate Rate, which may be a fixed, floating or other type of
rate as specified in the related Prospectus Supplement. Interest will be
distributed to Certificateholders on the Distribution Dates specified in the
related Prospectus Supplement. Interest payments on any Distribution Date will
be funded from Yield Collections allocated to the Certificateholders' Interest
during the preceding Due Period or Periods and may be funded from certain
investment earnings on funds held in accounts of the related Trust and, from any
applicable Enhancement, if necessary, or certain other amounts as specified in
the related Prospectus Supplement. If the Distribution Dates for payment of
interest for a Series or Class occur less frequently than monthly, such
collections or other amounts (or the portion thereof allocable to such Class)
may be deposited in one or more trust accounts (each, an 'Interest Funding
Account') pending distribution to the Certificateholders of such Series or
Class, as described in the related Prospectus Supplement. If a Series has more
than one Class of Certificates, each such Class may have a separate Interest
Funding Account. The Prospectus Supplement relating to each Series of
Certificates and each Class thereof will describe the amounts and sources of
interest payments to be made, the Certificate Rate, and, for a Series or Class
thereof bearing interest at a floating Certificate Rate, the initial Certificate
Rate, the dates and the manner for determining subsequent Certificate Rates, and
the formula, index or other method by which such Certificate Rates are
determined.
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PRINCIPAL PAYMENTS
Unless otherwise specified in the related Prospectus Supplement, during the
Revolving Period for each Series of Certificates (which begins on the Closing
Date relating to such Series and ends on the day before an Amortization Period
or Accumulation Period begins), no principal payments will be made to the
Certificateholders of such Series. During the Controlled Amortization Period,
Rapid Amortization Period or Accumulation Period, as applicable, which will be
scheduled to begin on the date specified in the related Prospectus Supplement,
and during the Early Amortization Period, which will begin upon the occurrence
of an Early Amortization Event, principal will be paid to the Certificateholders
in the amounts and on Distribution Dates specified in the related Prospectus
Supplement or will be accumulated in a Principal Funding Account for later
distribution to Certificateholders on the Expected Final Payment Date in the
amounts specified in the related Prospectus Supplement. Principal payments for
any Series or Class thereof will be funded from Principal Collections received
during the related Due Period or Periods as specified in the related Prospectus
Supplement and allocated to such Series or Class and from certain other sources
specified in the related Prospectus Supplement. In the case of a Series with
more than one Class of Certificates, the Certificateholders of one or more
Classes may receive payments of principal at different times. The related
Prospectus Supplement will describe the manner, timing and priority of payments
of principal to Certificateholders of each Class. Upon satisfaction of certain
conditions set forth in the related Prospectus Supplement, the Servicer may
elect to postpone the commencement of the Accumulation Period, if any, and
extend the length of the Revolving Period.
Funds on deposit in any Principal Funding Account applicable to a Series
may be subject to a guaranteed rate agreement or guaranteed investment contract
or other arrangement specified in the related Prospectus Supplement intended to
assure a minimum rate of return on the investment of such funds. In order to
enhance the likelihood of the payment in full of the principal amount of a
Series of Certificates or Class thereof at the end of an Accumulation Period,
such Series of Certificates or Class thereof may be subject to a principal
maturity guaranty or other similar arrangement specified in the related
Prospectus Supplement.
CONVEYANCE OF RECEIVABLES
With respect to Trust I, the Transferor has transferred and assigned, and
with respect to any New Trust the Transferor will transfer and assign at the
time of formation of each such Trust, all of its right, title and interest in
and to the Receivables in the related Designated Accounts and all Receivables
thereafter created in such Accounts and the proceeds of all the foregoing.
Credco has sold or will sell to TRS all its right, title and interest in and to
all the Receivables owned by it and existing as of the applicable Cut Off Date
under the Designated Accounts. Pursuant to Receivable Purchase Agreement I, TRS
sold and pursuant to any New Receivable Purchase Agreement, unless otherwise
specified in the related Prospectus Supplement, TRS (or any other seller) will
sell to the Transferor all its right, title and interest in and to the
Receivables existing under the related Designated Accounts and all Receivables
arising under such Accounts from time to time in the future.
In connection with the sale of the Receivables owned by Credco and existing
as of the applicable Cut Off Date to TRS and the sale of the Receivables by TRS
to the Transferor and the transfer of the Receivables by the Transferor to Trust
I or a New Trust, and in connection with each sale of Receivables by Credco to
TRS, by TRS to the Transferor and each transfer of such Receivables to such
Trust, TRS for itself and as servicer for Credco has indicated and will
indicate, as applicable, in its records, including any computer files, that such
Receivables have been sold to the Transferor and then transferred to such Trust
and the Transferor has indicated and will indicate, as applicable, in its
records, including any computer files, that the Receivables have been
transferred from the Transferor to such Trust. In addition, the Transferor
provided, with respect to Trust I, and will provide to the Trustee, computer
files or microfiche lists containing a true and complete list showing for each
related Designated Account, as of the applicable Cut Off Date and for each
Additional Account as of each Additional Account Cut Off Date, (i) its account
number and (ii) the amount of Receivables in such Designated Account. TRS, as
initial Servicer, will retain and will not deliver to the Trustee any other
records or agreements relating to the Designated Accounts or the Receivables.
Except as set forth above, the records and agreements relating to the Designated
Accounts and the Receivables have not been and will not be segregated from those
relating to other charge card accounts and receivables and neither the computer
files nor the physical documentation relating to the Designated Accounts or
Receivables has been or will be stamped or marked to reflect the transfer of
Receivables to the related Trust. The Trustee will have reasonable access to
such records and agreements as
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required by applicable law or to enforce the rights of the Certificateholders.
Credco and TRS have filed, with respect to Trust I, and will file, with respect
to each New Trust, one or more UCC-1 financing statements in accordance with the
UCC to perfect TRS' and the Transferor's interest in the Receivables, as
applicable. The Transferor, in turn, has filed, with respect to Trust I, and
will file with respect to each New Trust, one or more UCC-1 financing statements
in accordance with New York state law to perfect the related Trust's interest in
the Receivables. See 'Special Considerations' and 'Certain Legal Aspects of the
Receivables--Transfer of Receivables.'
EXCHANGES
Unless otherwise specified in the related Prospectus Supplement, for each
Series of Certificates, the related Agreement will provide for the Trustee to
issue two types of certificates: (i) one or more Series of Certificates which
are transferable and have the characteristics described below and (ii) the
Exchangeable Transferor Certificate, a certificate which evidences the
Transferor Interest, which will initially be held by the Transferor or a
designated affiliate and will be transferable only as provided in the related
Agreement. The related Agreement will also provide that, pursuant to any one or
more Series Supplements, the Transferor may tender the Exchangeable Transferor
Certificate, or the Exchangeable Transferor Certificate and the Certificates
evidencing any Series of certificates, to the Trustee in exchange for one or
more newly issued Series (which may include Series offered pursuant to this
Prospectus) and a reissued Exchangeable Transferor Certificate. Pursuant to each
Agreement, the holder of the Exchangeable Transferor Certificate may define,
with respect to any newly issued Series: (i) its name or designation, (ii) its
initial principal amount (or method for calculating such amount), (iii) its
certificate rate (or formula for the determination thereof), (iv) the interest
payment date or dates and the date or dates from which interest shall accrue,
(v) the method for allocating collections to Certificateholders, (vi) the names
of any accounts to be used by such Series and the terms governing the operation
of any such accounts, (vii) the percentage used to calculate monthly servicing
fees, (viii) the Minimum Transferor Percentage, (ix) the minimum amount of Trust
Principal Component required to be maintained through the designation by the
Transferor of Additional Accounts, (x) the issuer and terms of any Enhancement
with respect thereto, (xi) the base rate for such Series, if applicable, (xii)
the terms on which the Certificates of such Series may be repurchased at the
Transferor's option or remarketed to other investors, (xiii) the series
termination date, (xiv) any deposit into any account maintained for the benefit
of Certificateholders, (xv) the number of classes of such Series, and if more
than one class, the rights and priorities of each such class, (xvi) the extent
to which the certificates of such Series will be issuable in temporary or
permanent global form (and, in such case, the depositary for such global
certificate or certificates, the terms and conditions, if any, upon which such
global certificate may be exchanged, in whole or in part, for definitive
certificates, and the manner in which any interest payable on a temporary or
global certificate will be paid), (xvii) whether the certificates of such Series
may be issued in bearer form and any limitations imposed thereon, (xviii) the
priority of any Series with respect to any other Series, (xix) the rights of the
holder of the Exchangeable Transferor Certificate that have been transferred to
the holders of such Series and (xx) any other relevant terms (all such terms,
the 'Principal Terms' of such Series). Upon the issuance of an additional Series
of Certifcates, none of the Transferor, the Servicer, the Trustee or the Trust
will be required or will intend to obtain the consent of any Certificateholder
of any other Series previously issued by such Trust. However, as a condition of
an Exchange, the Transferor will deliver to the Trustee written confirmation
that the Exchange will not result in the applicable Rating Agency reducing or
withdrawing its rating of any outstanding Series previously issued by such
Trust. The Transferor may offer any Series to the public or other investors
under a Disclosure Document in offerings pursuant to this Prospectus or in
transactions either registered under the Act or exempt from registration
thereunder, directly, through one or more underwriters or placement agents, in
fixed-price offerings or in negotiated transactions or otherwise.
Unless otherwise specified in the related Prospectus Supplement, the
Transferor may perform Exchanges and define Principal Terms such that each
Series issued under a Trust has a period during which amortization of the
principal amount thereof is intended to occur which may have a different length
and begin on a different date than such period for any other Series. Further,
one or more Series may be in their revolving periods while other Series are not.
Thus, certain Series may not be amortizing, while other Series are amortizing. A
Series may have the benefits of a form of Enhancement issued by issuers
different from the issuers of the form of Enhancement with respect to any other
Series. Under the related Agreement, the Trustee shall hold any such Enhancement
only on behalf of the Series with respect to which such Enhancement relates.
Likewise, with respect to each such
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Enhancement, the Transferor may deliver a different form of Enhancement
agreement. The holder of the Exchangeable Transferor Certificate may specify
different certificate rates and monthly servicing fees with respect to each
Series. Yield Collections not used to pay interest on the certificates, the
monthly servicing fee, the investor default amount or investor charge-offs with
respect to any Series may be allocated as provided in the form of the
Enhancement agreement for such Series, if applicable. The holder of the
Exchangeable Transferor Certificate will also have the option under the
Agreement to vary between Series the terms upon which a Series (or a particular
Class within such Series) may be repurchased at the Transferor's option or
remarketed to other investors. Additionally, certain Series may be subordinated
to other Series, or Classes within a Series may have different priorities. There
will be no limit to the number of Exchanges that the Transferor may perform
under a related Agreement. Each Trust will terminate only as provided in the
related Agreement.
Unless otherwise specified in the related Prospectus Supplement, an
Exchange may only occur upon the satisfaction of certain conditions provided in
the related Agreement. Under each Agreement, the Transferor may perform an
Exchange by notifying the Trustee, at least three business days in advance of
the date upon which the Exchange is to occur. Under each Agreement, the notice
will state the designation of any Series to be issued on the date of the
Exchange and, with respect to each such Series: (i) its initial invested amount
(or method for calculating such amount) and (ii) its certificate rate (or the
method for allocating interest payments or other cash flow to such Series). Each
Agreement will provide that, on the date of the Exchange, that the Trustee will
issue any such Series only upon delivery to it of the following: (i) a
Supplement in form satisfactory to the Trustee signed by the Transferor and
specifying the Principal Terms of such Series, (ii) the form of Enhancement and
the Enhancement agreement, if any, with respect thereto executed by the
Transferor and the provider of the form of Enhancement, (iii) an opinion of
counsel to the effect that certificates of such Series will be characterized
either as indebtedness or an interest in a partnership under existing law for
Federal income tax purposes and that the issuance of such Series will not affect
the Federal income tax characterization of any outstanding Series of the related
Trust, (iv) written confirmation from the applicable Rating Agency that the
Exchange will not result in such Rating Agency reducing or withdrawing its
rating on any outstanding Series of the related Trust and (v) the existing
Exchangeable Transferor Certificate and the applicable certificates of the
Series to be exchanged, if applicable. Upon satisfaction of such conditions, the
Trustee will cancel the existing Exchangeable Transferor Certificate and the
certificates of the exchanged Series, if applicable, and issue the new Series
and new Exchangeable Transferor Certificate.
COVENANTS, REPRESENTATIONS AND WARRANTIES
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, the Transferor has covenanted in Agreement I, and will
covenant in each New Agreement to the Trustee for the benefit of all
certificateholders of all Series which from time to time may have an interest in
the related Trust that, as to the Receivables and the Designated Accounts, the
Transferor will accept the transfer of any Receivable which is charged-off as
uncollectible or any Receivable the proceeds of which are unavailable to the
Trust, if (i) such Receivable is not an Eligible Receivable, (ii) such
Receivable was not conveyed to the Trust free and clear of all liens (except
such liens as may be permitted by the Agreement) or in compliance in all
material respects with all requirements of law, (iii) all material information
with respect to the Receivables, and the Designated Accounts related thereto, in
the list provided to the Trustee was not true and correct in all material
respects, (iv) the Transferor did not obtain all consents, licenses, approvals
or authorizations required in connection with the conveyance of the Receivables
to the Trust, or (v) on the applicable Closing Date and on the applicable
Additional Account Closing Date with respect to Additional Accounts, the
computer file or list of Designated Accounts or Additional Accounts, as the case
may be, provided by the Transferor to the Trustee was not an accurate and
complete listing of all such Accounts in all material respects as of the related
Cut Off Date or the Additional Account Cut Off Date, as applicable, or the
information contained therein with respect to the identity of such Accounts and
the Receivables existing thereunder was not true and correct in all material
respects as of the related Cut Off Date or the Additional Account Cut Off Date,
as applicable, unless cured within 60 days or any longer period agreed upon by
the Trustee (not to exceed an additional 60 days) or within any other period of
time as specified in the related Prospectus Supplement, from the earlier to
occur of the discovery of any such event by the Transferor or the Servicer, or
receipt by the Transferor or the Servicer of written notice of any such event
given by the Trustee. Additionally, the Transferor covenants and will covenant
in each Agreement to
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accept, under certain conditions, the transfer of each Receivable which is
subject to certain specified liens immediately upon the discovery of such liens.
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, the Transferor shall accept the transfer of any
Receivable as described above (an 'Ineligible Receivable') by paying to the
Servicer within two business days for deposit in the Collection Account an
amount equal to the balance of such Ineligible Receivable. Any deposit into the
Collection Account in connection with the reassignment of an Ineligible
Receivable shall be deemed a payment in full of the Ineligible Receivable and
will be treated under the related Agreement in the same manner as are payments
received by the Servicer from Cardmembers under the Designated Accounts. Any
amounts so paid by the Transferor shall be allocated in respect of Yield
Collections and Principal Collections as provided in the related Agreement.
Notwithstanding the foregoing, no such reassignment shall be considered to occur
unless such deposit is made.
The obligation of the Transferor to accept reassignment of any Ineligible
Receivable as described above will be the sole remedy with respect to such
Receivable available to certificateholders of all Series outstanding or the
Trustee on behalf of certificateholders of all Series outstanding. Pursuant to
Receivable Purchase Agreement I, TRS has made, and pursuant to each New
Receivable Purchase Agreement, TRS or the applicable seller will make, covenants
with respect to Ineligible Receivables substantially similar to those described
above with respect to the Transferor. As a result, in the event that a
Receivable sold to the Transferor by TRS becomes an Ineligible Receivable, TRS
or the applicable seller will be required to repurchase such Receivable from the
Transferor.
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, the Transferor has represented and warranted in
Agreement I, and will represent and warrant in each New Agreement, to the
Trustee for the benefit of all holders of all Series which from time to time may
have an interest in the related Trust that (i) the Transferor is duly organized
and validly existing in good standing under the laws of the jurisdiction of its
organization, has the full corporate power, authority and legal right to own its
properties and conduct its business as such properties are presently owned and
such business is presently conducted, and to execute, deliver and perform its
obligations under the related Agreement and the related Receivable Purchase
Agreement and to execute and deliver to the Trustee the Certificates pursuant to
such Agreement, (ii) such Agreement and the Receivable Purchase Agreement
constitute legal, valid, binding and enforceable obligations of the Transferor,
and (iii) such Agreement constitutes a valid transfer to the related Trust of
all right, title and interest of the Transferor in and to the Receivables,
whether then existing or thereafter created in the Designated Accounts, and the
proceeds thereof (which amount shall include amounts in any of the accounts
established for the benefit of the Certificateholders) or the grant of a first
priority perfected security interest in such Receivables and with certain
exceptions made for certain limited time periods the proceeds thereof (which
amount shall include amounts in any of the accounts established for the benefit
of the Certificateholders), which is effective as to each Receivable upon the
transfer thereof to the related Trust or upon its creation, as the case may be,
and that the Receivable Purchase Agreement constitutes a valid transfer to the
Transferor of all right, title and interest of TRS or the applicable seller in
and to the Receivables, whether then existing or thereafter created in the
applicable Designated Accounts, and the proceeds thereof. In the event that (x)
any of the representations and warranties described in clauses (i) through (iii)
above are not true and correct or (y) a material amount of Receivables are not
Eligible Receivables, and in either case such event has a material adverse
effect on the interests of holders of the certificates of all Series which have
an interest in the Trust, either the Trustee or the holders of certificates
evidencing undivided interests in such Trust aggregating more than 50% of the
outstanding invested amount of all such Series, by written notice to the
Transferor (and to the Trustee and the Servicer, if given by the
Certificateholders), may direct the Transferor to accept reassignment of all
Receivables within 60 days of such notice or any longer period agreed upon by
the Trustee (not to exceed an additional 60 days). The Transferor will be
obligated to accept reassignment of all such Receivables on a Distribution Date
occurring within such applicable period, unless the representations and
warranties shall then be true and correct in all material respects or there
shall no longer be a material amount of such Receivables which are not Eligible
Receivables, as the case may be. The price for such transfer of Receivables
shall be equal to the sum of the aggregate invested amounts of all such Series
on the Record Date related to the applicable payment date on which the transfer
is scheduled to be made (less the aggregate principal amount on deposit in any
principal funding account) plus an amount equal to all interest accrued but
unpaid on all such Series at the applicable certificate rates through the end of
the interest accrual periods of such Series. The payment of such amount into
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the Collection Account in immediately available funds will be considered a
prepayment in full of all such Receivables and will be paid in full to the
certificateholders. The obligations described above shall be the sole remedies
respecting the foregoing representations, warranties and events available to the
Trustee or the certificateholders.
Pursuant to Receivable Purchase Agreement I, TRS has made, and pursuant to
each New Receivable Purchase Agreement, TRS or the applicable seller will make,
representations and warranties with respect to the Receivables sold by it to the
Transferor pursuant to the related Receivable Purchase Agreement substantially
similar to those described above with respect to the Transferor. As a result, in
the event that the Transferor breaches a representation and warranty described
above with respect to a Receivable sold to the Transferor by TRS or such seller,
TRS or such seller will be required to repurchase from the Transferor the
Receivables retransferred to the Transferor for an amount of cash equal to the
amount the Transferor is required to deposit under the related Agreement in
connection with such retransfer.
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Series of Certificates, an 'Eligible Receivable' will be defined
to mean each Receivable (i) which has arisen under an Eligible Account, (ii)
which was created in compliance with all requirements of law and pursuant to a
Cardmember agreement which complies with all requirements of law in either case
the failure to comply with which would have a material adverse effect upon
certificateholders, (iii) with respect to which all material consents, licenses,
approvals or authorizations of, or registrations with, any governmental
authority required to be obtained or given by TRS in connection with the
creation of such Receivable or the execution, delivery and performance by TRS of
the related Cardmember agreement have been duly obtained or given and are in
full force and effect as of such date of creation, (iv) as to which at the time
of the transfer of such Receivable to the related Trust, the Transferor or the
Trust will have good and marketable title, free and clear of all liens,
encumbrances, charges and security interests (except those permitted by the
related Agreement), (v) which has been the subject of either a valid transfer
and assignment from the Transferor to the related Trust of all of the
Transferor's right, title and interest therein or the grant of a first priority
perfected security interest therein (and in the proceeds thereof), effective
until the termination of the related Trust, (vi) which will at all times be the
legal, valid and binding payment obligation of the Cardmember thereof
enforceable against such Cardmember in accordance with its terms, subject to
certain bankruptcy and equity related exceptions, (vii) which constitutes either
an 'account' or a 'general intangible' under and as defined in Article 9 of the
UCC as then in effect in the State of New York, (viii) which, at the time of its
transfer to the related Trust, has not been waived or modified except in
accordance with the policies and procedures of TRS relating to the operation of
its consumer charge card business, (ix) which is not subject to any right of
rescission, setoff, counterclaim or other defense (including the defense of
usury), other than certain bankruptcy and equity related defenses, (x) as to
which TRS and the Transferor have satisfied all obligations to be fulfilled at
the time it is transferred to the related Trust and (xi) as to which TRS and the
Transferor have done nothing, at the time of its transfer to the related Trust,
to impair the rights of the Trust or certificateholders therein.
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, it will not be required or anticipated that the Trustee
will make any initial or periodic general examination of the Receivables or any
records relating to the Receivables for the purpose of establishing the presence
or absence of defects, compliance with the Transferor's representations and
warranties or for any other purpose. In addition, it is not anticipated or
required that the Trustee will make any initial or periodic general examination
of the Servicer for the purpose of establishing the compliance by the Servicer
with its representations or warranties or the performance by the Servicer of its
obligations under each Agreement for any other purpose. The Servicer, however,
will be required to deliver to the Trustee on or before March 1 (or such other
date specified in the related Prospectus Supplement) of each year an opinion of
counsel with respect to the validity of the security interest of each Trust in
and to the Receivables and certain other components of such Trust.
ADDITION OF ACCOUNTS
Subject to the conditions set forth in the second succeeding sentence, the
Transferor will have the right to designate from time to time Additional
Accounts to be included as Designated Accounts and to convey to a Trust on
designated dates all Receivables in such Additional Accounts (each such date, an
'Additional Account Closing Date'), whether such Receivables are then existing
or thereafter created. In addition, the Transferor will
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be required to designate the Receivables of Additional Accounts (to the extent
available) and to transfer the Receivables in such Additional Accounts to a
Trust if, as of the end of any two consecutive Due Periods, the Trust Principal
Component minus the sum of the invested amounts (or adjusted invested amounts)
for all Series having an interest in such Trust (the 'Transferor Amount') as a
percentage of the Trust Principal Component (reduced, for the purpose of this
calculation, by the Privileged Assets Calculated Amount for the prior Due
Period) is less than 15% with respect to Trust I and a percentage specified in
the related Prospectus Supplement with respect to each New Trust (the 'Minimum
Transferor Percentage') or under the circumstances and in the amounts specified
in the related Prospectus Supplement. The Transferor will in each case convey to
the Trust its interest in all Receivables in such Additional Accounts, whether
such Receivables are then existing or thereafter created, subject to the
following conditions, among others: (i) each such Additional Account at the time
of its selection must be an Eligible Account; (ii) the selection of the
Additional Accounts by the Transferor will be made in a manner which it
reasonably believes will not materially adversely affect the Certificateholders'
interests; and (iii) the Transferor shall have delivered prior written notice of
the addition to the applicable Rating Agency, the Trustee and the Servicer, and
if required by the related Agreement, shall have been notified in writing that
such addition will not result in a reduction or withdrawal of the rating of any
Series of certificates.
Although each Additional Account must satisfy certain criteria set forth in
the related Agreement at the time of its selection, Additional Accounts may not
be of the same credit quality as the initial Designated Accounts.
REMOVAL OF DESIGNATED ACCOUNTS
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, subject to the conditions set forth in the next
succeeding sentence, on each Determination Date with respect to which the
Transferor Amount as a percentage of the Trust Principal Component (reduced, for
the purpose of this calculation, by the Privileged Assets Calculated Amount for
the prior Due Period) exceeds 20% with respect to Trust I and a percentage
specified in the related Prospectus Supplement with respect to each New Trust at
the end of the related Due Period or under the circumstances and in the amounts
specified in the related Prospectus Supplement, the Transferor will have the
right to accept removal of certain Designated Accounts designated by the
Transferor from a Trust (the 'Removed Accounts') and accept the conveyance of
all the Receivables in the Removed Accounts, without notice to the
Certificateholders. The Transferor may, at its sole discretion, accept such
offer in an aggregate amount equal to an amount not greater than the excess of
the Transferor Amount over 15% of the Trust Principal Component (reduced as
aforesaid) as of the end of the related Due Period, unless otherwise specified
in the related Prospectus Supplement. The Transferor will be permitted to
designate and require reassignment to it of the Receivables from Removed
Accounts only upon satisfaction of the following conditions: (i) the Transferor
shall have delivered to the Trustee for execution a written instrument of
reassignment and a computer file or microfiche list containing a true and
complete list of all Designated Accounts in the related Trust after such
removal, the Designated Accounts to be identified by account number and
aggregate amount of Receivables; (ii) the Transferor shall represent and warrant
that no selection procedure used by the Transferor which is adverse to the
interests of the certificateholders or any provider of Enhancements was utilized
in selecting the Removed Accounts; (iii) the removal of any Receivables of any
Removed Accounts shall not, in the reasonable belief of the Transferor, cause an
Early Amortization Event to occur; (iv) the Transferor shall have delivered
prior written notice of the removal to each Rating Agency which has rated any
outstanding Series and prior to the date on which such Receivables are to be
removed shall have received notice from each Rating Agency that such removal
will not cause the reduction or withdrawal of its rating of any Series of
certificates; and (v) the Transferor shall have delivered to the Trustee and
each Rating Agency officers' certificates confirming the items set forth in
clauses (i) through (iv) above.
COLLECTION ACCOUNT
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, the Trustee will establish and maintain or cause to be
established and maintained, in the name of the Trustee, on behalf of each Trust,
a segregated trust account (the 'Collection Account') for the benefit of the
Certificateholders of all Series issued under such Trust, including any Series
offered hereby, with an Eligible Institution. An 'Eligible Institution' means a
depositary institution, which may include the Trustee, organized under the laws
of the United States or any one of the States thereof including the District of
Columbia (or any domestic branches of foreign banks), which at all times has a
short-term unsecured debt or certificate of deposit rating of at least A-1+
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and P-1 by the applicable Rating Agency; provided, however, that no such rating
shall be required of an institution which shall have corporate trust powers and
which maintains the Collection Account, any principal funding account, any
interest funding account or any other account maintained for the benefit of
Certificateholders as a fully segregated trust account with the trust department
of such institution. Funds in the Collection Account may be invested, at the
direction of the Servicer, in (i) obligations fully guaranteed by the United
States of America or its agencies, (ii) time deposits, certificates of deposit
or banker's acceptances of certain depository institutions or trust companies
having the highest rating from the applicable Rating Agency, (iii) commercial
paper having, at the time of the related Trust's investment, a rating in the
highest rating category from the applicable Rating Agency, (iv) money market
funds which have a rating in the highest rating category from the applicable
Rating Agency, (v) Eurodollar time deposits having, at the time of the related
Trust's investment or contractual commitment to invest therein, a rating in the
highest rating category from the applicable Rating Agency, (vi) repurchase
agreements involving certain of the above-listed investments so long as the
other party thereto has at the time of the related Trust's investment therein, a
rating in the highest rating category from the applicable Rating Agency and
(vii) any other investments as may be approved in writing by the applicable
Rating Agency prior to the related Trust's investment therein (collectively, the
'Eligible Investments'). Any such investment shall be held to maturity. Any
earnings (net of losses and investment expenses) on funds in the Collection
Account shall be paid monthly to the Transferor unless an Early Amortization
Event occurs, in which event such funds will remain on deposit in the Collection
Account. The Servicer will have the revocable power to withdraw funds from the
Collection Account and to instruct the Trustee to make withdrawals and payments
from the Collection Account for the purpose of carrying out the Servicer's or
the Trustee's duties under the related Agreement. So long as no Servicer Default
has occurred and the Servicer maintains certain short-term credit ratings, or
obtains a guaranty or written confirmation of the ratings on the Certificates
from each Rating Agency, the Servicer need not deposit funds into the Collection
Account until the business day preceding the following Distribution Date and may
use such funds for its own purposes. See '--Allocation of Collections; Deposits
in Collection Account.'
OTHER TRUST ACCOUNTS
Each Agreement will provide that the Trustee shall have the power to
establish series accounts in Series Supplements, including an Interest Funding
Account, a Principal Funding Account or such other account specified in the
related Series Supplement, each of which series account shall be held for the
benefit of the Certificateholders of the related Series and for the purposes set
forth in the related Prospectus Supplement.
ALLOCATION PERCENTAGES
Pursuant to each Agreement, during each Due Period the Servicer will
allocate among the Certificateholders' Interest of all Series of Certificates
issued by the related Trust (and between each Class of each Series) and the
Transferor Interest all Yield Collections, all Principal Collections and the
amount of all Defaulted Receivables. The Servicer will make each allocation by
reference to the applicable Invested Percentage of each Series and the
Transferor Percentage in each case. The Prospectus Supplement relating to a
Series will specify the Invested Percentage with respect to yield collections,
Principal Collections and Defaulted Receivables during the Revolving Period, any
Amortization Period and the Accumulation Period, as applicable. In addition, for
each Series of Certificates having more than one Class, the related Prospectus
Supplement will specify the method of allocation between each Class.
The Transferor Percentage will, in each case, be equal to 100% minus the
aggregate Invested Percentages for all Series then outstanding.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT
Unless otherwise specified in the related Prospectus Supplement, on the
date of processing (generally the first business day after a record of a
transaction is first output in written form), the Servicer will deposit
Collections on the Receivables and payments made by the Transferor in respect of
Ineligible Receivables allocable to the Certificateholders' Interest into the
Collection Account except as described below. So long as a Servicer Default has
not occurred, TRS or an affiliate of TRS is the Servicer and the Servicer (i)
maintains a short-term credit rating of at least A-1 and P-1 by the applicable
Rating Agency, or (ii) obtains a guarantee pursuant to the Agreement with
respect to the Servicer's deposit and payment obligations thereunder so long as
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the guarantor maintains a short-term credit rating of at least A-1 and P-1 by
the applicable Rating Agency, or (iii) obtains a written notification from each
Rating Agency to the effect that such Rating Agency does not intend to downgrade
or withdraw its then current rating of any outstanding Series of Certificates
despite the Servicer's inability to satisfy the rating requirement specified in
clause (i), and for the two business day period following any reduction of
either such rating or failure to satisfy the conditions of either clause (ii) or
(iii), the Servicer need not deposit Collections and payments made by the
Transferor in respect of Ineligible Receivables allocable to the
Certificateholders' Interest into the Collection Account on the day indicated in
the preceding sentence but may use for its own benefit all such Collections and
payments until the business day preceding the Distribution Date at which time
the Servicer must deposit such amounts (net of the Monthly Servicing Fee and net
of any amounts to be distributed to the Transferor) into the Collection Account.
Until such Collections and payments are deposited in the Collection Account,
such amounts will not be segregated from the assets of the Servicer, and the
proceeds of any short term investment of such proceeds will accrue to the
Servicer. Although Standard & Poor's Corporation and Moody's Investors Service,
Inc. have assigned short-term debt ratings to the Servicer of A-1 and P-1,
respectively, while the Servicer holds Collections and payments made by the
Transferor in respect of Ineligible Receivables, the Certificateholders will be
subject to risk of loss, including risk resulting from the bankruptcy or
insolvency of the Servicer. The Servicer will pay no fee to the Trust or the
Certificateholders for use of Collections and payments made by the Transferor in
respect of Ineligible Receivables. See 'Special Considerations--Certain Legal
Aspects.' Collections on the Receivables allocable to the Transferor Interest
will be remitted by the Servicer on each day to the Transferor.
Unless otherwise specified in the related Prospectus Supplement, if the
Servicer's short term credit rating is reduced below A-1 by Standard & Poor's
Corporation, the Trustee, within five business days, shall deliver to the banks
maintaining accounts into which Cardmember payments on the Accounts are
deposited certain lockbox letters executed by TRS relating to control of funds
in such accounts unless other arrangements satisfactory to Standard & Poor's
Corporation are put into place.
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, if the Servicer is required to deposit Collections on
the Receivables for the related Due Period allocable to the Certificateholders'
Interest into the Collection Account on the date of processing: (i) during the
Revolving Period, an amount equal to the applicable Invested Percentage of
Principal Collections received each day will first be deposited into the
Collection Account as Excess Principal Collections to the extent required to be
distributed to other Series on the next succeeding Distribution Date and then
will be remitted by the Servicer to the Transferor on the date of processing
unless such Principal Collections would reduce the Transferor Amount as a
percentage of the related Trust Principal Component (reduced by the Privileged
Assets Calculated Amount) below 3% (after giving effect to any new Receivables
transferred to the related Trust) in which case such amount will be deposited in
the Collection Account as Undistributed Principal Collections, and an amount
equal to the applicable Invested Percentage of Yield Collections received each
day will be deposited by the Servicer into the Collection Account on the date of
processing, (ii) during the Accumulation Period, the Controlled Amortization
Period or the Rapid Amortization Period, as applicable, an amount equal to the
applicable Invested Percentage of Principal Collections received each day will
be deposited by the Servicer into the Collection Account on the date of
processing until such deposits equal an amount specified in the related
Prospectus Supplement; thereafter the applicable Invested Percentage of
Principal Collections received each day will first be deposited into the
Collection Account as Excess Principal Collections to the extent required to be
distributed to other Series on the next succeeding Distribution Date, then will
be remitted by the Servicer to the Transferor on the date of processing unless
such Principal Collections would reduce the Transferor Amount as a percentage of
the Trust Principal Component (reduced as aforesaid) below 3% (after giving
effect to any new Receivables transferred to the related Trust), in which case
such amount will be deposited into the Collection Account as Undistributed
Principal Collections and the applicable Invested Percentage of Yield
Collections received each day will be deposited by the Servicer into the
Collection Account on the date of processing, and (iii) during an Early
Amortization Period, all Principal Collections received each day allocable to
the Certificateholders' Interest will be deposited by the Servicer into the
Collection Account on the date of processing until such deposits equal the
amount of principal permitted to be paid to Certificateholders on each Special
Payment Date; thereafter such Principal Collections will be deposited into the
Collection Account as Excess Principal Collections and the applicable Invested
Percentage of Yield Collections received each day will be deposited by the
Servicer into the Collection Account on the date of processing.
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PRINCIPAL COLLECTIONS FOR ALL SERIES
If so specified in the related Prospectus Supplement, to the extent that
Principal Collections and certain other amounts that are allocated to the
Certificateholders' Interest of any Series are not needed to make payments or
deposits with respect to such Series, such collections will constitute Excess
Principal Collections and will be applied to cover principal payments due to or
for the benefit of Certificateholders of other Series. Any such reallocation
will not result in a reduction in the Invested Amount of the Series to which
such collections were initially allocated.
APPLICATION OF COLLECTIONS
Any Principal Collections not distributed to the Transferor because such
Principal Collections would reduce the Transferor Amount as a percentage of the
Trust Principal Component (reduced, for the purpose of such calculation, by the
Privileged Assets Calculated Amount) below 3% (after giving effect to any new
Receivables transferred to the related Trust for the related Due Period)
('Undistributed Principal Collections') will be held in the Collection Account
until distributable to the Transferor or, if the Accumulation Period or the
Early Amortization Period has commenced, on each Distribution Date all or a
portion thereof will be treated as specified in the related Prospectus
Supplement. Any proceeds from any repurchase of the Certificates occurring in
connection with a Service Transfer and the proceeds of any sale, disposition or
liquidation of Receivables following the occurrence of an Early Amortization
Event as a result of the bankruptcy or insolvency of TRS or the Transferor or in
connection with the Series Termination Date will also be deposited into the
Collection Account immediately upon receipt and will be allocated as Principal
Collections or Yield Collections, as applicable.
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT
Unless otherwise specified in the related Prospectus Supplement, the
Servicer shall apply or shall cause the Trustee to apply the funds on deposit in
the Collection Account with respect to each Distribution Date to make the
following distributions and allocations for such Distribution Date:
(a) An amount equal to the applicable Invested Percentage of Yield
Collections deposited in the Collection Account for the Due Period immediately
preceding such Distribution Date will be allocated in the priority described in
the related Prospectus Supplement.
(b) For each Distribution Date with respect to an Accumulation Period, an
Amortization Period and thereafter, the remaining funds on deposit in the
Collection Account with respect to such Distribution Date will be allocated in
the priority described in the related Prospectus Supplement.
In the case of a Series of Certificates having more than one Class, the
amounts in the Collection Account will be allocated and applied to each Class in
the manner and order of priority described in the related Prospectus Supplement.
DEFAULTED RECEIVABLES; RECOVERIES; ADJUSTMENTS
'Defaulted Receivables' for any Due Period are Receivables which were
charged off as uncollectible in such Due Period. Unless otherwise specified in
the related Prospectus Supplement, Receivables in a Designated Account will be
considered charged off for the purposes of the Agreement on the earlier of (i)
the cycle billing date next following the date when such Designated Account
becomes 360 days past due from the date of the billing statement and (ii) the
cycle billing date on which such Designated Account is charged off in accordance
with the customary and usual servicing procedures of the Servicer. The amount of
Defaulted Receivables for any Due Period will be an amount (not less than zero)
equal to the product of one minus the Yield Factor and an amount equal to the
result of (a) the amount of the Receivables that were charged off in such Due
Period less (b) the amount of Recoveries received by the Servicer in such Due
Period and less (c) the full amount of any Defaulted Receivables as to which the
Transferor or the Servicer becomes obligated to accept reassignment for such Due
Period unless certain events of bankruptcy, insolvency or receivership have
occurred with respect to the Transferor or the Servicer. Unless otherwise
specified in the related Prospectus Supplement, a portion of all Defaulted
Receivables (the 'Investor Default Amount') will be allocated to the
Certificateholders' Interest for
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each Distribution Date in an amount equal to the product of (a) the applicable
Invested Percentage as specified in the related Prospectus Supplement, during
the immediately preceding Due Period and (b) the amount of Defaulted Receivables
for such Due Period.
If the Servicer makes a downward adjustment of the amount of any Receivable
because of a rebate, refund, unauthorized charge, billing error, nonpayment of a
Privileged Assets billed amount or certain other noncash items, or if the
Servicer otherwise adjusts downward the amount of any Receivable without
receiving collections therefor or charging off such amount as uncollectible, or
any Receivable is discovered as having been created through a fraudulent or
counterfeit action (each, an 'Adjustment'), the Trust Principal Component will
be reduced by the product of (i) one minus the Yield Factor and (ii) the amount
of such Adjustments. To the extent that such reduction in the Trust Principal
Component would cause the Transferor Amount as a percentage of the Trust
Principal Component (reduced, for the purpose of this calculation, by the
Privileged Assets Calculated Amount) to be less than 3%, the Transferor shall
deposit an amount (the 'Transfer Deposit Amount') sufficient to cause the
Transferor Amount as a percentage of the Trust Principal Component (reduced as
aforesaid) to be at least equal to 3%. Any such deposit into the Collection
Account shall be deemed a Principal Collection.
As one of the features of Cardmembership, TRS offers its Privileged Assets
program (the 'Privileged Assets program'), under which Cardmembers can make
voluntary contributions to an annuity program with a TRS insurance affiliate.
Enrollees can choose a monthly contribution amount not to exceed $5,000 per
month, which amount is billed to their Card account. Payment of such billed
contribution amounts is voluntary, and therefore such amounts do not constitute
Receivables, although they are treated under the Agreement in the same manner as
Receivables when they are billed to Cardmembers, in the same manner as
Collections when they are paid by Cardmembers and in the same manner as an
Adjustment if they are not paid within 60 days of first being billed. Because
payment of Privileged Assets billed amounts is voluntary by the Cardmember, a
portion of the Privileged Assets billed amounts estimated to have occurred with
respect to the Designated Accounts in a Due Period is excluded from the
calculation of Trust Principal Component for the purposes of determining whether
the Transferor is required to add Accounts or to deposit any Transfer Deposit
Amount, whether an Early Amortization Event has occurred and whether the
Transferor is permitted to remove Accounts. Such excluded portion (the
'Privileged Assets Calculated Amount') will be determined monthly as the product
of (a) one minus the Yield Factor, (b) the Privileged Assets billed amounts
estimated to have occurred with respect to the Designated Accounts in the
preceding Due Period and (c) a statistical formula applied to the lowest monthly
payment experience of Privileged Assets billed amounts for the previous twelve
months. Pursuant to the Agreement, if the estimated Privileged Assets billed
amounts in the Trust increase beyond a specified level or if the payment rate of
the Privileged Assets billed amounts in the entire Portfolio falls below a
specified level, the Transferor is required to remove, within 120 days of such
occurrence, a portion of the Accounts of Cardmembers who have enrolled in the
Privileged Assets program. Unless otherwise provided in the related Prospectus
Supplement, Privileged Assets billed amounts are included in the receivable
balances and charge volume information for the Portfolio and in the Receivable
balances for the Designated Accounts.
INVESTOR CHARGE-OFFS
With respect to each Series of Certificates, if on any Distribution Date,
the Investor Default Amount, if any, for such Distribution Date exceeds the
amount of Yield Collections which are allocated and available to fund such
amount, then the Invested Amount for such Series shall be reduced by the
aggregate amount of such excess, but not more than the Investor Default Amount
for such Distribution Date (an 'Investor Charge-Off'). The Invested Amount for
such Series will thereafter be increased (but not in excess of the unpaid
principal balance of the Certificates of such Series) on any Distribution Date
by the amount of Yield Collections allocated and available for that purpose.
In the case of a Series of Certificates having more than one Class, the
related Prospectus Supplement will describe the manner and priority of
allocating Investor Charge-Offs and reimbursements thereof among the Invested
Amounts of the several Classes.
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FINAL PAYMENT OF PRINCIPAL; TERMINATION OF TRUST
With respect to each Series, the Certificates will be subject to optional
repurchase by the Transferor on any Distribution Date on or after which the
Invested Amount is reduced to an amount less than or equal to 10% (or such other
amount specified in the related Prospectus Supplement) of the initial Invested
Amount, unless certain events of bankruptcy, insolvency or receivership have
occurred with respect to the Transferor. Unless otherwise specified on the
related Prospectus Supplement, the repurchase price will be equal to the total
Invested Amount (less the amount, if any, on deposit in any Principal Funding
Account with respect to such Series), plus the Enhancement Invested Amount, if
any, with respect to such Series plus accrued and unpaid interest on the
Certificates through the day preceding the Distribution Date with respect to
which the repurchase occurs.
Each Prospectus Supplement will specify the final date on which principal
and interest on the Certificates will be scheduled to be distributed (the
'Series Termination Date'), subject to prior termination as provided above. In
the event that the Invested Amount of the Certificates is greater than zero on
the Series Termination Date, the Trustee will sell or cause to be sold, and
apply the proceeds to the extent necessary to pay such remaining amounts to all
Certificateholders pro rata as final payment of the Certificates, an amount of
Receivables up to 110% of the Invested Amount of the Certificates at the close
of business on such date, but not more than the total amount of Receivables
allocable to the Certificates, unless otherwise specified in the related
Prospectus Supplement. The proceeds of any such sale will be treated as
collections on the Receivables and applied as provided above in '--Application
of Collections.'
Unless the Transferor instructs the Trustee otherwise, each Trust will only
terminate on the earlier to occur of: (a) the day following the day on which the
aggregate invested amounts of all Series issued by such Trust is zero or (b) the
date specified in the related Prospectus Supplement (the 'Final Termination
Date'). Upon the termination of each Trust and the surrender of the Exchangeable
Transferor Certificate, the Trustee shall convey to the Transferor all right,
title and interest of the Trust in and to the Receivables and other funds of the
Trust (other than amounts in the accounts maintained by the Trust for the final
payment of principal and interest to Certificateholders).
EARLY AMORTIZATION EVENTS
Unless otherwise specified in the related Prospectus Supplement, the
Revolving Period for a Series will continue through the end of the date
specified in the related Prospectus Supplement, unless an Early Amortization
Event occurs. An Early Amortization Period will commence (i) on the day on which
an Early Amortization Event occurs or is deemed to occur or (ii) on the Expected
Final Payment Date if the Invested Amount with respect to a Series is not paid
in full on such date. An 'Early Amortization Event' with respect to all Series
issued by any Trust refers to any of the following events, unless otherwise
specified in the related Prospectus Supplement:
(i) certain events of bankruptcy or insolvency relating to the
Transferor or TRS;
(ii) such Trust becomes an 'investment company' within the meaning of
the Investment Company Act of 1940, as amended;
(iii) after any applicable grace period, a failure by the Transferor
to convey Receivables in Additional Accounts to such Trust when required by
the related Agreement;
(iv) any Servicer Default occurs with respect to such Trust which
would have a material adverse effect on the Certificateholders of such
Series; or
(v) on any Determination Date, the Transferor Amount as a percentage
of the Trust Principal Component as of the last day of the prior Due Period
(reduced, for the purpose of this calculation, by the Privileged Assets
Calculated Amount for such Due Period) was less than 3%.
In addition, an Early Amortization Event may occur with respect to any
Series upon the occurrence of any other event specified as an Early Amortization
Event in the related Prospectus Supplement. The Early Amortization Period will
commence on the day on which an Early Amortization Event occurs or is deemed to
occur. Monthly distributions of principal to the Certificateholders will begin
(if they have not already) on the first Distribution Date following the Due
Period in which an Early Amortization Event occurs or is deemed to have
occurred. Thus, Certificateholders may begin receiving distributions of
principal earlier than they otherwise
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would have, which may shorten the final maturity of the Certificates. If the
only Early Amortization Event to occur is either the insolvency of the
Transferor or the appointment of a receiver or bankruptcy trustee for the
Transferor, the receiver or bankruptcy trustee for the Transferor may have the
power to delay or prevent commencement of the Early Amortization Period.
In addition to the consequences of an Early Amortization Event discussed
above, if TRS (or another seller specified in the related Prospectus Supplement)
or the Transferor voluntarily files a bankruptcy petition or goes into
liquidation or any person is appointed a receiver or bankruptcy trustee of TRS
(or such other seller) or the Transferor, on the day of such appointment TRS (or
such other seller) will immediately cease to sell Receivables to the Transferor
under any related Receivable Purchase Agreement and promptly give notice to each
related Trustee of such appointment. If the Transferor voluntarily files for
bankruptcy or a receiver or bankruptcy trustee is appointed for the Transferor,
on the day of such appointment the Transferor will immediately cease to transfer
Receivables to each Trust and the Transferor will promptly give notice to each
Trustee of such appointment. Within 15 days, each affected Trustee will publish
a notice of the liquidation or the appointment stating that such Trustee intends
to sell, dispose of or otherwise liquidate the Receivables of the related Trust
in a commercially reasonable manner and to the best of its ability. Unless
otherwise instructed within a specified period by the Certificateholders (other
than the Transferor or TRS, as holder of Class B Certificates, if the bankruptcy
of the Transferor or TRS, as applicable, resulted in such Early Amortization
Event) representing undivided interests aggregating more than 50% of the
aggregate principal amount of each Series issued by the Trust (or, if such
Series has more than one Class, of each Class thereof) and, with respect to any
Series, any other person specified in the related Prospectus Supplement, the
Trustee will sell, dispose of or otherwise liquidate the Receivables of such
Trust (other than the Receivables allocable, in accordance with the related
Agreement, to any outstanding Series that voted to continue the related Trust)
in accordance with the related Agreement in a commercially reasonable manner and
on commercially reasonable terms. The proceeds from the sale, disposition or
liquidation of the Receivables will be treated as collections on the Receivables
and such proceeds allocable to the Certificateholders will be distributed as
specified above in '--Distributions from the Collection Account' and in the
related Prospectus Supplement.
INDEMNIFICATION
Unless otherwise specified in the related Prospectus Supplement, Agreement
I provides, and each New Agreement will provide, that the Servicer will
indemnify the Trust, for the benefit of Certificateholders, and the Trustee,
including its officers, directors and employees, from and against any loss,
liability, expense, damage or injury arising out of or relating to any claims,
actions or proceedings brought or asserted by third parties which are suffered
or sustained by reason of any acts or omissions of the Servicer pursuant to the
Agreement and any Series Supplement; provided, however, that the Servicer shall
not indemnify any Trust, the Trustee or the Certificateholders for any
liabilities, costs or expenses with respect to U.S. Federal, state or local
income or franchise taxes required to the paid by any Trust or the
Certificateholders.
Under each Agreement, the Transferor will indemnify an injured party for
the entire amount of any losses, claims, damages or liabilities arising out of
or based on the Agreement or the actions of the Servicer taken pursuant to the
Agreement as though the Agreement created a partnership under the Uniform
Partnership Act. The Transferor will also indemnify each Certificateholder for
any such losses, claims, damages or liabilities (other than those incurred by a
Certificateholder in the capacity of an investor in the certificates) except to
the extent that they arise from any action by any Certificateholder. In the
event of a Service Transfer, the successor Servicer will indemnify the
Transferor for any losses, claims, damages and liabilities of the Transferor as
described in this paragraph arising from the actions or omissions of such
successor Servicer.
Agreement I provides, and each New Agreement will provide, that none of the
Transferor, the Servicer, TRS or any of their directors, officers, employees or
agents will be under any other liability to the Trust, the Trustee, the
Certificateholders, any Enhancement provider or any other person for any action
taken, or for refraining from taking any action, in good faith pursuant to the
Agreement. However, none of the Transferor, the Servicer, TRS or any of their
directors, officers, employees or agents will be protected against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence of any such person in the performance of their duties or by
reason of reckless disregard of their obligations and duties thereunder.
In addition, each Agreement will provide that the Servicer is not under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its servicing responsibilities under the Agreement. The
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Servicer may, in its sole discretion, undertake any such legal action which it
may deem necessary or desirable for the benefit of certificateholders with
respect to the Agreement and the rights and duties of the parties thereto and
the interest of the certificateholders thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Unless otherwise specified in the related Prospectus Supplement, pursuant
to each Agreement, the Servicer, whether acting itself or through one or more
subservicers, will be responsible for servicing, collecting, enforcing and
administering the Receivables in accordance with the policies and procedures and
the degree of skill and care applied or exercised with respect to charge card
receivables owned by the Servicer or any subservicer. The Servicer and any
subservicer are required to maintain fidelity bond coverage insuring against
losses through wrongdoing of its officers and employees who are involved in the
servicing of receivables covering such actions and in such amounts as the
Servicer believes to be reasonable from time to time.
TRS (or any other entity specified in the related Prospectus Supplement),
as Servicer, will be permitted under each Agreement to delegate its servicing
obligations. Notwithstanding any such delegation, TRS, as Servicer, will
continue to be liable for all of its obligations as Servicer under each
Agreement.
Servicing activities performed by the Servicer with respect to the
Designated Accounts include collecting and recording payments, communicating
with Cardmembers, investigating payment delinquencies, providing billing records
to Cardmembers and maintaining internal records. Managerial and custodial
services performed by the Servicer on behalf of each Trust include providing
assistance in any inspections of the documents and records relating to the
Designated Accounts and Receivables by the Trustee pursuant to the Agreement,
maintaining the agreements, documents and files relating to the Designated
Accounts and Receivables as custodian for each Trust and providing related data
processing and reporting services for Certificateholders and on behalf of the
Trustee.
SERVICER COVENANTS
In Agreement I, the Servicer covenants and in each New Agreement, the
Servicer will covenant, to the Certificateholders and the Trustee as to each
Receivable and related Designated Account that: (i) it will duly fulfill all
obligations on its part to be fulfilled under or in connection with the
Receivable or Designated Account, and will maintain in effect all qualifications
required in order to service the Receivable or Designated Account and will
comply with all requirements of law in connection with servicing the Receivables
and the Designated Accounts the failure to comply with which would have a
material adverse effect on Certificateholders; (ii) it will not permit any
rescission or cancellation of the Receivable, except as ordered by a court of
competent jurisdiction or except in accordance with the Servicer's usual and
customary servicing practices; and (iii) it will do nothing to impair the rights
of the Certificateholders in the Receivables and will not reschedule, revise or
defer payments due on the Receivables, except in accordance with the Servicer's
usual and customary servicing practices.
Under the terms of each Agreement, the Servicer will be obligated to accept
the transfer of any Receivable if it discovers, or receives written notice from
the Trustee, that (i) any covenant of the Servicer set forth above has not been
complied with respect to such Receivable or (ii) the Servicer has not complied
in all material respects with all requirements of law applicable to the
Receivables or Designated Accounts, and in either case such noncompliance has
not been cured within 60 days thereafter and the Receivable has been charged off
as uncollectible or the proceeds of the Receivables are not available to the
Trust. Such assignment and transfer will be made when the Servicer deposits an
amount equal to the amount of such Receivable in the Collection Account on the
business day preceding the Distribution Date following the Due Period during
which such obligation arises provided, that if the Servicer is then required to
make deposits to the Collection Account more frequently than monthly, the
Servicer shall make such deposits not later than two business days after such
obligation arises. The amount of such deposit shall be deemed a payment in
respect of the related Receivable and will be treated under the Agreement in the
same manner as are payments received by the Servicer from Cardmembers under the
Designated Accounts. Any amounts so paid by the Servicer shall be allocated in
respect of Yield Collections and Principal Collections as provided in the
Agreement. This reassignment or transfer and assignment to the Servicer
constitutes the sole remedy available to the Certificateholders if such covenant
or warranty of the Servicer is not satisfied and any Trust's interest in any
such reassigned Receivables shall be automatically assigned to the Servicer.
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SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, for each
Series of Certificates, the Servicer's compensation for its servicing activities
is a monthly servicing fee (the 'Servicing Fee') payable at the times and in the
amounts specified in the related Prospectus Supplement. The Servicing Fee will
be allocated among the Transferor Interest and the Certificateholders of all
Series. The portion of the Servicing Fee allocable to the Certificateholders'
Interest on each Distribution Date (the 'Monthly Servicing Fee') or such other
specified periodic basis. The remainder of the Servicing Fee, which will be
allocable to the Transferor Interest, will be paid directly by the holder of the
Exchangeable Transferor Certificate from Yield Collections allocated to the
Transferor Interest and neither the related Trust nor the Certificateholders
will have any obligations to pay such portion of the Servicing Fee. The Monthly
Servicing Fee will be paid with respect to each Due Period from the Collection
Account (unless such amount has been netted against deposits to the Collection
Account) as described in the related Prospectus Supplement.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Designated Accounts and the
Receivables including, without limitation, expenses related to enforcement of
the Receivables, payment of fees and disbursements of the Trustee and
independent accountants and all other fees and expenses which are not expressly
stated in each Agreement to be payable by the related Trust or the
Certificateholders other than Federal, state and local income and franchise
taxes, if any, of the Trust.
RESIGNATION AND CERTAIN OTHER MATTERS REGARDING THE SERVICER
With respect to each Series of Certificates, the Servicer may not resign
from its obligations and duties under the related Agreement, except, among other
reasons, (i) upon determination that such duties are impermissible under
applicable law, regulation or order or (ii) upon the satisfaction of the
following conditions: (a) the assumption of the duties and obligations of the
Servicer under the Agreement by a proposed successor Servicer, (b) the written
confirmation by the applicable Rating Agency that the rating of any related
Series of Certificates then outstanding will not, solely as a result of such
transfer, be reduced or withdrawn, (c) the delivery to the Trustee of an opinion
of counsel to the effect that such transfer will not materially adversely affect
the treatment of any related Series of Certificates then outstanding after such
transfer as debt for Federal income tax purposes and that such transfer will not
have any material adverse impact on the Federal income taxation of the related
Trust or any related Certificateholder or Certificate Owner, and (d) the
proposed successor Servicer has a net worth of not less than $50,000,000 and its
regular business includes the servicing of charge card or revolving credit
receivables. No such resignation described in clause (i) above will become
effective until the Trustee or a successor to the Servicer has assumed the
Servicer's responsibilities and obligations under the related Agreement.
Any person into which, in accordance with the related Agreement, any of the
Transferor or the Servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which any of the Transferor or the Servicer
is a party, or any person succeeding to the business of any of the Transferor or
the Servicer, will be the successor to the Transferor or the Servicer, as the
case may be, under the Agreement.
SERVICER DEFAULT
Unless otherwise specified in the related Prospectus Supplement, in the
event of any Servicer Default (as defined below), either the Trustee or
certificateholders evidencing undivided interests aggregating more than 50% of
the aggregate principal amount of all Series of the related Trust, by written
notice to the Servicer (and to the Trustee, if given by the certificateholders),
may terminate all of the rights and obligations of the Servicer, in its capacity
as servicer under the related Agreement, with respect to all of the Receivables
held by the Trust with respect to all Series of such Trust, and the proceeds
thereof, and the Trustee shall thereafter appoint a new Servicer (a 'Service
Transfer'). The rights and interests of the Transferor under the related
Agreement in the Transferor Interest will not be affected by any Service
Transfer. The Transferor shall have the right exercisable at any time within 60
days of the giving of the notice of termination as described above, to nominate
to the Trustee the name of a potential successor Servicer. The Trustee shall as
promptly as possible appoint the entity nominated by the Transferor if such
entity meets certain eligibility criteria set forth in the Agreement. If the
Transferor does not nominate an entity to be successor Servicer within such 60
day period, the Trustee shall as promptly as possible appoint a successor
Servicer, and if no successor Servicer has been appointed by the Trustee and has
accepted such appointment by the time the Servicer ceases to act as Servicer,
all authority, power and obligations of the Servicer under the Agreement will
pass to, and be vested in, the Trustee. Prior to any Service
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Transfer, the Trustee will seek to obtain bids from potential Servicers meeting
certain eligibility requirements set forth in the Agreement to serve as a
successor Servicer for servicing compensation not in excess of the Servicing
Fee. If the Trustee is unable to obtain any bids from eligible Servicers and the
Servicer delivers an officer's certificate to the effect that it cannot in good
faith cure the related Servicer Default, then the Trustee will offer the
Transferor the right to accept the retransfer of all of the Receivables.
A 'Servicer Default' refers to any of the following events:
(i) failure by the Servicer to make any payment, transfer or deposit,
or to give instructions to the Trustee to make any withdrawal, on the date
the Servicer is required to do so under the related Agreement or any Series
Supplement thereto (upon expiration of a five day grace period), provided,
however, that any such failure caused by a nonwillful act of the Servicer
shall not constitute a Servicer Default if the Servicer promptly remedies
such failure within five business days after receiving notice thereof;
(ii) failure on the part of the Servicer duly to observe or perform
any other covenants or agreements of the Servicer in the related Agreement
or any Series Supplement thereto which has a material adverse effect on the
Certificateholders of the related Series, which continues unremedied for a
period of 60 days after written notice and which continues to materially
adversely affect the rights of the Certificateholders of any related Series
then outstanding for such period, or the Servicer assigns its duties under
such Agreement, except as specifically permitted thereunder;
(iii) any representation, warranty or certification made by the
Servicer in the related Agreement or any Series Supplement thereto or in
any certificate delivered pursuant to the Agreement or any Series
Supplement thereto proves to have been incorrect when made, which has a
material adverse effect on the rights of the certificateholders of the
related Series, and which material adverse effect continues for the
certificateholders for a period of 60 days after written notice and which
continues to materially adversely affect the rights of the
certificateholders of any related Series then outstanding for such period;
or
(iv) the occurrence of certain events of bankruptcy or insolvency
relating to the Servicer.
Unless otherwise stated in the related Prospectus Supplement,
notwithstanding the foregoing, a delay in or failure of performance referred to
under clause (i) above for a period of 10 business days after the applicable
grace period or a delay in or failure of performance referred to under clauses
(ii) or (iii) for a period of 60 business days after the applicable grace period
shall not constitute a Servicer Default, if such delay or failure could not have
been prevented by the exercise of reasonable diligence by the Servicer and such
delay or failure was caused by an act of God or other similar occurrence. Upon
the occurrence of any such event, the Servicer shall not be relieved from using
its best efforts to perform its obligations in a timely manner in accordance
with the terms of the related Agreement or any Series Supplement thereto and the
Servicer shall provide the Trustee, the issuer of any irrevocable letter of
credit or provider of other form of Enhancement, if any, applicable to any
related Series, the Transferor and the certificateholders prompt notice of such
failure or delay by it, together with a description of its efforts to so perform
its obligations. The Servicer will immediately notify the related Trustee in
writing of any Servicer Default.
REPORTS TO CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement, prior to
each Distribution Date, the Servicer will forward to the Trustee a statement
(the 'Monthly Servicer Report') prepared by the Servicer setting forth certain
information with respect to the Trust and the Certificates, including: (a) the
aggregate amount of Collections, the aggregate amount of Yield Collections and
the aggregate amount of Principal Collections processed during the immediately
preceding Due Period; (b) the applicable Invested Percentages for such Due
Period; (c) the total amount to be deposited in the Principal Funding Account,
if applicable; (d) the aggregate outstanding balance of the Designated Accounts
which were delinquent by 30 days, 60 days, 90 days and 120 days or more as of
the cycle billing date for each such Designated Account occurring in the Due
Period immediately preceding such Distribution Date; (e) the Investor Default
Amount for such Distribution Date; (f) the amount of Investor Charge-Offs and
the amount of reimbursements thereof for such Distribution Date; (g) the amount
of the Monthly Servicing Fee for such Distribution Date; (h) the existing
Deficit Controlled Amortization Amount or Deficit Controlled Accumulation
Amount, if applicable; (i) the aggregate amount of Receivables in the Trust at
the close of business on the last day of the Due Period preceding such
Distribution Date; (j) the Invested Amount at the close of business on the last
day of the Due Period immediately preceding such Distribution Date; (k) the
amount available under any Enhancement, if any, at the close of business on such
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Distribution Date; and (l) whether an Early Amortization Event shall have
occurred. The Trustee will make such statement available to the
Certificateholders or Certificate Owners upon request. In the case of a Series
of Certificates having more than one Class, the statements forwarded to
Certificateholders will provide information as to each Class of Certificates, as
appropriate.
On each Interest Payment Date (including the Expected Final Payment Date)
or Special Payment Date, as the case may be, the Paying Agent, on behalf of the
Trustee, will forward to each Certificateholder of record a statement (the
'Payment Date Statement') prepared by the Servicer setting forth the information
with respect to the Certificates set forth in the Monthly Servicer Report
supplied to the Trustee as described in the preceding paragraph since the
immediately preceding Interest Payment Date or Special Payment Date, as the case
may be, and the following additional information (which, in the case of (a), (b)
and (c) below, will be stated on the basis of an original principal amount of
$1,000 per Certificate): (a) the total amount distributed; (b) the amount of
such distribution allocable to principal on the Certificates; (c) the amount of
such distribution allocable to interest on the Certificates; (d) the amount, if
any, by which the principal balance of the Certificates exceeds the Invested
Amount as of the Record Date with respect to such Interest Payment Date or
Special Payment Date, as the case may be; and (e) the 'series factor' as of the
end of the Record Date with respect to such Interest Payment Date or Special
Payment Date (consisting of an eight-digit decimal expressing the Invested
Amount as of such Record Date (determined after taking into account any increase
or decrease in the Invested Amount which will occur on the following
Distribution Date) as a proportion of the Initial Invested Amount).
Unless otherwise specified in the related Prospectus Supplement, the fiscal
year of each Trust ends on December 31 in each year. On or before January 31 of
each calendar year (or such other date specified in the related Prospectus
Supplement), beginning with January 31, 1994, the Paying Agent, on behalf of the
Trustee, will furnish or cause to be furnished to each person who at any time
during the preceding calendar year was a Certificateholder of record (or, if so
provided in applicable Treasury regulations, made available to Certificate
Owners) a statement prepared by the Servicer containing the information required
to be provided by an issuer of indebtedness under the Code for such calendar
year or the applicable portion thereof during which such person was a
Certificateholder, together with such other customary information as the
Servicer deems necessary or desirable to enable the Certificateholders to
prepare their tax returns. See 'Tax Matters.'
EVIDENCE AS TO COMPLIANCE
Agreement I provides and each new Agreement will provide that on or before
January 31 of each calendar year (or such other date specified in the related
Prospectus Supplement), the Servicer will cause a firm of nationally recognized
independent accountants to furnish a report to the effect that such firm has
applied procedures, as agreed upon between such firm and the Servicer, to
certain documents and records relating to the servicing of the Receivables and
that, based upon such agreed-upon procedures, no matters came to their attention
that caused them to believe that such servicing was not conducted in compliance
with certain applicable terms and conditions set forth in the Agreement except
for such exceptions or errors as shall be set forth in such statement. In
addition, on or before March 1 of each calendar year (or such other date
specified in the related Prospectus Supplement), such accountants will compare
the mathematical calculations of the amounts contained in the Monthly Servicer
Reports and other certificates delivered during such year with the computer
reports of the Servicer and statements of any agents engaged by the Servicer to
perform servicing activities which were the source of such amounts and deliver a
certificate to the Trustee stating that such amounts are in agreement except for
such exceptions which shall be set forth in such report.
Agreement I provides and each new Agreement will provide for delivery to
the Trustee on or before January 31 of each calendar year (or such other date
specified in the related Prospectus Supplement), of a statement signed by an
officer of the Servicer to the effect that the Servicer has, or has caused to
be, fully performed its obligations in all material respects under the Agreement
throughout the preceding year or, if there has been a default in the performance
of any such obligation, specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the Trustee
may be obtained by a request in writing delivered to the Trustee.
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AMENDMENTS
Unless otherwise specified in the related Prospectus Supplement, each
Agreement and the related Series Supplement may be amended by the Transferor,
the Servicer and the Trustee, without certificateholder consent, to cure any
ambiguity, to correct or supplement any provision therein which may be
inconsistent with any other provision therein and to add any other provisions
with respect to matters or questions arising under the Agreement or the related
Series Supplement which are not inconsistent with the provisions of the
Agreement or such Supplement. In addition, the Agreement and the related Series
Supplement may be amended from time to time by the Transferor, the Servicer and
the Trustee, without certificateholder consent, for the purpose of adding any
provisions to, changing in any manner or eliminating any of the provisions of
the Agreement or the related Series Supplement or of modifying in any manner the
rights of Certificateholders of any Series then issued and outstanding
thereunder provided that (i) the Servicer must provide an opinion of counsel to
the Trustee to the effect that such amendment will not materially and adversely
affect the interests of the Certificateholders of any outstanding Series
thereunder (or 100% of the class of certificateholders so affected shall have
consented), (ii) such amendment shall not, as evidenced by an opinion of
counsel, cause the related Trust to be characterized for Federal income tax
purposes as an association taxable as a corporation or otherwise have any
material adverse impact on the Federal income taxation of any outstanding Series
of Certificates thereunder or any Certificate Owner and (iii) the applicable
Rating Agency shall confirm that such amendment shall not cause a reduction or
withdrawal of the rating of any outstanding Series of Certificates thereunder.
Any Series Supplement and any amendments regarding the addition or removal of
Receivables from the Trust will not require certificateholder consent under the
provisions of the related Agreement or any Series Supplement.
Each Agreement and the related Series Supplement may also be amended by the
Transferor, the Servicer and the Trustee with the consent of the holders of
Certificates evidencing undivided interests aggregating not less than 66 2/3% of
the principal amount of all Series adversely affected for the purpose of adding
any provisions to, changing in any manner or eliminating any of the provisions
of the Agreement or the related Series Supplement or of modifying in any manner
the rights of Certificateholders of any Series then issued thereunder and
outstanding. No such amendment, however, may (i) reduce in any manner the amount
of, or delay the timing of, distributions required to be made on such Series,
(ii) change the definition or the manner of calculating the invested amount,
invested percentage, the applicable available amount under any Enhancement or
the investor default amount of such Series, or (iii) reduce the aforesaid
percentage of undivided interests the holders of which are required to consent
to any such amendment, in each case without the consent of all
Certificateholders of all Series adversely affected.
Promptly following the execution of any amendment to an Agreement or a
Series Supplement, the Trustee will furnish written notice of the substance of
such amendment to each Certificateholder of all related Series.
LIST OF CERTIFICATEHOLDERS
With respect to each Series of Certificates, upon written request of three
or more Certificateholders of record or any Certificateholder or group of
Certificateholders of record representing undivided interests in the related
Trust aggregating not less than 10% (or such other percentage specified in the
related Prospectus Supplement) of the Invested Amount, the Trustee will afford
such Certificateholders access during business hours to the current list of
Certificateholders of the Trust for purposes of communicating with other
Certificateholders with respect to their rights under the Agreement.
Unless otherwise specified in the related Prospectus Supplement, no
Agreement generally will provide for any annual or other meetings of
Certificateholders.
THE TRUSTEE
The Prospectus Supplement for each Series will specify the Trustee under
the related Agreement. The Bank of New York is Trustee of Trust I under
Agreement I. The Transferor, the Servicer and their respective affiliates may
from time to time enter into normal banking and trustee relationships with the
Trustee and its affiliates. The Trustee, the Transferor, the Servicer and any of
their respective affiliates may hold Certificates in their own names; however,
any Certificates so held shall not be entitled to participate in any decisions
made or instructions given to the Trustee by the Certificateholders as a group.
For purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee will have the power to appoint a co-trustee or
separate trustees of all or any part of the Trust. In the event of such
appointment, all
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rights, powers, duties and obligations conferred or imposed upon the Trustee
will be conferred or imposed upon and exercised or performed by the Trustee and
such separate trustee or co-trustee jointly, or, in any jurisdiction in which
the Trustee will be incompetent or unqualified to perform certain acts, singly
upon such separate trustee or co-trustee who shall exercise and perform such
rights, powers, duties and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event a successor Trustee will
be appointed as provided in the related Agreement. The Servicer may also remove
the Trustee, if the Trustee ceases to be eligible to continue as such under the
related Agreement or if the Trustee becomes insolvent. In such circumstances, a
successor Trustee will be appointed as provided in the related Agreement. Any
resignation or removal of the Trustee and appointment of a successor Trustee
does not become effective until acceptance of the appointment by the successor
Trustee.
ENHANCEMENT
GENERAL
For any Series, Enhancement may be provided with respect to one or more
Classes thereof. Enhancement may be in the form of the subordination of one or
more Classes of the Certificates of such Series, a letter of credit, a
guaranteed rate agreement, a maturity guaranty facility, a cash collateral
account or guaranty, a tax protection agreement, an interest rate swap, a surety
bond, insurance, a spread account, a reserve account, the use of cross support
features, a subordinated interest in the Receivables or certain cash flows in
respect of the Receivables or another method of Enhancement described in the
related Prospectus Supplement, or any combination of the foregoing. If so
specified in the related Prospectus Supplement, any form of Enhancement may be
structured so as to be drawn upon by more than one Class to the extent described
therein.
Unless otherwise specified in the related Prospectus Supplement for a
Series, the Enhancement will not provide protection against all risks of loss
and will not guarantee repayment of the entire principal balance of the
Certificates and interest thereon. If losses occur which exceed the amount
covered by the Enhancement or which are not covered by the Enhancement,
Certificateholders will bear their allocable share of deficiencies.
If Enhancement is provided with respect to a Series, the related Prospectus
Supplement will include a description of (a) the amount payable under such
Enhancement, (b) any conditions to payment thereunder not otherwise described
herein, (c) the conditions (if any) under which the amount payable under such
Enhancement may be reduced and under which such Enhancement may be terminated or
replaced and (d) any material provision of any agreement relating to such
Enhancement. Additionally, the related Prospectus Supplement may set forth
certain information with respect to any Enhancement Provider, including (i) a
brief description of its principal business activities, (ii) its principal place
of business, place of incorporation and the jurisdiction under such it is
chartered or licensed to do business, (iii) if applicable, the identity of
regulatory agencies which exercise primary jurisdiction over the conduct of its
business and (iv) its total assets, and its stockholders' or policy holders'
surplus, if applicable, and other appropriate financial information as of the
date specified in the Prospectus Supplement. If so specified in the related
Prospectus Supplement, Enhancement with respect to a Series may be available to
pay principal of the Certificates of such Series following the occurrence of
certain Early Amortization Events with respect to such Series. In such event,
the Enhancer will have an interest in certain cash flows in respect of the
Receivables to the extent described in such Prospectus Supplement (the
'Enhancement Invested Amount').
SUBORDINATION
If so specified in the related Prospectus Supplement, one or more of any
Series will be subordinated as described in the related Prospectus Supplement to
the extent necessary to fund payments with respect to the Senior Certificates.
The rights of the holders of any such Subordinated Certificates to receive
distributions of principal and/or interest on any Distribution Date for such
Series will be subordinate in right and priority to the rights of the holders of
Senior Certificates, but only to the extent set forth in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, subordination
may apply only in the event of certain types of losses not covered by another
Enhancement. The related Prospectus Supplement will also set forth information
concerning the amount of subordination of a Class or Classes of Subordinated
Certificates in a Series, the circumstances in which such subordination will be
applicable, the manner, if any, in which the amount of subordination will
decrease over time, and the conditions under which such amounts available from
payments
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that would otherwise be made to holders of such Subordinated Certificates will
be distributed to holders of Senior Certificates. If collections of Receivables
otherwise distributable to holders of a Subordinated Class of a Series will be
used as support for a Class of another Series, the related Prospectus Supplement
will specify the manner and conditions for applying such a cross-support
feature.
LETTER OF CREDIT
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes thereof will be provided by one or more letters of
credit. A letter of credit may provide limited protection against certain losses
in addition to or in lieu of other Enhancement. The issuer of the letter of
credit (the 'L/C Bank') will be obligated to honor demands with respect to such
letter of credit, to the extent of the amount available thereunder, to provide
funds under the circumstances and subject to such conditions as are specified in
the related Prospectus Supplement.
The maximum liability of an L/C Bank under its letter of credit will
generally be an amount equal to a percentage specified in the related Prospectus
Supplement of the initial Invested Amount of a Series or a Class of such Series.
The maximum amount available at any time to be paid under a letter of credit
will be determined in the manner specified therein and in the related Prospectus
Supplement.
CASH COLLATERAL GUARANTY OR ACCOUNT
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes thereof will be provided by a guaranty (the 'Cash
Collateral Guaranty') secured by the deposit of cash or certain permitted
investments in an account (the 'Cash Collateral Account') reserved for the
beneficiaries of the Cash Collateral Guaranty or by a Cash Collateral Account
alone. The amount available pursuant to the Cash Collateral Guaranty or the Cash
Collateral Account will be the lesser of amounts on deposit in the Cash
Collateral Account and an amount specified in the related Prospectus Supplement.
The related Prospectus Supplement will set forth the circumstances under which
payments are made to beneficiaries of the Cash Collateral Guaranty from the Cash
Collateral Account or from the Cash Collateral Account directly.
SURETY BOND OR INSURANCE POLICY
If so specified in the related Prospectus Supplement, insurance with
respect to a Series or one or more Classes thereof will be provided by one or
more insurance companies. Such insurance will guarantee, with respect to one or
more Classes of the related Series, distributions of interest or principal in
the manner and amount specified in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, a surety bond will be
purchased for the benefit of the holders of any Series or Class of such Series
to assure distributions of interest or principal with respect to such Series or
Class of Certificates in the manner and amount specified in the related
Prospectus Supplement.
SPREAD ACCOUNT
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes thereof will be provided by the periodic deposit of
certain available excess cash flow from the Trust assets into an account (the
'Spread Account') intended to assure the subsequent distribution of interest and
principal on the Certificates of such Class or Series in the manner specified in
the related Prospectus Supplement.
RESERVE ACCOUNT
If so specified in the related Prospectus Supplement, support for a Series
or one or more Classes thereof will be provided by the establishment of a
reserve account (the 'Reserve Account'). The Reserve Account may be funded, to
the extent provided in the related Prospectus Supplement, by an initial cash
deposit, the retention of certain periodic distributions of principal or
interest or both otherwise payable to one or more Classes of Certificates,
including the Subordinated Certificates, or the provision of a letter of credit,
guarantee, insurance policy or other form of credit or any combination thereof.
The Reserve Account will be established to assure the subsequent distribution of
principal or interest on the Certificates of such Series or Class thereof in the
manner provided in the related Prospectus Supplement.
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DESCRIPTION OF THE RECEIVABLE PURCHASE AGREEMENT
The Receivables originated under the Designated Accounts transferred to
Trust I by the Transferor were purchased by the Transferor from TRS pursuant to
Receivable Purchase Agreement I, dated as of June 30, 1992, as amended and
supplemented, entered into between the Transferor, as purchaser, and TRS, as
seller. (A copy of the Receivable Purchase Agreement is incorporated by
reference to the Registration Statement of which this Prospectus is a part.) The
following summary describes certain terms of Receivable Purchase Agreement I and
any New Receivable Purchase Agreement to be entered into between the Transferor
and TRS (or another seller).
SALE OF RECEIVABLES
Under Receivable Purchase Agreement I, TRS sold and under each New
Receivable Purchase Agreement, unless otherwise specified in the related
Prospectus Supplement TRS will sell to the Transferor all its right, title and
interest in and to the Receivables originated under the related Designated
Accounts and all Receivables arising under such Accounts from time to time in
the future. Pursuant to each Agreement, all such Receivables were, or will be,
immediately transferred by the Transferor to the related Trust, and the
Transferor assigned, or will assign, its rights in, to and under the related
Receivable Purchase Agreement with respect to such Receivables to the related
Trust. In addition, pursuant to each Receivable Purchase Agreement, TRS may sell
to the Transferor all its right, title and interest in and to the Receivables in
each Additional Account added from time to time to the Designated Accounts as of
the date of such addition, whether such Receivables shall then be existing or
shall thereafter be created. Unless otherwise specified in the related
Prospectus Supplement, the purchase price of the purchased Receivables was paid
and will be payable by the Transferor in cash or, at the election of the
Transferor, as a capital contribution by TRS, the Transferor's parent, or a
combination thereof.
In connection with each Receivable Purchase Agreement, TRS has indicated
and will indicate in its records, including any computer files, that the
Receivables arising under the Designated Accounts have been sold to the
Transferor by TRS and that such Receivables have been transferred by the
Transferor to the related Trust. In addition, TRS provided and will provide to
the Transferor a computer file or a microfiche list containing a true and
complete list showing each Designated Account identified by account number and
by total outstanding balance on the Cut Off Date or Additional Account Cut Off
Date, as the case may be. The records and agreements relating to such Designated
Accounts and Receivables have not been and will not be segregated by TRS from
other documents and agreements relating to other charge accounts and receivables
and have not been and will not be stamped or marked to reflect the sale thereof
to the Transferor. TRS has filed UCC financing statements meeting the
requirements of state law in New York with respect to the Receivables arising
under the initial Designated Accounts and will similarly file UCC financing
statements with respect to such Receivables in any Additional Accounts. See
'Special Considerations--Certain Legal Aspects' and 'Certain Legal Aspects of
the Receivables.'
Pursuant to each Receivable Purchase Agreement, TRS may, if the Transferor
is required to designate Additional Accounts under the Agreement, upon request
of the Transferor designate Additional Accounts to be included as Designated
Accounts under the Receivable Purchase Agreement. TRS and the Transferor may
also agree from time to time to designate Additional Accounts under each
Receivable Purchase Agreement. The Transferor may require TRS to repurchase
Receivables existing or to be created in Designated Accounts designated as
Removed Accounts pursuant to the related Agreement. See 'Description of the
Class A Certificates and the Agreement--Removal of Designated Accounts.'
REPRESENTATIONS AND WARRANTIES
Unless otherwise specified in the related Prospectus Supplement, TRS will
represent and warrant to the Transferor to the effect, among other things, that
as of the related Closing Date (a) TRS is duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization, has the
full corporate power, authority and legal right to own its properties and
conduct its business as such properties are presently owned and such business is
presently conducted, and to execute, deliver and perform its obligations under
the related Receivable Purchase Agreement, (b) the Receivable Purchase Agreement
constitutes a legal, valid and binding obligation of TRS, (c) the Receivable
Purchase Agreement constitutes a valid sale to the Transferor of all right,
title and interest of TRS in and to the Receivables, whether then existing or
thereafter created in the
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Designated Accounts and the proceeds thereof which is effective as to each such
Receivable upon the creation thereof and (d) as of the applicable Selection Date
and, in the case of certain selection criteria, also as of the applicable Cut
Off Date (or as of the Additional Account Selection Date and, in the case of
certain selection criteria, also as of the Additional Account Cut Off Date),
each Account subject to the Receivable Purchase Agreement was an Eligible
Account. Upon the breach of certain of the representations and warranties
described in this paragraph or if a material amount of the Receivables are
determined not to be Eligible Receivables, TRS will repurchase from the
Transferor for an amount of cash equal to the amount of cash which the
Transferor is required to deposit under the related Agreement in connection with
such breach.
TRS has covenanted and will covenant to the Transferor for the benefit of
all Certificateholders of all Series which from time to time may have an
interest in a Trust that, as to the Receivables and the Designated Accounts
subject to the related Receivable Purchase Agreement, unless cured within 60
days from receipt of notice from the Transferor or the Trustee, it will accept
the transfer of any Receivable which is charged off as uncollectible or any such
Receivable the proceeds of which are unavailable to such Trust, if (i) such
Receivable is not an Eligible Receivable, (ii) such Receivable was not conveyed
to the Transferor free and clear of all liens (except such liens as may be
permitted by the Agreement) or in compliance in all material respects with all
requirements of law, (iii) all material information with respect to the
Receivables and the Designated Accounts related thereto, in the list provided to
the Transferor was not true and correct in all material respects, (iv) TRS did
not obtain all consents, licenses, approvals or authorizations required in
connection with the conveyance of the Receivables to the related Trust, or (v)
on the closing date with respect to the initial Designated Accounts, and on the
applicable Additional Account Closing Date with respect to Additional Accounts,
the computer file or list of Designated Accounts or Additional Accounts, as the
case may be, provided by TRS to the Transferor was not an accurate and complete
listing of all such Accounts in all material respects as of the Cut Off Date or
the Additional Account Cut Off Date, as applicable, or the information contained
therein with respect to the identity of such Accounts and the Receivables
existing thereunder was not true and correct in all material respects as of the
Cut Off Date or the Additional Account Cut Off Date, as applicable.
Additionally, TRS covenants in Receivable Purchase Agreement I and will covenant
in each New Receivable Purchase Agreement to repurchase, under certain
conditions, each Receivable sold by it to the Transferor which is subject to
certain specified liens immediately upon the discovery of such liens. TRS shall
repurchase any such Receivable, if the Transferor is required to accept the
retransfer of such Receivable under the related Agreement, on the date of such
retransfer. The purchase price for such Ineligible Receivable shall be the
balance of such Receivable.
TRS has also agreed to indemnify the Transferor and to hold the Transferor
harmless from and against any and all losses, damages and expenses (including
reasonable attorneys' fees) suffered or incurred by the Transferor if the
foregoing representations and warranties are materially false.
CERTAIN COVENANTS
In Receivable Purchase Agreement I, TRS covenants, and in each New
Receivable Purchase Agreement, TRS will covenant, to perform its obligations
under the account agreements relating to the Designated Accounts and TRS'
policies and procedures relating to the Designated Accounts unless the failure
to do so would not have a material adverse effect on the rights of the related
Trust, as assignee of the Receivables existing or arising thereunder, or the
certificateholders. In that regard, TRS may change the terms and provisions of
such account agreements or policies and procedures in any respect (including,
without limitation, the calculation of the amount, or the timing, of
charge-offs), so long as any such changes are made applicable to comparable
segments of the charge accounts owned and serviced by TRS which have
characteristics the same as, or substantially similar to, the Designated
Accounts.
In addition, TRS expressly acknowledges and consents or will acknowledge
and consent as applicable, to the Transferor's assignment of its rights relating
to the interests sold by TRS under each Receivable Purchase Agreement to the
Trustee for the benefit of the certificateholders. TRS also agrees, for the
benefit of the Trustee and any provider of any Enhancement, that any amounts
payable by TRS to the Transferor pursuant to each Receivable Purchase Agreement
that are to be paid by the Transferor to the Trustee for the benefit of the
Certificateholders will be paid by TRS on behalf of the Transferor directly to
the Trustee.
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TERMINATION
Each Receivable Purchase Agreement will terminate immediately after the
related Trust terminates. In addition, if pursuant to certain provisions of
Federal law, TRS becomes party to any bankruptcy or similar proceeding (other
than as a claimant) and, if such proceeding is not voluntary it is not dismissed
within 90 days of its institution, or if a bankruptcy trustee is appointed for
TRS, TRS will immediately cease to sell Receivables to the Transferor and
promptly give notice of such event to the Transferor and to the Trustee.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
The following is a description of certain legal aspects of the transfer of
Receivables under Receivable Purchase Agreement I and any New Receivable
Purchase Agreement relating to Accounts between the Transferor and TRS.
TRANSFER OF RECEIVABLES
Pursuant to Receivable Purchase Agreement I, TRS has sold, and pursuant to
each New Receivable Purchase Agreement, TRS will sell to the Transferor all its
right, title and interest in and to those Receivables existing or arising under
the Designated Accounts from time to time. The Transferor then conveyed and will
convey to the related Trust, without recourse, all Receivables existing under
the Designated Accounts. The Transferor covenants and warrants and pursuant to
each new Agreement the Transferor will covenant and warrant that such transfer
constitutes either a valid transfer and assignment to the related Trust of all
right, title and interest of the Transferor in and to the Receivables, except
for the interest of the Transferor as holder of the Exchangeable Transferor
Certificate, or a grant of a security interest to the related Trust in and to
the Receivables. See 'Special Considerations--Insolvency-Related Matters' and
'The Transferor and Related Parties.'
The Transferor also covenants and warrants to Trust I in Agreement I and
pursuant to each new Agreement the Transfer will covenant and warrant that, in
the event the transfer of Receivables by the Transferor to the related Trust is
deemed to create a security interest under the UCC and assuming that the
Transferor is not at the time the subject of any insolvency proceedings, there
exists a valid, subsisting and enforceable first priority perfected security
interest in the Receivables in existence since the time of the formation of the
related Trust in favor of such Trust and a valid, subsisting and enforceable
first priority perfected security interest in the Receivables created thereafter
and, with certain exceptions, and for certain limited time periods, the proceeds
thereof, in favor of the related Trust on and after their creation. For a
discussion of each Trust's rights arising from these covenants and warranties
not being satisfied, see 'Description of the Certificates--Covenants,
Representations and Warranties.'
The Receivables are 'accounts' or 'general intangibles' as defined in
Article 9 of the UCC. To the extent the Receivables constitute accounts, both
the absolute transfer of such Receivables and the transfer of such Receivables
as security for an obligation are treated under Article 9 of the UCC as creating
a security interest therein and are subject to its provisions, including the
filing of financing statements to perfect the related Trust's security interest.
To the extent Receivables constitute general intangibles and the transfer of
such Receivables is deemed to be a transfer as security for an obligation,
Article 9 of the UCC is applicable to the same extent as it is applicable to
Receivables constituting accounts. Financing statements covering the Receivables
will be filed under the UCC as in effect in New York to protect the Transferor
and the related Trust. In the event the transfer by the Transferor to the
related Trust of any general intangibles is deemed to be an absolute transfer,
then the UCC is not applicable, and no further action is required to perfect the
Trustee's interest in such Receivables from third party claims.
There are certain limited circumstances under the UCC in which prior or
subsequent transferees of Receivables coming into existence after the date of
the related Agreement could have an interest in such Receivables with priority
over the related Trust's interest. A tax or other government lien on property of
the Transferor arising prior to the time a Receivable comes into existence may
also have priority over the interest of such Trust in such Receivables. Under
Receivable Purchase Agreement I, however, TRS covenants and under each New
Receivable Purchase Agreement, TRS will covenant to repurchase from the
Transferor the Receivables
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in any Designated Account containing a Receivable sold to the Transferor that is
not free and clear of the lien of any third party, except certain permitted tax
liens. In addition, under each Agreement, the Transferor will covenant to accept
the reassignment of the Receivables in any Designated Account containing a
Receivable transferred to the related Trust that is not free and clear of the
lien of any third party, except certain permitted tax liens. In addition, the
Transferor covenants and will covenant that it will not sell, pledge, assign,
transfer or grant any lien on any Receivable (or any interest therein) other
than to the related Trust.
Unless continuation statements are filed within the time specified in the
UCC in respect of the ownership interest of the Transferor or the ownership or
security interest of the related Trust in the Receivables, the perfection of
such interest will lapse.
Because the related Trust's interest in the Receivables is dependent upon
the Transferor's interest in such Receivables, any adverse change in the
priority or perfection of the Transferor's ownership or security interest would
correspondingly affect the Trust's interest in the affected Receivables.
As set forth under 'Special Considerations--Certain Legal Aspects,' cash
Collections of Receivables will, except in certain circumstances, be available
for use by the Servicer until deposited into the Collection Account on each
Distribution Date. In the event of insolvency or receivership of the Servicer
or, in certain circumstances, the lapse of certain time periods, the Trust may
not have a perfected interest in such cash Collections.
CERTAIN MATTERS RELATING TO BANKRUPTCY
Agreement I provides, and each New Agreement will provide, that, upon the
appointment of a receiver or bankruptcy trustee for the Transferor or TRS, such
party will promptly give notice thereof to the Trustee, and an Early
Amortization Event with respect to all Series issued by the related trust will
occur. Under each Agreement no new Receivables will be transferred to the
related Trust and, unless otherwise instructed within a specified period by the
holders of Certificates (other than the Transferor or TRS, as holder of Class B
Certificates, if the appointment of a receiver or bankruptcy trustee for the
Transferor or TRS, as applicable, resulted in such Early Amortization Event)
representing undivided interests aggregating more than 50% of the aggregate
principal amount of each Class of each Series and, with respect to any Series,
any other person specified in the related Prospectus Supplement, or unless
otherwise required by the receiver or bankruptcy trustee for the Transferor or
TRS, the Trustee will proceed to sell, dispose of or otherwise liquidate the
Receivables in a commercially reasonable manner and on commercially reasonable
terms. The proceeds from the sale of the Receivables would then be treated by
the Trustee as collections on the Receivables. If the only Early Amortization
Event to occur is either the insolvency of TRS or the Transferor or the
appointment of a receiver or bankruptcy trustee for the Transferor or TRS, such
receiver or bankruptcy trustee may have the power to continue to require TRS to
transfer new Receivables to the Transferor or require the Transferor to continue
to transfer new Receivables to the related Trust, as applicable, and to prevent
the early sale, liquidation or disposition of the Receivables and the
commencement of the Early Amortization Period. See 'Description of the
Certificates--Early Amortization Events.'
CONSUMER PROTECTION LAWS
The relationship between the consumer and the provider of consumer credit
is extensively regulated by Federal and state consumer protection laws. With
respect to charge cards issued by TRS the most significant Federal laws include
the Federal Truth-In-Lending and Equal Credit Opportunity Acts. These statutes
impose disclosure requirements before and when an Account is opened and at the
end of monthly billing cycles, and prohibit certain types of discrimination in
the extension of credit. In addition, Cardmembers are entitled under these laws
to have payments and credits applied to the account promptly and to require
billing errors to be resolved promptly. A Trust may be liable for certain
violations of consumer protection laws that apply to the Receivables, either as
assignee from the Transferor with respect to obligations arising before transfer
of the Receivables to the Trust or as the party directly responsible for
obligations arising after the transfer. In addition, a Cardmember may be
entitled to assert such violations by way of set off against the obligation to
pay the amount of Receivables owing. The Transferor has agreed to accept the
transfer of all Receivables that have been charged off and that were not created
in compliance in all material respects with the requirements of such laws. TRS
has also agreed in Agreement I, and will agree in each New Agreement, to
indemnify the related Trust, among other
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things, for any liability arising from such violations. For a discussion of the
related Trust's rights if the Receivables were not created in compliance in all
material respects with applicable laws, see 'Description of the
Certificates--Covenants, Representations and Warranties.'
The Soldiers' and Sailors' Civil Relief Act of 1940 permits, subject to
judicial discretion, the stay of any action or court proceeding in which an
individual in active military service is involved if the individual's rights
would be prejudiced by denial of such stay.
Application of Federal and state bankruptcy and debtor relief laws would
affect the interests of the Certificateholders, if such laws result in any
Receivables being charged off as uncollectible in excess of the Invested Amount.
See 'Description of the Certificates--Defaulted Receivables; Recoveries;
Adjustments.'
CLAIMS AND DEFENSES OF CARDMEMBERS AGAINST TRUST
The UCC provides that (a) unless an obligor has made an enforceable
agreement not to assert defenses or claims arising out of a sale, the rights of
the Trust, as assignee, are subject to all the terms of the contract between TRS
and the obligor and any defense or claim arising therefrom and to any other
defense or claim of the obligor against TRS which accrues before the obligor
receives notification of the assignment and (b) any obligor is authorized to
continue to pay TRS until (i) the obligor receives notification, reasonably
identifying the rights assigned, that the amount due or to become due has been
assigned and that payment is to be made to the Trustee and (ii) if requested by
the obligor, the Trustee has furnished reasonable proof of the assignment.
TAX MATTERS
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General. The following discussion, summarizing certain anticipated Federal
income tax aspects of the purchase, ownership and disposition of the
Certificates of a Series, is based upon the provisions of the Internal Revenue
Code of 1986, as amended (the 'Code'), the Treasury regulations thereunder, and
published rulings and court decisions in effect as of the date hereof, all of
which are subject to change, possibly retroactively. This discussion does not
address every aspect of the Federal income tax laws that may be relevant to
Certificate Owners of a Series in light of their personal investment
circumstances or to certain types of Certificate Owners of a Series subject to
special treatment under the Federal income tax laws (for example, banks and life
insurance companies). Accordingly, investors should consult their own tax
advisors regarding Federal, state, local, foreign and any other tax consequences
to them of any investment in the Certificates of a Series. PROSPECTIVE INVESTORS
ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO THE FEDERAL TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP, OR DISPOSITION OF INTERESTS IN
CERTIFICATES, AS WELL AS THE TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY
STATE, FOREIGN COUNTRY, OR OTHER TAXING JURISDICTION.
Characterization of the Certificates as Indebtedness. Unless otherwise
specified in the related Prospectus Supplement, special tax counsel to the
Transferor ('Tax Counsel') specified in such Prospectus Supplement will, upon
issuance of a Series of Certificates, advise the Transferor that the
Certificates of such Series will be treated as indebtedness for Federal income
tax purposes. However, opinions of counsel are not binding on the Internal
Revenue Service (the 'IRS') and there can be no assurance that the IRS could not
successfully challenge this conclusion.
The Transferor, the Trustee, each Certificateholder and each Certificate
Owner express in Agreement I, and, unless otherwise specified in the related
Prospectus Supplement will express in each New Agreement, their intent that for
Federal, state and local income or franchise tax purposes, the Certificates of
each Series will be indebtedness secured by the Receivables. The Transferor
agrees and each Certificateholder and Certificate Owner, by acquiring an
interest in a Certificate of a Series, agree or will be deemed to agree, unless
otherwise specified in the related Prospectus Supplement, to treat the
Certificates of such Series as indebtedness for Federal, state and local income
or francise tax purposes. However, because different criteria are used to
determine the non-tax accounting characterization of the transactions
contemplated by Agreement I and, unless
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otherwise specified in the related Prospectus Supplement, each New Agreement,
the Transferor expects to treat such transaction, for regulatory and financial
accounting purposes, as a sale of an ownership interest in the Receivables and
not as a debt obligation.
The economic substance of a transaction generally determines its tax
consequences. The form of a transaction, while it is one of the factors
considered, is not conclusive evidence of its tax characterization, although in
some instances, courts have held that a taxpayer is bound by the particular form
it has chosen for a transaction, even if the substance of the transaction does
not accord with its form. In general, whether for Federal income tax purposes a
transaction constitutes a sale of property or a loan, the repayment of which is
secured by the property, is a question of fact, the resolution of which is based
upon the economic substance of the transaction rather than its form or the
manner in which it is labeled. While the IRS and the courts have set forth
several factors to be taken into account in determining whether the substance of
a transaction is a sale of property or a secured indebtedness for Federal income
tax purposes, the primary factor in making this determination is whether the
transferee has assumed the risk of loss or other economic burdens relating to
the property and has obtained the benefits of ownership thereof. Unless
otherwise set forth in a Prospectus Supplement, it is expected that, as set
forth in its opinion, Tax Counsel will analyze and rely on several factors in
reaching its opinion that the weight of the benefits and burdens of ownership of
the Receivables has not been transferred to the Certificate Owners.
In some instances, courts have held that a taxpayer is bound by a
particular form it has chosen for a transaction, even if the substance of the
transaction does not accord with its form. Unless otherwise specified in a
Prospectus Supplement, it is expected that Tax Counsel will advise that the
rationale of those cases will not apply to the transaction evidenced by a Series
of Certificates, because the form of the transaction, as reflected in the
operative provisions of the documents, either is not inconsistent with the
characterization of the Certificates of such Series as debt for Federal income
tax purposes or otherwise makes the rationale of those cases inapplicable to
this situation.
TAXATION OF INTEREST INCOME OF CERTIFICATEHOLDERS
As set forth above, it is expected that, unless otherwise specified in a
Prospectus Supplement, Tax Counsel will advise the Transferor that the
Certificates of a Series will constitute indebtedness for Federal income tax
purposes, and accordingly, interest thereon will be includable in income by
Certificate Owners as ordinary income when received (in the case of a cash basis
taxpayer) or accrued (in the case of an accrual basis taxpayer) in accordance
with their respective methods of tax accounting. Interest received on the
Certificates of a Series may also constitute 'investment income' for purposes of
certain limitations of the Code concerning the deductibility of investment
interest expense.
While it is not anticipated that the Certificates will be issued at a
greater than de minimis discount ('OID'), under Treasury regulations (the
'Regulations') the Certificates may nevertheless be deemed to have been issued
with OID. This could be the case, for example, if interest payments for a Series
are not deemed to be payments of 'qualified stated interest' because (i)
Certificate Owners of that Series do not have default remedies ordinarily
available to holders of debt instruments and (ii) no penalties are imposed on
the Transferor or the Trust as a result of any failure to make interest
payments. As a result, if such Regulations were to apply, all of the taxable
income to be recognized with respect to the Certificates would be includable in
income as OID but would not be includable again when the interest is actually
received.
If the Certificates are in fact issued at a greater than de minimis
discount or are treated as having been issued with OID under the Regulations,
the following rules will apply. The excess of the 'stated redemption price at
maturity' of a Certificate over the original issue price (in this case, the
first price at which a substantial amount of the Certificates of a class are
sold) will constitute OID. A Certificate Owner must include OID in income as
interest over the term of the Certificate under a constant yield method. In
general, OID must be included in income in advance of the receipt of cash
representing that income. In the case of a debt instrument as to which the
repayment of principal may be accelerated as a result of the prepayment of other
obligations securing the debt instrument, the periodic accrual of OID is
determined by taking into account both the prepayment assumptions used in
pricing the debt instrument and the prepayment experience. If this provision
applies to a Class of Certificates (which is not clear), the amount of OID which
will accrue in any given 'accrual period' may either
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increase or decrease depending upon the actual prepayment rate. Accordingly,
each Certificate Owner should consult its own tax advisor regarding the impact
to him of the OID rules if the Certificates are issued with OID. Under the
Regulations, a holder of a Certificate issued with de minimis OID must include
such OID in income proportionately as principal payments are made on that Class
of Certificates.
A holder that purchases a Certificate at a discount from its stated
redemption price at maturity or, in the case of a Certificate issued with OID,
its adjusted issue price, may be subject to the 'market discount' rules of the
Code. These rules provide, in part, for the treatment of gain attributable to
accrued market discount as ordinary income upon the receipt of partial principal
payments or on the sale or other disposition of the Certificate, and for the
deferral of interest deductions with respect to debt incurred to acquire or
carry the market discount Certificate.
A subsequent holder who purchases a Certificate at a premium may elect to
amortize and deduct this premium over the remaining term of the Certificate in
accordance with rules set forth in Section 171 of the Code.
SALE OF A CERTIFICATE
In general, a Certificate Owner will recognize gain or loss upon the sale,
exchange, redemption, or other taxable disposition of a Certificate measured by
the difference between (i) the amount of cash and the fair market value of any
property received (other than amounts attributable to, and taxable as, accrued
interest) and (ii) the Certificate Owner's tax basis in the Certificate (as
increased by any OID or market discount previously included in income by the
holder and decreased by any deductions previously allowed for amortizable bond
premium and by any payments reflecting principal or OID received with respect to
such Certificate). Subject to the market discount rules discussed above and to
the one-year holding requirement for long-term capital gain treatment, any such
gain or loss generally will be long-term capital gain, provided that the
Certificate was held as a capital asset. Effective for tax years beginning after
December 31, 1992, the maximum ordinary income rate for individuals, estates,
and trusts has generally increased to 39.6%, whereas the maximum long-term
capital gains rate for such taxpayers remains at 28% (subject to certain
exceptions). Moreover, capital losses generally may be used only to offset
capital gains.
FUTURE LEGISLATION
It is possible that future tax legislation will permit a Trust to make an
election comparable to the REMIC election now available to trusts primarily
holding real estate mortgages. A Trust will be permitted to make such an
election if the Transferor delivers an opinion of counsel acceptable to the
Trustee that (1) following such election such Trust will not be an association
(or publicly traded partnership) taxable as a corporation, and (2) the election
will not have a significant adverse effect on federal income tax treatment of
holders of any then-outstanding Series of Certificates.
POSSIBLE CLASSIFICATION OF THE TRANSACTION AS A PARTNERSHIP OR AS AN ASSOCIATION
TAXABLE AS A CORPORATION
The opinion of Tax Counsel with respect to any Series of Certificates will
not be binding on the courts or the IRS. It is possible that the IRS could
assert that, for purposes of the Code, the transaction contemplated by this
Prospectus and a related Prospectus Supplement constitutes a sale of the
Receivables (or an interest therein) to the Certificate Owners of such Series
and that the proper classification of the legal relationship between the
Transferor and the Certificate Owners of such Series resulting from the
transaction is that of a partnership (including a publicly traded partnership),
a publicly traded partnership taxed as a corporation, or an association taxable
as a corporation. Since Tax Counsel, unless otherwise specified in the related
Prospectus Supplement, will advise that the Certificates of a Series will be
treated as indebtedness in the hands of the Certificate Owners of a Series for
Federal income tax purposes, the Transferor generally will not attempt to comply
with the Federal income tax reporting requirements that would apply if
Certificates were treated as interests in a partnership or corporation (unless,
as is permitted by the related Agreement, an interest in the trust is issued or
sold that is intended to be classified as an interest in a partnership).
If a transaction were treated as creating a partnership (other than a
publicly traded partnership taxable as an association) between the Transferor
and the Certificate Owners of one or more Series, the partnership itself would
not be subject to Federal income tax (unless it were to be characterized as a
publicly traded partnership
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taxable as a corporation); rather, the partners of such partnership, including
the Certificate Owners of such Series, would be taxed individually on their
respective distributive shares of the partnership's income, gain, loss,
deductions and credits. The amount and timing of items of income and deductions
of a Certificate Owner could differ if the Certificates of such Series were held
to constitute partnership interests, rather than indebtedness. Moreover, unless
the partnership were treated as engaged in a trade or business, an individual's
share of expenses of the partnership would be miscellaneous itemized deductions
that, in the aggegate, are allowed as deductions only to the extent they exceed
two percent of the individual's adjusted gross income, and would be subject to
reduction under Section 68 of the Code if the individual's adjusted gross income
exceeded certain limits. As a result, the individual might be taxed on a greater
amount of income than the stated rate on the Certificates. Finally, assuming the
partnership is a 'publicly traded partnership' (as defined in Section 469(k)(2)
of the Code), even if it qualifies for exemption from taxation as a corporation,
all or a portion of any taxable income allocated to a Certificate Owner that is
a pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) may, under certain circumstances,
constitute 'unrelated business taxable income' which generally would be taxable
to the holder under the Code.
If it were determined that a transaction created an entity classified as an
association or as a publicly traded partnership taxable as a corporation, the
Trust would be subject to Federal income tax at corporate income tax rates on
the income it derives from the Receivables, which would reduce the amounts
available for distribution to the Certificate Owners, possibly including
Certificate Owners of a Series that is treated as indebtedness. Such
classification may also have adverse state and local tax consequences that would
reduce amounts available for distribution to Certificate Owners. Cash
distributions to the Certificate Owners (except any Class not recharacterized as
an equity interest in an association) generally would be treated as dividends
for tax purposes to the extent of such deemed corporation's earnings and
profits.
FOREIGN INVESTORS
As set forth above, it is expected that Tax Counsel will render an opinion,
upon issuance, that the Certificates of a Series will be treated as debt for
U.S. Federal income tax purposes. The following information describes the U.S.
Federal income tax treatment of investors that are not U.S. persons ('Foreign
Investors') if the Certificates are treated as debt. The term 'Foreign Investor'
means any person other than (i) a citizen or resident of the United States, (ii)
a corporation, partnership or other entity organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for U.S. Federal income tax
purposes, regardless of its source.
Interest, including OID, paid to a Foreign Investor will be subject to U.S.
withholding taxes at a rate of 30% unless (i) the income is 'effectively
connected' with the conduct by such Foreign Investor of a trade or business in
the United States or (ii) the Foreign Investor and each securities clearing
organization, bank, or other financial institution that holds the Certificates
on behalf of the customer in the ordinary course of its trade or business, in
the chain between the Certificate Owner and the U.S. person otherwise required
to withhold the U.S. tax, complies with applicable identification requirements
and the Certificate Owner does not actually or constructively own 10% or more of
the voting stock of the Transferor (or, upon the issuance of an interest in the
Trust that is treated as a partnership interest, any holder of such interest)
and is not a controlled foreign corporation with respect to the Transferor (or
the holder of such an interest). Applicable identification requirements
generally will be satisfied if there is delivered to a securities clearing
organization (i) IRS Form W-8 signed under penalties of perjury by the
Certificate Owner, stating that the Certificate Owner is not a U.S. person and
providing such Certificate Owner's name and address, (ii) IRS Form 1001, signed
by the Certificate Owner or such Certificate Owner's agent, claiming exemption
from withholding under an applicable tax treaty, or (iii) IRS Form 4224 signed
by the Certificate Owner or such owner's agent, claiming exemption from
withholding of tax on income effectively connected with the conduct of a trade
or business in the United States; provided that in any such case (x) the
applicable form is delivered pursuant to applicable procedures and is properly
transmitted to the United States entity otherwise required to withhold tax and
(y) none of the entities receiving the form has actual knowledge that the
Certificate Owner is a U.S. person.
A Certificate Owner that is a nonresident alien or foreign corporation will
not be subject to U.S. Federal income tax on gain realized upon the sale,
exchange, or redemption of a Certificate, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States, (ii) in the case of a
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Certificate Owner that is an individual, such Certificate Owner is not present
in the United States for 183 days or more during the taxable year in which such
sale, exchange, or redemption occurs, and (iii) in the case of gain representing
accrued interest, the conditions described in the immediately preceding
paragraph are satisified.
If the interests of the Certificate Owners of a Series were reclassified as
interests in a partnership (not taxable as a corporation), such
recharacterization could cause a Foreign Investor to be treated as engaged in a
trade or business in the United States. In such event the Certificate Owner of
such Series would be required to file a Federal income tax return and, in
general, would be subject to Federal income tax, including branch profits tax in
the case of a Certificateholder that is a corporation, on its net income from
the partnership. Further, the partnership would be required, on a quarterly
basis, to pay withholding tax equal to the sum, for each foreign partner, of
such foreign partner's distributive share of 'effectively connected' income of
the partnership multiplied by the highest rate of tax applicable to that foreign
partner. The tax withheld from each foreign partner would be credited against
such foreign partner's U.S. income tax liability.
If the Trust were taxable as a corporation, distributions to foreign
persons, to the extent treated as dividends, would generally be subject to
withholding at the rate of 30%, unless such rate were reduced by an applicable
tax treaty.
BACKUP WITHHOLDING
Certain Certificateholders may be subject to backup withholding at the rate
of 31% with respect to interest paid on the Certificates of a Series if the
Certificateholder, upon issuance, fails to supply the Trustee or his broker with
his taxpayer identification number, furnishes an incorrect taxpayer
identification number, fails to report interest, dividends, or other 'reportable
payments' (as defined in the Code) properly, or, under the circumstances, fails
to provide the Trustee or his broker with a certified statement, under penalty
of perjury, that he is not subject to backup witholding. Information returns
will be sent annually to the IRS and to each Certificateholder of a Series
setting forth the amount of interest paid on the Certificates of such Series and
the amount of tax withheld thereon.
STATE AND LOCAL TAXATION
The discussion above does not address the tax treatment of any Trust, the
Certificates of any Series, or the Certificate Owners of any Series under state
tax laws. Prospective investors are urged to consult their own tax advisers
regarding state and local tax treatment of any Trust and the Certificates of any
Series, and the consequences of purchase, ownership or disposition of the
Certificates of any Series under any state or local tax law.
ERISA CONSIDERATIONS
ERISA imposes certain requirements on those pension, profit sharing and
other employee benefit plans to which it applies and on those persons who are
fiduciaries with respect to such plans. In accordance with ERISA's fiduciary
standards, before purchasing Certificates a fiduciary should determine whether
such an investment is permitted under the documents and instruments governing
the plan and is appropriate for the plan in view of its overall investment
policy and the composition and diversification of its investment portfolio.
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit sharing or other employee benefit plan that is subject to such provisions
from engaging in certain transactions involving 'plan assets' with persons that
are 'parties in interest' under ERISA or 'disqualified persons' under the Code
with respect to the plan. A violation of these 'prohibited transaction' rules
may generate excise tax and other liabilities under ERISA and the Code for such
persons. In addition, investments by Benefit Plans are subject to ERISA's
general fiduciary requirements, including the requirements of investment
prudence and diversification and the requirement that a Benefit Plan's
investments be made in accordance with the documents governing the Benefit Plan.
On November 13, 1986, the Department of Labor ('DOL') issued a final
regulation (the 'Final Regulation') concerning the definition of what
constitutes the 'plan assets' of an employee benefit plan subject
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to ERISA or the Code or an individual retirement account (collectively referred
to as 'Benefit Plans'). Under the Final Regulation the assets and properties of
certain entities in which a Benefit Plan makes an equity investment could be
deemed to be assets of the Benefit Plan in certain circumstances. Accordingly,
if Benefit Plans purchase Certificates, the related Trust could be deemed to
hold Benefit Plan assets unless one of the exceptions under the Final Regulation
(or another statutory or administrative exemption) is applicable to the related
Trust. The operations of the related Trust could result in prohibited
transactions if Benefit Plans that purchase the Certificates are deemed to own
an interest in the underlying assets of the related Trust. There may also be an
improper delegation of the responsibility to manage plan assets if Benefit Plans
that purchase the Certificates are deemed to own an interest in the underlying
assets of the related Trust.
The Final Regulation only applies to the purchase by a Benefit Plan of an
'equity interest' in an entity. Assuming that the Certificates are equity
interests, the Final Regulation contains an exception that provides that if a
Benefit Plan acquires a 'publicly-offered security' the issuer of the security
is not deemed to hold Benefit Plan assets. A 'publicly-offered security' is a
security that is (i) freely transferable, (ii) part of a class of securities
that is owned by 100 or more investors independent of the issuer and of one
another and (iii) either is (A) a part of a class of securities registered under
section 12(b) or 12(g) of the Securities Exchange Act of 1934, or (B) sold to
the plan as part of an offering of securities to the public pursuant to an
effective registration statement under the Securities Act of 1933 and the class
of securities of which such security is a part is registered under the
Securities Exchange Act of 1934 within 120 days (or such later time as may be
allowed by the Commission) after the end of the fiscal year of the issuer during
which the offering of such securities to the public occurred.
Unless otherwise specified in the related Prospectus Supplement, it is
anticipated that the Certificates will meet the criteria of publicly-offered
securities as set forth above. Unless otherwise specified in the related
Prospectus Supplement, the Underwriters expect (although no assurance can be
given) that the Certificates will be held by at least 100 independent persons at
the conclusion of each related offering, there will be no restrictions imposed
on the transfer of the Certificates, and the Certificates will be sold as part
of an offering pursuant to an effective registration statement under the
Securities Act of 1933, and then will be timely registered under the Securities
Exchange Act of 1934.
If the Certificates fail to meet the criteria of publicly-offered
securities and the related Trust's assets are deemed to include assets of
Benefit Plans that are Certificateholders, transactions involving the related
Trust and 'parties in interest' or 'disqualified persons' with respect to such
plans might be prohibited under Section 406 of ERISA and Section 4975 of the
Code unless an exemption is applicable. Thus, for example, if a participant in
any Benefit Plan is a Cardmember under one of the Designated Accounts, under DOL
interpretations the purchase of Certificates by such plan could constitute a
prohibited transaction. There are certain class exemptions issued by the DOL
that could apply in such event including DOL Prohibited Transaction Exemption
84-14 (Class Exemption for Plan Asset Transactions Determined by Independent
Qualified Professional Asset Managers), 91-38 (Class Exemption for Certain
Transactions Involving Bank Collective Investment Funds) and 90-1 (Class
Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts). There is no assurance that these exemptions, even if all of the
conditions specified therein are satisfied, will apply to all transactions
involving the related Trust's assets.
In addition, the Transferor or its affiliates may be considered to be a
party in interest or a fiduciary with respect to some Benefit Plans.
Accordingly, an investment by a Benefit Plan in Certificates may be a prohibited
transaction under ERISA and the Code unless such investment is subject to a
statutory or administrative exemption.
In light of the foregoing, fiduciaries of a Benefit Plan considering the
purchase of Certificates should consult their own counsel as to whether the
assets of the related Trust which are represented by the Certificates would be
considered plan assets, the consequences that would apply if the Trust's assets
were considered plan assets and the applicability of exemptive relief from the
prohibited transaction rules.
Moreover, each Benefit Plan fiduciary should determine whether, under the
general fiduciary standards of investment prudence and diversification, an
investment in the Certificates is appropriate for the Benefit Plan, taking into
account the overall investment policy of the Benefit Plan and the composition of
the Benefit Plan's investment portfolio.
59
<PAGE>
LEGAL MATTERS
Unless other legal counsel is specified in the related Prospectus
Supplement, certain legal matters relating to the Certificates will be passed
upon for the Transferor by Richard S. Collins, Esq., counsel to the Transferor,
for the Servicer by Andrew B. Somers, Jr., Esq., Executive Vice President and
General Counsel to the Servicer and for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom, New York, New York. Certain federal income tax and other
matters will be passed upon for the Transferor and the Servicer by Skadden,
Arps, Slate, Meagher & Flom. Skadden, Arps, Slate, Meagher & Flom has from time
to time represented the Servicer and Credco and certain of their affiliates.
PLAN OF DISTRIBUTION
The Transferor may sell the Certificates offered hereby either directly or
through one or more underwriters or underwriting syndicates (the
'Underwriters'). The Prospectus Supplement for each Series will set forth the
terms of the offering of such Series and of each Class within such Series,
including the name or names of the Underwriters, the proceeds to and their use
by the Transferor, and either the initial public offering price, the discounts
and commissions to the Underwriters and any discounts or concessions allowed or
reallowed to certain dealers, or the method by which the price at which the
Underwriters will sell the Certificates will be determined.
The Certificates of a Series may be acquired by Underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The obligations of any
Underwriters will be subject to certain conditions precedent, and such
Underwriters will be severally obligated to purchase all the Certificates of a
Series described in the related Prospectus Supplement, if any are purchased. If
Certificates of a Series are offered other than through Underwriters, the
related Prospectus Supplement will contain information regarding the nature of
such offering and any agreements to be entered into between the Transferor and
purchasers of Certificates of such Series.
The place and time of delivery for any Series of Certificates in respect of
which this Prospectus is delivered will be set forth in the accompanying
Prospectus Supplement.
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GLOSSARY FOR THE PROSPECTUS
<TABLE>
<CAPTION>
TERM PAGE(S)
- ---- -------
<S> <C>
Account.............................................................................................. 20
Accumulation Period.................................................................................. 10
Act.................................................................................................. 8
Additional Account Closing Date...................................................................... 35
Additional Account Cut Off Date...................................................................... 8
Additional Account Selection Date.................................................................... 23
Additional Accounts.................................................................................. 4, 23
Adjustment........................................................................................... 40
Adverse Party........................................................................................ 24
Agreement............................................................................................ 3
Agreement I.......................................................................................... 3
American Express..................................................................................... 24
Amortization Period.................................................................................. 5
application process.................................................................................. 20
Bankruptcy Code...................................................................................... 24
Benefit Plans........................................................................................ 59
Card................................................................................................. 17, 20
Cardmember........................................................................................... 20
Cash Collateral Account.............................................................................. 48
Cash Collateral Guaranty............................................................................. 48
Cede................................................................................................. 2
CEDEL................................................................................................ 28
CEDEL Participants................................................................................... 28
Certificate Owners................................................................................... 2
Certificate Rate..................................................................................... 5
Certificateholders................................................................................... 2
Certificateholders' Interest......................................................................... 5
Certificates......................................................................................... cover, 3
Class................................................................................................ cover
Closing Date......................................................................................... 9
Code................................................................................................. 54
Collection Account................................................................................... 13, 36
Collections.......................................................................................... 5
Commission........................................................................................... 2
Controlled Accumulation Amount....................................................................... 10
Controlled Amortization Amount....................................................................... 10
Controlled Amortization Period....................................................................... 9
Controlled Deposit Amount............................................................................ 10
Controlled Distribution Amount....................................................................... 10
Cooperative.......................................................................................... 29
Credco............................................................................................... 15
Cut Off Date......................................................................................... 5
Defaulted Receivables................................................................................ 39
Definitive Certificates.............................................................................. 30
Depositaries......................................................................................... 27
Depository........................................................................................... 27
Designated Accounts.................................................................................. cover, 3, 23
Disclosure Document.................................................................................. 8
Distribution Date.................................................................................... 26
DOL.................................................................................................. 58
DTC.................................................................................................. 9, 64
Due Period........................................................................................... 5
Early Amortization Event............................................................................. 41
Early Amortization Period............................................................................ 11
Eligible Account..................................................................................... 23
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE(S)
- ---- -------
<S> <C>
Eligible Institution................................................................................. 36
Eligible Investments................................................................................. 37
Eligible Receivable.................................................................................. 35
Enhancement.......................................................................................... 4
Enhancement Invested Amount.......................................................................... 48
ERISA................................................................................................ 14
Euroclear............................................................................................ 29
Euroclear Operator................................................................................... 29
Euroclear Participants............................................................................... 29
Excess Principal Collections......................................................................... 12
Exchange............................................................................................. 8
Exchange Act......................................................................................... 2
Exchangeable Transferor Certificate.................................................................. 6
Expected Final Payment Date.......................................................................... 7
Final Regulation..................................................................................... 58
Final Termination Date............................................................................... 41
Foreign Investor..................................................................................... 57
Global Securities.................................................................................... 64
Holders.............................................................................................. 30
Indirect Participants................................................................................ 28
Ineligible Receivable................................................................................ 34
Interest Funding Account............................................................................. 30
Interest Payment Date................................................................................ 7
Interest Period...................................................................................... 7
Invested Amount...................................................................................... 6
Invested Percentage.................................................................................. 6
Investor Charge-Off.................................................................................. 40
Investor Default Amount.............................................................................. 39
IRS.................................................................................................. 54
L/C Bank............................................................................................. 49
MasterCard........................................................................................... 17
Minimum Transferor Percentage........................................................................ 36
Monthly Interest..................................................................................... 11
Monthly Servicer Report.............................................................................. 45
Monthly Servicing Fee................................................................................ 44
New Agreement........................................................................................ 3
New Receivable Purchase Agreement.................................................................... 7
New Trust............................................................................................ cover, 3
Original Billing Date................................................................................ 21
OID.................................................................................................. 55
Participants......................................................................................... 27
Paying Agent......................................................................................... 28
Payment Date Statement............................................................................... 46
Portfolio............................................................................................ 23
pre-approved process................................................................................. 20
Principal Collections................................................................................ 18
Principal Commencement Date.......................................................................... 7
Principal Funding Account............................................................................ 10
Principal Terms...................................................................................... 32
Privileged Assets Calculated Amount.................................................................. 40
Privileged Assets program............................................................................ 40
Prospectus Supplement................................................................................ cover
Rapid Amortization Period............................................................................ 11
Rating Agency........................................................................................ 19
Receivables.......................................................................................... cover, 3
Receivable Purchase Agreement........................................................................ 7
Receivable Purchase Agreement I...................................................................... 7
</TABLE>
62
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE(S)
- ---- -------
<S> <C>
Record Date.......................................................................................... 26
Recoveries........................................................................................... 4
Regulations.......................................................................................... 55
Removed Accounts..................................................................................... 4, 23, 36
Reserve Account...................................................................................... 49
Revolving Period..................................................................................... 9
RFC.................................................................................................. 2
Selection Date....................................................................................... 4
Senior Certificates.................................................................................. 6
Series............................................................................................... cover
Series Supplement.................................................................................... 3
Series Termination Date.............................................................................. 41
Service Transfer..................................................................................... 44
Servicer............................................................................................. cover, 13
Servicer Default..................................................................................... 45
Servicing Fee........................................................................................ 44
Spread Account....................................................................................... 49
Subordinated Certificates............................................................................ 6
Tax Counsel.......................................................................................... 54
Terms and Conditions................................................................................. 29
TRS.................................................................................................. cover, 3, 24
Transfer Deposit Amount.............................................................................. 40
Transferor........................................................................................... cover, 24
Transferor Amount.................................................................................... 6, 36
Transferor Interest.................................................................................. 5, 26
Transferor Percentage................................................................................ 26
Trust................................................................................................ cover
Trust I.............................................................................................. cover, 3
Trust Portfolio...................................................................................... 23
Trust Principal Component............................................................................ 12
Trustee.............................................................................................. 3
UCC.................................................................................................. 15
Undistributed Principal Collections.................................................................. 39
Underwriters......................................................................................... 60
VISA................................................................................................. 17
Yield Collections.................................................................................... 18
Yield Factor......................................................................................... 5
</TABLE>
63
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, any globally offered Certificates
('Global Securities') will be available only in book-entry form. Investors in
Global Securities may hold such Global Securities through any of The Depository
Trust Company ('DTC'), CEDEL or Euroclear. The Global Securities will be
tradeable as home market instruments in both the European and U.S. domestic
markets. Initial settlement and all secondary trades will settle in same-day
funds.
Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
participants holding Certificates will be effected on a delivery-against-payment
basis through the respective depositaries of CEDEL and Euroclear and as
participants in DTC.
Non-U.S. holders of Global Securities will be exempt from U.S. withholding
taxes, provided that such holders meet certain requirements and deliver
appropriate U.S. tax documents to the securities clearing organizations or their
participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect participants in DTC. As a result, CEDEL and Euroclear will hold
positions on behalf of their participants through their respective depositaries,
which in turn will hold such positions in accounts as participants of DTC.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no 'lock-up' or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchase determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC participants. Secondary market trading between DTC
participants will be settled using the procedures applicable to U.S. corporate
debt issues in same-day funds.
Trading between CEDEL and/or Euroclear participants. Secondary market
trading between CEDEL participants and/or Euroclear participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and CEDEL or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC participant to the
account of a CEDEL participant or a Euroclear participant, the purchaser will
send instructions to CEDEL or Euroclear through a participant at least one
64
<PAGE>
business day prior to settlement. CEDEL or Euroclear will instruct the
respective depositary to receive the Global Securities against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date, on the basis of a
calendar year consisting of twelve 30-day calendar months. For transactions
settling on the 31st of the month, payment will include interest accrued to and
excluding the first day of the following month. Payment will then be made by the
respective depositary to the DTC participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the CEDEL participant's or Euroclear
participant's account. The Global Securities credit will appear the next day
(European time) and the cash debit will be back-valued to, and the interest on
the Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the CEDEL or
Euroclear cash debit will be valued instead as of the actual settlement date.
CEDEL participants and Euroclear participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within CEDEL or Euroclear. Under this approach,
they may take on credit exposure to CEDEL or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit to
them, participants can elect not to preposition funds and allow that credit line
to be drawn upon to finance settlement. Under this procedure, CEDEL participants
or Euroclear participants purchasing Global Securities would incur overdraft
charges for one day, assuming they cleared the overdraft when the Global
Securities were credited to their accounts. However, interest on the Global
Securities would accrue from the value date. Therefore, in many cases the
investment income on the Global Securities earned during that one-day period may
substantially reduce or offset the amount of such overdraft charges, although
this result will depend on each participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Global Securities to
the respective depositary for the benefit of CEDEL participants or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant a cross-market transaction will
settle no differently than a trade between two DTC participants.
Trading between CEDEL or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, CEDEL and Euroclear participants may employ
their customary procedures for transactions in which Global Securities are to be
transferred by the respective clearing system, through the respective
depositary, to a DTC participant. The seller will send instructions to CEDEL or
Euroclear through a participant at least one business day prior to settlement.
In this case, CEDEL or Euroclear will instruct the respective depositary to
deliver the bonds to the DTC participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date on the basis of a
calendar year consisting of twelve 30-day calendar months. For transactions
settling on the 31st of the month, payment will include interest accrued to and
excluding the first day of the following month. The payment will then be
reflected in the account of the CEDEL participant or Euroclear participant the
following day, and receipt of the cash proceeds in the CEDEL or Euroclear
participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the CEDEL or
Euroclear participant have a line of credit with its respective clearing system
and elect to be in debit in anticipation of receipt of the sale proceeds in its
account, the back-valuation will extinguish any overdraft charges incurred over
that one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the CEDEL or Euroclear
participant's account would instead be valued as of the actual settlement date.
Finally, day traders that use CEDEL or Euroclear and that purchase Global
Securities from DTC Participants for delivery to CEDEL participants or Euroclear
participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
65
<PAGE>
1. borrowing through CEDEL or Euroclear for one day (until the
purchase side of the day trade is reflected in their CEDEL or Euroclear
accounts) in accordance with the clearing system's customary procedures;
2. borrowing the Global Securities in the U.S. from a DTC participant
no later than one day prior to settlement, which would give Global
Securities sufficient time to be reflected in their CEDEL or Euroclear
account in order to settle the sale side of the trade; or
3. staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC participant is at
least one day prior to the value date for the sale to the CEDEL participant
or Euroclear participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A holder of Global Securities holding securities through CEDEL or Euroclear
(or through DTC if the holder has an address outside the U.S.) will be subject
to the 30% U.S. withholding tax that generally applies to payments of interest
(including original interest discount) on registered debt issued by U.S.
persons, unless (i) each clearing system, bank or other financial institution
that holds custormers' securities in the ordinary course of its trade or
business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such holder takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. persons (Form W-8). Non-U.S. persons that are
beneficial owners can obtain a complete exemption from the withholding tax by
filing a signed Form W-8 (Certificate of Foreign Status).
If the information shown on Form W-8 changes, a new Form W-8 must be filed
within 30 days of such change.
Exemption for non-U.S. persons with effectively connected income (Form
4224). A non-U.S. person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. persons resident in treaty countries
(Form 1001). Non-U.S. persons that are beneficial owners residing in a country
that has a tax treaty with the United States can obtain an exemption or reduced
tax rate (depending on the treaty terms ) by filing Form 1001 (Ownership,
Exemption or Reduced Rate Certificate). If the treaty provides only for a
reduced rate, withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the beneficial owner or
his agent.
Exemption for U.S. persons (Form W-9). U.S. persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Global Security holder or,
in the case of a Form 1001 or a Form 4224 filer, his agent, files by submitting
the appropriate form to the person through which he holds (the clearing agency,
in the case of persons holding directly on the books of the clearing agency).
Form W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year.
The term 'U.S. Person' means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includable in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. Federal income tax withholding that may be relevant to foreign holders
of Global Securities. Investors are advised to consult their own tax advisors
for specific tax advice concerning their holding and disposing of Global
Securities.
This summary does not deal with all aspects of Federal income tax
withholding that may be relevant to foreign holders of Global Securities.
Investors are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of Global Securities.
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<PAGE>
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No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained in this
Prospectus Supplement and the accompanying Prospectus and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Transferor or the Underwriters. Neither the delivery of this
Prospectus Supplement nor the accompanying Prospectus nor any sale made
hereunder shall under any circumstance create an implication that there has been
no change in the affairs of the Transferor, American Express Travel Related
Services Company, Inc., American Express Company or any affiliate thereof or in
the Receivables or the Designated Accounts since the date hereof. This
Prospectus Supplement and the accompanying Prospectus do not constitute an offer
to sell or solicitation of an offer to buy any of the securities offered hereby
in any jurisdiction to any person to whom it is unlawful to make such offer in
such jurisdiction.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary............................... S-3
Special Considerations........................... S-11
TRS' Domestic Consumer Charge Card Business...... S-12
The Designated Accounts.......................... S-16
Use of Proceeds.................................. S-17
Maturity and Principal Payment Considerations.... S-17
Description of the Class A Certificates and the
Agreement...................................... S-18
Tax Matters...................................... S-29
Legal Matters.................................... S-30
Underwriting..................................... S-30
Glossary for Prospectus Supplement............... S-32
Annex I: Other Issuances of Investor
Certificates............................ S-34
PROSPECTUS
Prospectus Supplement............................ 2
Reports to Certificateholders.................... 2
Available Information............................ 2
Incorporation of Certain Documents by
Reference...................................... 2
Prospectus Summary............................... 3
Special Considerations........................... 15
TRS' Domestic Consumer Charge Card Business...... 20
The Designated Accounts.......................... 23
The Transferor and Related Parties............... 24
The Trusts....................................... 25
Maturity and Principal Payment Considerations.... 25
Description of the Certificates.................. 26
Enhancement...................................... 48
Description of the Receivable Purchase
Agreement...................................... 50
Certain Legal Aspects of the Receivables......... 52
Tax Matters...................................... 54
State and Local Taxation......................... 58
ERISA Considerations............................. 58
Legal Matters.................................... 60
Plan of Distribution............................. 60
Glossary for the Prospectus...................... 61
Annex I: Global Clearance, Settlement and Tax
Documentation Procedures................ 64
</TABLE>
------------------
Until December 8, 1996 (90 days after the date of this Prospectus
Supplement) all dealers effecting transactions in the Class A Certificiates,
whether or not participating in this distribution, may be required to deliver a
Prospectus Supplement and a Prospectus. This delivery requirement is in addition
to the obligation of dealers to deliver a Prospectus Supplement and a Prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
$950,000,000
AMERICAN EXPRESS
MASTER TRUST
CLASS A FLOATING RATE ACCOUNTS
RECEIVABLE
TRUST CERTIFICATES,
SERIES 1996-1
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION
TRANSFEROR
[LOGO]
AMERICAN EXPRESS
TRAVEL RELATED
SERVICES COMPANY, INC.
SERVICER
------------------------------------------
PROSPECTUS SUPPLEMENT
SEPTEMBER 9, 1996
------------------------------------------
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
UBS SECURITIES
------------------------------------------------------
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