<PAGE>
As filed with the Securities and Exchange Commission on January 16, 2001
Registration No. 333-48860 and 333-48860-01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________________
First Consumers National Bank
(Originator of the Trusts described herein)
(Exact name of registrant as specified in its charter)
First Consumers Master Trust
(Issuer of the Collateral Certificate)
(Exact name of registrant as specified in its charter)
First Consumers Credit Card Master Note Trust
(Issuer of the Notes)
National Banking Association 93-098-2044
(State of Incorporation) (I.R.S. Employer
Identification No.)
9300 S.W. Gemini Drive
Beaverton, OR 97008
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
John R. Steele
First Consumers National Bank
9300 S.W. Gemini Drive
Beaverton, OR 97008
(630) 986-8800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C> <C>
Robert F. Hugi Andy Yokom Jay A. Lipe
Mayer, Brown & Platt Spiegel, Inc. Rooks, Pitts and Poust
190 South LaSalle Street Treasury Department 10 South Wacker Drive
Chicago, Illinois 60603-3441 3500 Lacey Road Suite 2300
(312) 782-0600 Downers Grove, Illinois 60515-5432 Chicago, Illinois 60606
(630) 769-3006 (312) 876-1700
</TABLE>
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.[_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================================
Amount to be Proposed Maximum Proposed Maximum
Title of Each Class of Registered Offering Price Aggregate Amount of
Securities to be Registered Per Unit(1) Offering Price(1) Registration Fee(3)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed Notes ............................. $1,200,000,000 100% $1,200,000,000 $316,800
-------------------------------------------------------------------------------------------------------------------------------
Collateral Certificate(2)....................... $1,200,000,000 - - -
===============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) No additional consideration will be paid by the purchasers of the Asset
Backed Notes for the Collateral Certificate, which is pledged as security
for the Asset Backed Notes and issued by another trust formed by the
registrant.
(3) $264 has been previously paid.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus supplement and the accompanying prospectus +
+is not complete and may be amended. We may not sell these securities until the+
+registration statement filed with the Securities and Exchange Commission is +
+effective. This prospectus supplement and the accompanying prospectus are not +
+an offer to sell and are not soliciting an offer to buy these securities in +
+any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated __________ ___, 2001
Prospectus Supplement to Prospectus dated ____________ ___, 2001
First Consumers Credit Card Master Note Trust
Issuer
First Consumers National Bank
Seller and Servicer
Series 2001- Asset Backed Notes
<TABLE>
<CAPTION>
Class A Notes Class B Notes Class C Notes
------------- ------------- -------------
<S> <C> <C> <C>
Principal amount $ $ $
Interest Rate [One-month LIBOR [One-month LIBOR [One-month LIBOR
plus] [ ]% per year, plus] [ ]% per year, plus] [ ]% per year,
payable monthly on payable monthly on payable monthly on
the 15th the 15th the 15th
Expected principal
payment date 200 200 200
Final maturity date 200 200 200
Price to public $ (or %) $ (or %) $ (or %)
Underwriting $ (or %) $ (or %) $ (or %)
discount
Proceeds to issuer $ (or %) $ (or %) $ (or %)
</TABLE>
The notes will be paid from the trust assets consisting primarily of an interest
in receivables in a portfolio of MasterCard(R) and VISA(R) revolving credit card
accounts owned by First Consumers National Bank.
We expect to issue your series of notes in book-entry form on or about , 2001.
--------------------------------------------------------------------------------
You should consider carefully the risk factors beginning on page ___ in the
prospectus.
A note is not a deposit and neither the notes nor the underlying accounts or
receivables are insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.
The notes are obligations of First Consumers Credit Card Master Note Trust only
and are not obligations of First Consumers National Bank or any other person.
This prospectus supplement may be used to offer and sell the notes only if
accompanied by the prospectus.
--------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved these notes or determined that this prospectus
supplement or the prospectus is accurate or complete. Any representation to the
contrary is a criminal offense.
Underwriters of the Class A notes
Underwriters of the Class B notes
Underwriters of the Class C notes
, 2001
<PAGE>
Important Notice about Information Presented in this
Prospectus Supplement and the Accompanying Prospectus
We (First Consumers National Bank) provide information to you about the
notes in two separate documents: (a) the accompanying prospectus, which provides
general information, some of which may not apply to your series of notes, and
(b) this prospectus supplement, which describes the specific terms of your
series of notes.
Whenever the information in this prospectus supplement is more specific
than the information in the accompanying prospectus, you should rely on the
information in this prospectus supplement.
You should rely only on the information provided in this prospectus
supplement and the accompanying prospectus, including the information
incorporated by reference. We have not authorized anyone to provide you with
different information. We are not offering the notes in any state where the
offer is not permitted.
We include cross references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following Table of Contents and the Table of
Contents in the accompanying prospectus provide the pages on which these
captions are located.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Summary of Terms....................................................... S-1
Structural Summary..................................................... S-3
The Issuer........................................................ S-3
Collateral for the Notes.......................................... S-3
First Consumers Master Trust...................................... S-4
Other Claims on the Receivables................................... S-4
Other Series of Notes............................................. S-4
Outstanding Series of Investor
Certificates.................................................... S-4
The Seller Interest............................................... S-4
Principal Collections............................................. S-6
Subordination................................................. S-6
Spread Account................................................ S-7
Events of Default................................................. S-8
Optional Redemption............................................... S-8
Tax Status........................................................ S-8
ERISA Considerations.............................................. S-9
Exchange Listing.................................................. S-9
First Consumers National Bank..................................... S-9
Receivables Performance................................................ S-10
Delinquency and Loss Experience................................... S-10
Revenue Experience................................................ S-13
The Trust Portfolio............................................... S-15
Maturity Considerations................................................ S-19
Controlled Accumulation Period.................................... S-19
Rapid Amortization Period......................................... S-19
Payment Rates..................................................... S-20
Paired Series..................................................... S-20
Spiegel's Retail Operations............................................ S-21
Eddie Bauer....................................................... S-21
Newport News.................................................. S-22
Description of Series Provisions....................................... S-22
General........................................................... S-22
Collateral Amount................................................. S-22
Allocation Percentages............................................ S-23
Interest Payments................................................. S-24
Principal Payments................................................ S-25
Controlled Accumulation Period.................................... S-26
Rapid Amortization Period......................................... S-27
Subordination..................................................... S-27
Application of Finance Charge Collections......................... S-28
Reallocation of Principal Collections............................. S-29
Investor Charge-Offs.............................................. S-30
Sharing Provisions................................................ S-31
Principal Accumulation Account.................................... S-31
Reserve Account................................................... S-32
Excess Collateral Amount.......................................... S-34
Spread Account.................................................... S-34
Spread Account Distributions...................................... S-36
Paired Series..................................................... S-36
Pay Out Events.................................................... S-37
Events of Default................................................. S-38
Servicing Compensation and Payment of
Expenses...................................................... S-39
Underwriting........................................................... S-39
Glossary of Terms for Prospectus Supplement............................ S-42
Other Securities Issued and Outstanding................................ I-1
Part A............................................................ I-1
Part B............................................................ I-1
</TABLE>
i
<PAGE>
Summary of Terms
--------------------------------------------------------------------------------
Issuer: First Consumers Credit Card Master Note Trust
Seller of Receivables to First
Consumers Master Trust: First Consumers National Bank
Originator and Servicer: First Consumers National Bank
Indenture Trustee: The Bank of New York
Owner Trustee: Bankers Trust Company
Closing Date: , 2001
Clearance and Settlement: DTC/Clearstream/Euroclear
Minimum Denominations: $1,000
Servicing Fee Rate: 2% per annum
Initial Collateral Amount: $______________
Excess Collateral Amount: $______________ (___% of the collateral amount)
Primary Assets of the Issuer: An interest in receivables originated in
MasterCard(R)and VISA(R) credit card
accounts/1/
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Principal Amount $ $ $
Percentage of Collateral Amount % % %
Anticipated Ratings:/2/ Aaa/AAA/AAA A2/A/A Baa2/NA/BBB
(Moody's/Standard &
Poor's/Fitch IBCA)
Credit Enhancement: subordination of subordination of spread account
Class B and Class Class C and and subordination
C and excess excess collateral of excess
collateral amount amount collateral amount
Interest Rate: [One-month [One-month [One-month
LIBOR plus] LIBOR plus] LIBOR plus]
[_]% per year [_]% per year [_]% per year
Interest Accrual Method: [30] [actual]/360 [30] [actual]/360 [30] [actual]/360
Interest Payment Dates: monthly (15th) monthly (15th) monthly (15th)
[Interest Rate Index Reset Date: 2 London 2 London 2 London business
business days business days days before each
before each before each interest payment
interest payment interest payment date]
date date
First Interest Payment Date: , 2001 , 2001 , 2001
Commencement of Accumulation
Period (subject to adjustment): , 200 , 200 , 200
</TABLE>
____________________
1 MasterCard and Visa are federally registered servicemarks of MasterCard
- International and Visa U.S.A., Inc., respectively.
2 It is a condition to issuance that one of these ratings be obtained and
- the collateral certificate be rated investment grade.
S-2
<PAGE>
<TABLE>
<S> <C> <C> <C>
Expected Principal Payment Date: , 200 , 200 , 200
Final Maturity Date: , 200 , 200 , 200
ERISA eligibility: Yes, subject to important considerations described under
"ERISA Considerations" in the accompanying prospectus.
Debt for United States Federal Yes, subject to important considerations described under
Income Tax Purposes: "Federal Income Tax Consequences" in the accompanying
prospectus.
</TABLE>
S-3
<PAGE>
Structural Summary
This summary does not contain all of the information that you need to consider
in making your investment decision. You should carefully read this entire
document and the accompanying prospectus before you purchase any notes.
First First First
Consumers Receivables Consumers Collateral Consumers
National Master Certificate Credit Card Notes
Bank Trust Master Note
Trust
The Issuer
The notes will be issued by First Consumers Credit Card Master Note Trust, an
Illinois common law trust, under an indenture supplement to an indenture, each
between the issuer and the indenture trustee.
The indenture trustee is The Bank of New York.
Collateral for the Notes
The notes are secured by a beneficial interest in a pool of receivables that
arise under our MasterCard(R) and VISA(R) credit card accounts. We refer to
these accounts collectively as bank card accounts, to distinguish them from our
private label credit card accounts.
We have designated all of the eligible accounts in our bank card portfolio and
have transferred the receivables in those accounts to First Consumers Master
Trust. We refer to the accounts that have been designated as trust accounts as
the trust portfolio. First Consumers Master Trust has issued a certificate
representing an interest in the receivables and the other assets of First
Consumers Master Trust to us. We have transferred that certificate to the issuer
and that certificate serves as collateral for the notes.
The accounts in the trust portfolio include unsecured cards, as well as secured
cards, which require the cardholder to secure his or her line of credit with a
savings or time deposit with us. The cardholders in our secured card program,
representing % of the trust portfolio, are generally individuals who have a low
income level and/or a limited or adverse credit history. Based on our experience
with the secured card program, we have developed certain unsecured card
programs, representing % of the trust portfolio, that are targeted at
individuals that have adverse credit histories. The cardholders in both programs
must fit within our parameters for our secured card or unsecured credit card
programs, as applicable, indicating a probability that the customer is a
reasonable, although higher, credit risk after taking into account any deposit
securing obligations under the account. See "Risk Factors--Secured card and
related programs may affect portfolio yield" and "Our Bank Card Activities" in
the accompanying prospectus. Our other unsecured card programs, representing
___% of the trust portfolio,
S-4
<PAGE>
include the Eddie Bauer and Spiegel Catalog co-branded programs.
The receivables in First Consumers Master Trust as of _______, 2001 were as
follows:
. total receivables: $_________
. principal receivables: $________
. finance charge receivables: $________
. total accounts designated to First
Consumers Master Trust: ________
In addition, a share of interchange on the bank card accounts and investment
earnings from temporary investments of receivables collections that are held by
the trust will be added to the collateral for your notes.
First Consumers Master Trust
First Consumers Master Trust is a common law trust formed by us in 1992 under a
pooling and servicing agreement that we amended and restated on February 1,
1999. We have transferred our bank card receivables to First Consumers Master
Trust under that pooling and servicing agreement.
The trustee for First Consumers Master Trust is The Bank of New York.
After all outstanding series of investor certificates that have been issued by
First Consumers Master Trust have been retired, we may cause First Consumers
Master Trust to terminate, at which time the receivables will be transferred to
the issuer and held directly by the issuer as collateral for the notes. We refer
to the entity -- either First Consumers Master Trust or the issuer -- that holds
the receivables at any given time as the trust.
Other Claims on the Receivables
Other Series of Notes
Series 2001- is the [___] series of notes issued by the issuer. The issuer may
issue other series of notes from time to time in the future. [A summary of the
outstanding series of notes is in Part A of "Annex I: Other Securities Issued
and Outstanding" included at the end of this prospectus supplement.] Neither you
nor any other noteholder will have the right to consent to the issuance of
future series of notes.
Outstanding Series of Investor Certificates
The collateral certificate issued by First Consumers Master Trust to the issuer
will be the [_] series of investor certificates issued by First Consumers Master
Trust. In addition to the collateral certificate, there will be [_] series of
investor certificates outstanding on the closing date. Each series of investor
certificates represents a beneficial interest in the receivables and the other
trust assets. A summary of the outstanding series of investor certificates is in
[Part B] of "Annex I: Other Securities Issued and Outstanding" included at the
end of this prospectus supplement. Neither you nor any other noteholder will
have the right to consent to the issuance of future series of investor
certificates.
The Seller Interest
We own the interest, called the seller interest, in the receivables and the
other assets of the trust not securing your series or any other series of notes
or investor certificates. The seller interest does not provide credit
enhancement for your series or any other series.
Allocations of Collections and Losses
Your notes represent the right to payments from a portion of the collections on
the receivables. The servicer will also allocate to
S-5
<PAGE>
your notes a portion of defaulted receivables and would also allocate a portion
of the dilution on the receivables to your series if the servicer failed to
comply with its obligation to compensate the trust for dilution. Dilution means
any reduction to the principal balances of receivables made by the servicer
because of merchandise returns or any other reason except losses or payments.
The portion of collections, defaulted receivables and uncovered dilution
allocated to your series will be based mainly upon the ratio of the amount of
collateral for your series to the sum of the total amount of principal
receivables in the trust and any balance in the trust's excess funding account.
The way this ratio is calculated will vary during each of three periods that
will or may apply to your notes:
. The revolving period, which will begin on the closing date and end when
either of the other two periods begins.
. The controlled accumulation period, which is scheduled to begin on _______,
200_ and end when the notes have been paid in full. However, if a pay out
event occurs before the controlled accumulation period begins, there will
be no controlled accumulation period. If a pay out event occurs during the
controlled accumulation period, the controlled accumulation period will
end, and a rapid amortization period will begin.
. The rapid amortization period, which will only occur if one or more adverse
events, known as pay out events, occurs.
For most purposes, the collateral amount used in determining these ratios will
be reset no less frequently than at the end of each month. However, for
allocations of principal collections during the controlled accumulation period
or the rapid amortization period, the collateral amount at the end of the
revolving period will be used, subject to reduction during the controlled
accumulation period if a pay out event occurs for a series paired with Series
2001- .
The collateral amount for your series is:
. the original principal amount of the notes, plus
. an initial excess collateral amount of $ ------, minus
. principal payments on the notes and the balance held in the principal
accumulation account for principal payments, minus
. reductions in the excess collateral amount that result from reductions in
the required amount of the excess collateral, minus
. the amount of any principal collections reallocated to cover interest and
servicing payments for your series to non-affiliates, minus
. your series' share of defaults and uncovered dilution to the extent not
reimbursed from finance charge collections and investment earnings
allocated to your series.
A reduction to the collateral amount because of reallocated principal
collections, defaults or uncovered dilution will be reversed to the extent that
your series has extra finance charge collections and investment earnings in
future periods.
Application of Finance Charge Collections
The issuer will apply your series' share of collections of finance charge
receivables, interchange and investment earnings each month in the following
order of priority:
S-6
<PAGE>
. to pay interest on the Class A notes;
. to pay interest on the Class B notes;
. to pay the servicing fee for your series if neither we nor any of our
affiliates is the servicer;
. to pay interest on the Class C notes;
. to cover your series' share of defaults and uncovered dilution;
. to cover reductions in your series' collateral amount resulting from
defaults and uncovered dilution allocated to your series and from
reallocated principal collections, in each case that have not been
reimbursed;
. to fund, in limited circumstances, a reserve account to cover interest
payment shortfalls for the Series 2001- notes during the controlled
accumulation period;
. to make a deposit, if needed, to the spread account for Class C up to the
required spread account amount;
. to pay the servicing fee for your series if neither we nor any of our
affiliates is the servicer; and
. to other series that share excess finance charge collections with Series
2001-__, to make any required deposits to the excess funding account or to
us or our assigns.
Principal Collections
Revolving Period
During the revolving period, no principal will be paid or accumulated in a trust
account for you.
Controlled Accumulation Period
During the controlled accumulation period, your series' share of principal
collections will be deposited in a trust account, up to a specified deposit
amount on each distribution date. On the expected principal payment date,
amounts on deposit in that account will be paid first to the Class A
noteholders, then to the Class B noteholders and then to the Class C
noteholders, in each case until the specified class of notes is paid in full.
Rapid Amortization Period
A rapid amortization period for your series may start if a pay out event occurs.
The pay out events for your series are described below in this summary and under
"Description of Series Provisions -- Pay Out Events" in this prospectus
supplement. During the rapid amortization period, your series' share of
principal collections will be paid monthly first to the Class A noteholders,
then to the Class B noteholders and then to the Class C noteholders, in each
case until the specified class of notes is paid in full.
S-7
<PAGE>
Reallocation of Principal Collections
During any of the above periods, principal collections allocated to your series
may be reallocated, if necessary, to make required payments of interest on the
Class A notes, the Class B notes and the Class C notes and monthly servicing fee
payments to non- affiliates not made from your series' share of finance charge
collections, investment earnings and excess finance charge collections available
from other series that share with your series. This reallocation is one of the
ways that the notes obtain the benefit of subordination, as described in the
next section of this summary. The amount of reallocated principal collections is
limited by the amount of available subordination.
At all times, collections of principal receivables allocated to your series that
are not needed for payments on your series will first be made available to other
series and then be paid to us or our assigns or deposited in the excess funding
account.
Credit Enhancement
Subordination
Credit enhancement for the Class A notes is provided by the subordination of the
Class B notes, the Class C notes and the excess collateral amount.
Credit enhancement for the Class B notes is provided by the subordination of the
Class C notes and the excess collateral amount.
Credit enhancement for the Class C notes is provided by the subordination of the
excess collateral amount.
Subordination serves as credit enhancement as follows. The more subordinated, or
junior, classes of notes will not receive payment of interest or principal until
required payments have been made to the more senior classes. As a result,
subordinated classes will absorb any shortfalls in collections or deterioration
in the collateral for the notes prior to senior classes. The excess collateral
amount for your series is subordinated to all of the classes of notes, so it
will absorb shortfalls and collateral deterioration before even the most
subordinated class of notes does.
Spread Account
A spread account will provide credit enhancement for your series, mostly for the
Class C notes. The spread account initially will not be funded. After the Series
2001- notes are issued, deposits into the spread account will be made each month
from finance charge collections allocated to your series and excess finance
charge collections available from other series up to the required spread account
amount as described in this prospectus supplement under "Description of Series
Provisions -- Spread Account." The spread account will be used to make payments
on the Class C notes if collections of receivables available to the Class C
notes are insufficient to make required payments and to offset any potential
reductions in the collateral amount if the excess collateral amount has been
reduced to zero.
On any day following an event of default and an acceleration of the Series 2001-
notes, funds available in the spread account will be used to fund any shortfalls
in amounts owed on the Class C notes, the Class A notes and the Class B notes,
in that order of priority.
Credit enhancement for your series is for your series' benefit only, and you are
not entitled to the benefits of credit enhancement available to other series.
Pay Out Events
S-8
<PAGE>
The issuer will begin to repay the principal of the notes before the expected
principal payment date if a pay out event occurs. A pay out event will occur if
the finance charge collections on the receivables in the designated accounts are
too low. The minimum amount that must be available for payments to your series
in any month, referred to as the base rate, is the sum of the interest payable
on the Series 2001- notes for the related interest period, plus your series'
share of the servicing fee for the related calendar month. If the average net
yield for the trust portfolio, after deducting net defaulted receivables, for
any three consecutive calendar months is less than the average base rate for the
same three consecutive calendar months, a pay out event will occur.
The other pay out events are:
. Our failure to make required payments or deposits or material failure to
perform other obligations, subject to applicable grace periods;
. Material inaccuracies in our representations and warranties;
. The Series 2001- notes are not paid in full on the expected principal
payment date;
. Bankruptcy, insolvency or similar events relating to us;
. We are unable to transfer receivables to the trust when required;
. We do not transfer receivables in additional accounts to the trust within
10 days after we are required to do so;
. Material defaults of the servicer;
. First Consumers Master Trust or the issuer becomes subject to regulation as
an "investment company" under the Investment Company Act of 1940; or
. An event of default occurs for the Series 2001- notes and their maturity
date is accelerated.
Events of Default
The Series 2001- notes are subject to events of default described under "The
Indenture -- Events of Default; Rights upon Event of Default" in the
accompanying prospectus. These include, among other things, the failure to pay
interest for 35 days after it is due or to pay principal when it is due on the
final maturity date.
In the case of an event of default involving bankruptcy, insolvency or similar
events relating to the issuer, the principal amount of the Series 2001- notes
automatically will become immediately due and payable. If any other event of
default occurs and continues with respect to the Series 2001- notes, the
indenture trustee or holders of more than 50% of the then-outstanding principal
balance of the Series 2001- notes may declare the principal amount of the Series
2001- notes to be immediately due and payable. These declarations may be
rescinded by holders of more than 50% of the then-outstanding principal balance
of the Series 2001- notes if the related event of default has been cured,
subject to the conditions described under "The Indenture -- Events of Default;
Rights upon Event of Default" in the accompanying prospectus.
After an event of default and the acceleration of the Series 2001- notes, funds
allocated to Series 2001- and on deposit in the collection account, the excess
funding account and the other trust accounts will be applied to pay principal of
and interest on the Series 2001- notes to the extent permitted by law. Principal
S-9
<PAGE>
collections and finance charge collections allocated to Series 2001- will be
applied to make monthly principal and interest payments on the Series 2001-notes
until the earlier of the date those notes are paid in full or the final maturity
date of those notes.
If the Series 2001- notes are accelerated or the issuer fails to pay the
principal of the Series 2001- notes on the final maturity date, subject to the
conditions described in the prospectus under "The Indenture -- Events of
Default; Rights upon Event of Default", the indenture trustee may, if legally
permitted, cause the issuer to sell principal receivables in an amount equal to
the collateral amount for Series 2001- and the related finance charge
receivables.
Optional Redemption
The servicer has the option to purchase your notes when the outstanding
principal amount for your series has been reduced to 10% or less of the initial
principal amount. See "Description of the Notes -- Final Payment of Principal"
in the accompanying prospectus.
Tax Status
Subject to important considerations described under "Federal Income Tax
Consequences" in the accompanying prospectus, Rooks, Pitts and Poust as special
tax counsel to the issuer, is of the opinion that under existing law your Series
2001- notes will be characterized as debt for federal income tax purposes and
that the issuer will not be classified as an association or publicly traded
partnership taxable as a corporation for U.S. federal income tax purposes. By
your acceptance of a Series 2001- note, you will agree to treat your Series
2001- notes as debt for federal, state and local income and franchise tax
purposes. See "Federal Income Tax Consequences" in the accompanying prospectus
for additional information concerning the application of federal income tax
laws.
ERISA Considerations
Subject to important considerations described under "ERISA Considerations" in
the accompanying prospectus, the Series 2001- notes are eligible for purchase by
persons investing assets of employee benefit plans or individual retirement
accounts. If you are contemplating purchasing the Series 2001- notes on behalf
of or with plan assets of any plan or account, we suggest that you consult with
counsel regarding whether the purchase or holding of the Series 2001- notes
could give rise to a transaction prohibited or not otherwise permissible under
ERISA or Section 4975 of the Internal Revenue Code.
Risk Factors
There are material risks associated with an investment in the Series 2001-
notes, and you should consider the matters set forth under "Risk Factors" on
pages __ through __ of the accompanying prospectus.
Ratings
It is a condition to the issuance of your notes that one of the ratings set
forth for each class of Series 2001- notes in the "Summary of Terms" above be
obtained.
Any rating assigned to the notes by a credit rating agency will reflect the
rating agency's assessment solely of the likelihood that noteholders will
receive the payments of interest and principal required to be made under the
terms of the series and will be based primarily on the value of the receivables
in the trust and the credit enhancement provided. The rating is not a
recommendation to purchase, hold or sell any notes. The rating does not
constitute a comment as to the
S-10
<PAGE>
marketability of any notes, any market price or suitability for a particular
investor. Any rating can be changed or withdrawn by a rating agency at any time.
[Exchange Listing
We will apply to list the Series 2001- notes on the Luxembourg Stock Exchange.
We cannot guarantee that the application for the listing will be accepted.]
First Consumers National Bank
Our address is 9300 S.W. Gemini Drive,
Beaverton, Oregon 97008. Our phone number
is (503) 520-____.
S-11
<PAGE>
This prospectus supplement uses defined terms. You can find a glossary of
terms under the caption "Glossary of Terms for Prospectus Supplement" beginning
on page S-__ in this prospectus supplement and under the caption "Glossary of
Terms for Prospectus" beginning on page __ in the accompanying prospectus.
Receivables Performance
The tables below contain performance information for the receivables in the
bank card portfolio for the fiscal years ended December 31, 2000, 1999, 1998,
1997 and 1996. The composition of the bank card portfolio is expected to change
over time. The actual performance of the receivables in the bank card portfolio
may be different from that set forth below.
Delinquency and Loss Experience
The following tables set forth the aggregate delinquency and loss
experience for cardholder payments on the credit card accounts in the bank card
portfolio for each of the five fiscal years in the period ended December 31,
2000.
The delinquency and loss experience primarily reflects the overall credit
quality of the cardholders, the composition of the bank card portfolio by
marketing program, the seasoning of the accounts, the success of various
initiatives taken in recent years and general economic conditions. As indicated
in the delinquency and loss tables, delinquency and loss rates have decreased in
the most recent year. The improvement in these rates is due primarily to:
. an increase in the number of accounts in the Eddie Bauer and Spiegel
Catalog co- branded programs, which historically demonstrate lower
delinquency rates than other programs in the portfolio, resulting in
an overall lower delinquency rate for the portfolio;
. cancellation of a test program which was active from October 1997
through March 1999. The test program demonstrated higher delinquency
rates than other programs in the portfolio. The percentage of the
portfolio represented by the test program has decreased from over 13%
during late 1998 to less than 3% currently.
. more frequent assignment of lower credit limits to new accounts, with
credit limits being increased for more seasoned accounts based on
consistent payment behavior; and
. improved collection techniques, including contacting delinquent
cardholders earlier, using a greater number of collectors and more
frequent outsourcing of pre-charge-off accounts to external
collections agencies.
S-12
<PAGE>
We cannot assure you that the future delinquency and loss experience for
the receivables will be similar to the historical experience set forth below.
Delinquency Experience
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------------------------------
2000 1999 1998 1997
-------------------------- -------------------------- --------------------------- -------------------------
Percentage of Percentage of Percentage Percentage
Average Average Average Average Average of Average Average of Average
Receivables Receivables Receivables Receivables Receivables Receivables Receivables Receivables
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Receivables $858,417,504 $515,210,995 $343,446,581 $230,162,550
Outstanding
Average Receivables
Delinquent:
31-60 Days $ 22,718,020 2.65% $ 13,449,254 2.61% $ 10,647,980 3.10% $ 7,126,449 3.10%
61-90 Days 17,689,884 2.06 10,776,182 2.09 7,908,705 2.30 5,459,937 2.37
91 Days or more 38,538,007 4.49 25,436,493 4.94 15,265,640 4.44 9,625,172 4.18
------------ ----- ------------ ---- ------------ ----- ------------ ----
Total $ 78,945,911 9.20% $ 49,661,929 9.64% $ 33,822,325 9.85% $ 22,211,558 9.65%
<CAPTION>
Year Ended December 31,
1996
-------------------------
Percentage
Average of Average
Receivables Receivables
----------- -----------
<S> <C> <C>
Average Receivables $201,247,839
Outstanding
Average Receivables
Delinquent:
31-60 Days $ 6,768,857 3.36%
61-90 Days 4,972,179 2.47
91 Days or more 6,698,195 3.33
------------ ----
Total $ 18,439,231 9.16%
</TABLE>
For purposes of the following loss experience table:
. Average receivables outstanding is the average of the receivable
balance outstanding during each month for the period indicated.
. Total charge-offs shown include principal and finance receivables,
before recoveries, and include all losses due to bankruptcy in
accordance with our policies.
S-13
<PAGE>
Loss Experience
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------ -----------------------------------------------------------------
2000 1999 1998 1997 1996
------------------ -------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Average Receivables $ 858,417,504 $ 515,210,995 $ 343,446,581 $ 230,162,550 $ 201,247,839
Outstanding
Total Charge-Offs $ 96,190,592 $ 64,610,844 $ 37,350,367 $ 26,247,986 $ 15,315,786
Recoveries $ 9,479,877 $ 4,884,231 $ 3,620,908 $ 2,491,813 $ 1,972,970
Net Charge-Offs $ 86,710,715 $ 59,726,613 $ 33,729,459 $ 23,756,173 $ 13,342,816
Net Charge-Offs as a
Percentage of Average
Receivables Outstanding 10.1% 11.6% 9.8% 10.3% 6.6%
</TABLE>
Revenue Experience
The gross revenues from finance charges, credit card fees and merchant fees
related to accounts in the bank card portfolio for each of the five fiscal years
in the period ended December 31, 2000 are set forth in the following table. The
historical yield figures reflected in the following table are calculated on an
accrual basis.
For purposes of the following gross portfolio yield table:
. The revenue for the accounts is comprised of monthly periodic finance
charges, interchange and credit card fees. These revenues vary for
each account based on the type and volume of activity for each
account. See "Our Bank Card Activities" in the accompanying
prospectus.
. Average receivables outstanding is the average of the receivable
balance during each month for the period indicated.
S-14
<PAGE>
Gross Portfolio Yield
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------------ ---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Average Receivables $858,417,504 $515,210,995 $343,446,581 $230,162,550 $201,247,839
Billed Finance Charges,
Interchange and Fees $253,727,991 $174,358,659 $161,813,688 $ 76,452,171 $ 63,916,535
Gross Portfolio Yield 29.6% 33.8% 47.1% 33.2% 31.8%
</TABLE>
S-15
<PAGE>
The Trust Portfolio
As of the beginning of the day on _________, 2001:
. The receivables in the trust portfolio included $________
of principal receivables and $_________ of finance charge
receivables.
. The accounts designated for the trust portfolio had an
average principal receivable balance of $___________ and
an average credit limit of $----------.
. The percentage of the aggregate total receivable balance
to the aggregate total credit limit was _____%.
. The average age of the accounts was approximately _____
months.
. Cardholders whose accounts are designated for the trust
portfolio had billing addresses in all 50 states and the
District of Columbia.
The following tables summarize the trust portfolio by various criteria as of
the beginning of the day on _________ __, 2001. Because the future composition
of the trust portfolio will change over time, these tables are not indicative of
the composition of the trust portfolio at any subsequent time.
S-16
<PAGE>
Composition by Account Balance
Trust Portfolio
<TABLE>
<CAPTION>
Percentage
Number of Total Percentage
of Number of of Total
Account Balance Range Accounts Accounts Receivables Receivables
--------------------- ------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Credit Balance................................. % $ ( ) ( ) %
No Balance..................................... 0 0.0
$.01-$ 240.00..................................
$ 240.01-$ 600.00..............................
$ 600.01-$ 900.00..............................
$ 900.01-$1200.00..............................
$1200.01-$2000.00..............................
$2000.01 or More...............................
------------- ---------------- ---------------- ----------------
Total...................................... % $ %
============= ================ ================ ================
</TABLE>
Composition by Credit Limit
Trust Portfolio
<TABLE>
<CAPTION>
Percentage
Number of Total Percentage
of Number of of Total
Credit Limit Range Accounts Accounts Receivables Receivables
------------------ ------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Less than or equal to $500.00.................. % $ %
$ 500.01-$1,000.00.............................
$1,000.01-$2,000.00............................
$2,000.01-$3,000.00............................
$3,000.01-$4,000.00 ...........................
$4,000.01-$5,000.00............................
$5,000.01-$6,000.00 ...........................
$6,000.01 or More..............................
------------- ---------------- ---------------- ----------------
Total...................................... % $ %
============= ================ ================ ================
</TABLE>
Composition by Period of Delinquency
Trust Portfolio
<TABLE>
<CAPTION>
Percentage
Number of Total Percentage
of Number of of Total
Delinquency Status Accounts Accounts Receivables Receivable
------------------ ------------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Not Delinquent..................................... % $ %
Up to 29 Days......................................
30 to 59 Days......................................
60 to 89 Days......................................
90 or More Days....................................
------------- --------------- --------------- -------------
Total.......................................... % $ %
============= =============== =============== =============
</TABLE>
S-17
<PAGE>
<TABLE>
<CAPTION>
Composition by Account Age
Trust Portfolio
Percentage of Percentage
Number Total Number of Total
Account Age of Accounts of Accounts Receivables Receivables
----------- ----------------- ------------------- --------------- -----------------
<S> <C> <C> <C> <C>
Not More Than 6 Months.................. % $ %
Over 6 Months to 12 Months..............
Over 12 Months to 24 Months.............
Over 24 Months to 36 Months.............
Over 36 Months to 48 Months.............
Over 48 Months to 60 Months.............
Over 60 Months to 72 Months.............
Over 72 Months..........................
----------------- ------------------- --------------- -----------------
Total.............................. % $ %
================= =================== =============== =================
</TABLE>
Geographic Distribution of Accounts
Trust Portfolio
<TABLE>
<CAPTION>
Percentage of Percentage
Number Total Number of Total
State of Residence of Accounts of Accounts Receivables Receivables
------------------ ----------------- ------------------- --------------- -----------------
<S> <C> <C> <C> <C>
[New York............................... % $ %
California..............................
Texas...................................
Florida.................................
Illinois................................
Pennsylvania............................
New Jersey..............................
Other..................................]
----------------- ------------------- --------------- -----------------
Total.............................. % $ %
================= =================== =============== =================
</TABLE>
S-18
<PAGE>
Maturity Considerations
Unless a pay out event occurs, you will not receive payments of
principal until the expected payment date for your notes, which for all classes
is ___________, 200- . We expect the issuer to have sufficient funds to pay the
full principal amount of each class of Series 2001- notes on the expected
principal payment date. However, if a pay out event occurs, principal payments
may begin prior to the expected principal payment date.
Controlled Accumulation Period
During the controlled accumulation period, principal allocated to the
Series 2001- noteholders will accumulate in the principal accumulation account
in an amount calculated to pay the Series 2001- notes in full on the expected
principal payment date. We expect, but cannot assure you, that the amounts
available in the principal accumulation account on the expected principal
payment date will be sufficient to pay in full the outstanding principal amount
of the Series 2001-_ notes. If these amounts are not available on the expected
principal payment date, a pay out event will occur and the rapid amortization
period will begin.
Rapid Amortization Period
If a pay out event occurs during either the revolving period or the
controlled accumulation period, the rapid amortization period will begin. If a
pay out event occurs during the controlled accumulation period, on the next
distribution date any amount on deposit in the principal accumulation account
will be paid:
. first to Class A noteholders, up to the outstanding principal
balance of the Class A notes;
. then to Class B noteholders, up to the outstanding principal
balance of the Class B notes; and
. then to Class C noteholders, up to the outstanding principal
balance of the Class C notes.
In addition, if the outstanding principal balance of the notes has not
been paid in full, the issuer will continue to pay principal to the noteholders
on each distribution date during the rapid amortization period until the Series
2001- final maturity date, which is _____________, 200_. Funds available for
this purpose will be distributed first to the Class A noteholders, then to the
Class B noteholders and then to the Class C noteholders, in each case until the
specified class of notes has been paid in full.
S-19
<PAGE>
Payment Rates
The payment rate on the receivables is most important factor that will
determine the size of principal payments during a rapid amortization period and
whether the issuer has funds available to repay the Series 2001- notes on the
expected principal payment date. The following table sets forth the highest and
lowest cardholder monthly payment rates on the credit card accounts during any
month in the periods shown and the average cardholder monthly payment rates for
all months in the periods shown, in each case calculated as a percentage of
average principal receivables for each month during the periods shown. Payment
rates shown in the table are based on amounts which would be deemed payments of
principal receivables and finance charge receivables with respect to the
accounts, including recoveries on charged-off accounts.
Cardholder Monthly Payment Rates
Year Ended December 31,
-----------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
Lowest Month............. 11.9% 13.9% 13.7% 12.9% 12.0%
Highest Month............ 16.0% 17.8% 17.5% 15.2% 16.3%
Monthly Average.......... 14.1% 15.5% 15.2% 14.1% 14.3%
We cannot assure you that the cardholder monthly payment rates in the
future will be similar to the historical experience set forth above. In
addition, the amount of collections of receivables may vary from month to month
due to seasonal variations, general economic conditions and payment habits of
individual cardholders.
Paired Series
The issuer may issue another series of notes as a paired series for
Series 2001- . If issued, a paired series may have terms that are different than
the terms of Series 2001- and other series. For example, the pay out events for
the paired series may vary from the pay out events for Series 2001- and may
include pay out events that are unrelated to the status of the issuer or the
servicer, such as pay out events related to the continued availability and
rating of the providers of credit enhancement for the paired series. If a pay
out event occurs with respect to the paired series prior to the payment in full
of the Series 2001- notes, the allocation percentage used to determine your
series' share of principal collections may be reduced, which may delay the final
payment of principal for your series. See "Description of Series Provisions--
Paired Series" in this prospectus supplement.
S-20
<PAGE>
Spiegel's Retail Operations
Spiegel offers merchandise primarily through three subsidiaries--
Spiegel Catalog, Inc., Eddie Bauer, Inc. and Newport News, Inc.
Spiegel Catalog
Spiegel Catalog is a leading lifestyle resource for the working woman.
Spiegel Catalog serves its customers by offering an extensive array of
fashionable apparel, home furnishings and other merchandise through its
trademark semi-annual catalog, seasonal and specialty catalogs, and the
spiegel.com e-commerce site. Spiegel Catalog offers overstock, end-of-season and
other merchandise through its Ultimate Outlet stores, predominantly located in
outlet malls, catalogs and the ultimate-outlet.com e-commerce site. Total net
sales were $717 million and $587 million for the fiscal years ended January 1,
2000 and January 2, 1999, respectively. Sales through catalog offerings comprise
approximately 86 percent of total net sales. Spiegel Catalog distributed over
129 million catalogs in 1999 and at January 1, 2000 had approximately 3.0
million active customers who had purchased merchandise within the last 18
months.
Eddie Bauer
Eddie Bauer is a leading specialty retailer serving the active, casual
lifestyle needs of men and women through the sale of high quality private-label
apparel, accessories and home furnishings. Eddie Bauer markets its products
through stores, catalogs and e-commerce sites. Total net sales were $1.8 billion
and $1.7 billion for the years ended January 1, 2000 and January 2, 1999,
respectively. Approximately 74 percent of total net sales for Eddie Bauer are
retail and outlet store sales.
Eddie Bauer's apparel category comprised 86 percent of its total net
sales in 1999. Eddie Bauer presents its active, casual apparel and related
accessories through its trademark Eddie Bauer sportswear stores, catalogs and
the eddiebauer.com and eddiebaueroutlet.com e-commerce sites. The apparel
category includes full seasonal collections of fine quality sportswear and dress
casual, outerwear, footwear and accessories. Eddie Bauer presents its
comfortable, relaxed home furnishings and decor for the bed and bath through its
Eddie Bauer HOME retail stores, catalogs and on its e-commerce sites.
At January 1, 2000, Eddie Bauer operated a total of 532 stores,
consisting of 479 retail stores and 53 outlets. There are 492 stores located in
the United States and 40 stores in Canada. The Eddie Bauer catalog division
distributed 97 million catalogs in 1999 and at January 1, 2000 had approximately
3.4 million active customers who had purchased merchandise within the last 18
months.
S-21
<PAGE>
Newport News
Newport News is a specialty catalog business offering fashionable,
moderately priced women's apparel and home furnishings. Total net sales were
$411 million for the fiscal year ended January 1, 2000, compared to $345 million
for the year ended January 2, 1999. Newport News distributed 212 million
catalogs in 1999 and at January 1, 2000 had approximately 3.9 million active
customers who had purchased merchandise within the last 18 months. In 1999,
Newport News launched an e-commerce site, newport-news.com, to broaden its sales
and marketing reach.
Description of Series Provisions
We have summarized the material terms of the Series 2001- notes below
and under "Description of the Notes" in the accompanying prospectus.
General
The Class A notes, the Class B notes and the Class C notes comprise the
Series 2001- notes and will be issued under the indenture, as supplemented by
the Series 2001- indenture supplement, in each case between the issuer and the
indenture trustee.
The Series 2001- notes will be issued in denominations of $1,000 and
integral multiples of $1,000 and will be available only in book-entry form,
registered in the name of Cede & Co., as nominee of DTC. See "Description of the
Notes -- General," "-- Book-Entry Registration" and "-- Definitive Notes" in the
accompanying prospectus. Payments of interest and principal will be made on each
distribution date on which those amounts are due to the noteholders in whose
names Series 2001-A notes were registered on the related record date, which will
be the last day of the calendar month preceding that distribution date.
[We will apply to list the notes on the Luxembourg Stock Exchange;
however, we cannot assure you that the listing will be obtained. You should
consult with the Luxembourg listing agent for the notes, [Address] Luxembourg,
phone number ( ) , for the status of the listing].
Collateral Amount
Your notes are secured by collateral consisting of an interest in the
receivables. At any time, the principal amount of the collateral for your notes,
which we call the collateral amount, is calculated as follows:
(a) the initial collateral amount, which equals the aggregate initial
principal amount of the notes in your series plus an excess
collateral amount of $_________, less
S-22
<PAGE>
(b) all previous principal payments made on your series and the
balance held in the principal accumulation account for such
payments, less
(c) reductions in the excess collateral amount that result from
reductions in the required amount of the excess collateral, less
(d) all unreimbursed reductions to the collateral amount as a result
of defaulted receivables or uncovered dilution allocated to your
series or reallocations of principal collections to cover
interest or the servicing fee for your series.
The collateral amount will also be reduced if we purchase and cancel
notes in your series. We are not permitted to do this if it would reduce the
proportional amount of credit enhancement available for any class of notes. The
collateral amount will also increase or reduce if we increase or reduce the
excess collateral amount as described under "--Excess Collateral Amount" below.
The collateral amount cannot be less than zero.
Allocation Percentages
The servicer will allocate among your series, other series of notes
issued and outstanding, outstanding series of investor certificates issued by
First Consumers Master Trust and our unpledged interest in the trust the
following items: collections of finance charge receivables and principal
receivables; interchange; defaulted receivables; and any dilution amounts that
are not absorbed by our interest in the trust or reimbursed by the servicer. On
any day, the allocation percentage for your series will be the percentage
equivalent--which may not exceed 100%--of a fraction:
. the numerator of which is the collateral amount measured as of a
specified date, and
. the denominator of which is the greater of:
(a) the sum of the total amount of principal receivables in the
trust and the amount on deposit in the excess funding
account, after excluding investment earnings, and the
amount of principal collections on deposit in the
collection account, after excluding investment earnings, in
each case as of the preceding day, and
(b) the sum of the numerators used to calculate the applicable
allocation percentages for all series of notes or investor
certificates outstanding as of the date of determination.
The numerator referred to above will initially be set as of the closing
date. For purposes of allocating finance charge collections, interchange and
defaulted receivables at all times, and principal collections during the
revolving period, the numerator will be reset at the end of each
S-23
<PAGE>
calendar month for allocations during the following calendar month. For purposes
of allocations of principal collections during the controlled accumulation
period and the rapid amortization period, the numerator will be fixed at the end
of the revolving period and will not change thereafter except as follows.
The Series 2001- notes are subject to being paired with a future
series. If a pay out event occurs with respect to a series paired with Series
2001- during the controlled accumulation period for Series 2001- , we may, by
written notice delivered to the indenture trustee and the servicer, designate a
different numerator for allocating principal collections to your series,
provided that:
(1) the numerator is not less than the collateral amount as of the
last day of the revolving period for the series paired with
Series 2001- ; and
(2) each rating agency confirms that the designation will not impair
its rating of the Series 2001- notes.
Any reduction in the numerator made as described in the preceding
paragraph will also apply during any rapid amortization period that begins after
the reduction is made.
Interest Payments
The Class A notes will accrue interest from and including the closing
date through but excluding , 2001, and for each following interest period, at a
rate of % per year [above LIBOR for the related interest period.]
The Class B notes will accrue interest from and including the closing
date through but excluding , 2001, and for each following interest period, at a
rate of % per year [above LIBOR for the related interest period.]
The Class C notes will accrue interest from and including the closing
date through but excluding , 2001, and for each following interest period, at a
rate of % per year [above LIBOR for the related interest period.]
Each interest period will begin on and include a distribution date and
end on but exclude the next distribution date. However, the first interest
period will begin on and include the closing date.
[For purposes of determining the interest rates applicable to each
interest period, LIBOR will be determined two London business days before that
interest period begins and will equal the rate for deposits in United States
dollars for a one-month period which appears on the display page currently
designated as "Telerate Page 3750" on the Bridge Telerate Capital Markets
Report, or any other page as may replace that page on that service for the
purpose of displaying comparable rates or price as of 11:00 a.m., London time,
on that date. If that rate does not
S-24
<PAGE>
appear on that display page, the rate for that date will be determined based on
the rates at which deposits in United States dollars are offered by four major
banks, selected by the servicer, at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a one-month period.
The indenture trustee will request the principal London office of each of those
banks to provide a quotation of its rate. If at least two quotations are
provided, the rate for that date will be the arithmetic mean of the quotations.
If fewer than two quotations are provided, the rate for that 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.]
[The interest rates applicable to the then current and immediately
preceding interest period may be obtained by telephoning the indenture trustee
at its corporate trust office at [__________].]
Interest on the notes will be calculated on the basis of the [actual
number of days in the related interest period and] a 360-day year [of twelve
30-day months].
If the issuer does not pay interest as calculated above to any class
when due on a distribution date, the amount not paid will be due on the next
distribution date, together with interest on the overdue amount of regular
monthly interest at the interest rate for the applicable class.
Principal Payments
During the revolving period, no principal payments will be made on your
notes. During the controlled accumulation period and the rapid amortization
period, deposits to the principal accumulation account and principal payments on
the Series 2001- notes will be made on each distribution date from the following
sources:
(a) principal collections allocated to your series based on your
allocation percentage and retained in the collection account
during the prior calendar month, less any amounts required to be
reallocated to cover interest payments on the Series 2001-notes
or servicing fees payments to non-affiliates; plus
(b) any amount on deposit in the excess funding account allocated to
your series on that distribution date; plus
(c) any finance charge collections or other amounts required to be
treated as principal collections in order to cover the share of
defaulted receivables and uncovered dilution amounts allocated to
your series or to reinstate prior reductions to the collateral
amount; plus
(d) any principal collections from other series that are shared with
your series.
S-25
<PAGE>
Controlled Accumulation Period
The controlled accumulation period is scheduled to commence on ___ ,
200_ and to last [ ] months. However, the servicer may elect to extend the
revolving period and postpone the controlled accumulation period, subject to the
conditions described under "Description of the Notes--Suspension and
Postponement of Controlled Accumulation Period" in the accompanying prospectus.
The servicer may elect to postpone the controlled accumulation period only if
the number of months needed to fund the principal accumulation account is less
than [ ] months. In no event will the servicer postpone the beginning of the
controlled accumulation period to later than [_____], 200_ .
The servicer may also elect to suspend the controlled accumulation
period, subject to the conditions described under "Description of the
Notes--Suspension and Postponement of Controlled Accumulation Period" in the
accompanying prospectus.
On each distribution date relating to the controlled accumulation
period, the indenture trustee will deposit in the principal accumulation account
an amount equal to the least of:
(1) funds available for this purpose for your series with respect
to that distribution date;
(2) $ _________ or, if the commencement of the controlled
accumulation is postponed, any higher deposit amount as the
servicer may determine is necessary to fully fund the
principal accumulation account, plus any amounts required to
be deposited to the principal accumulation account on prior
distribution dates that have not yet been deposited;
(3) an amount equal to the outstanding principal amount of the
notes, minus the amount on deposit in the principal
accumulation account prior to any deposits on that date; and
(4) the collateral amount.
If the rapid amortization period has not commenced, amounts in the
principal accumulation account will be paid on the expected principal payment
date:
. first to Class A noteholders, up to the outstanding principal
balance of the Class A notes;
. then to Class B noteholders, up to the outstanding principal
balance of the Class B notes; and
. then to Class C noteholders, up to the outstanding principal
balance of the Class C notes.
S-26
<PAGE>
During the controlled accumulation period, the portion of funds
available but not required to be deposited in the principal accumulation account
on a distribution date may be applied to make payments to us that will reduce
your excess collateral amount, to the extent that the excess collateral amount
is greater than the required excess collateral amount. Any remaining funds will
be made available to investors in other series as shared principal collections,
be paid to us to purchase additional interests in receivables in order to
maintain the collateral amount or be deposited in the excess funding account if
necessary to maintain the Minimum Seller Amount.
Rapid Amortization Period
On each distribution date relating to the rapid amortization period,
the Class A noteholders will be entitled to receive funds available for
principal payments for Series 2001-for the related calendar month in an amount
up to the outstanding principal balance of the Class A notes.
After payment in full of the outstanding principal balance of the Class
A notes, the Class B noteholders will be entitled to receive, on each
distribution date relating to the rapid amortization period, the remaining
available funds for Series 2001- for the related calendar month in an amount up
to the outstanding principal balance of the Class B notes.
After payment in full of the outstanding principal balance of the Class
B notes, the Class C noteholders will be entitled to receive on each
distribution date relating to the rapid amortization period, the remaining
available funds for Series 2001- for the related calendar month in an amount up
to the outstanding principal balance of the Class C notes.
See "--Pay Out Events" below for a discussion of events that might
lead to the commencement of the rapid amortization period.
Subordination
The Class B notes are subordinated to the Class A notes. The Class C
notes are subordinated to the Class A notes and the Class B notes. The excess
collateral amount is subordinated to all three classes of notes. Interest
payments will be made on the Class A notes prior to being made on the Class B
notes and the Class C notes. Interest payments will be made on the Class B notes
prior to being made on the Class C notes.
Principal payments on the Class B notes will not begin until the Class
A notes have been paid in full. Principal payments on the Class C notes will not
begin until the Class A notes and the Class B notes have been paid in full.
The collateral amount for your series will be reduced as the collateral
is applied for the benefit of your series, for instance as principal payments
are made on your series. Reductions due to principal payments on a senior class
should not directly cause a loss on junior classes.
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<PAGE>
However, the collateral amount can be applied for the benefit of your
series in two other ways:
. by reallocating principal collections to make interest
payments and pay the servicing fee for your series, when
finance charge collections and investment earnings are not
sufficient to make these payments; and
. to absorb your series' share of defaulted receivables and any
uncovered dilution amounts, when finance charge collections
and investment earnings are not sufficient to cover these
amounts.
If the total amount of these latter two types of reductions exceeds the
excess collateral amount, then the Class C Notes may not be repaid in full. If
the total exceeds the sum of the excess collateral amount and the principal
amount of the Class C Notes, then the Class B Notes may not be repaid in full.
If the total exceeds the sum of the excess collateral amount and the principal
amounts of the Class C and Class B notes, then the Class A notes may not be
repaid in full.
If receivables are sold after an event of default, the net proceeds of
that sale would be paid first to the Class A notes, then to the Class B notes
and finally to the Class C notes, in each case until the outstanding principal
amount of the specified class and all accrued and unpaid interest payable to
that class have been paid in full.
Application of Finance Charge Collections
We refer to your series' share of finance charge collections --
including interchange and net investment proceeds transferred from the principal
accumulation account and amounts withdrawn from the reserve account -- and any
available excess finance charge collections from other series, collectively, as
finance charge collections. On each distribution date, the servicer will direct
the indenture trustee to apply your series' share of finance charge collections
for the prior month in the following order:
(1) to pay interest on the Class A notes, including any overdue
interest and additional interest on the overdue interest;
(2) to pay interest on the Class B notes, including any overdue
interest and additional interest on the overdue interest;
(3) if neither we nor any of our affiliates is the servicer, to
pay the servicing fee for your series for the prior calendar
month and any overdue servicing fee;
(4) to pay interest on the Class C notes, including any overdue
interest and additional interest on the overdue interest;
S-28
<PAGE>
(5) an amount equal to your series' share of the defaulted
receivables and uncovered dilution, if any, for the related
calendar month, will be treated as principal collections for
the prior calendar month;
(6) an amount equal to any previously unreimbursed reductions to
the collateral amount on account of defaulted receivables,
uncovered dilution or reallocations of principal collections
will be treated as principal collections for the prior
calendar month;
(7) on and after the reserve account funding date, an amount equal
to the excess, if any, of the required reserve account amount
over the amount then on deposit in the reserve account will be
deposited into the reserve account;
(8) an amount equal to the excess, if any, of the required spread
account amount over the amount then on deposit in the spread
account will be deposited into the spread account;
(9) to pay any unpaid servicing fee for your series for the prior
calendar month and any overdue servicing fee to the extent not
paid in accordance with clause (3) above; and
(10) all remaining amounts will constitute excess finance charge
collections and will be available to cover any shortfalls in
finance charge collections for other outstanding series in
group one and, after payment of these shortfalls, the
remaining amount will be paid to us or our assigns or
deposited in the excess funding account.
If your series' share of finance charge collections for any calendar
month is insufficient to pay interest on the Class C notes--including any
overdue interest and additional interest on the overdue interest--when due, a
draw will be made from amounts available in the spread account and will be paid
to the Class C noteholders on the related distribution date.
Reallocation of Principal Collections
If your series' share of finance charge collections plus any withdrawal
from the spread account are not sufficient to pay interest on the Class A notes,
interest on the Class B notes, interest on the Class C notes or the servicing
fee for your series payable to non-affiliates, then principal collections
allocated to more junior classes of notes or the excess collateral amount will
be reallocated to cover these amounts. Any reallocation of principal collections
is a use of the collateral for your notes. Consequently, these uses will reduce
the remaining collateral amount by a corresponding amount. The amount of
principal collections that will be reallocated on any distribution date will not
exceed:
S-29
<PAGE>
. the lower of:
. the excess of the amounts needed to pay current,
overdue and additional interest on the Class A notes
over the amount of finance charge collections
allocated to your series and available to cover these
amounts; and
. the greater of (1)(a) [ ]% of the initial collateral
amount minus (b) the sum of (i) the amount of
unreimbursed investor charge-offs after giving effect
to investor charge-offs for the related calendar
month and (ii) the amount of unreimbursed reallocated
principal collections as of the previous distribution
date and (2) zero; plus
. the lower of:
. the excess of the sum of the amounts needed to pay
current, overdue and additional interest on the Class
B notes and the current and past due servicing fee
for your series over the amount of finance charge
collections allocated to your series and available to
cover these amounts; and
. the greater of (1)(a) [ ]% of the initial collateral
amount minus (b) the sum of (i) the amount of
unreimbursed investor charge-offs after giving effect
to investor charge-offs for the related calendar
month and (ii) the amount of unreimbursed reallocated
principal collections as of the previous distribution
date and after giving effect to the reallocation of
principal collections to make required interest
payments for Class A on the then- current
distribution date and (2) zero; plus
. the lower of:
. the excess of the amounts needed to pay current,
overdue and additional interest on the Class C notes
over the amount of finance charge collections
allocated to your series and available to cover these
amounts; and
. the greater of (1)(a) [ ]% of the initial collateral
amount minus (b) the sum of (i) the amount of
unreimbursed investor charge-offs after giving effect
to investor charge-offs for the related calendar
month and (ii) the amount of unreimbursed reallocated
principal collections as of the previous distribution
date and after giving effect to the reallocation of
principal collections to make required interest
payments for Class A and Class B and required
servicing fee payments on the then-current
distribution date and (2) zero.
S-30
<PAGE>
Investor Charge-Offs
The servicer will allocate a portion of defaulted receivables for each
calendar month to your series based on the allocation percentage for your
series. The allocation percentage is described under "--Allocation Percentages"
above.
Dilution will also be allocated to your series in the circumstances
described in "Defaulted Receivables; Dilution; Investor Charge-Offs" in the
accompanying prospectus. If dilution is allocated among series, your series'
share of dilution will equal:
(1) dilution to be allocated to all series, times
(2) a fraction,
. the numerator of which is your series' allocation
percentage for purposes of allocating defaulted
receivables, as described under "--Allocation
Percentages" above, and
. the denominator of which is the sum of the allocation
percentages used by all outstanding series for
purposes of allocating defaulted receivables.
As described under "Defaulted Receivables; Dilution; Investor
Charge-Offs" in the accompanying prospectus, so long as your series had a
Minimum Seller Percentage greater than zero, dilution allocated to your series
will first reduce the Seller Amount and collections allocated to the seller
interest and funds on deposit in the excess funding account will be available on
a ratable basis to cover dilution allocated to all series that have Minimum
Seller Percentages greater than zero. On each distribution date, if the sum of
the defaulted receivables and any remaining uncovered dilution allocated to your
series is greater than finance charge collections used to cover those amounts,
then the collateral amount will be reduced by the amount of the excess.
Any reductions in the collateral amount on account of defaulted
receivables and uncovered dilution will be reinstated to the extent that finance
charge collections are available for that purpose on any subsequent distribution
date.
Sharing Provisions
Your series is in group one for purposes of sharing excess finance
charge collections. Your series will share excess finance charge collections
with other series of notes in group one and other series of investor
certificates in group one for First Consumers Master Trust. See "Description of
the Notes -- Shared Excess Finance Charge Collections" in the accompanying
prospectus.
S-31
<PAGE>
Your series is a principal sharing series. See "Description of the
Notes -- Shared Principal Collections; Excess Funding Account" in the
accompanying prospectus.
Principal Accumulation Account
The indenture trustee will establish and maintain a segregated trust
account held for the benefit of the noteholders to serve as the principal
accumulation account. During the controlled accumulation period, the indenture
trustee at the direction of the servicer will make deposits to the principal
accumulation account as described under "-- Principal Payments" in this
prospectus supplement.
Funds on deposit in the principal accumulation account will be invested
to the following distribution date by the indenture trustee at the direction of
the servicer in highly rated liquid investments that meet the criteria described
in the indenture supplement. Investment earnings, net of investment losses and
expenses, on funds on deposit in the principal accumulation account will be
deposited in the collection account and treated as finance charge collections
available to your series for the related interest period. If, for any
distribution date, these net investment earnings are less than the sum of:
(a) the product of (i) the balance of the principal accumulation
account, up to the outstanding principal balance of the Class
A notes, on the record date immediately preceding that
distribution date, (ii) the Class A note interest rate for the
related interest period and (iii) the number of days in the
related interest period divided by 360, plus
(b) the product of (i) the balance of the principal accumulation
account in excess of the outstanding principal balance of the
Class A notes, up to the outstanding principal balance of the
Class B notes, in each case on the record date immediately
preceding that distribution date, (ii) the Class B note
interest rate for the related interest period and (iii) the
number of days in the related interest period divided by 360,
plus
(c) the product of (i) the balance of the principal accumulation
account in excess of the outstanding principal balance of the
Class A and Class B notes on the record date immediately
preceding that distribution date, (ii) the Class C note
interest rate for the related interest period and (iii) the
number of days in the related interest period divided by 360,
then the indenture trustee will withdraw the shortfall, to the extent required
and available, from the reserve account and deposit it in the collection account
for use as finance charge collections that are available to your series.
S-32
<PAGE>
Reserve Account
The indenture trustee will establish and maintain a segregated trust
account held for the benefit of the noteholders to serve as the reserve account.
The reserve account is established to assist with the distribution of interest
on the notes during the controlled accumulation period and on the first
distribution date with respect to the rapid amortization period. On each
distribution date from and after the reserve account funding date, but prior to
the termination of the reserve account, the indenture trustee, will apply
finance charge collections allocated to your series to increase the amount on
deposit in the reserve account to the extent the amount on deposit in the
reserve account is less than the required reserve account amount.
The reserve account funding date will be the distribution date with
respect to the calendar month which commences [_____] months prior to the
commencement of the controlled accumulation period, or an earlier date as the
servicer may determine.
The required reserve account amount for any distribution date on or
after the reserve account funding date will be equal to (a) [___]% of the
outstanding principal balance of the Series 2001- notes or (b) any other amount
designated by us. We may only designate a lesser amount if each rating agency
confirms that the designation will not impair its rating of any outstanding
series or class and we will certify to the indenture trustee that, based on the
facts known to the certifying officer at the time, in our reasonable belief, the
designation will not cause a pay out event to occur for Series 2001-.
On each distribution date, after giving effect to any deposit to be
made to, and any withdrawal to be made from, the reserve account on that
distribution date, the indenture trustee will withdraw from the reserve account
an amount equal to the excess, if any, of the amount on deposit in the reserve
account over the required reserve account amount, will deposit the excess in the
spread account to the extent that funds available in the spread account are less
than the required spread account amount and will distribute any remaining excess
to us or our assigns. Any amounts withdrawn from the reserve account and
distributed to us or our assigns will not be available for distribution to the
noteholders.
All amounts on deposit in the reserve account on any distribution
date--after giving effect to any deposits to, or withdrawals from, the reserve
account to be made on that distribution date--will be invested to the following
distribution date by the indenture trustee, at the direction of the servicer, in
highly rated liquid investments that meet the criteria described in the
indenture supplement. The interest and other investment income, net of losses
and investment expenses, earned on these investments will be either retained in
the reserve account to the extent the amount on deposit is less than the
required reserve account amount or deposited in the collection account and
treated as finance charge collections available to your series.
On or before each distribution date with respect to the controlled
accumulation period and on or before the first distribution date with respect to
the rapid amortization period, the
S-33
<PAGE>
indenture trustee will withdraw from the reserve account and deposit in the
collection account an amount equal to the least of:
(1) the amount then on deposit in the reserve account with respect to
that distribution date; and
(2) the amount of the shortfall described under "--Principal
Accumulation Account" above.
Amounts withdrawn from the reserve account on any distribution date will be
included as finance charge collections available to your series for that
distribution date.
The reserve account will be terminated upon the earliest to occur of:
(1) the first distribution date for the rapid amortization period;
(2) the expected principal payment date; and
(3) the termination of the trust.
Upon the termination of the reserve account, all amounts on deposit in
the reserve account, after giving effect to any withdrawal from the reserve
account on that date, will be deposited in the spread account to the extent that
funds available in the spread account are less than the required spread account
amount and any remaining amounts will be distributed to us or our assigns. Any
amounts withdrawn from the reserve account and distributed to us or our assigns
will not be available for distribution to the noteholders.
Excess Collateral Amount
An excess collateral amount provides credit enhancement for your series.
The initial excess collateral amount will be $[___], which equals [___]% of the
initial collateral amount.
The excess collateral amount may be decreased by payments to us during
the controlled accumulation period to the extent that it exceeds the required
amount. See "Description of Series Provisions--Controlled Accumulation Period"
in this prospectus supplement and under "Credit Enhancement--Excess Collateral
Amount" in the accompanying prospectus.
The required excess collateral amount for your series on any day is
currently equal to [____]% of the total collateral amount on that day. However,
a percentage lower than [___]% may be used to calculate the required excess
collateral amount in the future if each rating agency we designate for the
Series 2001- notes confirms that the use of a lower percentage will not impair
its ratings of the notes. In addition:
S-34
<PAGE>
(a) except as provided in clause (c), the required excess collateral
amount will never be less than 3% of the initial collateral
amount,
(b) except as provided in clause (c), the required excess collateral
amount will not reduce during a rapid amortization period, and
(c) the required excess collateral amount will never exceed the
aggregate outstanding principal amount of the notes.
Spread Account
The indenture trustee will establish and maintain as a segregated
account held as security primarily for the benefit of the Class C noteholders to
serve as the spread account. Amounts on deposit in the spread account will be
used as described below under "--Spread Account Distributions."
The spread account initially will not be funded, but will be funded up
to the required spread account amount on each distribution date from finance
charge collections allocated to your series to the extent available for that
purpose.
The required spread account amount will be determined on each
distribution date as follows:
. Prior to an event of default and acceleration of your notes, the
required spread account amount for any date of determination will
be equal to the product of (a) the spread account percentage
determined in accordance with the table below for that date of
determination and (b) the initial collateral amount, but will not
exceed the outstanding principal balance of the Class C notes
minus the excess, if any, of the principal accumulation account
balance over the sum of the outstanding principal balances of the
Class A notes and the Class B notes on that date of
determination.
The spread account percentage will be determined as follows:
<TABLE>
<CAPTION>
If the Average Excess Spread Percentage is then, the spread account
greater than or equal to: and less than Percentage will equal to:
------------------------------ -------------------- -------------------------------
<S> <C> <C>
[--]% -- 0
[--]% [--]% [--]%
[--]% [--]% [--]%
[--]% [--]% [--]%
-- [--]% [--]%
</TABLE>
. After an event of default and acceleration of your notes, the
required spread account amount for any distribution date will be
equal to the outstanding principal amount of your series of
notes.
S-35
<PAGE>
After the spread account percentage has been increased above zero as
specified in the table above, it will remain at the specified percentage until:
. further increased to a higher required percentage as specified
above, or
. the third consecutive distribution date on which the Average
Excess Spread Percentage has increased to a level above that for
the then current spread account percentage, in which case the
spread account percentage will be decreased to the appropriate
percentage as specified above (or, if the Excess Spread
Percentage is greater than or equal to [ ]%, the spread account
percentage will be zero and the required spread account amount
will be zero).
However, if a pay out event with respect to Series 2001- has occurred, the
spread account percentage will equal [--]% and may not be subsequently reduced.
Funds on deposit in the spread account will be invested, at the
direction of the servicer, in highly rated liquid investments that meet the
criteria described in the indenture supplement. Investment earnings, net of
losses and investment expenses, will, except as otherwise indicated in this
prospectus supplement, not be deposited into the spread account and will be paid
to the holders of the seller certificates. However, after an event of default
relating to your series of notes, these investment earnings will be available
for payment to holders of the Class C notes.
Spread Account Distributions
On each distribution date, funds on deposit in the spread account,
including investment earnings, will be applied to cover the following items in
the following order of priority, to the extent not covered by finance charge
collections:
(1) if the interest to be paid on the Class C notes exceeds the
amount allocated to pay that interest, to fund any shortfall in
the payment of interest on the Class C notes;
(2) if the excess collateral amount previously has been reduced to
zero, or will be reduced to zero because of (a) the reallocation
of principal collections or (b) the allocation of defaults or
uncovered dilution to your series on the then-current
distribution date, to cover any potential reductions in the
collateral amount that would occur after the reduction of the
excess collateral amount to zero; and
(3) to reimburse any prior reductions in the collateral amount that
have not been reimbursed, other than reductions to the excess
collateral amount.
On the Series 2001- final maturity date, funds available in the spread
account, after giving effect to any withdrawals to be made as discussed in the
preceding paragraph, will be used to fund any shortfall in the payment of the
outstanding principal balance of the Class C
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<PAGE>
notes. On any day following an event of default and an acceleration of the
notes, funds available in the spread account will be used to fund any shortfalls
in amounts owed on the Class C notes.
Funds on deposit in the spread account on any distribution date, after
giving effect to all withdrawals from and deposits to the spread account, in
excess of the required spread account amount will be paid to us or our assigns.
On the date on which all amounts due to the noteholders from the spread account
have been paid in full, all amounts, if any, then remaining in the spread
account will be distributed to us or our assigns.
Paired Series
Your series may be paired with one or more other series issued at a
later time once the controlled accumulation period for your series begins. We
call each of these later issued series a paired series. See "Description of the
Notes -- Paired Series" in the accompanying prospectus. The issuance of the
paired series will be subject to the conditions described under "Description of
the Notes -- New Issuances" in the accompanying prospectus.
We cannot guarantee that the terms of any paired series will not have
an impact on the calculation of the allocation percentage used to allocate
principal collections to your series or the timing or amount of payments
received by you as a Series 2001- noteholder. In particular, the numerator for
the allocation percentage used to allocate principal collections to your series
may be reduced upon the occurrence of a pay out event for a paired series, but
not below the collateral amount as of the last day of the revolving period for
the paired series. The extent to which the timing or amount of payments received
by you may be affected will depend on many factors, only one of which is a
change in the calculation of the allocation percentage.
Pay Out Events
A pay out event will occur for the Series 2001- notes upon the
occurrence of any of the following events:
(a) our failure (i) to make any payment or deposit on the date
required to be made under the transfer and servicing agreement, the
indenture or the Series 2001- indenture supplement within the
applicable grace period which shall not exceed 5 days or (ii) to
observe or perform in any material respect any of our other covenants
or agreements set forth in the transfer and servicing agreement, the
indenture or the Series 2001- indenture supplement, which failure has a
material adverse effect on the Series 2001- noteholders and which
continues unremedied for a period of 60 days after written notice of
the failure, requiring the same to be remedied;
(b) any representation or warranty made by us in the transfer
and servicing agreement or the pooling and servicing agreement or any
information required to be given by us to identify the accounts proves
to have been incorrect in any material respect when made or delivered
and which continues to be incorrect in any material respect for a
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<PAGE>
period of 60 days after written notice of the failure, requiring the
same to be remedied, and as a result of which the interests of the
noteholders are materially and adversely affected and continue to be
materially and adversely affected for the designated period; except
that a pay out event described in this subparagraph (b) will not occur
if we have accepted reassignment of the related receivable or all
related receivables, if applicable, within the designated period;
(c) our failure to convey receivables in additional accounts to
the trust within 10 days after we are required to do so;
(d) any servicer default occurs;
(e) the average of the Portfolio Yields for any 3 consecutive
calendar months is less than the average of the Base Rates for the same
calendar months;
(f) sufficient funds are not available to pay in full the
outstanding principal balance of the Series 2001- notes on the expected
principal payment date;
(g) specified bankruptcy, insolvency, liquidation,
conservatorship, receivership or similar events relating to us;
(h) we are unable for any reason to transfer receivables to the
trust;
(i) First Consumers Master Trust or the issuer becomes subject
to regulation as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended; or
(j) an event of default for Series 2001- and an acceleration of
the maturity of the Series 2001- notes occurs under the indenture.
In the case of any event described in clause (a), (b) or (d) above, a
pay out event will be deemed to have occurred with respect to the notes only if,
after any applicable grace period, either the indenture trustee or the Series
2001- noteholders evidencing interests aggregating more than 50% of the
aggregate unpaid principal amount of the Series 2001- notes, by written notice
to us, the servicer and, if notice is given by the Series 2001- noteholders, the
indenture trustee, declare that a pay out event has occurred with respect to the
Series 2001- notes as of the date of the notice.
In the case of any event described in clause (g), (h) or (i), a pay
out event with respect to all series then outstanding, and in the case of any
event described in clause (c), (e), (f) or (j), a pay out event with respect to
only the Series 2001- notes, will occur without any notice or other action on
the part of the indenture trustee or the Series 2001- noteholders immediately
upon the occurrence of the event.
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<PAGE>
On the business day immediately before the date on which a pay out
event is deemed to have occurred, the rapid amortization period will begin.
See "Description of the Notes -- Pay Out Events" in the accompanying
prospectus for an additional discussion of the consequences of insolvency,
conservatorship or receivership events related to us.
Events of Default
The events of default for Series 2001- , as well as the rights and
remedies available to the indenture trustee and the Series 2001- noteholders
when an event of default occurs, are described under "The Indenture--Events of
Default; Rights Upon Event of Default" in the accompanying prospectus.
In the case of an event of default involving bankruptcy, insolvency or
similar events relating to the issuer, the principal amount of the Series 2001-
notes automatically will be deemed to be immediately due and payable. If any
other event of default for Series 2001- occurs, the indenture trustee or the
holders of a majority of the then-outstanding principal balance of the Series
2001- notes may declare the Series 2001- notes to be immediately due and
payable. If the Series 2001- notes are accelerated, you may receive principal
prior to the expected principal payment date for your class of notes.
Servicing Compensation and Payment of Expenses
The servicing fee rate for your series is 2% per annum. Your series'
share of the servicing fee for each month will be calculated as described under
"Description of the Notes--Servicing Compensation and Payment of Expenses" in
the accompanying prospectus. However, the monthly servicing fee allocable to
your series for the first distribution date will equal $[_].
Underwriting
Subject to the terms and conditions set forth in an underwriting
agreement between us and the underwriters named below, we have agreed to sell to
the underwriters, and each of the underwriters has severally agreed to purchase,
the principal amount of the notes set forth opposite its name:
Principal Amount of
Class A Underwriters Class A Notes
-------------------- ---------------------
$
Total........................................... ________
................................................ $
========
S-39
<PAGE>
<TABLE>
<CAPTION>
Principal Amount of
Class B Underwriters Class B Notes
-------------------- ---------------------
<S> <C>
$
____________
Total........................................... $
============
Principal Amount of
Class C Underwriters Class C Notes
-------------------- ---------------------
$
____________
Total........................................... $
============
</TABLE>
In the underwriting agreement, the underwriters of each class of notes
have agreed, subject to the terms and conditions set forth in that agreement, to
purchase all of the notes in that class offered by this prospectus supplement if
any of the notes in that class are purchased.
The underwriters of each class of notes have advised us that they
propose initially to offer the notes in that class to the public at the prices
set forth in this prospectus supplement, and to dealers chosen by the
underwriters at the prices set forth in this prospectus supplement less a
concession not in excess of the percentages set forth in the following table.
The underwriters of each class of notes and those dealers may reallow a
concession not in excess of the percentages set forth in the following table.
After the initial public offering of the notes, the public offering prices and
the concessions referred to in this paragraph may be changed. Additional
offering expenses are estimated to be $[_____].
Class A Class B Class C
Notes Notes Notes
Concessions......................... % % %
Reallowances........................ % % %
The underwriters will be compensated as set forth in the following table:
S-40
<PAGE>
<TABLE>
<CAPTION>
Underwriters' Amount
Discounts and per $1,000
Commissions of Principal Total Amount
-------------------------- --------------------- ------------------------
<S> <C> <C> <C>
Class A Notes % $ $
Class B Notes % $ $
Class C Notes % $ $
------------------------
Total Class A, Class B and
Class C Notes $
========================
</TABLE>
Each underwriter has represented and agreed that:
(a) it has complied and will comply with all applicable provisions of
the Financial Services Act 1986 with respect to anything done by
it in relation to the notes in, from or otherwise involving the
United Kingdom;
(b) 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 or sale of the notes to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a
person to whom that document may otherwise lawfully be issued or
passed on;
(c) if it is an authorized person under Chapter III of part I of the
Financial Services Act 1986, it has only promoted and will only
promote (as that term is defined in Regulation 1.02(2) of the
Financial Services (Promotion of Unregulated Schemes) Regulations
1991) to any person in the United Kingdom the scheme described in
this prospectus supplement and the accompanying prospectus 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; and
(d) it is a person of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996.
We will indemnify the underwriters against the liabilities specified
in the underwriting agreement, including liabilities under the Securities Act,
or will contribute to payments the underwriters may be required to make in
connection with those liabilities.
The underwriters may engage in over-allotment transactions,
stabilizing transactions, syndicate covering transactions and penalty bids with
respect to the notes in accordance with Regulation M under the Exchange Act.
Over-allotment transactions involve syndicate sales in excess of the offering
size, which creates a syndicate short position. The underwriters do not
S-41
<PAGE>
have an "overallotment" option to purchase additional notes in the offering, so
syndicate sales in excess of the offering size will result in a naked short
position. The underwriters must close out any naked short position through
syndicate covering transactions in which the underwriters purchase notes in the
open market. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on the price of
the notes in the open market after pricing that would adversely affect investors
who purchase in the offering. Stabilizing transactions permit bids to purchase
the notes so long as the stabilizing bids do not exceed a specified maximum.
Penalty bids permit the underwriters to reclaim a selling concession from a
syndicate member when the notes originally sold by that syndicate member are
purchased in a syndicate covering transaction. Over-allotment transactions,
stabilizing transactions, syndicate covering transactions and penalty bids may
have the effect of raising or maintaining the market price of the notes or
preventing or retarding a decline in the market price of the notes. As a result,
the price of the notes may be higher than the price that might otherwise exist
in the open market. Neither we nor the underwriters represent that the
underwriters will engage in any of these transactions or that those
transactions, once commenced, will not be discontinued without notice at any
time.
In the ordinary course of their respective businesses, the
underwriters and their respective affiliates have engaged and may in the future
engage in investment banking or commercial banking transactions with us and our
affiliates.
Legal Matters
Certain legal matters relating to the issuance of the Series 2001-
notes will be passed upon for us by Rooks, Pitts and Poust, special counsel for
us. Certain legal matters relating to the federal tax consequences of the
issuance of the Series 2001- notes will be passed upon for us by Rooks, Pitts
and Poust. Certain legal matters relating to the issuance of the Series 2001-
notes will be passed upon for the underwriters by [______].
S-42
<PAGE>
Glossary of Terms for Prospectus Supplement
"Average Excess Spread Percentage" means, for any distribution date, the
percentage determined as follows:
For the [Month 1]
2001 The Excess Spread Percentage for the [Month 1] 2001
distribution date: distribution date
For the [Month 2]
2001 The sum of the Excess Spread Percentage for the
distribution date: [Month 1] 2001 distribution date, plus the Excess
Spread Percentage for the [Month 2] 2001
distribution date
----------------------------------------------------
2
For each following
distribution date: The sum of the Excess Spread Percentages for the
then-current distribution date and the two prior
distribution dates
-----------------------------------------------------
3
"Base Rate" means, with respect to any calendar month, the annualized
percentage equivalent of a fraction:
. the numerator of which is the sum of (a) the interest due on the
Series 2001- notes and (b) the product of (i) the monthly servicing
fee rate for your series and (ii) the outstanding principal amount of
the Series 2001- notes, less amounts, if any, on deposit in the
principal accumulation account, each for the following distribution
date; and
. the denominator of which is the collateral amount as of the first day
of that calendar month.
"Excess Spread Percentage" means, for any distribution date, the amount, if
any, by which the Portfolio Yield for the prior calendar month exceeds the Base
Rate for the prior calendar month. However, the Excess Spread Percentage for the
first distribution date will be calculated for the period from the closing date
through the end of the calendar month preceding the first distribution date.
"Portfolio Yield" means, with respect to any calendar month, the annualized
percentage equivalent of a fraction:
. the numerator of which is the amount of finance charge collections
allocated to your series, minus the amount of defaulted receivables
allocated to your series for that calendar month; and
S-43
<PAGE>
. the denominator of which is the collateral amount as of the first day
of that calendar month.
S-44
<PAGE>
Annex I
Other Securities Issued and Outstanding
The principal characteristics of the other outstanding series of notes
previously issued by the issuer and the outstanding series of investor
certificates issued by First Consumers Master Trust are set forth in Part A and
Part B, respectively, of the table below. All of the outstanding series of notes
and investor certificates are in group one. For more specific information with
respect to any series of notes or investor certificates, any prospective
investor should contact us at (503) 520-____. We will provide, without charge,
to any prospective purchaser of the notes, a copy of the disclosure documents
for any previous publicly-issued series of notes or investor certificates.
Part A
[I. Series 2001-
<TABLE>
<S> <C> <C>
Initial Class A collateral amount........................................................... $
Initial Class B collateral amount........................................................... $
Initial Class C collateral amount........................................................... $
Class A interest rate....................................................... [one-month LIBOR plus] % per annum
Class B interest rate...................................................... [one-month LIBOR plus] % per annum
Class C interest rate....................................................... [one-month LIBOR plus] % per annum
[Controlled Accumulation Amount ..................................................................... $ ]
[Expected principal payment date................................................... [ ] distribution date]
Annual servicing fee percentage..................................................................... 2.0% per annum
[Enhancement for the Class A notes..................................... Subordination of Class B and Class C notes]
[Enhancement for the Class B notes................................................. Subordination of Class C notes]
[Enhancement for the Class C notes................................................................. spread account]
Series 2001- termination date....................................................... [ ] distribution date
Series Issuance Date........................................................................... , 2001]
Part B
Series 2000-A
Initial Class A Investor Amount....................................................................... $300,000,000
Initial Class B Investor Amount........................................................................ $44,828,000
Class A interest rate.................................... Floating rate generally based upon commercial paper rates
Class B interest rate.................................... Floating rate generally based upon commercial paper rates
Scheduled Pay Out Commencement Date................................................................. March 31, 2001
Annual servicing fee percentage..................................................................... 2.0% per annum
Enhancement for the Class A certificates...................................... Subordination of Class B certificate
Scheduled Series 2000-A termination date............................................ [April 2004] distribution date
Series Issuance Date............................................................................. December 21, 2000
</TABLE>
I-1
<PAGE>
Series 1999-A
<TABLE>
<S> <C>
Initial Class A Investor Amount....................................................................... $214,000,000
Initial Class B Investor Amount........................................................................ $36,000,000
Initial Class C Investor Amount........................................................................ $26,243,094
Class A interest rate........................................................................................ 5.80%
Class B interest rate........................................................................................ 6.28%
Class C interest rate........................................................................................... 0%
Scheduled Pay Out Commencement Date................................................... April 2003 Distribution Date
Annual servicing fee percentage..................................................................... 2.0% per annum
Enhancement for the Class A certificates.......................... Subordination of Class B and Class C certificate
Enhancement for the Class B certificates..................................... Subordination of Class C certificate
Series 1999-A termination date..................................................... December 2005 distribution date
Series Issuance Date.............................................................................. February 1, 1999
Series 1999-B
Initial Class A Investor Amount................................................................................. $0
Initial Class B Investor Amount................................................................................. $0
Maximum Class A Investor Amount..................................................................... $1,125,000,000
Maximum Class B Investor Amount....................................................................... $168,103,448
Class A interest rate.................................... Floating rate generally based upon commercial paper rates
Class B interest rate......................................................................... non-interest bearing
Scheduled Pay Out Commencement Date....................................... last day of December 2002 Monthly Period
Annual servicing fee percentage..................................................................... 2.0% per annum
Enhancement for the Class A certificates..................................... Subordination of Class B certificates
Series 1999-B termination date............................. 36 months after the earlier of the commencement of the
Controlled Amortization Period or a Rapid Amortization period
Series Issuance Date.............................................................................. December 9, 1999
</TABLE>
I-2
<PAGE>
First Consumers Credit Card Master Note Trust
Issuer
First Consumers National Bank
Seller and Servicer
Series 2001-
$
Class A [Floating Rate] [___%] Asset Backed Notes
$
Class B [Floating Rate] [___%] Asset Backed Notes
$
Class C [Floating Rate] [___%] Asset Backed Notes
______________
PROSPECTUS SUPPLEMENT
_______________
Underwriters of the Class A Notes
Underwriters of the Class B Notes
Underwriters of the Class C Notes
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying
prospectus. We have not authorized anyone to provide you with different
information.
We are not offering the notes in any state where the offer is not
permitted.
We do not claim the accuracy of the information in this prospectus
supplement and the accompanying prospectus as of any date other than
the dates stated on their respective covers.
Dealers will deliver a prospectus supplement and prospectus when acting
as underwriters of the notes and with respect to their unsold
allotments or subscriptions. In addition, all dealers selling the notes
will deliver a prospectus supplement and prospectus until ,
2001.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ The information in this prospectus is not complete and may be amended. We +
+ may not sell these securities until the registration statement filed with +
+ the Securities and Exchange Commission is effective. This prospectus is not +
+ an offer to sell these securities and is not soliciting an offer to buy +
+ these securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated _______ __, 2001
Prospectus
First Consumers Credit Card Master Note Trust
Issuer
First Consumers National Bank
Seller and Servicer
Asset Backed Notes
The Issuer --
. may periodically issue asset backed notes in one or more series with
one or more classes; and
. will have a direct or indirect interest in --
. receivables in a portfolio of MasterCard(R) and VISA(R) revolving
credit card accounts owned by First Consumers National Bank;
. payments due on those receivables; and
. other property described in this prospectus and in the
accompanying prospectus supplement.
The Notes --
. will be paid only from the trust assets;
. offered with this prospectus will be rated in one of the four highest
rating categories by at least one nationally recognized rating
organization;
. may have one or more forms of credit enhancement; and
. will be issued as part of a designated series which may include one or
more classes of notes.
--------------------------------------------------------------------------------
You should consider carefully the risk factors beginning on page ____ in this
prospectus.
A note is not a deposit and neither the notes nor the underlying accounts or
receivables are insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency.
The notes are obligations of First Consumers Credit Card Master Note Trust only
and are not obligations of First Consumers National Bank or any other person.
This prospectus may be used to offer and sell notes of a series only if
accompanied by the prospectus supplement for that series.
--------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved these notes or determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
_____________, 2001
<PAGE>
Important Notice about Information Presented in this
Prospectus and the Accompanying Prospectus Supplement
We provide information to you about the notes in two separate documents:
(a) this prospectus, which provides general information, some of which may not
apply to your series of notes, and (b) the accompanying prospectus supplement,
which describes the specific terms of your series of notes, including:
. the terms, including interest rates, for each class;
. the timing of interest and principal payments;
. information about the receivables;
. information about credit enhancement, if any, for each class;
. the ratings for each class being offered; and
. the method for selling the notes.
If the terms of your series of notes vary between this prospectus and the
accompanying prospectus supplement, you should rely on the information in the
prospectus supplement.
You should rely only on the information provided in this prospectus and the
accompanying prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the notes in any state where the offer is not
permitted.
We include cross references in this prospectus and the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following Table of Contents and the Table of Contents
in the accompanying prospectus supplement provide the pages on which these
captions are located.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary: Overview of Transactions.......................................................................... iii
Risk Factors................................................................................................ 1
It may not be possible to find an investor to purchase your notes.................................. 1
Some liens would be given priority over your notes which could cause delayed or reduced payments... 1
If a conservator or receiver were appointed for us, delays or reductions in payment of your notes
could occur........................................................................................ 2
The account owner may change the terms and conditions of the accounts in a way that reduces
collections........................................................................................ 3
Changes to consumer protection laws may impede collection efforts or reduce collections............ 4
Limited remedies for breaches of representations could reduce or delay payments.................... 4
Payment patterns of receivables could reduce collections........................................... 5
Allocations of charged-off receivables or uncovered dilution could reduce payments to you.......... 5
Subordinated classes bear losses before senior classes............................................. 6
Recharacterization of principal receivables would reduce principal receivables and may
require addition of new receivables................................................................ 6
The note interest rate and the receivables interest rate may re-set at different times,
resulting in reduced or early payments to you...................................................... 6
Competition in the bank credit card industry....................................................... 7
Reliance on co-branding............................................................................ 8
Secured card and related programs.................................................................. 8
Important Parties........................................................................................... 9
The Issuer......................................................................................... 9
First Consumers Master Trust....................................................................... 9
Spiegel, Inc. and its Retail Subsidiaries.......................................................... 10
First Consumers National Bank...................................................................... 10
Our Bank Card Activities.................................................................................... 10
Origination........................................................................................ 12
Credit Granting Procedure.......................................................................... 12
Billing and Payments............................................................................... 15
Delinquency and Collections........................................................................ 16
Description of First Data Resources................................................................ 17
The Trust Portfolio......................................................................................... 17
Use of Proceeds............................................................................................. 19
Description of the Notes.................................................................................... 19
General............................................................................................ 20
Book-Entry Registration............................................................................ 21
Definitive Notes................................................................................... 25
Interest Payments.................................................................................. 26
Principal Payments................................................................................. 27
Suspension and Postponement of Controlled Accumulation Period...................................... 28
Transfer and Assignment of Receivables............................................................. 30
New Issuances of Notes............................................................................. 30
Representations and Warranties..................................................................... 32
Addition of Trust Assets........................................................................... 33
Removal of Accounts................................................................................ 34
Collection and Other Servicing Procedures.......................................................... 35
Discount Option.................................................................................... 35
Trust Accounts..................................................................................... 37
Funding Period..................................................................................... 37
Application of Collections......................................................................... 38
Shared Excess Finance Charge Collections........................................................... 40
Shared Principal Collections....................................................................... 40
Defaulted Receivables; Dilution; Investor Charge-Offs.............................................. 41
Defeasance......................................................................................... 42
Final Payment of Principal......................................................................... 42
Paired Series...................................................................................... 43
Pay Out Events..................................................................................... 43
Servicing Compensation and Payment of Expenses..................................................... 44
Matters Regarding the Seller and the Servicer...................................................... 45
Servicer Default................................................................................... 48
Reports to Noteholders............................................................................. 50
Evidence as to Compliance.......................................................................... 52
Amendments......................................................................................... 52
The Indenture............................................................................................... 54
Events of Default; Rights upon Event of Default.................................................... 54
Covenants.......................................................................................... 58
Modification of the Indenture...................................................................... 60
Annual Compliance Statement........................................................................ 62
Indenture Trustee's Annual Report.................................................................. 62
List of Noteholders................................................................................ 63
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Satisfaction and Discharge of Indenture........................................................... 63
The Indenture Trustee............................................................................. 63
Matters Regarding the Administrator............................................................... 63
Pooling and Servicing Agreement............................................................................ 64
New Issuances of Investor Certificates............................................................ 64
Amendments........................................................................................ 64
Credit Enhancement......................................................................................... 65
General........................................................................................... 65
Excess Collateral Amount.......................................................................... 66
Subordination..................................................................................... 67
Letter of Credit.................................................................................. 68
Cash Collateral Guaranty or Account............................................................... 68
Surety Bond or Insurance Policy................................................................... 68
Spread Account.................................................................................... 69
Reserve Account................................................................................... 69
Note Ratings............................................................................................... 69
Material Legal Aspects of the Receivables.................................................................. 70
Transfer of Receivables........................................................................... 70
Conservatorship and Receivership.................................................................. 71
Consumer Protection Laws.......................................................................... 73
Federal Income Tax Consequences............................................................................ 74
General........................................................................................... 74
Tax Classification of the Issuer and the Notes.................................................... 75
Consequences to Holders of the Offered Notes...................................................... 76
State and Local Tax Consequences.................................................................. 78
ERISA Considerations....................................................................................... 78
Plan of Distribution....................................................................................... 80
Reports to Noteholders..................................................................................... 81
Where You Can Find More Information........................................................................ 81
Annex I.................................................................................................... 85
Global Clearance, Settlement and Tax Documentation Procedures..................................... 85
Global Clearance, Settlement and Tax Documentation Procedures..................................... 93
Initial Settlement................................................................................ 93
Secondary Market Trading.......................................................................... 94
Certain U.S. Federal Income Tax Documentation Requirements........................................ 95
</TABLE>
ii
<PAGE>
Summary: Overview of Transactions
First
First First Consumers
Consumers Receivables Consumers Collateral Credit Card Notes
National Master Certificate Master Note
Bank Trust Trust
Each series of notes will be issued by First Consumers Credit Card Master Note
Trust and will include one or more classes of notes, representing debt of the
issuer. Each series and class may differ as to timing and priority of
distributions, allocations of losses, interest rates, amount of distributions in
respect of principal or interest and credit enhancement. We, First Consumers
National Bank, will disclose the details of these timing, priority and other
matters in a prospectus supplement.
Initially, the primary asset of the issuer will be a collateral certificate
issued by First Consumers Master Trust to us and transferred to the issuer under
a transfer and servicing agreement. It represents a beneficial interest in the
assets of First Consumers Master Trust. First Consumers Master Trust owns
primarily credit card receivables arising in MasterCard(R) and VISA(R)/1/
revolving credit card accounts.
We are the originator of the credit card receivables. We have designated all
eligible accounts from our portfolio of MasterCard and VISA credit card accounts
and have transferred the receivables in those accounts to First Consumers Master
Trust under a pooling and servicing agreement. We will continue to own the
accounts that are designated to the trust. After all outstanding series of
investor certificates that have been issued by First Consumers Master Trust have
been retired, we may cause First Consumers Master Trust to terminate, at which
time the receivables will be transferred to the issuer and held directly by the
issuer. We refer to the entity -- either First Consumers Master Trust or the
issuer -- that holds the receivables at any given time as the trust.
The notes will represent the right to payments from a portion of collections on
the credit card receivables and certain fees held by the trust. All new
receivables generated in the accounts will be automatically transferred to the
trust. The total amount of receivables held by the trust will fluctuate daily as
new receivables are generated and payments are received on existing receivables.
We continue to service the receivables that are transferred to the trust and
will act as the issuer's administrator.
The Bank of New York is the trustee for First Consumers Master Trust. The Bank
of New York will also act as indenture trustee for the issuer. The issuer will
grant a security interest in its assets -- including the collateral certificate
or, if First Consumers Master Trust has terminated, the receivables -- to the
indenture trustee for the benefit of the noteholders.
____________
/1/ MasterCard and Visa are federally registered servicemarks of MasterCard
-
International and Visa U.S.A., Inc., respectively.
iii
<PAGE>
Risk Factors
The following is a summary of the principal risk factors that apply to an
investment in the notes. You should consider the following risk factors and any
risk factors in the accompanying prospectus supplement before deciding whether
to purchase the notes.
It may not be possible to find an investor to purchase your notes.
The underwriters may assist in resales of the notes but they are not
required to do so. A secondary market for any notes may not develop. If a
secondary market does develop, it might not continue or it might not be
sufficiently liquid to allow you to resell any of your notes.
Some liens would be given priority over your notes which could cause delayed or
reduced payments.
We account for the transfer of the receivables as a sale. Even so, a court
could conclude that we own the receivables and that the trust holds only a
security interest. Even if a court would reach that conclusion, however, the
indenture trustee will have a first-priority perfected security interest, either
directly or through First Consumers Master Trust.
If a court were to conclude that the trust has only a security interest, a
tax or governmental lien or other lien imposed under applicable state or federal
law without consent on the property of the person that owns the receivables
arising before receivables come into existence may be senior to the trust's
interest in the receivables. Additionally, if a receiver or conservator were
appointed for us, the fees and expenses of the receiver or conservator might be
paid from the receivables before the trust receives any payments on the
receivables. In addition, the trust may not have a first-priority perfected
security interest in collections commingled and used for the benefit of the
servicer if (a) insolvency proceedings were commenced by or against the servicer
or (b) a ten-day period were to elapse after receipt by the servicer of
collections that have been commingled with other funds. If any of these events
were to occur, payments to you could be delayed or reduced. See "Material Legal
Aspects of the
1
<PAGE>
Receivables--Transfer of Receivables" and "Description of the Notes--
Representations and Warranties" in this prospectus.
If a conservator or receiver were appointed for us, delays or reductions in
payment of your notes could occur.
If we were to become insolvent, the FDIC could act as our conservator or
receiver. In that role, the FDIC would have broad powers to repudiate contracts
to which we were party if the FDIC determined that the contracts were burdensome
and that repudiation would promote the orderly administration of our affairs. In
addition, no agreement that tended to diminish or defeat the FDIC's interest in
an asset acquired from us would be enforceable against the FDIC unless the
agreement meets legal requirements. One of those requirements is that the
agreement would have to have been executed by us contemporaneously with our
acquisition of the asset.
The FDIC has adopted a rule stating that the FDIC shall not use its
repudiation power to reclaim, recover or recharacterize as property of an FDIC-
insured bank any financial assets transferred by that bank in connection with a
securitization transaction. The same rule states that the FDIC shall not seek to
avoid an otherwise legally enforceable securitization agreement solely because
the agreement does not satisfy the contemporaneous execution requirement.
Although the FDIC has the power to repeal or amend its own rules, the
securitization rule states that any repeal or amendment of that rule will not
apply to any transfers of financial assets made in connection with a
securitization that was in effect before the repeal or modification.
We have structured the issuance of the notes with the intention that our
transfers of the receivables will have the benefit of this rule. If the FDIC
were to assert that the rule does not apply to these transfers of receivables,
however, payments of principal and interest on your notes could be delayed and,
if the FDIC were successful, possibly reduced. Furthermore, if the FDIC were
successful, the FDIC could--
. require the indenture trustee to go through the administrative claims
procedure established by the FDIC in order to obtain payments on the
notes;
2
<PAGE>
. obtain a stay of any actions by the indenture trustee to enforce the
transaction documents against us; or
. repudiate the transaction documents and limit the affected parties'
claims to their "actual direct compensatory damages" (as defined in
the statute that governs the FDIC's authority and actions as a
receiver or conservator).
If the FDIC were to successfully take any of these actions, the amount
payable to you could be lower than the outstanding principal and accrued
interest on the notes, thus resulting in losses to you.
If a conservator or receiver were appointed for us, an early payment of
principal on all outstanding series could result. Under the terms of the
agreement that governs the transfer of the receivables from us to the trust, new
principal receivables would not be transferred to the trust. However, the
conservator or the receiver may have the power, regardless of the terms of that
agreement, to prevent the early payment of principal or to require new principal
receivables to continue being transferred.
In addition, our conservator or receiver may have the power to prevent
either the indenture trustee or the noteholders from appointing a new servicer.
See "Material Legal Aspects of the Receivables--Conservatorship and
Receivership" in this prospectus.
The account owner may change the terms and conditions of the accounts in a way
that reduces collections.
As owner of the accounts, we retain the right to change various account
terms, including finance charges, other fees and the required monthly minimum
payment. These changes may be voluntary on our part or may be forced by law or
market conditions. Changes in interest and fees could decrease the effective
yield on the accounts and this could result in an early payment of principal of
your notes. Changes could also cause a reduction in the credit ratings on your
notes.
3
<PAGE>
Changes to consumer protection laws may impede collection efforts or reduce
collections.
Federal and state consumer protection laws regulate the creation and
enforcement of consumer loans, including credit card accounts and receivables.
Changes or additions to those regulations could make it more difficult for the
servicer of the receivables to collect payments on the receivables or reduce the
finance charges and other fees that the originator can charge on credit card
account balances, resulting in reduced collections.
Receivables that do not comply with consumer protection laws may not be
valid or enforceable under their terms against the obligors on those
receivables.
If a cardholder sought protection under federal or state bankruptcy or
debtor relief laws, a court could reduce or discharge completely the
cardholder's obligations to repay amounts due on its account and, as a result,
the related receivables would be written off as uncollectible. See "Material
Legal Aspects of the Receivables--Consumer Protection Laws" in this prospectus.
Limited remedies for breaches of representations could reduce or delay payments.
When we transfer the receivables to the trust, we make representations and
warranties relating to the validity and enforceability of the receivables
arising under the accounts designated to the trust, and as to the perfection and
priority of the indenture trustee's interest in the receivables. However, none
of the trustee for First Consumers Master Trust, the owner trustee or the
indenture trustee will make any examination of the receivables or the related
assets to determine the presence of defects or compliance with the
representations and warranties or for any other purpose.
A representation or warranty relating to the receivables may be violated if
the related obligors have defenses to payment or offset rights, or our creditors
claim rights to the trust assets. If a representation or warranty is violated,
we may have an opportunity to cure the violation. If we are unable to cure the
violation within the specified time period or if there is no right to cure the
violation, we must accept reassignment of the receivables affected by the
violation. These reassignments are the only remedy for
4
<PAGE>
breaches of representations and warranties, even if your damages exceed your
share of the reassignment price. See "Description of the Notes--Representations
and Warranties" in this prospectus.
Payment patterns of receivables could reduce collections.
The receivables transferred to the trust may be paid at any time. We cannot
assure the creation of additional receivables in the accounts designated to the
trust or that any particular pattern of cardholder payments will occur. A
significant decline in the amount of new receivables generated could result in
the occurrence of a pay out event for one or more series and the commencement of
the rapid amortization period for each of those series. If a pay out event
occurs, you could receive payment of principal sooner than expected. Our ability
to compete in the current industry environment will affect our ability to
generate new receivables and might also affect payment patterns on the
receivables. In addition, changes in finance charges can alter the monthly
payment rates of cardholders. A significant decrease in monthly payment rates
could slow the return or accumulation of principal during an amortization period
or accumulation period. See "Maturity Considerations" in the accompanying
prospectus supplement.
Allocations of charged-off receivables or uncovered dilution could reduce
payments to you.
As servicer, we will write off the receivables arising in accounts
designated to the trust if the receivables become uncollectible. Your series
will be allocated a portion of these charged-off receivables. See "Description
of Series Provisions-- Allocation Percentages" and "Our Credit Card Portfolio--
Delinquency and Loss Experience" in the accompanying prospectus supplement.
Unlike charged-off receivables, reductions in the receivables due to returns of
merchandise, unauthorized charges and the like, called dilution, are typically
absorbed by reductions in our interest in the trust or reimbursed by us through
cash deposits to the excess funding account and are not intended to be allocated
to investors. However, to the extent our interest is insufficient to cover
dilution for any calendar month and we then default in our obligation to
compensate the trust for these reductions, your series will be allocated a
portion of the uncovered dilution. If the amount of charged-off receivables and
any uncovered dilution allocated to your series of notes exceeds the
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amount of funds available to reimburse those amounts, you may not receive the
full amount of principal and interest due to you. See "Description of Series
Provisions--Application of Collections" and "--Investor Charge-Offs" in the
accompanying prospectus supplement.
Subordinated classes bear losses before senior classes.
One or more classes of notes in a series may be subordinated to one or more
senior classes of notes in the same series. Principal allocations to the
subordinated class or classes may not begin until each of the more senior
classes has been paid in full. Additionally, if collections of finance charge
receivables allocated to a series are insufficient to cover amounts due for that
series' senior notes or to reimburse for that series' share of charged-off
receivables, the collateral amount for the series might be reduced. This would
reduce the amount of finance charge collections available to the subordinated
notes in future periods and could cause a possible delay or reduction in
principal and interest payments on the subordinated notes.
Recharacterization of principal receivables would reduce principal receivables
and may require addition of new receivables.
As described under "Description of the Notes--Discount Option," we may
designate a percentage of the receivables that would otherwise be treated as
principal receivables to be treated as finance charge receivables. This
designation should decrease the likelihood of a pay out event occurring as a
result of a reduction of the average net portfolio yield for a given period.
However, this designation will also reduce the aggregate amount of principal
receivables, which may increase the likelihood that the seller will be required
to add receivables to the trust. If we were unable to add receivables and could
not make a sufficient cash deposit into the excess funding account, one or more
series of notes, including your series, could go into rapid amortization.
The note interest rate and the receivables interest rate may re-set at different
times, resulting in reduced or early payments to you.
The accounts currently have finance charges assessed at a variable rate. A
series of notes may bear interest either at a fixed rate or at a floating rate
based on a different index. If the interest
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rate charged on the accounts declines, collections of finance charge receivables
may be reduced without a corresponding reduction in he amounts of interest
payable on your notes and other amounts required to be paid out of collections
of finance charge receivables. If the interest rate on the accounts declines or
the interest rate on a series increases, this could decrease the spread, or
difference, between collections of finance charge receivables and those
collections allocated to make interest payments on your notes. This would
increase the risk of early repayment of your notes, as well as the risk that
there may not be sufficient collections to make all required payments on your
notes.
Competition in the bank credit card industry could impair our ability to
generate new receivables.
The credit card industry is highly competitive and operates in a legal and
regulatory environment increasingly focused on the cost of services charged for
credit cards. There is increased use of advertising, target marketing and
pricing competition. New credit card issuers seek to expand or enter the market,
including the secured card segment of the market which has previously been our
primary focus. Congress and the states may enact new laws and amendments to
existing laws to regulate further the credit card industry or to reduce finance
charges or other fees or charges applicable to credit card accounts. In
addition, certain credit card issuers assess periodic finance charges or other
fees or charges at rates lower than the rate currently being assessed on most of
the accounts.
We currently issue the FCNB Preferred Charge credit card for use by
customers of Spiegel's retailing subsidiaries, and we may solicit our MasterCard
and/or VISA cardholders to open FCNB Preferred Charge accounts or other
revolving credit card accounts which may offer certain benefits not available
under the accounts. If cardholders choose to utilize these or other competing
sources of credit, the rate at which new receivables are generated in the
accounts may be reduced and certain purchase and payment patterns with respect
to receivables may be affected. The trust will be dependent upon our continued
ability to generate new receivables. If the rate at which new receivables are
generated declines significantly and we do not add additional accounts to the
trust, a pay out event could occur.
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Reliance on co-branding may reduce portfolio yield.
Over the last several years, the proportion of our MasterCard and VISA
accounts originated from the issuance of credit cards co-branded with Spiegel
and Eddie Bauer has increased. This has had the effect of reducing the rate of
interest earned on our portfolio, as well as reducing the rate of charge-offs
experienced by the portfolio, since the interest rate and the charge offs are
both lower in this segment of our portfolio. Our co-branding programs with
Spiegel Catalog and Eddie Bauer are expected to play a significant part in the
origination of our MasterCard and VISA accounts. Eddie Bauer has experienced
sales declines in recent months. If such declines were to continue, it could
have a material adverse effect on such co-branded account originations. Although
the Spiegel Catalog and Eddie Bauer co-branded programs have been important in
generating new receivables, there can be no assurance that this will continue to
be the case.
Secured card and related programs may affect portfolio yield.
The cardholders in our secured card and certain other of our credit card
programs are generally individuals who have a low income level and/or a limited
or adverse credit history but who nevertheless fit within our parameters for our
secured card credit card programs indicating a probability that, notwithstanding
such characteristics (and taking into account any deposit securing obligations
under the account), the customer is a reasonable, although higher, credit risk.
The benefit to us in dealing with such higher risk cardholders is that they are
typically willing to pay a relatively high annual percentage rate of interest
and annual fee for their credit card privileges. The risk to holders of the
notes is that the default rate for such customers will also be relatively high.
In addition, if the FDIC were appointed as our receiver or conservator,
there could be delays in realizing on the collateral for secured accounts, which
could result in delays or reductions in payments on the notes.
This prospectus uses defined terms. You can find a glossary of terms under
the caption "Glossary of Terms for Prospectus" beginning on page __ in this
prospectus.
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Important Parties
The Issuer
The issuer of your notes will be First Consumers Credit Card Master Note
Trust. The issuer is a common law trust created under the laws of the State of
Illinois. It is operated under a trust agreement, dated as of [_________], 2001,
between us and Bankers Trust Company, as owner trustee.
The activities of the issuer are limited to:
. acquiring, owning and managing the trust assets and the proceeds of
those assets;
. issuing and making payments on the notes; and
. engaging in related activities.
The issuer's principal offices are in New York, in care of Bankers Trust
Company, as owner trustee, at the following address: 4 Albany Street, 10th
Floor, New York, New York 10006, Attention: Structured Finance Group.
We will pay the fees of the owner trustee and will reimburse it for various
liabilities and expenses.
First Consumers Master Trust
The notes are secured by a beneficial interest in a pool of receivables
that arise under MasterCard and VISA credit card accounts that we own and
designate as trust accounts. The receivables are currently held by First
Consumers Master Trust, an Illinois common law trust formed by us in September
1992 to securitize a portion of our MasterCard and VISA credit card receivables.
First Consumers Master Trust is operated under a pooling and servicing
agreement, amended and restated in February 1999, among us, as seller and
servicer, and The Bank of New York, as trustee.
First Consumers Master Trust has issued a collateral certificate to us that
represents a beneficial interest in the receivables. We have transferred this
collateral certificate to the issuer under a transfer and servicing agreement
between us, as seller and servicer, and the issuer. The other outstanding series
of investor certificates issued by First Consumers Master Trust and the notes
are referred to in this prospectus, collectively, as the securities, and the
holders of those securities are referred to as the securityholders. After all
the outstanding series of investor certificates issued by First Consumers Master
Trust are retired, we may cause First Consumers Master Trust to terminate, at
which time the receivables will be transferred to the issuer under the transfer
and servicing agreement and held directly by the issuer.
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First Consumers National Bank
We are headquartered in Beaverton, Oregon, which is a suburb of Portland.
We were organized as a national banking association on December 12, 1988, and
operate as a "credit card bank." We were acquired by Spiegel on November 1,
1990. As a credit card bank, our activities are limited primarily to the
issuance of credit cards. We issue MasterCard and VISA credit cards, as well as
private label cards for purchases from Spiegel's retail subsidiaries. The
receivables in the trust arise under our MasterCard and VISA credit cards, which
we refer to as "bank cards." We continue to service the receivables that are
transferred to the trust.
Also, in our capacity as administrator under the administration agreement,
dated as of [_________], 2001, between us and the issuer, we will provide the
notices and perform on behalf of the issuer other administrative obligations
required by the transfer and servicing agreement, the indenture and the
indenture supplement for each series, and will be compensated for acting as the
administrator.
We are regulated, supervised, and examined by the Office of the Comptroller
of the Currency.
Spiegel, Inc. and its Retail Subsidiaries
Though not a party to the agreements governing the notes, the trust, the
issuer or the accounts, Spiegel is our parent corporation. Spiegel is a leading
international specialty retailer that offers merchandise through its
subsidiaries, including Eddie Bauer, Inc., Newport News, Inc. and Spiegel
Catalog, Inc. Spiegel's retail subsidiaries distribute apparel, household
furnishings and other merchandise through catalogs, Internet sites and retail
stores.
Spiegel and its predecessors date from 1865. Spiegel has operated as a
catalog merchandiser since 1905 and was incorporated in Delaware in 1965. In
1988, Spiegel acquired Eddie Bauer. In August 1993, Spiegel acquired
substantially all of the assets of Newport News, which was formerly named New
Hampton, Inc. until 1995.
The retail businesses of Spiegel Catalog, Eddie Bauer and Newport News are
described under "Spiegel's Retail Operations" in the accompanying prospectus
supplement.
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Our Bank Card Activities
We participate in both the MasterCard International and VISA USA, Inc.
credit card systems. MasterCard and VISA credit cards are issued as part of the
worldwide MasterCard and VISA systems, respectively, and transactions creating
the receivables through the use of the credit cards are processed through the
MasterCard and VISA authorization and settlement systems. We began offering
MasterCard products in 1988 and began offering VISA products in July 1998.
We offer two types of bank cards to our customers: unsecured and
secured credit cards. Unsecured cards are either marketed on a co-branded basis
to certain customers of Spiegel Catalog and Eddie Bauer, or marketed to selected
affinity niches. Unsecured bank card products include the Eddie Bauer MasterCard
and the Spiegel MasterCard. Both the Spiegel MasterCard and Eddie Bauer
MasterCard offer a reward program. In some cases, the Spiegel MasterCard also
features a 10% discount on the first purchase. Costs of the reward programs are
paid by Spiegel Catalog and Eddie Bauer.
Secured cards require a cardholder to secure his or her line of credit
with a savings or time deposit with us in a minimum amount of $100. Approved
applicants receive a credit limit ranging from 100% to 300% of the amount
deposited, with the maximum unsecured portion of the credit limit initially
restricted to $2,500. Occasionally a credit limit of up to 500% is used on a
test basis. Customers earn interest on their deposits. While our prior practice
was to require customers to purchase certificates of deposit at a third party
bank in order to secure lines of credit, this practice was changed effective
November 6, 1998 in light of legislation allowing us to hold these types of
customer deposits. We purchased the existing collateral deposit liabilities of
our secured card customers and transformed such deposits into our savings
accounts. We currently require that all new secured card customer deposits be
established with us as savings accounts.
Both secured and unsecured cards may be used to purchase goods and
services from Spiegel group retail subsidiaries or unaffiliated companies that
accept MasterCard or VISA, and to obtain cash advances within limits. We market
secured and unsecured bank cards on a nationwide basis through our Beaverton
headquarters office.
We also issue three basic versions--one for each of the merchandising
subsidiaries of Spiegel--of the FCNB Preferred Charge card, a private label card
which may be used to purchase all types of goods or services offered in Spiegel
Catalog catalogs, and Spiegel Outlet stores, as well as goods offered in Eddie
Bauer catalogs and outlet stores and in Newport News catalogs and outlet stores.
Currently, all of our bank card receivables are included in the trust,
other than a portfolio of about $20 million that we recently purchased. This has
been the case since formation of the First Consumers Master Trust in 1992.
Preferred Charge receivables are not eligible for inclusion in the trust.
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Origination
Our marketing operations are centralized in our Beaverton, Oregon
headquarters facility, with bank card originations varying based on whether the
bank card is a secured card or an unsecured card.
Our largest sources of new account openings for our secured cards are
direct mail and television advertising. Potential cardholders typically express
interest by responding by toll-free call to a number listed in our
advertisements and are then sent an application to complete and return with
their check or money order. In addition to advertising, we actively solicit
secured bank card customers through pre-approved card acquisition campaigns. The
names and addresses of prospective cardholders are acquired through credit
bureau extracts targeted to groups satisfying specific demographics. We also
take advantage of Spiegel's substantial marketing database by targeting selected
names that are declined for the Preferred Card product. This strategy captures
potential customers that would find utility in our secured bank card product,
while not cannibalizing Spiegel's Preferred Card customer base. A smaller
channel of origination for secured bank cards is the offering of "take-ones,"
available at distributor partners with affiliations to customers who meet our
target bank card demographics.
The majority of our new unsecured bank cards are issued as the result
of pre-approved solicitations. In particular, many of our MasterCard products
issued on a co-branded basis with Spiegel Catalog or Eddie Bauer are sourced
from the marketing files of these companies by identifying both inactive
Preferred Card customers as well as those Preferred Card prospects who declined
a Preferred Card. Pre-approved bank card applications are then attached to
catalog mailings or mailed as stand-alone offers to these bank card prospects.
We also solicit customers for unsecured credit who demonstrate characteristics
that we believe from our experience with secured card customers will produce
targeted performance on an unsecured basis. Finally, a small number of
applications for the Eddie Bauer MasterCard product are sourced via "take-ones"
in Eddie Bauer retail locations, and via Eddie Bauer's internet website.
We are open to the opportunity to acquire one or more existing credit
card portfolios that would be included as part of the bank card program.
Credit Granting Procedure
Since early 1989, credit underwriting standards for FCNB's bank card
accounts have been revised periodically so as to improve the overall performance
of the FCNB Bank Card portfolio.
For the unsecured card, a credit bureau risk score and/or income and
other credit characteristics are used for determining whether an applicant is
accepted or declined. Adjustments to the scorecard and risk score cutoffs have
been made from time to time to
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continually improve performance. Behavioral scores from the Preferred Card
database (if available) are also used in assessing applicants. Applicants with a
no-file and inquiry-only type bureau report are declined. There is also a
minimum annual income requirement of $12,000 and a minimum age requirement of
18. Before an unsecured bank card application is approved, a credit bureau
report is ordered to verify that there has been no deterioration in applicant
creditworthiness since the bank card application was first sent out.
For secured card applicants, we use an empirically-derived scorecard
developed from our customer history to determine acceptance or rejection.
Serious derogatory ratings within the last 6 months or unrealized Federal tax
liens are reasons for decline. Bankruptcy, if discharged, will not cause
rejection. The $12,000 minimum annual income requirement and the 18-year minimum
age requirement also apply. Before a secured bank card application is approved,
a credit bureau report is ordered to verify that there has been no deterioration
in applicant creditworthiness since the bank card application was first sent
out.
The credit scoring model we use when processing bank card applications
is based on the same criteria as pre-approved offers, and our proprietary credit
scoring models are continually revalidated. Each of the models evaluates a
variety of factors. Although the relative importance of these factors varies
among models, the following factors currently contribute the most to the credit
score:
. performance with other creditors,
. number of references on credit file,
. length of time on credit file,
. utilization of credit lines with other creditors,
. types of trade lines,
. total amount of available credit,
. recent inquiries into credit file, and
. payment performance on other trade lines.
A small portion of total applications processed through the internal
scoring model are routed by the system for manual verification handling. These
applications are so routed due to credit bureau alert messages, name or address
variations between applications and credit reports or an existing credit line
from the bank listed on the report. Only applications meeting the final credit
score requirement are referred for verification procedures. Once applications
are referred, they are approved only upon successful verification of the
information in question.
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The approval process for both the secured and unsecured bank cards is
automated. No manual overrides are allowed, thus reducing the potential for
human error.
We assign a credit limit to each bank card assigned based on the
applicant's credit score, income or type of account. We review credit limits on
existing accounts at least monthly, and credit line increases, or decreases (if
appropriate), are considered using adaptive control software. This software uses
a behavioral score in its analysis and includes a credit bureau score component
as well. The behavioral score used in the decision process is updated at least
monthly, while the credit bureau score is refreshed at least once every four
months. Credit lines are then adjusted accordingly, if necessary. The software
also performs ongoing authorizations. If a purchase causes greater than a 10%
overlimit, then the account is flagged for collections review. We screen for
fraud on the front end of the credit process, at approval. We rely on various
tools, including First Data Resources fraud referral criteria, credit bureau
alerts and our own internally developed fraud screens. On an ongoing basis, the
adaptive control software flags aberrant behavior as it considers
authorizations. For example, large purchases or large payments will be flagged,
and no overlimit amount authorized until appropriate verifications have been
completed.
New purchases for existing accounts must fall within the authorized
credit limit plus an approval buffer determined by behavior scores and a set of
strategies, collectively referred to as "adaptive control software." All
existing account authorizations are approved if the account is in good credit
standing and the resulting balance is within the credit limit and the approval
buffer. The vast majority of existing account authorizations are handled by our
system logic without manual interruption.
Each accountholder is subject to an agreement governing the terms and
conditions of the account. Each of these agreements permits us to change or
terminate any terms, conditions, services or features of the account, including
increasing or decreasing finance charges, other charges or minimum payments.
We may change our credit standards or screening criteria and methods at
any time.
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Billing and Payments
We assess finance charges on an account based upon the average daily
balance outstanding on the account during a monthly billing cycle. If a payment
is not received by the payment due date, a finance charge is imposed on all
purchases from the date of the transaction to the date of repayment. A finance
charge is imposed on each cash advance from the day that advance is made. The
finance charge is currently assessed at an annual variable percentage rate
subject to a floor of between 14.9% and 20.5%, depending on the product.
However, unsecured accounts under the Eddie Bauer and Spiegel Catalog
co-branding arrangements receive introductory fixed rates ranging from 6.9% to
9.9%.
The finance charge is applied to the average daily balance, which is
the sum of the daily unpaid balances of purchases and cash advances, finance
charges and fees on each day of the cycle divided by the number of days in the
cycle. Daily unpaid balances are determined by deducting payments and credits
and by adding new purchases, cash advances and other charges, in each case, as
of the date of the transaction. A $.50 minimum finance charge is imposed for any
billing cycle in which a finance charge of less than $.50 would otherwise be
imposed. Accountholders are given a grace period averaging 30 days from the
closing date of the cycle to the payment due date. If the entire balance on the
account is paid during the grace period, a finance charge is not imposed.
Currently accountholders must make a minimum monthly payment equal to
the greater of 2.5% of the outstanding balance and $10.00. Payments are applied
first to miscellaneous charges or fees, then to finance charges and then to
purchases in the order made, and last to cash advances in the order made.
Annual fees for unsecured bank cards range from none for the Eddie
Bauer and Spiegel Catalog co-branded cards to $39. Annual fees for secured bank
cards range from $30 to $48, with $39 being the standard fee. Other fee revenue
results from over limit charges, late charges, returned check fees, $29 each,
and reinstatement charges, all as provided in the applicable cardholder
agreement.
Credit card issuers participating in the MasterCard International, Inc.
and VISA USA, Inc. systems receive certain fees, called "interchange," as
partial compensation for taking credit risk, absorbing fraud losses and funding
receivables for a limited period prior to initial billing. Under the MasterCard
and VISA systems, a portion of this interchange in connection with cardholder
charges for merchandise and services is passed from banks which clear the
transactions for merchants to credit card-issuing banks. Interchange fees range
from approximately 1% to 1.85% of the transaction amount, and are set annually
by MasterCard and VISA based on the number of credit card transactions and the
amount charged per transaction. We transfer to the trust all interchange
allocated to the accounts in the trust, and treat the interchange like finance
charge collections.
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Delinquency and Collections
Our collection centers for the bank card portfolio are located in
Beaverton, Oregon and Trevose, Pennsylvania. Generally the Trevose collection
center services accounts with a billing address in the eastern half of the
United States, with the remaining accounts serviced from the Beaverton
collection center. Both collection centers are capable of collecting on accounts
with any billing address and delinquent accounts can be routed to either site in
the case of heavy call volume or a natural disaster at one collection center.
We classify an account as delinquent when the minimum payment due on
the account is not received by the payment due date specified in the
cardholder's billing statement. Our collections staff is segregated into five
separate collection departments, each of which is made up of six queues based on
severity of delinquency. The collections staff initiates collection efforts as
early as the third day of delinquency if no contact has been made through the
autodialer as discussed below. Accounts are placed in the collection office at
various levels of delinquency, with all accounts being placed no later than 60
days after the first payment is missed. The majority of accounts are placed
within the first 30 days of a missed payment. We use behavioral scoring of all
accounts to adjust our collection efforts based on the potential risk of an
account and the dollars at risk. Collection efforts escalate in intensity as an
account cycles into a more advanced delinquency category.
Our collection strategy begins with an early delinquency calling
program using state of the art technology that includes predictive dialing for
accounts that are up to two payments past due. Statement messaging and automatic
letter dunning are also used on delinquent accounts up to two payments past due.
Accounts which are placed in the collections office are assigned to specific
members of our collections staff for accelerated collection efforts, including
demands for balance in full, correspondence from one or more of the national
credit bureaus describing the impact that the delinquent credit obligation has
on the cardholder's credit history and preparatory actions to place accounts
with attorneys for legal action. We also outsource a portion of pre- charge-off
accounts to external collection agencies for resolution.
Additional purchases are not permitted to be charged to accounts which
are two or more payments past due. Accounts can be reinstated after six months
if no bankruptcy has occurred, the customer pays as agreed and after payment of
a reinstatement fee.
For secured accounts, an order to liquidate the related security
deposit is made when the account is between 90-120 days past due. Secured
accounts are permanently closed at 90 days past due.
We recognize losses when a customer's account becomes six months past
due. This practice is mandated by the OCC, our primary regulator. Charge-offs
may be recognized earlier in some circumstances, including bankruptcy, deceased
customers, accounts determined to be fraudulent and settlement of dispute. We
outsource collections for charged-off accounts to third party collection agents
based on where the defaulted accountholder resides. Once outsourced to
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a third party collector, the charged-off account may be sent to a second or
third additional collection agency until resolution. We review all collection
agencies on a six month audit cycle, and the results of the agencies in each
region are compared against each other.
Our credit evaluation, servicing and charge-off policies and
collection practices may change at any time as dictated by our business judgment
and applicable law.
Customer Service and Account Management
An automated voice response unit at our headquarters in Beaverton
handles a substantial percentage of incoming calls and enables accountholders to
receive account information 24 hours a day, including balance, payment and
credit information, and request documents without having to speak with a
customer service representative.
We review accounts for potential credit line increases every three to
six months. All credit line increases are automated except that sometimes a
manual credit limit increase is granted if the customer will qualify for an
automated credit line increase during the next two months. Using adaptive
control software, we are able to identify accountholders who have demonstrated
good payment history and high usage patterns. The amount of the credit line
increases depends on the score assigned by the adaptive control software,
available credit bureau information and the type of account.
Description of First Data Resources
First Data Resources, Inc. provides new account processing, account
management, billing and new card production for us. We believe that this
relationship with First Data Resources allows us to achieve operational
efficiencies while remaining flexible enough to handle additional growth. If
First Data Resources were to fail to perform its services for us or become
insolvent, delays in processing could occur, and the replacement of the services
First Data Resources currently provides to us could be time consuming.
First Data Resources provides computer data processing services
primarily to the bank card industry. First Data Resources is a subsidiary of
First Data Corp.
The Trust Portfolio
We refer to the accounts that have been designated as trust accounts as
the trust portfolio. References to the trustee in this prospectus will refer to
(a) The Bank of New York, as trustee of First Consumers Master Trust under the
pooling and servicing agreement for so long as First Consumers Master Trust
holds the receivables, or (b) The Bank of New York, as indenture trustee, if the
issuer holds the receivables.
In addition to the receivables in the trust portfolio, the notes will
be secured by:
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. interchange;
. all proceeds of these receivables and related recoveries;
. all proceeds of any credit insurance policies relating to these
receivables;
. all monies on deposit in specified trust accounts or investments
made with these monies, including any earned investment proceeds if
the prospectus supplement for your series of notes so indicates;
. proceeds of any credit enhancement or derivative contracts,
consisting of interest rate swaps, currency swaps, credit swaps,
interest rate caps or bankruptcy options, which are instruments
under which a counterparty assumes the risk of an increase in
bankruptcies in exchange for payment, as described in the
prospectus supplement for your series of notes.
Receivables in the trust consist of:
. principal receivables, which are amounts charged by trust account
cardholders for goods and services and cash advances; and
. finance charge receivables, which are periodic finance charges,
interchange and other amounts charged to trust accounts, including
late fees, over limit fees, NSF fees, cash advance fees and annual
fees.
We currently designate all newly created eligible bank card accounts to
the trust as they arise and we expect to continue to do so. However, our right
to automatically add all additional eligible bank card accounts to the trust as
they arise is subject to the quantitative limitations described in "Description
of the Notes--Addition of Trust Assets" in this prospectus. We may also elect to
stop designating all new accounts to the trust. If we do so, we have the right,
and in some cases the obligation, to designate from time to time additional
eligible accounts to the trust portfolio and to convey to the trust all
receivables in those additional accounts, whether those receivables are then
existing or thereafter created.
The accounts must be Eligible Accounts as of the date we designate them
as additional accounts. Once these accounts are designated, only the receivables
arising under these accounts, and not the accounts themselves, are sold. In
addition, as of the date on which any new receivables are created, we will
represent and warrant to the trust that the receivables conveyed to the trust on
that day are Eligible Receivables. However, we cannot guarantee that all the
accounts will continue to meet the applicable eligibility requirements
throughout the life of the trust.
Under some circumstances, we may also designate that some accounts will
no longer be trust accounts, and the receivables originated under these accounts
will be removed from the
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trust. Throughout the term of the trust, the trust portfolio will consist of
receivables originated in the initial accounts plus receivables originated in
any additional accounts and minus receivables originated in any removed
accounts.
We can designate accounts to the trust that are different from the
current accounts, if the rating agencies for each outstanding series of
securities confirm that doing so will not impair their ratings of any
outstanding securities. There can be no assurance that additional accounts will
be of the same credit quality as the initial accounts. Moreover, additional
accounts may contain receivables which consist of fees, charges and amounts
which are different from the fees, charges and amounts described in this
prospectus. Additional accounts may also have different credit guidelines,
balances and ages. Consequently, there can be no assurance that the accounts
will continue to have the characteristics described in this prospectus as
additional accounts are added. In addition, if we designate additional accounts
with lower periodic finance charges, that may have the effect of reducing the
portfolio yield.
The prospectus supplement relating to each series of notes will provide
the following information about the trust portfolio as of the date specified:
. the amount of principal receivables;
. the amount of finance charge receivables;
. the range and average of principal balances of the accounts;
. the range and average of credit limits of the accounts;
. the range and average of ages of the accounts;
. the geographic distribution of the accounts; and
. delinquency statistics relating to the accounts.
Use of Proceeds
We will receive the net proceeds from the sale of each series of notes
offered by this prospectus and will use those proceeds (a) to retire existing
series of investor certificates, and (b) for general corporate purposes.
Description of the Notes
The issuer will issue one or more series of notes under a master
indenture and an indenture supplement entered into by the issuer and the
indenture trustee. The following summaries describe all material provisions
common to each series of notes. The accompanying
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prospectus supplement gives you all of the additional material terms specific to
the notes of your series. The summaries are qualified by all of the provisions
of the transfer and servicing agreement, the indenture and the related indenture
supplement and the pooling and servicing agreement. We have filed a copy of the
pooling and servicing agreement for First Consumers Master Trust and a form of
each of the transfer and servicing agreement, the indenture and an indenture
supplement with the SEC as exhibits to the registration statement relating to
the notes.
General
The notes will be secured by and paid from the assets of the issuer.
The amount of collateral allocated for any series of notes, called its
collateral amount, will be specified in the related prospectus supplement. Each
series of notes will be allocated collections of principal receivables and
finance receivables based on its allocation percentage, which will be based on
the collateral amount for that series and will be calculated as described in the
related prospectus supplement.
Each series of notes may consist of one or more classes, one or more of
which may be senior notes and one or more of which may be subordinated notes.
Each class of a series will evidence the right to receive a specified portion of
each distribution of principal or interest or both. Each class of a series may
differ from other classes in some aspects, including:
. amounts allocated to principal payments;
. maturity date;
. interest rate; and
. availability and amount of enhancement.
We will have the right to receive all cash flows from the assets of the
trust not required to make payments on the securities or to make payments to
credit enhancement providers for any series of securities. Our interest is
called the seller interest and is an amount equal to the Seller Amount.
During the revolving period, the amount of collateral for a series will
remain constant unless reduced on account of:
. defaulted receivables or dilution; or
. reallocation of principal collections to cover shortfalls in the
payment of interest or other specified amounts to be paid from
finance charge collections.
See "--Defaulted Receivables; Dilution; Investor Charge-Offs" in this
prospectus. The amount of principal receivables in the trust, however, will vary
each day as new principal receivables are
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created and others are paid. The Seller Amount will fluctuate each day to
reflect the changes in the amount of the principal receivables in the trust.
When a series is amortizing, the collateral amount of that series will decline
as customer payments of principal receivables are collected and distributed, or
accumulated for distribution, to the noteholders. As a result, the Seller Amount
will generally increase to reflect reductions in the collateral amount for that
series and will also change to reflect the variations in the amount of principal
receivables in the trust. The Seller Amount may also be reduced as the result of
new issuances by the issuer, see "--New Issuances" in this prospectus, or new
issuances of investor certificates by First Consumers Master Trust, see "Pooling
and Servicing Agreement--New Issuances of Investor Certificates" in this
prospectus.
Generally, notes offered under this prospectus and the accompanying
prospectus supplement:
. will be represented by notes registered in the name of a DTC
nominee;
. will be available for purchase in minimum denominations of $1,000
and multiples of $1,000 in excess of that amount; and
. will be available for purchase in book-entry form only.
The accompanying prospectus supplement will specify if your notes have
different characteristics from those listed above.
DTC has informed us that its nominee will be Cede & Co. Accordingly,
Cede & Co. is expected to be the holder of record of each series of notes. As an
owner of beneficial interests in the notes, you will generally not be entitled
to a definitive note representing your interest in the issued notes because you
will own notes through a book-entry record maintained by DTC. References in this
prospectus and the accompanying prospectus supplement to distributions, reports,
notices and statements to noteholders refer to DTC or Cede & Co., as registered
holder of the notes, for distribution to you in accordance with DTC procedures.
All references in this prospectus and the accompanying prospectus supplement to
actions by noteholders shall refer to actions taken by DTC upon instructions
from DTC participants.
The accompanying prospectus supplement may state that application will
be made to list your series or class of notes on the Luxembourg Stock Exchange
or another exchange.
Book-Entry Registration
Following is a description of the form your notes will take. We also
describe how your notes may be transferred and how payments will be made to you.
The information in this section concerning DTC and DTC's book-entry
system has been provided by DTC. We have not independently verified the accuracy
of this information.
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You may hold your notes through DTC in the U.S., Clearstream or
Euroclear in Europe or in any other manner described in the accompanying
prospectus supplement. You may hold your notes directly with one of these
systems if you are a participant in the system, or indirectly through
organizations which are participants.
Cede & Co., as nominee for DTC, will hold the global notes. Clearstream
and Euroclear will hold omnibus positions on behalf of the Clearstream customers
and the Euroclear participants, respectively, through customers' securities
accounts in Clearstream's and Euroclear's names on the books of their respective
depositaries, which in turn will hold those positions in customers' securities
accounts in the depositaries' names on the books of DTC.
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 Uniform Commercial Code, and a
"clearing agency" registered under the provisions of Section 17A of the
Securities Exchange Act of 1934. 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 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 other organizations.
Participants also may include the underwriters of any series. Indirect access to
the DTC system also is available to others, including banks, brokers, dealers
and trust companies, as indirect participants, that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Transfers between DTC participants will occur in accordance with DTC
rules. Transfers between Clearstream customers and Euroclear participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
customers or Euroclear participants, on the other, will be effected through DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by its depositary; however, those cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in that system in accordance with its rules and
procedures and within its established deadlines, which will be based on 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.
Clearstream customers and Euroclear participants may not deliver instructions
directly to Clearstream's and Euroclear's the depositaries.
Because of time-zone differences, credits of securities in Clearstream
or Euroclear as a result of a transaction with a participant will be made during
the subsequent securities settlement
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processing, dated the business day following the DTC settlement date, and those
credits or any transactions in those securities settled during that processing
will be reported to the relevant Clearstream customer or Euroclear participant
on that business day. Cash received in Clearstream or Euroclear as a result of
sales of securities by or through a Clearstream customer or a Euroclear
participant to a DTC participant will be received with value on the DTC
settlement date but will be available in the relevant Clearstream or Euroclear
cash account only as of the business day following settlement in DTC.
Note owners that are not participants or indirect participants but
desire to purchase, sell or otherwise transfer ownership of, or other interest
in, notes may do so only through participants and indirect participants. In
addition, note owners will receive all distributions of principal of and
interest on the notes from the indenture trustee through the participants who in
turn will receive them from DTC. Under a book-entry format, note owners may
experience some delay in their receipt of payments, since payments will be
forwarded by the indenture trustee to Cede & Co., as nominee for DTC. DTC will
forward those payments to its participants, which thereafter will forward them
to indirect participants or note owners. It is anticipated that the only
"noteholder" will be Cede & Co., as nominee of DTC. Note owners will not be
recognized by the indenture trustee as noteholders, as that term is used in the
indenture, and note owners will only be permitted to exercise the rights of
noteholders indirectly through the participants who in turn will exercise the
rights of noteholders 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 notes and is required
to receive and transmit distributions of principal and interest on the notes.
Participants and indirect participants with which note owners have accounts with
respect to the notes similarly are required to make book-entry transfers and
receive and transmit those payments on behalf of their respective note owners.
Accordingly, although note owners will not possess notes, note 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 note owner
to pledge notes to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of those notes, may be limited due
to the lack of a physical certificate for those notes.
DTC has advised us that it will take any action permitted to be taken
by a noteholder under the indenture only at the direction of one or more
participants to whose account with DTC the notes are credited. Additionally, DTC
has advised us that it will take those actions with respect to specified
percentages of the collateral amount only at the direction of and on behalf of
participants whose holdings include interests that satisfy those specified
percentages. DTC may take conflicting actions with respect to other interests to
the extent that those actions are taken on behalf of participants whose holdings
include those interests.
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Clearstream is incorporated under the laws of Luxembourg. Clearstream
holds securities for its customers and facilitates the clearance and settlement
of securities transactions between Clearstream customers through electronic
book-entry changes in accounts of Clearstream customers, thereby eliminating the
need for physical movement of notes. Transactions may be settled in Clearstream
in any of 36 currencies, including United States dollars. Clearstream provides
to its Clearstream customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream also deals with domestic
securities markets in over 30 countries through established depository and
custodial relationships. Clearstream is registered as a bank in Luxembourg, and
therefore is subject to regulation by the Commission de Surveillance du Secteur
Financier, which supervises Luxembourg banks. Clearstream's customers are world-
wide financial institutions, including underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations, among others, and may
include the underwriters of any series of notes. Clearstream's U.S. customers
are limited to securities brokers and dealers and banks. Currently, Clearstream
has approximately 2,000 customers located in over 80 countries, including all
major European countries, Canada and the United States. Indirect access to
Clearstream is also available to other institutions that clear through or
maintain a custodial relationship with an account holder of Clearstream.
Clearstream has established an electronic bridge with Morgan Guaranty Trust
Company of New York as the operator of the Euroclear System in Brussels to
facilitate settlement of trades between Clearstream and Euroclear.
Euroclear was created in 1968 to hold securities for participants of
the Euroclear System 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 notes and any
risk from lack of simultaneous transfers of securities and cash. Transactions
may now be settled in any of 27 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 as the Euroclear operator, under
contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation. 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 central banks and other banks, securities brokers and
dealers and other professional financial intermediaries and may include the
underwriters of any series of notes. 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.
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Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law. These rules and laws govern transfers of securities and cash within the
Euroclear System, withdrawal of securities and cash from the Euroclear System,
and receipts of payments with respect to securities in the Euroclear System. All
securities in the Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear operator acts under these rules and laws only on behalf of
Euroclear participants and has no record of or relationship with persons holding
through Euroclear participants.
Distributions with respect to notes held through Clearstream or
Euroclear will be credited to the cash accounts of Clearstream customers or
Euroclear participants in accordance with the relevant system's rules and
procedures, to the extent received by its depositary. Those distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. See "Federal Income Tax Consequences" in this prospectus.
Clearstream or the Euroclear operator, as the case may be, will take any other
action permitted to be taken by a noteholder under the indenture on behalf of a
Clearstream customer or Euroclear participant only in accordance with its
relevant rules and procedures and subject to its depositary's ability to effect
those actions on its behalf through DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of notes among participants of DTC,
Clearstream and Euroclear, they are under no obligation to perform or continue
to perform those procedures and those procedures may be discontinued at any
time.
Definitive Notes
Notes that are initially cleared through DTC will be issued in
definitive, fully registered, certificated form to note owners or their
nominees, rather than to DTC or its nominee, only if:
. the issuer advises the indenture trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities
as depository with respect to that series or class of notes, and
the indenture trustee or the issuer is unable to locate a qualified
successor;
. the issuer, at its option, advises the indenture trustee in writing
that it elects to terminate the book-entry system through DTC with
respect to that series or class of notes; or
. after the occurrence of a servicer default, note owners
representing not less than 50%--or another percentage specified in
the accompanying prospectus supplement--of the collateral amount
advise the indenture trustee and DTC through participants in
writing that the continuation of a book-entry system
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through DTC or a successor to DTC is no longer in the best interest
of the note owners.
If any of these events occur, DTC must notify all participants of the
availability through DTC of definitive notes. Upon surrender by DTC of the
definitive instrument representing the notes and instructions for
re-registration, the issuer will execute and the indenture trustee will
authenticate the notes as definitive notes, and thereafter the indenture trustee
will recognize the registered holders of those definitive notes as noteholders
under the indenture.
Distribution of principal and interest on the notes will be made by the
indenture trustee directly to holders of definitive notes in accordance with the
procedures set forth in this prospectus and in the indenture. Interest payments
and any principal payments on each distribution date will be made to holders in
whose names the definitive notes were registered at the close of business on the
related record date. Distributions will be made by check mailed to the address
of the noteholders as it appears on the register maintained by the indenture
trustee. However, the final payment on any note--whether definitive notes or the
notes registered in the name of Cede & Co. representing the notes--will be made
only upon presentation and surrender of that note at the office or agency
specified in the notice of final distribution to noteholders. The indenture
trustee will provide this notice to registered noteholders not later than the
fifth day of the month of the final distributions.
Definitive notes will be transferable and exchangeable at the offices
of the transfer agent and registrar, which will initially be the indenture
trustee. No service charge will be imposed for any registration of transfer or
exchange, but the issuer and transfer agent and registrar may require payment of
a sum sufficient to cover any tax or other governmental charge imposed in
connection with the transfer or exchange. The transfer agent and registrar will
not be required to register the transfer or exchange of definitive notes for a
period of twenty days preceding the due date for any payment on those definitive
notes.
Interest Payments
Your class of notes will pay interest on the dates and at the interest
rate specified in the accompanying prospectus supplement. The interest rate on
any note may be a fixed, floating or any other type of rate as specified in the
accompanying prospectus supplement. If your notes bear interest at a floating or
variable rate, the accompanying prospectus supplement will describe how that
rate is calculated.
Interest payments or deposits on any distribution date will be funded
from:
. collections of finance charge receivables, recoveries of charged
off receivables and interchange allocated to the series during the
preceding monthly period or periods;
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. investment earnings, if any, on any funds held in trust accounts,
to the extent described in the accompanying prospectus supplement;
. any credit enhancement or derivative instrument, to the extent
described in the accompanying prospectus supplement; and
. collections of principal receivables treated as collections of
finance charge receivables as described under "--Discount Option,"
to the extent described in the accompanying prospectus supplement.
If interest payments will be made less frequently than monthly, an
interest funding account may be established to accumulate the required interest
amount. If a series has more than one class of notes, that series may have more
than one interest funding account.
Principal Payments
Each series will begin with a revolving period during which no
principal payments will be made to the noteholders of that series.
The revolving period for each series will be scheduled to end on or no
later than a specified date, at which time a new period will begin during which
principal collections available to that series will be set aside on a daily
basis to repay the series. That new period is called an amortization period if
partial principal payments are made each month and an accumulation period if the
available principal is accumulated for a series over one or more months to pay
off a class in full. If the amount paid or accumulated each month is limited to
some specified figure then the period is called a controlled amortization period
or controlled accumulation period.
However, each series will also be subject to pay out events, which
could cause the revolving period to end earlier than scheduled or could
terminate an existing amortization period or accumulation period. Upon a pay out
event, a rapid amortization period will begin, during which available principal
will be distributed monthly and will not be subject to any controlled amount or
accumulation provision. Finally, a series with an accumulation period may
specify some adverse events as accumulation events, rather than pay out events,
resulting in an early start to an accumulation period or removing any limitation
based on a controlled accumulation amount.
Principal payments for any series or the related class will be funded
from collections of principal receivables allocated to that series or class and
from other sources specified in the accompanying prospectus supplement. In the
case of a series with more than one class of notes, the noteholders of one or
more classes may receive payments of principal at different times. The
accompanying prospectus supplement will describe the manner, timing and priority
of payments of principal to noteholders of each class.
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Funds on deposit in any principal accumulation account for a series may
be subject to a guaranteed rate agreement or guaranteed investment contract or
other arrangement intended to assure a minimum rate of return on the investment
of those funds if specified in the related prospectus supplement. In order to
enhance the likelihood of the payment in full of the principal amount of a
series or a related class of notes at the end of an accumulation period, that
series or class of notes may be subject to a principal guaranty or other similar
arrangement if specified in the related prospectus supplement.
Suspension and Postponement of Controlled Accumulation Period
The prospectus supplement for any series having a controlled
accumulation period will specify the date on which that period is scheduled to
commence and the scheduled length of that period. However, if specified in the
prospectus supplement for any series, upon notice to the indenture trustee, the
servicer may extend the revolving period and postpone the controlled
accumulation period, or may elect to suspend the controlled accumulation,
subject to the conditions described in the third following paragraph and any
other conditions described in the related prospectus supplement.
On each determination date until the controlled accumulation period
begins for any series, the servicer will review the amount of expected principal
collections and determine the number of months expected to be required to fully
fund the principal accumulation account by the related expected principal
payment date for each class of notes in that series. If the number of months
needed to fully fund the principal accumulation account by the related expected
principal payment date for each class is less than the number of months in the
scheduled controlled accumulation period, the servicer may then elect to
postpone the controlled accumulation period. In making its decision, the
servicer is required to assume that the principal payment rate will be no
greater than the lowest monthly principal payment rate for the prior 12 months
and will consider the amount of principal expected to be allocable to
noteholders of all other series and certificateholders of all other series of
investor certificates issued by First Consumers Master Trust, which are expected
to be amortizing or accumulating principal during the controlled accumulation
period for that series. In no case will the controlled accumulation period for
any series be reduced to less than one month.
The method for determining the number of months required to fully fund
the principal accumulation account may be changed if each rating agency confirms
that the change will not impair its rating of any outstanding series or class.
If specified in the prospectus supplement for any series having a
controlled accumulation period, the servicer may also elect to suspend the
controlled accumulation period if it:
. obtains a qualified maturity agreement in which a Qualified
Institution agrees to deposit in the related principal accumulation
account on the expected principal payment date for each class of
notes of that series an amount equal to the
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outstanding principal amount of those notes as of their respective
expected principal payment dates; and
. delivers an opinion of counsel to the indenture trustee to the
effect that the qualified maturity agreement is enforceable against
the provider of that agreement.
The servicer will pledge to the indenture trustee for the benefit of the
noteholders of the related series, all right, title and interest in any
qualified maturity agreement.
If the servicer obtains a qualified maturity agreement, the servicer
will cause the provider of that agreement to deposit in the principal
accumulation account for the related series or class on or before its expected
principal payment date an amount equal to the outstanding principal amount of
that series or class. However, on the expected principal payment date for any
series or class, we may instead elect to fund all or a portion of the required
deposit from either the proceeds of a new series or collections of principal
receivables and other amounts allocated to that series or class for that
purpose.
A qualified maturity agreement for any series or class will terminate
at the close of business on the related expected principal payment date.
However,
(1) the servicer may terminate a qualified maturity agreement
earlier than the expected principal payment date if:
(a) the servicer obtains a substitute qualified maturity
agreement,
(b) the institution providing the qualified maturity agreement
ceases to be a Qualified Institution and the servicer is
unable to obtain a substitute qualified maturity agreement,
or
(c) a pay out event occurs for the related series; and
(2) the servicer may terminate a qualified maturity agreement prior
to the later of:
(a) the date on which the controlled accumulation period was
scheduled to begin, before giving effect to the suspension
of the controlled accumulation period, and
(b) and the date to which the commencement of the controlled
accumulation period may be postponed, as determined on the
determination date preceding the termination of the
qualified maturity agreement.
If the institution providing a qualified maturity agreement ceases to
be a Qualified Institution, the servicer will use its best efforts to obtain a
substitute qualified maturity
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agreement, unless the servicer elects to terminate the qualified maturity
agreement and is not required to obtain a substitute qualified maturity
agreement for any of the reasons described in the preceding paragraph.
If a qualified maturity agreement is terminated prior to the earlier of
the expected principal payment date for the related series or class and the
commencement of the rapid amortization period for that series and the servicer
does not obtain a substitute qualified maturity agreement, the controlled
accumulation period will begin on the latest of:
. the date on which the controlled accumulation period was scheduled
to begin, before giving effect to the suspension of the controlled
accumulation period;
. at the servicer's election, the date to which the controlled
accumulation period may be postponed, as determined on the
determination date preceding the termination of the qualified
maturity agreement; and
. the first day of the calendar month following the termination of
the qualified maturity agreement.
Transfer and Assignment of Receivables
We have transferred and assigned to the trust the receivables in the
accounts designated as accounts of the trust and future receivables created in
these accounts. In connection with each future transfer of receivables to the
trust, we will indicate in our computer files or books and records that the
receivables have been conveyed to the trust. In addition, we have provided or
caused to be provided to the trustee and the owner trustee computer files or
microfiche lists, containing a true and complete list showing each account,
identified by account number and by total outstanding balance on the date of
transfer. We will not deliver to the trustee or the owner trustee any other
records or agreements relating to the accounts or the receivables, except in
connection with additions or removals of accounts. Except as stated in this
paragraph, the records and agreements that we maintain relating to the accounts
and the receivables are not and will not be segregated from other documents and
agreements relating to other credit card accounts and receivables and are not
and will not be stamped or marked to reflect the transfers described in this
paragraph, but our computer records are and will be required to be marked to
evidence these transfers. We have filed in all appropriate jurisdictions Uniform
Commercial Code financing statements with respect to the receivables meeting the
requirements of applicable law. See "Risk Factors--Some liens would be given
priority over your notes which could cause delayed or reduced payments" and
"Material Legal Aspects of the Receivables" in this prospectus.
New Issuances of Notes
We may cause the owner trustee, on behalf of the issuer, to issue one
or more new series of notes. We will define all principal terms of each new
series in an indenture supplement. Each
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series issued may have terms and enhancements that are different than those for
any other series. Upon the issuance of an additional series of notes, neither we
nor any of the servicer, the indenture trustee or the issuer will be required or
will intend to obtain the consent of any noteholder of any other series
previously issued by the issuer. We may offer any series under a prospectus or
other disclosure document in transactions either registered under the Securities
Act or exempt from registration under the Securities Act directly, through one
or more other underwriters or placement agents, in fixed-price offerings or in
negotiated transactions or otherwise.
Unless First Consumers Master Trust has been terminated, the interests of
all series of notes in the receivables and the other trust assets will be
evidenced by a single global certificate held by the issuer. A new collateral
certificate will be deemed to be issued and evidenced by the global certificate
upon the issuance of each series of notes.
No new series may be issued unless we satisfy various conditions, including
that:
(1) each rating agency confirms that the new issuance will not impair its
rating of any outstanding series or class;
(2) we certify that we reasonably believe, based on the facts known to the
certifying officer, that the new issuance will not:
(a) cause a pay out event or an event of default, or
(b) materially and adversely affect the amount or timing of payments
to be made to the noteholders of any series or class;
(3) after giving effect to the new issuance, the Aggregate Principal
Balance is not less than the Minimum Aggregate Principal Balance;
(4) we deliver an opinion of counsel to the effect that, for federal
income tax purposes:
(a) except as otherwise stated in the related indenture supplement,
the notes of the new series will be characterized as debt;
(b) the issuance will not adversely affect the tax characterization
as debt of the notes of any outstanding series or class that were
characterized as debt at the time of their issuance;
(c) the new issuance will not cause the issuer to be deemed to be an
association or publicly traded partnership taxable as a
corporation; and
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(d) the new issuance will not cause or constitute an event in which
gain or loss would be recognized by any noteholder; and
(5) unless First Consumers Master Trust has been terminated, all of the
conditions required for it to issue a new series of investor
certificates are satisfied, as described under "Pooling and Servicing
Agreement--New Issuances of Investor Certificates."
Representations and Warranties
As of the date each receivable is transferred to the trust, we represent to
the trust that:
(1) each receivable is an Eligible Receivable;
(2) each receivable has been transferred to the trust free and clear of
any liens, other than liens permitted by the pooling and servicing
agreement and the transfer and servicing agreement, and in compliance
in all material respects with all applicable laws;
(3) all required governmental approvals in connection with the transfer of
each receivable to the trust have been obtained and remain in full
force and effect; and
(4) the trust has all right, title and interest in each receivable or has
a first priority perfected security interest in that receivable.
If any of these representations is not true with respect to any receivable
as of the date that receivable is transferred to the trust, we are required to
accept reassignment of the affected receivable. Except with respect to the
breach of the representation set forth in clause (2) above, before accepting
reassignment, (a) prior to the termination of First Consumers Master Trust, we
will be permitted 30 days to cure the breach or a longer period not to exceed 45
days agreed to by the trustee for First Consumers Master Trust and (b) if First
Consumer Master Trust has terminated, we will be permitted 60 days to cure the
breach or a longer period not to exceed 120 days agreed to by the indenture
trustee. If, with respect to any receivable, there has been a breach of the
representation set forth in clause (2) above, we will be obligated to
immediately accept retransfer of that receivable.
We will accept retransfer of a receivable by directing the servicer to
deduct the principal amount of the ineligible receivable from the Seller Amount.
If this would reduce the Seller Amount below the Minimum Seller Amount, we will
make a cash deposit in the excess funding account in the amount by which the
Seller Amount would have been reduced below the Minimum Seller Amount. Any
deduction or deposit is considered a repayment in full of the ineligible
receivable.
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We will also make representations and warranties to the trust as to
enforceability against us of the agreement that governs the transfer of the
receivables to the trust--either the pooling and servicing agreement or the
transfer and servicing agreement--and the effectiveness of that agreement as an
absolute assignment of, or a grant of a security interest in, the receivables.
If any of these representations and warranties is false in any material respect
and the breach of the representation or warranty has a material adverse effect
on the receivables or the availability of the proceeds of the receivables to the
trust, then (i) prior to the termination of First Consumers Master Trust, either
the trustee for First Consumers Master Trust or securityholders holding not less
than 25% of the principal amount of any series of securities, or (ii) if First
Consumers Master Trust has terminated, the owner trustee, the indenture trustee
or noteholders holding not less than 50% of the aggregate principal amount of
all outstanding series of notes may direct us to accept retransfer of the entire
trust portfolio. Prior to the termination of First Consumers Master Trust, we
will be permitted 45 days after a direction to accept retransfer of the
receivables is given or a longer period, as may be specified in the direction,
to cure the breach. If First Consumers Master Trust has been terminated, we will
be permitted 60 days after the direction is given, or a longer period, not to
exceed 120 days, as may be specified in the direction, to cure the breach.
The reassignment price would equal the aggregate outstanding principal
amounts for all series of securities, in each case as of the distribution date
on which the reassignment is scheduled to be made, plus accrued and unpaid
interest on the securities through the distribution date, plus any other amounts
specified in any prospectus supplement.
Reassignment of any affected receivables or the entire trust portfolio to
us, as the case may be, is the sole remedy respecting any breach of the
representations and warranties described in this section.
Addition of Trust Assets
We may, at our option, designate additional accounts to the trust, the
receivables in which will be sold and assigned to the trust. As described above
under "The Trust Portfolio," we currently designate all new Eligible Accounts to
the trust upon their establishment, and we expect to continue to do so. We are
permitted to continue to automatically designate all new Eligible Accounts as
they arise, so long as the number of accounts that we designate in this manner
does not exceed the following limits:
(1) The new accounts designated during any calendar year may not exceed
20% of the number of accounts as of the first day of that calendar
year; or
(2) For any calendar quarter, the new accounts designated during that
calendar quarter may not exceed 15% of the number of accounts as of
the first day of that calendar quarter.
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We may exceed these limitations if each rating agency confirms that doing
so will not impair its rating of any outstanding series or class of securities.
In addition, we will be required to designate additional accounts, to the
extent available:
. to maintain the Aggregate Principal Balance on any day so that the
Aggregate Principal Balance is not less than the Minimum Aggregate
Principal Balance on that day; and
. prior to the termination of First Consumers Master Trust, to maintain
the Aggregate Principal Balance so that the Aggregate Principal
Balance on the last day of any month is not less than the sum of the
initial investor amounts and initial collateral amounts of all series
of securities outstanding on that date.
When we transfer receivables in additional accounts to the trust in our
discretion, we must satisfy several conditions, including:
. each rating agency and each credit enhancement provider must receive
prior notice of each addition;
. we must certify that any additional accounts are Eligible Accounts and
that:
. no selection procedures adverse to the securityholders were used
in selecting the additional accounts;
. as of the addition date, we are not insolvent and would not
become insolvent by the addition of the accounts; and
. the transfer of the additional receivables constitutes a valid
transfer to the trust of all our right, title and interest in the
receivables in the additional accounts or the grant to the trust
of a first priority perfected security interest in those
receivables; and
. we must deliver an opinion of counsel with respect to the perfection
of the transfer and related matters.
In addition to the periodic reports otherwise required to be filed by the
servicer with the SEC in accordance with the Securities Exchange Act of 1934, we
will file a Report on Form 8-K with respect to any addition to the trust of
receivables in additional accounts that would have a material effect on the
composition of the trust assets.
Defaulted accounts that have been charged-off as uncollectible in
accordance with the servicer's credit card guidelines and the servicer's
customary and usual policies and procedures for servicing revolving credit card
receivables will not be included in any account addition. See
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"--Defaulted Receivables; Dilution; Investor Charge-Offs" in this prospectus. In
addition, less than 20% of the receivables in the trust portfolio, by
outstanding principal balance, will be 30 or more days delinquent immediately
following any account addition.
Removal of Accounts
We also have the right to remove accounts from the list of designated
accounts and to require the reassignment to us of all receivables in the removed
accounts, whether the receivables already exist or arise after the designation.
However, we may not designate removed accounts more than once during any
calendar month and, prior to the termination of First Consumers Master Trust, we
may not designate removed accounts at any time that any series is not in its
revolving period. Our right to remove accounts is subject to the satisfaction of
several conditions, including that:
(1) if the accounts to be removed have outstanding receivables, each
rating agency confirms that the removal will not impair its rating of
any outstanding series or class of securities;
(2) we certify that:
(a) individual accounts or administratively convenient groups of
accounts, such as billing cycles, were chosen for removal
randomly or at any rate not on a basis intended to select
particular accounts or groups of accounts for removal for any
reason other than administrative convenience, and no selection
procedures adverse to the securityholders were used in selecting
the removed accounts;
(b) in our reasonable belief, the removal will not cause a pay out
event, or an event that with notice or lapse of time or both,
would constitute a pay out event; and
(c) as of the removal date, we are not insolvent and the removal was
not made in contemplation of our insolvency;
(3) the removal will not cause the Aggregate Principal Balance be less
than the Minimum Aggregate Principal Balance after giving effect to
the removal; and
(4) at any time that First Consumers Master Trust holds the Receivables,
the removal will not cause the Aggregate Principal Balance to be less
than the sum of the initial investor amounts and initial collateral
amounts of all series of securities outstanding after giving effect to
the removal.
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Collection and Other Servicing Procedures
The servicer will be responsible for servicing and administering the
receivables in the trust portfolio in accordance with the servicer's policies
and procedures for servicing credit card receivables comparable to the
receivables in the trust portfolio. The servicer will be required to maintain
fidelity bond coverage insuring against losses through wrongdoing of its
officers and employees who are involved in the servicing of credit card
receivables.
Discount Option
We have the option to reclassify a percentage of collections of principal
receivables in the trust portfolio as collections of finance charge receivables.
If we do so, the reclassified percentage of collections of principal receivables
for the trust portfolio for each monthly period will be considered collections
of finance charge receivables and will be allocated with all other collections
of finance charge receivables in the trust portfolio.
We may exercise this option in order to compensate for a decline in the
portfolio yield, but only if there would be sufficient principal receivables to
allow for that discounting. Exercise of this option would result in a larger
amount of collections of finance charge receivables and a smaller amount of
collections of principal receivables. By doing so, we would reduce the
likelihood that a pay out event would occur as a result of a decreased portfolio
yield and, at the same time, would increase the likelihood that we will have to
add principal receivables to the trust. We may not exercise our option to
reclassify collections of principal receivables as collections of finance charge
receivables if we reasonably believe that doing so would cause a pay out event,
or any event that with notice or lapse of time or both, would constitute a pay
out event for any series of securities.
In addition, we may exercise this option only if each rating agency
confirms that doing so will not impair its rating of any outstanding series or
class of securities.
Trust Accounts
As servicer, we have established and maintain a collection account and an
excess funding account, each in the name of the trustee, for the benefit of the
securityholders. Both the collection account and the excess funding account must
be Qualified Accounts.
The funds on deposit in these accounts may only be invested, at the
direction of the servicer, in highly rated liquid investments that meet the
criteria described in the indenture or the related indenture supplement for that
series.
The indenture trustee, acting as the initial paying agent--or any entity
then acting as paying agent--will have the revocable power to withdraw funds
from the collection account and
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the excess funding account for the purpose of making payments to the noteholders
of any series under the related indenture supplement.
Funding Period
On the closing date for any series of notes, the total amount of principal
receivables in the trust available to that series may be less than the total
principal amount of the notes of that series. If this occurs, the initial
collateral amount for that series of notes will be less than the principal
amount of that series of notes. In this case, the related prospectus supplement
will set forth the terms of the funding period, which is the period from that
series' closing date to the earlier of:
. the date that series' collateral amount equals the principal amount of
that series of notes; and
. the date specified in the related prospectus supplement, which will be
no later than one year after that series' closing date.
During the funding period, the portion of the collateral amount not
invested in receivables will be maintained in a prefunding account, which is a
trust account established with the indenture trustee for the benefit of the
noteholders of that series. On the closing date for that series of notes, this
amount may be up to 100% of the principal balance of that series of notes. The
collateral amount for that series will increase as new receivables are
transferred to the trust or as the collateral amounts of other outstanding
series of securities are reduced. The collateral amount may decrease due to
investor charge-offs allocated to the series.
During the funding period, funds on deposit in the prefunding account will
be paid to us as the collateral amount increases. If the collateral amount for
that series is not increased so that the initial collateral amount equals the
initial principal balance of the notes of that series, plus any initial excess
collateral amount, by the end of the funding period, any amount remaining in the
prefunding account will be repaid to noteholders.
The prospectus supplement for a series with a funding period will set
forth:
. the series' initial collateral amount;
. the series' full collateral amount, which is the initial principal
balance of the series of notes plus any initial excess collateral
amount;
. the date on which the series' collateral amount is expected to equal
the series' full collateral amount;
. the date by which the funding period will end; and
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. what other events, if any, will occur if the end of the funding period
is reached before the full collateral amount is funded.
We will file a Current Report on Form 8-K with the SEC following the
termination of the funding period containing updated trust portfolio
information.
Application of Collections
The servicer must deposit into the collection account, no later than two
business days after processing, all payments made on receivables in the trust
portfolio. However, the servicer will be able to make these deposits on a
monthly or other periodic basis if:
(1) we remain the servicer and no servicer default has occurred and is
continuing; and
(2) either
(a) (i) the servicer provides to the trustee a letter of credit or
other arrangement covering risk of collection of the
servicer; and
(ii) written confirmation is received from each rating agency
that the arrangement will not impair its rating of any
outstanding series or class of securities; or
(b) the servicer has and maintains a certificate of deposit or short-
term deposit rating acceptable to Standard & Poor's and Moody's
and has deposit insurance as required by law and by the FDIC,
unless any rating agency then rating any class or series of
securities, has notified the servicer that making monthly
deposits will impair its rating of any outstanding series or
class of securities.
For purposes of allocating collections on a daily basis, the servicer may
estimate the portion of collections on our entire MasterCard and VISA credit
card portfolio that is allocable to the trust portfolio. The servicer may also
estimate for each business day the amount of collections that are attributable
to finance charge receivables and principal receivables. The servicer may change
the method for determining the amount of collections that are attributable to
the trust portfolio and the allocation of those collections as finance charge
collections or principal collections from time to time to more accurately
reflect the amounts being collected in respect of the principal receivables and
finance charge receivables in the trust portfolio. However, the servicer must
give each rating agency written notice of any change in its method for
estimating the amount of collections from our entire MasterCard and VISA credit
card portfolio that are allocable to the trust portfolio.
The servicer will also deposit into the collection account on the business
day before each distribution date, the excess of (i) all of the recoveries by
the servicer during the preceding
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calendar month on receivables that have previously been charged-off as
uncollectible over (ii) the aggregate amount of receivables in accounts that
have been charged-off as uncollectible during that calendar month. The servicer
will treat these net recoveries as collections of finance charge receivables.
The servicer will then allocate all collections of finance charge
receivables and principal receivables among each series of securities and the
Seller Amount based on the respective allocation percentages for each series and
the seller allocation percentage. The seller allocation percentage at any time
will equal 100% minus the total of the applicable allocation percentages for all
outstanding series. The seller allocation percentage of finance charge
collections will be paid to us or our assigns. The seller allocation percentage
of principal collections will first be deposited in the excess funding account
to the extent required to maintain an Aggregate Principal Balance that is not
less than (1) the Minimum Aggregate Principal Balance and (2) prior to the
termination of First Consumers Master Trust, the sum of the initial investor
amounts and initial collateral amounts of all outstanding series of securities.
Any remaining principal collections will be paid to us or our assigns. The
collections allocated to each series will be retained in the collection account
or applied as described in the related prospectus supplement.
Shared Excess Finance Charge Collections
If a series is identified in the prospectus supplement for that series as
included in a group, collections of finance charge receivables allocated to that
series in excess of the amount needed to make deposits or payments for the
benefit of that series may be shared with other series of securities that have
been designated for inclusion in the same group. The servicer will allocate the
aggregate of the excess finance charge collections for all series in the same
group to cover any payments required to be made out of finance charge
collections for any series in that group that have not been covered out of the
finance charge collections allocable to those series. If the finance charge
shortfalls exceed the excess finance charge collections for any group for any
calendar month, excess finance charge collections will be allocated pro rata
among the applicable series based on the relative amounts of finance charge
shortfalls.
Shared Principal Collections
Each series of notes will share excess principal collections with each other
series of securities unless the related prospectus supplement excludes that
series from this sharing arrangement. If a principal sharing series--including
any series of investor certificates designated as a principal sharing series--is
allocated principal in excess of the amount needed for deposits or distributions
of principal collections, that excess will be shared with other principal
sharing series. The servicer will allocate the aggregate of the shared principal
collections for all principal sharing series to cover any scheduled or permitted
principal distributions to securityholders and deposits to principal
accumulation accounts, if any, for any series that have not been covered out of
the collections of principal receivables allocable to those series. Shared
principal collections will not be used to cover investor charge-offs for any
series of securities.
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If the principal shortfalls exceed the amount of shared principal
collections for any calendar month, shared principal collections for all series
will be allocated pro rata among the applicable series based on the relative
amounts of principal shortfalls. If shared principal collections exceed
principal shortfalls, the balance will be paid to us or our assigns or deposited
in the excess funding account under the circumstances described under "--Excess
Funding Account" below.
Excess Funding Account
Prior to the termination of First Consumers Master Trust, on each business
day on which the Aggregate Principal Balance is less than the greater of (a) the
sum of the collateral amounts and investor amounts of all outstanding series on
that day, plus the Minimum Seller Amount on that day and (b) the sum of the
initial investor amounts and collateral amounts of all outstanding series, the
servicer will deposit collections of principal receivables allocable to the
Seller Amount, as described in "--Application of Collections" above, and excess
shared principal collections otherwise distributable to us, into the excess
funding account until the Aggregate Principal Balance equals the greater of the
amounts describes in the preceding clauses (a) and (b). Prior to the termination
of First Consumers Master Trust, funds on deposit in the excess funding account
will be withdrawn and paid to us to the extent that on each day the Aggregate
Principal Balance exceeds the greater of the amounts describing in clauses (a)
and (b) of the preceding sentence.
If First Consumers Master Trust has been terminated, on each business day
on which the Seller Amount is less than the Minimum Seller Amount, the servicer
will deposit collections of principal receivables allocable to the Seller
Amount, as described in "--Application of Collections" above, and excess shared
principal collections otherwise distributable to us, into the excess funding
account until the Seller Amount equals the Minimum Seller Amount. Funds on
deposit in the excess funding account will be withdrawn and paid to us to the
extent that on each day the Seller Amount exceeds the Minimum Seller Amount.
When any series of securities is in an amortization period or accumulation
period, the principal balance in the excess funding account will be applied like
shared principal collections.
Investment earnings on amounts on deposit in the excess funding account
will be treated as finance charge collections and allocated to each series of
securities based on the respective allocation percentages for each series.
Defaulted Receivables; Dilution; Investor Charge-Offs
Receivables in any account will be charged-off as uncollectible in
accordance with the servicer's credit card guidelines and the servicer's
customary and usual policies and procedures for servicing revolving credit card
receivables and other revolving credit account receivables comparable to the
receivables. The servicer's current policy is to charge off the receivables in
an account when that account becomes 180 days delinquent. On the date on which
an account is
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charged-off, the trust will automatically be deemed to transfer all receivables
in the charged-off account to us and the charged-off account will cease to be a
trust account.
Each series will be allocated a portion of the excess, if any, of (i)
defaulted receivables for each calendar month over (ii) all of the recoveries
received during that calendar month, as specified in the accompanying prospectus
supplement. For this purpose, defaulted receivables for any monthly period are
principal receivables that were charged-off as uncollectible in that monthly
period.
Unlike defaulted receivables, dilution, which includes reductions in
principal receivables as a result of returns, unauthorized charges and the like,
is not intended to be allocated to investors. Instead, these reductions are
applied to reduce our interest in the trust, and to the extent they would reduce
our interest in the trust below the Minimum Seller Amount, we are required to
deposit the amount of the reduction into the trust's collection account and the
deposited amount will be treated as principal collections. However, if we
default in our obligation to make a payment to cover dilution, then a portion of
any resulting shortfall in receivables will be allocated to your series as
specified in the accompanying prospectus supplement. For all series that have
Minimum Seller Percentages greater than zero, the portion of dilution allocated
to those series will first reduce the Seller Amount. In addition, any
collections allocated to the seller interest and the balance on deposit in the
excess funding account will be available on a ratable basis to cover dilution
allocated to those series that have Minimum Seller Percentages greater than
zero. For all series that have Minimum Seller Percentages equal to zero, the
portion of dilution allocated to those series will not further reduce the Seller
Amount and those series will not receive collections allocated to the seller
interest or funds on deposit in the excess funding account to cover
dilution.
On each distribution date, if the sum of the defaulted receivables and any
dilution allocated to any series is greater than the finance charge collections
and other funds available to cover those amounts as described in the related
prospectus supplement, then the collateral amount for that series will be
reduced by the amount of the excess. Any reductions in the collateral amount for
any series on account of defaulted receivables and dilution will be reinstated
to the extent that finance charge collections and other amounts on deposit in
the collection account are available for that purpose on any subsequent
distribution date as described in the related prospectus.
Defeasance
If so specified in the prospectus supplement relating to a series, the
issuer may, at our direction, terminate its substantive obligations in respect
of that series or the trust by depositing with the indenture trustee, from
amounts representing, or acquired with, collections of receivables, money or
eligible investments sufficient to make all remaining scheduled interest and
principal payments on that series on the dates scheduled for those payments and
to pay all amounts owing to any credit enhancement provider with respect to that
series or all outstanding series, as the case may be, if that action would not
result in a pay out event for any series. Prior
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to its first exercise of its right to substitute money or eligible investments
for receivables, the issuer will deliver to the indenture trustee an opinion of
counsel to the effect that:
. for federal income tax purposes, the deposit and termination of
obligations will not cause the trust, or any portion of the trust, to
be deemed to be an association or publicly traded partnership taxable
as a corporation; and
. the deposit and termination of obligations will not result in the
trust being required to register as an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
Final Payment of Principal
For each series, the servicer has the option to purchase the notes at any
time after the remaining outstanding principal amount of that series is 10% or
less of the initial principal amount of that series. The purchase price will
equal:
. the outstanding principal amount of the notes of that series, plus
. any accrued and unpaid interest through the day preceding the
distribution date on which the repurchase occurs or, if the repurchase
occurs on any other date, through the day preceding the distribution
date immediately following the repurchase date.
For any series of notes, the related prospectus supplement may specify
additional conditions to the servicer's purchase option.
Each prospectus supplement will specify the final maturity date for the
related series of notes, which will generally be a date falling substantially
later than the expected principal payment date. For any series, the failure to
pay principal in full not later than the final maturity date will be an event of
default and the indenture trustee or holders of a specified percentage of the
notes of that series will have the rights described under "The Indenture--Events
of Default; Rights upon Event of Default" in this prospectus.
Paired Series
The prospectus supplement for a series of notes will specify whether that
series may be paired with a previously or later issued series so that a decrease
in the collateral amount of the previously issued series results in a
corresponding increase in the collateral amount of the later issued series. In
general, a series may be issued as a paired series so the trust can fund the
amount by which the previously issued series either has amortized or has
accumulated funds for a principal payment.
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The later issued series will either be prefunded with an initial deposit to
a prefunding account in an amount up to the initial principal balance of the
previously issued series or will have a variable principal amount.
During the controlled amortization period or controlled accumulation period
for any series that is paired with a later issued series, as principal payments
are made on that previously issued series or deposits are made to the principal
accumulation account for that previously issued series, as applicable,
(a) in the case of a prefunded paired series, an equal amount of funds on
deposit in any prefunding account for that prefunded paired series
will be released, which funds will be distributed to us;
(b) in the case of a paired series having a variable principal amount, an
interest in that variable paired series in an equal or lesser amount
may be sold by the issuer, and the proceeds from the issuance will be
distributed to us;
(c) and, in either case, the collateral amount of the later issued series
will increase by up to a corresponding amount.
If a pay out event occurs for the previously issued series or its paired
series when the previously issued series is amortizing, the allocation
percentage for the allocation of collections of principal receivables for the
previously issued series may be reset to a lower percentage as described in the
prospectus supplement for that series and the period over which it will amortize
may be lengthened as a result. The extent to which the period over which it
amortizes is lengthened will depend on many factors, only one of which is the
reduction of its allocation percentage. For a discussion of these factors, see
"Risk Factors--Issuance of additional series by the trust may affect the timing
of payments to you" in this prospectus and "Maturity Considerations" in the
accompanying prospectus supplement.
Pay Out Events
The revolving period for your series of notes will continue through the
date specified in the accompanying prospectus supplement unless a pay out event
occurs prior to that date. A pay out event occurs with respect to all series
issued by the issuer upon the occurrence of any of the following events:
(a) insolvency, liquidation, conservatorship, receivership or similar
events relating to us;
(b) we are unable for any reason to transfer receivables to the trust; or
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(c) First Consumers Master Trust or the issuer becomes subject to
regulation as an "investment company" within the meaning of the
Investment Company Act of 1940.
In addition, a pay out event may occur with respect to any series upon the
occurrence of any other event specified in the accompanying prospectus
supplement. On the date on which a pay out event is deemed to have occurred, the
rapid amortization period or, if so specified in the accompanying prospectus
supplement, the early accumulation period will commence. If, because of the
occurrence of a pay out event, the rapid amortization period begins earlier than
the scheduled commencement of an amortization period or prior to an expected
principal payment date, noteholders will begin receiving distributions of
principal earlier than they otherwise would have, which may shorten the average
life of the notes.
In addition to the consequences of a pay out event discussed above, unless
otherwise specified in the accompanying prospectus supplement, if insolvency or
similar proceedings under the Federal Deposit Insurance Act or similar laws
occur with respect to us, on the day of that event we will immediately cease to
transfer principal receivables to the trust and promptly give notice to the
trustee for First Consumers Master Trust, the indenture trustee and the owner
trustee of this event. Any principal receivables transferred to the trust prior
to the event, as well as collections on those principal receivables and finance
charge receivables accrued at any time with respect to those principal
receivables, will continue to be part of the trust assets.
If the only pay out event to occur is our insolvency, the court may have
the power to require the continued transfer of principal receivables to the
trust. See "Risk Factors--If a conservator were appointed for us, delays or
reductions in payment of your notes could occur" in this prospectus.
Servicing Compensation and Payment of Expenses
The servicer receives a fee for its servicing activities and reimbursement
of expenses incurred in administering the issuer. The share of the servicing fee
allocable to each series of notes for any distribution date will be equal to
one-twelfth of the product of (a) the servicing fee rate specified in the
related prospectus supplement and (b) (i) the collateral amount for that series
as of the last day of the calendar period preceding that distribution date,
minus (ii) the product of the amount, if any, on deposit in the excess funding
account as of the last day of the calendar month preceding that distribution
date and the allocation percentage for that series with respect to finance
charge collections for that calendar month.
The servicer will pay from its servicing compensation expenses of servicing
the receivables, including payment of the fees and disbursements of the
indenture trustee, the trustee for First Consumers Master Trust, the owner
trustee and independent certified public accountants and other fees which are
not expressly stated in the transfer and servicing agreement, the indenture, any
indenture supplement or the pooling and servicing agreement for First Consumers
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Master Trust to be payable by the issuer or the securityholders, other than
federal, state and local income and franchise taxes, if any, of the issuer or
First Consumers Master Trust.
Each series' servicing fee is payable each period from collections of
finance charge receivables allocated to the series. Neither the issuer nor the
noteholders are responsible for any servicing fee allocable to the Seller
Amount.
Matters Regarding the Seller and the Servicer
The servicer may not resign from its obligations and duties, except upon a
determination that:
. performance of its duties is no longer permissible under applicable
law, as evidenced by an opinion of counsel to that effect delivered to
the trustee; and
. there is no reasonable action that the servicer could take to make the
performance of its duties permissible under applicable law.
If within 120 days of the determination that the servicer is no longer
permitted to act as servicer, the indenture trustee is unable to appoint a
successor, then the indenture trustee will act as servicer. If the indenture
trustee is unable to act as servicer, it will petition an appropriate court to
appoint an eligible successor.
The servicer's resignation will not become effective until the indenture
trustee or another successor has assumed the servicer's obligations and duties.
The resigning servicer will notify each rating agency of its resignation. The
servicer may delegate any of its servicing duties to any entity, including
Spiegel, that agrees to conduct those duties in accordance with our charge
account guidelines. However, the servicer's delegation of its duties will not
relieve it of its liability and responsibility with respect to the delegated
duties.
The servicer will indemnify First Consumers Master Trust, the issuer, the
owner trustee, the trustee for First Consumers Master Trust and the indenture
trustee for any losses suffered as a result of (a) actions or omissions arising
out of the activities of First Consumers Master Trust, the issuer, the owner
trustee, the trustee for First Consumers Master Trust and the indenture trustee
under the pooling and servicing agreement, the transfer and servicing agreement,
the indenture and related documents including its actions or omissions as
servicer or (b) the administration by the owner trustee of the issuer, except in
each case, for losses resulting from the fraud, negligence or breach of
fiduciary duty by the owner trustee, the trustee for First Consumers Master
Trust or the indenture trustee, as applicable. The indemnity also does not
include:
. any liabilities, costs or expenses of First Consumers Master Trust or
the issuer arising from any action taken by the trustee for First
Consumers Master Trust or the indenture trustee at the direction of
the securityholders;
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. any losses, liabilities, expenses, damages or injuries that are
incurred by the issuer or any noteholder in the capacity of an
investor, including losses incurred as a result of the performance of
the receivables; and
. any federal, state or local income or franchise taxes or any other tax
imposed on or measured by income or any penalties under any related
tax laws required to be paid by First Consumers Master Trust, the
issuer or any securityholder.
Neither we nor any of our directors, officers, employees, incorporators or
agents will be liable to First Consumers Master Trust, the issuer, the owner
trustee, the indenture trustee, the trustee for First Consumers Master Trust,
the securityholders or any other person for any action taken, or for refraining
from taking any action, in good faith under the pooling and servicing agreement
or the transfer and servicing agreement. However, none of them will be protected
against any liability resulting from willful wrongdoing, bad faith or gross
negligence in the performance of its duties or by reason of its willful
misconduct under the pooling and servicing agreement or the transfer and
servicing agreement. In addition, we are not under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its servicing
responsibilities under the pooling and servicing agreement and the transfer and
servicing agreement and which in its reasonable opinion may expose it to any
expense or liability.
Neither we nor any of our directors, officers, employees or agents will be
liable to First Consumers Master Trust, the issuer, the owner trustee, the
indenture trustee, the trustee for First Consumers Master Trust, the
securityholders or any other person for any action taken, or for refraining from
taking any action, under the pooling and servicing agreement or the transfer and
servicing agreement. However, neither we nor any of the foregoing persons will
be protected against any liability resulting from willful wrongdoing, bad faith
or gross negligence in the performance of its duties or by reason of its willful
misconduct under the pooling and servicing agreement or the transfer and
servicing agreement.
The trust agreement provides that we may sell, assign, pledge or otherwise
transfer our interest in all or a portion of the seller interest. Before we may
transfer our interest in the seller interest to an entity that is not an
affiliate, the following must occur:
(1) each rating agency confirms that the transfer will not impair its
rating of any outstanding series or class of notes;
(2) we certify to the owner trustee and the indenture trustee that, based
on the facts known to the certifying officer, the new issuance will
not:
(a) cause a pay out event or an event of default; or
(b) materially and adversely affect the amount or timing of payments
to be made to the noteholders of any series or class;
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(3) after giving effect to the exchange, the Aggregate Principal Balance
exceeds the Minimum Aggregate Principal Balance;
(4) we deliver an opinion of counsel to the effect that, for federal
income tax purposes:
(a) the transfer will not adversely affect the tax characterization
as debt of notes of any outstanding series or class that were
characterized as debt at the time of their issuance;
(b) the transfer will not cause the issuer to be deemed to be an
association or publicly traded partnership taxable as a
corporation; and
(c) the transfer will not cause or constitute an event in which gain
or loss would be recognized by any noteholder; and
(5) we deliver an opinion of counsel to the effect that:
(a) the transfer will not subject the issuer to any state income tax
or to the Illinois Personal Property Replacement Tax; and
(b) the transfer will not require the registration of the transferred
interest under the Securities Act or any state securities law
except for any such registration that has been duly completed and
become effective.
Neither we nor any person may transfer the seller interest nor any interest
in the seller interest to any person unless an opinion of the type described in
clause (4) above is delivered to the owner trustee and the indenture trustee
regarding the transfer.
We or the servicer may consolidate with, merge into, or sell our or its
respective businesses to, another entity, in accordance with the pooling and
servicing agreement and the transfer and servicing agreement on the following
conditions:
(6) the entity, if other than us or the servicer, as applicable, formed by
the consolidation or merger or that acquires our property or assets or
the servicer's property or assets, as the case may be:
(a) is organized under the laws of the United States or any one of
its states;
(b) expressly assumes, by a supplemental agreement, to perform every
covenant and obligation of us or the servicer, as applicable;
except that, if any right, covenant or obligation of the servicer
under the pooling and servicing agreement or the transfer and
servicing agreement is inapplicable to the successor entity, the
successor entity will be subject to
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that covenant or obligation, or benefit from that right, as would
apply, to the extent practicable, to the successor entity;
(7) delivery to the trustee for First Consumers Master Trust, the
indenture trustee and each credit enhancement provider, of an
officer's certificate and an opinion of counsel stating that the
merger, consolidation or transfer and the related supplemental
agreement comply with the pooling and servicing agreement and the
transfer and servicing agreement and that all conditions precedent
relating to the applicable transaction have been complied with and, in
the case of the opinion of counsel, the related supplemental agreement
is legal, valid and binding with respect to us or the servicer, as
applicable; and
(8) delivery of notice of the applicable transaction to each rating
agency.
Servicer Default
Each of the following events constitutes a servicer default:
(1) failure by the servicer to make any payment, transfer or deposit or to
make any required drawing, withdrawal or payment under any credit
enhancement, or to give instructions or notice to the trustee to do
so, on the required date under the pooling and servicing agreement,
any series supplement to the pooling and servicing agreement with
respect to a series of investor certificates, the transfer and
servicing agreement, the indenture or any indenture supplement, in
each case on or before (i) if First Consumers Master Trust has been
terminated, the date occurring 5 business days after the date that
payment, transfer or deposit or that instruction or notice is required
to be made or given under the applicable document, or (ii) prior to
the termination of First Consumers Master Trust, the date occurring 3
business days after the date that payment, transfer or deposit or that
instruction or notice is required to be made or given under the
applicable document;
(2) failure on the part of the servicer to observe or perform in any
material respect any of its other covenants or agreements if the
failure:
(a) has a material adverse effect on the securityholders;
(b) prior to the termination of First Consumers Master Trust,
continues unremedied for a period of 30 days after the earlier of
(i) the servicer's knowledge of the failure or (ii) notice to the
servicer by the trustee for First Consumers Master trust or to
the servicer and the trustee for First Consumers Master Trust by
securityholders holding not less than 25% of the outstanding
principal amount of any affected series; and
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(c) if First Consumers Master Trust has been terminated, continues
unremedied for a period of 60 days after notice to the servicer
by the indenture trustee or to the servicer and the indenture
trustee by noteholders holding not less than 10% of the
outstanding principal amount of the investor certificates of any
adversely affected series and continues to materially adversely
affect those noteholders during the 60-day period;
(3) the servicer assigns or delegates its duties, except as specifically
permitted under the pooling and servicing agreement and the transfer
and servicing agreement;
(4) any representation, warranty or certification made by the servicer in
the pooling and servicing agreement or the transfer and servicing
agreement, or in any certificate delivered in accordance with either
agreement, proves to have been incorrect when made if it:
(a) has a material adverse effect on the rights of the
securityholders of any series;
(b) prior to the termination of First Consumers Master Trust,
continues to be incorrect in any material respect for a period of
30 days after the earlier of (i) the servicer's knowledge of the
failure or (ii) notice to the servicer by the trustee for First
Consumers Master Trust or to the servicer and the trustee for
First Consumers Master Trust by securityholders holding not less
than 25% of the outstanding principal amount of any affected
series, or if the failure cannot be cured within the applicable
30-day period due to causes beyond the control of the servicer,
if the servicer fails to proceed promptly to cure the failure
with diligence and continuity; and
(c) if First Consumers Master Trust has been terminated, continues to
be incorrect in any material respect and to have a material
adverse effect on those securityholders for a period of 60 days
after notice to the servicer by the indenture trustee or to the
servicer and the indenture trustee by noteholders holding not
less than 10% of the outstanding principal amount of the notes of
any affected series, or if the failure cannot be cured within the
applicable 60-day period due to causes beyond the control of the
servicer, if the servicer fails to proceed promptly to cure the
failure with diligence and continuity; and
(5) specific insolvency, liquidation, conservatorship, receivership or
similar events relating to the servicer; or
(6) any other event specified in the accompanying prospectus supplement.
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Prior to the termination of First Consumers Master Trust, if a servicer
default occurs, for so long as it has not been remedied, the trustee for First
Consumers Master Trust or securityholders representing more than 50% of the
then-outstanding principal amount any outstanding series of securities affected
by the servicer default may give notice to the servicer, and if notice is given
by the securityholders, the trustee for First Consumers Master Trust,
terminating all of the rights and obligations of the servicer under the pooling
and servicing agreement and the transfer and servicing agreement. If First
Consumers Master Trust has been terminated, if a servicer default occurs, for so
long as it has not been remedied, the indenture trustee or noteholders
representing more than 50% of the aggregate principal amount of all outstanding
series of notes may give notice to the servicer, and if notice is given by the
noteholders, the indenture trustee, terminating all of the rights and
obligations of the servicer under the transfer and servicing agreement. The
trustee will as promptly as possible appoint an eligible successor to the
servicer with the consent of securityholders representing more than 50% of the
then-outstanding principal amount of each series of securities. If the trustee
is unable to obtain bids from eligible servicers and the servicer delivers a
certificate of an authorized officer to the effect that it cannot in good faith
cure the servicer default which gave rise to a transfer of servicing, then the
trustee for First Consumers Master Trust or the owner trustee, as applicable,
will offer us the right to accept retransfer of all of the receivables. However,
if our long-term unsecured debt obligations are not rated at least Baa3 by
Moody's and BBB- by Standard & Poor's at the time of the proposed retransfer, no
retransfer will occur unless we have delivered an opinion of counsel reasonably
acceptable to the trustee that the retransfer would not constitute a fraudulent
conveyance by us.
The retransfer price to be received by each series of notes will be equal
to the higher of:
(1) the outstanding principal balance of the notes of that series, plus
accrued interest at the applicable interest rate, through the date of
retransfer; and
(2) the average bid price quoted by two recognized dealers for a similar
security rated in the highest rating category by Moody's and Standard
& Poor's and having a remaining maturity similar to the remaining
maturity of those notes.
If no successor has been appointed or has accepted the appointment by the
time the servicer ceases to act as servicer, the trustee will automatically
become the successor. If the trustee is legally unable to act as servicer, the
trustee may petition a court of competent jurisdiction to appoint an eligible
servicer.
Prior to the termination of First Consumers Master Trust, the
securityholders of more than 50% of the then-outstanding principal amount of the
securities of any series affected by any default by the servicer or us in the
performance of its or our obligations under the pooling and servicing agreement
and the transfer and servicing agreement may waive, on behalf of all
securityholders, that default unless the default relates to a failure to make
any required deposits or payments with respect to any series. If First Consumers
Master Trust is terminated, any default by the servicer or us in the performance
of its or our obligations under the transfer and
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servicing agreement may be waived by noteholders holding 662/3% or more of the
then-outstanding principal balance of the notes of each series as to which that
default relates, or with respect to any series with two or more classes, each
class as to which the default relates, unless that default relates to a failure
to make any required deposits or payments to be made to noteholders. No waiver
by the securityholders will affect the rights of any credit enhancement
providers for any series.
Our rights and obligations under the pooling and servicing agreement and
the transfer and servicing agreement will be unaffected by any change in
servicer.
If a conservator or receiver is appointed for the servicer, the conservator
or receiver may have the power to prevent either the trustee or the
securityholders from appointing a successor servicer.
Reports to Noteholders
Noteholders of each series issued by the issuer will receive reports with
information on the series and the trust. The paying agent will forward to each
noteholder of record a report, prepared by the servicer, for its series on the
distribution dates for that series. The report will contain the information
specified in the related prospectus supplement. If a series has multiple
classes, information will be provided for each class, as specified in the
related prospectus supplement.
Periodic information to noteholders generally will include:
. the total amount distributed;
. the amount of principal and interest for distribution;
. collections of principal receivables and finance charge receivables
allocated to the series;
. the aggregate amount of principal receivables, the collateral amount
and the collateral amount as a percentage of the aggregate amount of
the principal receivables in the trust portfolio;
. the aggregate outstanding balance of accounts broken out by
delinquency status;
. the aggregate defaults and dilution allocated to the series;
. the amount of reductions, if any, to the collateral amount due to
defaulted receivables and dilution allocated to the series and any
reimbursements of previous reductions to the collateral amount;
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. the monthly servicing fee for that series;
. the amount available under the credit enhancement, if any, for the
series or each class of the series;
. the "pool factor," which is the ratio of the current collateral amount
to the initial collateral amount;
. the Base Rate and Portfolio Yield, each as defined in the accompanying
prospectus supplement for the series;
. if the series or a class of the series bears interest at a floating or
variable rate, information relating to that rate;
. for any distribution date during a funding period, the remaining
balance in the prefunding account; and
. for the first distribution date that is on or immediately following
the end of a funding period, the amount of any remaining balance in
the prefunding account that has not been used to fund the purchase of
receivables and is being paid as principal on the notes.
By January 31 of each calendar year, the paying agent will also provide to
each person who at any time during the preceding calendar year was a noteholder
of record a statement, prepared by the servicer, containing the type of
information presented in the periodic reports, aggregated for that calendar year
or the portion of that calendar year that the person was a noteholder, together
with other information that is customarily provided to holders of debt, to
assist noteholders in preparing their United States tax returns.
Evidence as to Compliance
The pooling and servicing agreement and the transfer and servicing
agreement provide that on or before April 30 of each calendar year, the servicer
will have a firm of independent certified public accountants furnish a report
showing that, for the prior calendar year:
. the accounting firm has applied the procedures required by those
agreements to the documents and records relating to the servicing of
the accounts, compared the information contained in the servicer's
certificates delivered during the prior calendar year with those
documents and records, and that based upon those procedures, no
matters came to the attention of that accounting firm that caused them
to believe that servicing was not conducted in compliance with
specified sections of the pooling and servicing agreement and the
transfer and servicing agreement, and
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. the accounting firm has compared specified amounts set forth in the
periodic reports prepared by the servicer for the prior calendar year
with the servicer's computer reports and that, in the accounting
firm's opinion, the amounts are in agreement,
in either case, except for any discrepancies or exceptions they consider
immaterial or that are otherwise disclosed.
The pooling and servicing agreement and the transfer and servicing
agreement also provide that by April 30 of each calendar year, the servicer will
deliver to the trustee for First Consumers Master Trust, the indenture trustee,
each credit enhancement provider and each rating agency a certificate of an
authorized officer to the effect that the servicer has fully performed its
obligations under the pooling and servicing agreement and the transfer and
servicing agreement during the preceding year, or, if there has been a default
in the performance of any of its obligations, specifying the nature and status
of the default.
Amendments
The transfer and servicing agreement may be amended by us, the servicer and
the issuer, without the consent of the indenture trustee or the noteholders of
any series, on the following conditions:
(1) we deliver to the owner trustee and the indenture trustee a
certificate of an authorized officer stating that, in our reasonable
belief, the amendment will not:
(a) result in the occurrence of a pay out event or an event of
default; or
(b) materially and adversely affect the amount or timing of
distributions to be made to noteholders of any series or class;
and
(2) each rating agency confirms that the amendment will not impair its
rating of any outstanding series or class of notes.
The transfer and servicing agreement may also be amended by us, the
servicer and the issuer at our direction, without the consent of the indenture
trustee, the noteholders of any series or the credit enhancement providers for
any series to add, modify or eliminate any provisions necessary or advisable in
order to enable the issuer or any portion of the issuer to (i) qualify as, and
to permit an election to be made for the issuer to be treated as, a "financial
asset securitization investment trust" under the Internal Revenue Code and (ii)
avoid the imposition of state or local income or franchise taxes on the issuer's
property or its income. However, we may not amend the transfer and servicing
agreement as described in this paragraph unless each rating agency confirms that
the amendment will not impair its rating of any outstanding series or class of
notes. In addition, the amendment must not affect the rights, duties or
obligations of the indenture trustee or the owner trustee under the transfer and
servicing agreement.
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The amendments that we may make without the consent of the noteholders of
any series or the credit enhancement providers for any series may include the
addition or sale of receivables in the trust portfolio.
The transfer and servicing agreement may also be amended by us, the
servicer and the issuer with the consent of noteholders representing more than
66 2/3% of the then-outstanding principal balance of the notes of each series
adversely affected by the amendment, except that no amendment may occur if
it:
(1) reduces the amount of, or delays the timing of:
(a) any distributions to be made to noteholders of any series or
deposits of amounts to be distributed; or
(b) the amount available under any credit enhancement,
in each case, without the consent of each affected noteholder;
(2) changes the manner of calculating the interest of any noteholder
without the consent of each affected noteholder;
(3) reduces the percentage of the outstanding principal balance of the
notes required to consent to any amendment, without the consent of
each affected noteholder; or
(4) adversely affects the rating of any series or class by each rating
agency, without the consent of noteholders representing more than
66 2/3% of the then-outstanding principal balance of the notes of each
affected series or class.
For purposes of clause (1) above, changes in pay out events or events of
default that decrease the likelihood of the occurrence of those events will not
be considered delays in the timing of distributions.
The Indenture
We have summarized the material terms of the indenture below. The summary
is not complete and is qualified in its entirety by reference to the indenture.
Events of Default; Rights upon Event of Default
An event of default will occur under the indenture for any series of notes
upon the occurrence of any of the following events:
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(1) the issuer fails to pay principal when it becomes due and payable on
the final maturity date for that series of notes;
(2) the issuer fails to pay interest when it becomes due and payable and
the default continues for a period of 35 days;
(3) bankruptcy, insolvency, conservatorship, receivership, liquidation or
similar events relating to the issuer; or
(4) the issuer fails to observe or perform covenants or agreements made in
the indenture in respect of the notes of that series, and:
(a) the failure continues, or is not cured, for 60 days after notice
to the issuer by the indenture trustee or to the issuer and the
indenture trustee by noteholders representing 25% or more of the
then-outstanding principal amount of all outstanding series of
notes; and
(b) as a result, the interests of the noteholders are materially and
adversely affected, and continue to be materially and adversely
affected during the 60-day period.
An event of default will not occur if the issuer fails to pay the full
principal amount of a note on its expected principal payment date.
An event of default with respect to one series of notes will not
necessarily be an event of default with respect to any other series of notes.
If an event of default referred to in clause (1), (2) or (4) above occurs
and is continuing with respect to any series of notes, the indenture trustee or
noteholders holding a majority of the then-outstanding principal balance of the
notes of the affected series may declare the principal of the notes of that
series to be immediately due and payable. If an event of default referred to in
clause (3) above occurs and is continuing, the unpaid principal and interest due
on the notes automatically will be deemed to be declared due and payable. Before
a judgment or decree for payment of the money due has been obtained by the
indenture trustee, noteholders holding a majority of the then-outstanding
principal balance of the notes of that series may rescind the declaration of
acceleration of maturity if:
(a) the issuer has paid or deposited with the indenture trustee all
principal and interest due on the Notes and all other amounts
that would then be due if the event of default giving rise to the
acceleration had not occurred, including all amounts then payable
to the indenture trustee; and
(b) all events of default have been cured or waived.
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If an event of default occurs, the indenture trustee will be under no
obligation to exercise any of the rights or powers under the indenture if
requested or directed by any of the holders of the notes of the affected series
if:
(1) the indenture trustee is advised by counsel the action it is directed
to take is in conflict with applicable law or the indenture;
(2) the indenture trustee determines in good faith that the requested
actions would be illegal or involve the indenture trustee in personal
liability or be unjustly prejudicial to noteholders not making the
request or direction; or
(3) the indenture trustee reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities which might be
incurred by it in complying with that request.
Subject to those provisions for indemnification and those limitations
contained in the indenture, noteholders holding more than 50% of the then-
outstanding principal balance of the notes of the affected series will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the indenture trustee if an event of default has occurred
and is continuing. Prior to the acceleration of the maturity of the notes of the
affected series, the noteholders holding more than 50% of the then-outstanding
principal balance of the notes of the affected series may also waive any default
with respect to the notes, except a default in the payment of principal or
interest or a default relating to a covenant or provision of the indenture that
cannot be modified without the waiver or consent of each affected
noteholder.
After acceleration of a series of notes, principal collections and finance
charge collections allocated to those notes will be applied to make monthly
principal and interest payments on the notes until the earlier of the date the
notes are paid in full or the final maturity date of the notes. Funds in the
collection account, the excess funding account and the other trust accounts for
an accelerated series of notes will be applied immediately to pay principal of
and interest on those notes.
Upon acceleration of the maturity of a series of notes following an event
of default, the indenture trustee will have a lien on the collateral for those
notes for its unpaid fees and expenses that ranks senior to the lien of those
notes on the collateral.
In general, the indenture trustee will enforce the rights and remedies of
the holders of accelerated notes. However, noteholders will have the right to
institute any proceeding with respect to the indenture if the following
conditions are met:
. the noteholder or noteholders have previously given the indenture
trustee written notice of a continuing event of default;
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. the noteholders of at least 25% of the then-outstanding principal
balance of each affected series make a written request of the
indenture trustee to institute a proceeding as indenture trustee;
. the noteholders offer indemnification to the indenture trustee against
the costs, expenses and liabilities of instituting a proceeding that
is satisfactory to the indenture trustee;
. the indenture trustee has not instituted a proceeding within 60 days
after receipt of the request and offer of indemnification; and
. during the 60-day period following receipt of the request and offer of
indemnification, the indenture trustee has not received from
noteholders holding more than 50% of the then-outstanding principal
balance of the notes of that series a direction inconsistent with the
request.
If the indenture trustee receives conflicting or inconsistent requests and
indemnity from two or more groups of any affected series, each representing no
more than 50% of the then- outstanding principal balance of that series, the
indenture trustee in its sole discretion may determine what action, if any, will
be taken.
Each holder of a note will have an absolute and unconditional right to
receive payment of the principal of and interest in respect of that note as
principal and interest become due and payable, and to institute suit for the
enforcement of any payment of principal and interest then due and payable and
those rights may not be impaired without the consent of that noteholder.
If any series of notes has been accelerated following an event of default,
and the indenture trustee has not received any valid directions from those
noteholders, the indenture trustee may, but is not required to, elect to
continue to hold the portion of the trust assets that secures those notes and
apply distributions on the trust assets to make payments on those notes to the
extent funds are available.
Subject to the provisions of the indenture relating to the duties of the
indenture trustee, if any series of notes has been accelerated following an
event of default, the indenture trustee may:
. institute proceedings in its own name and as trustee for the
collection of all amounts then payable on the notes of the affected
series; or
. take any other appropriate action to protect and enforce the rights
and remedies of the indenture trustee and the noteholders of the
affected series.
Subject to the conditions described in the following sentence, the
indenture trustee also may cause the trust to sell principal receivables in an
amount equal to the collateral amount for the series of accelerated notes and
the related finance charge receivables. Before exercising this
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remedy, the indenture trustee must receive an opinion of counsel to the effect
that exercise of this remedy complies with applicable federal and state
securities laws and one of the following conditions must be satisfied:
. receipt by the indenture trustee of the consent of all noteholders of
the affected series;
. determination by the indenture trustee that any proceeds from
exercising the remedy will be sufficient to discharge in full all
principal and interest due on the accelerated notes, and the indenture
trustee obtains the consent of noteholders holding more than 50% of
the then-outstanding principal balance of the affected series; or
. determination by the indenture trustee that the assets may not
continue to provide sufficient funds for the payment of principal of
and interest on those notes as they would have become due if the notes
had not been accelerated, and the indenture trustee obtains the
consent of noteholders holding at least 66 2/3% of the then-
outstanding principal balance of each class of the notes of the
affected series.
The remedies described above are the exclusive remedies provided to
noteholders and each noteholder by accepting its interest in the notes of any
series or the indenture trustee expressly waives any other remedy that might
have been available under the uniform commercial code.
The indenture trustee and the noteholders will covenant that they will not
at any time institute against the issuer or First Consumers Master Trust any
reorganization or other proceeding under any federal or state law.
None of us, the administrator, the owner trustee, the indenture trustee,
the servicer, or First Consumers Master Trust, nor any holder of an ownership
interest in the issuer, nor any of their respective owners, beneficiaries,
agents, officers, directors, employees, successors or assigns shall, in the
absence of an express agreement to the contrary, be personally liable for the
payment of the principal of or interest on the notes or for the agreements of
the issuer contained in the indenture. The notes will represent obligations
solely of the issuer, and the notes will not be insured or guaranteed by us, the
servicer, the administrator, the owner trustee, the indenture trustee, or any
other person or entity.
Covenants
The indenture provides that the issuer may not consolidate with, merge into
or sell its business to, another entity, unless:
(1) the entity, if other than the issuer, formed by or surviving the
consolidation or merger or that acquires the issuer's business:
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(a) is organized under the laws of the United States or any one of
its states;
(b) is not subject to regulation as an "investment company" under the
Investment Company Act of 1940;
(c) expressly assumes, by supplemental indenture, the issuer's
obligation to make due and punctual payments upon the notes and
the performance of every covenant of the issuer under the
indenture;
(d) in the case of a sale of the issuer's business, expressly agrees,
by supplemental indenture that (i) all right, title and interest
so conveyed or transferred by the issuer will be subject and
subordinate to the rights of the noteholders and (ii) it will
make all filings with the Securities and Exchange Commission
required by the Securities Exchange Act of 1934 in connection
with the notes; and
(e) expressly agrees to indemnify the issuer from any loss, liability
or expense arising under the indenture and the notes;
(2) no pay out event or event of default will exist immediately after the
merger, consolidation or sale;
(3) each rating agency confirms that the transaction will not impair its
rating of any outstanding series or class of notes;
(4) the issuer will have received an opinion of counsel to the effect that
for federal income tax purposes:
(a) the transaction will not adversely affect the tax
characterization as debt of notes of any outstanding series or
class that were characterized as debt at the time of their
issuance;
(b) the transaction will not cause the issuer to be deemed to be an
association or publicly traded partnership taxable as a
corporation; and
(c) the transaction will not cause or constitute an event in which
gain or loss would be recognized by any noteholder;
(5) any action necessary to maintain the lien and security interest
created by the indenture will have been taken; and
(6) the issuer has delivered to the indenture trustee an opinion of
counsel and officer's certificate each stating that the consolidation,
merger or sale satisfies all
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requirements under the indenture and that the supplemental indenture
is duly authorized, executed and delivered and is valid, binding and
enforceable.
As long as the notes are outstanding, the issuer will not, among other
things:
. except as expressly permitted by the indenture, the transfer and
servicing agreement or related documents, sell, transfer, exchange or
otherwise dispose of any of the assets of the issuer that secure the
notes unless directed to do so by the indenture trustee;
. claim any credit on or make any deduction from payments in respect of
the principal of and interest on the notes--other than amounts
withheld under the Internal Revenue Code or applicable state law--or
assert any claim against any present or former noteholders because of
the payment of taxes levied or assessed upon the assets of the issuer
that secure the notes;
. voluntarily dissolve or liquidate in whole or in part; or
. permit (A) the validity or effectiveness of the indenture or the lien
under the indenture to be impaired, or permit any person to be
released from any covenants or obligations with respect to the notes
under the indenture except as may be expressly permitted by the
indenture, (B) any lien or other claim of a third party to be created
with respect to the assets of the issuer, or (C) the lien of the
indenture not to constitute a valid first priority perfected security
interest in the assets of the issuer that secure the notes.
The issuer may not engage in any activity other than as specified under
"The Issuer" in this prospectus. The issuer will not incur, assume or guarantee
any indebtedness other than indebtedness under the notes and the indenture.
Modification of the Indenture
The issuer and the indenture trustee may, without the consent of any
noteholders but with prior written notice to each rating agency, enter into one
or more supplemental indentures for any of the following purposes:
. to correct or enhance the description of any property subject to the
lien of the indenture, or to take any action that will enhance the
indenture trustee's lien under the indenture, or to add to the
property pledged to secure the notes;
. to reflect the agreement of another person to assume the role of the
issuer;
. to add to the covenants of the issuer, for the benefit of the
noteholders, or to surrender any right or power of the issuer;
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. to transfer or pledge any property to the indenture trustee;
. to cure any ambiguity, to correct or supplement any provision in the
indenture or in any supplemental indenture that may be inconsistent
with any other provision in the indenture or in any supplemental
indenture as long as that action would not adversely affect the
interests of the noteholders;
. to appoint a successor to the indenture trustee with respect to the
notes and to add to or change any of the provisions of the indenture
to allow more than one indenture trustee to act under the indenture;
. to modify, eliminate or add to the provisions of the indenture as
necessary to qualify the indenture under the Trust Indenture Act of
1939, or any similar federal statute later enacted;
. to permit the issuance of one or more new series of notes under the
indenture; or
. to terminate any interest rate swap agreement or other credit
enhancement in accordance with the related indenture supplement.
The issuer and the indenture trustee may also, without the consent of any
noteholders, enter into one or more supplemental indentures to amend the
indenture, upon:
(1) receipt of written confirmation from each rating agency that the
action will not impair its rating of any outstanding series or class
of notes; and
(2) our certification to the effect that, in the reasonable belief of the
certifying officer, the action will not (i) cause a pay out event or
an event of default or (ii) materially and adversely affect the amount
or timing of payments to be made to the noteholders of any series or
class.
The issuer and the indenture trustee may also, without the consent of the
noteholders of any series or the credit enhancement providers for any series,
enter into one or more supplemental indentures to add, modify or eliminate any
provisions necessary or advisable in order to enable the issuer or any portion
of the issuer (i) to qualify as, and to permit an election to be made for the
issuer to be treated as, a "financial asset securitization investment trust"
under the Internal Revenue Code and (ii) to avoid the imposition of state or
local income or franchise taxes on the issuer's property or its income. Prior to
any amendment described in this paragraph, each rating agency must confirm that
the amendment will not impair its rating of any outstanding series or class of
notes. In addition, no amendment described in this paragraph may affect the
rights, duties or obligations of the indenture trustee or the owner trustee
under the indenture.
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The issuer and the indenture trustee will not, without prior notice to
each rating agency and the consent of each noteholder affected, enter into any
supplemental indenture to:
. change the date of payment of any installment of principal of or
interest on any note or reduce the principal amount of a note, the
note interest rate or the redemption price of the note or change any
place of payment where, or the currency in which, any note is payable;
. impair the right to institute suit for the enforcement of specified
payment provisions of the indenture;
. reduce the percentage of the aggregate principal amount of the notes
of any series, whose consent is required (a) for execution of any
supplemental indenture or (b) for any waiver of compliance with
specified provisions of the indenture or of some defaults under the
indenture and their consequences provided in the indenture;
. reduce the percentage of the aggregate outstanding amount of the notes
required to direct the indenture trustee to sell or liquidate the
trust assets if the proceeds of the sale would be insufficient to pay
the principal amount and interest due on those notes;
. decrease the percentage of the aggregate principal amount of the notes
required to amend the sections of the indenture that specify the
percentage of the principal amount of the notes of a series necessary
to amend the indenture or other related agreements;
. modify provisions of the indenture prohibiting the voting of notes
held by the issuer, any other party obligated on the notes, us, or any
of their affiliates; or
. permit the creation of any lien superior or equal to the lien of the
indenture with respect to any of the collateral for any notes or,
except as otherwise permitted or contemplated in the indenture,
terminate the lien of the indenture on the collateral or deprive any
noteholder of the security provided by the lien of the indenture.
The issuer and the indenture trustee may otherwise, with receipt of written
confirmation from each rating agency that the action will not impair its rating
of any outstanding series or class and with the consent of noteholders holding
more than 66 2/3% of the then-outstanding principal balance of the notes of each
series adversely affected, enter into one or more supplemental indentures to add
provisions to or change in any manner or eliminate any provision of the
indenture or to change the rights of the noteholders under the indenture.
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Annual Compliance Statement
The issuer will be required to present to the indenture trustee each year a
written statement as to the performance of its obligations under the indenture.
Indenture Trustee's Annual Report
The indenture trustee will be required to mail to the noteholders each year
a brief report relating to its eligibility and qualification to continue as
indenture trustee under the indenture, the property and funds physically held by
the indenture trustee and any action it took that materially affects the notes
and that has not been previously reported.
List of Noteholders
Upon the issuance of definitive notes, three or more holders of the notes
who have each owned a note for at least six months may obtain access to the list
of noteholders the indenture trustee maintains for the purpose of communicating
with other noteholders. The indenture trustee may elect not to allow the
requesting noteholders access to the list of noteholders if it agrees to mail
the requested communication or proxy, on behalf and at the expense of the
requesting noteholders, to all noteholders of record.
Satisfaction and Discharge of Indenture
The indenture will be discharged with respect to the notes upon the
delivery to the indenture trustee for cancellation of all the notes or, with
specific limitations, upon deposit with the indenture trustee of funds
sufficient for the payment in full of all the notes.
The Indenture Trustee
The indenture trustee may resign at any time. Noteholders holding more than
66 2/3% of the aggregate outstanding principal balance of all series may remove
the indenture trustee and may appoint a successor indenture trustee. In
addition, the administrator will remove the indenture trustee if it ceases to be
eligible to continue as an indenture trustee under the indenture or if the
indenture trustee becomes insolvent or otherwise becomes legally unable to act
as indenture trustee. If the indenture trustee resigns or is removed, the
administrator will then be obligated to appoint a successor indenture trustee.
If a successor indenture trustee does not assume the duties of indenture trustee
within 60 days after the retiring indenture trustee resigns or is removed, the
retiring indenture trustee, the issuer or noteholders representing more than 50%
of the aggregate outstanding principal balance of all series may petition a
court of competent jurisdiction to appoint a successor indenture trustee. In
addition, if the indenture trustee ceases to be eligible to continue as
indenture trustee, any noteholder may petition a court of competent jurisdiction
for the removal of the indenture trustee and the appointment of a successor
indenture trustee.
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If an event of default occurs under the indenture, under the Trust
Indenture Act of 1939, the indenture trustee may be deemed to have a conflict of
interest and be required to resign as indenture trustee for one or more classes
of each series of notes. In that case, a successor indenture trustee will be
appointed for one or more of those classes of notes and may provide for rights
of senior noteholders to consent to or direct actions by the indenture trustee
which are different from those of subordinated noteholders. Any resignation or
removal of the indenture trustee and appointment of a successor indenture
trustee for any class or series of notes will not become effective until the
successor indenture trustee accepts its appointment.
The indenture trustee is not responsible for the accuracy, validity or
adequacy of any of the information contained in this prospectus.
Matters Regarding the Administrator
The administrator will, to the extent provided in the administration
agreement, provide the notices and perform on behalf of the issuer other
administrative obligations required by the indenture.
Pooling and Servicing Agreement
We have summarized the terms of the pooling and servicing agreement that
are material to noteholders in this prospectus. The summary is not complete and
is qualified in its entirety by reference to the pooling and servicing
agreement.
New Issuances of Investor Certificates
The pooling and servicing agreement provides that, in any one or more
series supplements to the pooling and servicing agreement, we may direct the
trustee for First Consumers Master Trust to issue one or more new series of
investor certificates and may define all principal terms of those series. A
series supplement may only modify or amend the terms of the pooling and
servicing agreement as applied to the new series. There is no limit to the
number of new issuances we may cause under the pooling and servicing agreement.
No new series of investor certificates may be issued unless we satisfy
various conditions, including that:
(1) each rating agency confirms that the issuance of the new series will
not impair its rating of any outstanding series or class of investor
certificates;
(2) we certify that, after giving effect to the issuance of the new
series:
(i) we would not be required to add additional accounts; and
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(ii) the Aggregate Principal Balance would exceed the greater of (A)
the sum of the investor amounts and collateral amounts of all
outstanding series, pis the Minimum Seller Amount and (B) the
sum of the initial investor amounts and initial collateral
amounts of all outstanding series; and
(3) we deliver an opinion to the effect that:
(i) the issuance will not adversely affect the tax characterization
as debt of any outstanding series or class of investor
certificates that were characterized as debt at the time of
their issuance;
(ii) the issuance will not cause First Consumers Master Trust to be
deemed to be an association or publicly traded partnership
taxable as a corporation;
(iii) the transaction will not cause or constitute an event in which
gain or loss would be recognized by an investor
certificateholder; and
(iv) except as provided in the series supplement for the new series,
the new series will be properly characterized as debt.
Amendments
The pooling and servicing agreement and any series supplement to the
pooling and servicing agreement may be amended by us, the servicer and the
trustee for First Consumers Master Trust, without the consent of
certificateholders of any series, to cure any ambiguity, to correct or
supplement any provisions which may be inconsistent with any other provisions of
the pooling and servicing agreement or to add any other provisions which would
not be inconsistent with the pooling and servicing agreement if the amendment
would not adversely effect the interests of the certificateholders in any
material respect and we deliver an opinion of counsel to that effect to the
rating agencies.
The amendments that we may make without the consent of the
certificateholders of any series or the credit enhancement providers for any
series may include the addition or sale of receivables in the trust portfolio.
The pooling and servicing agreement may also be amended by us and the
trustee for First Consumers Master Trust with the consent of certificateholders
representing not less than 66 2/3% of the investor amount of the investor
certificates of each series adversely affected by the amendment. Even with
consent, no amendment may occur if it:
(1) reduces the amount of, or delays the timing of any distributions to be
made to certificateholders of any series without the consent of each
affected certificateholder;
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(2) changes the manner of calculating the investor amounts and allocation
percentages for any series or changes the manner of allocating
defaulted receivables to any series without the consent of each
affected certificateholder; or
(3) reduces the percentage of undivided interests the holders of which are
required to consent to any amendment, without the consent of each
affected noteholder.
Credit Enhancement
General
For any series, credit enhancement may be provided with respect to one or
more of the related classes. Credit enhancement may be in the form of setting
the collateral amount for that series at an amount greater than the initial
principal amount of the notes in that series, the subordination of one or more
classes of the notes of that series, a letter of credit, the establishment of a
cash collateral guaranty or account, a surety bond, an insurance policy, a
spread account, a reserve account, the use of cross support features or another
method of credit enhancement described in the accompanying prospectus
supplement, or any combination of these. If so specified in the accompanying
prospectus supplement, any form of credit enhancement may be structured so as to
be drawn upon by more than one class to the extent described in that
accompanying prospectus supplement. Any credit enhancement that constitutes a
guarantee of the applicable notes will be separately registered under the
Securities Act unless exempt from registration under the Securities Act.
In the prospectus supplement for each series, we will describe the amount
and the material terms of the related credit enhancement. Often, the credit
enhancement will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance of the notes and interest
thereon. If losses occur which exceed the amount covered by the credit
enhancement or which are not covered by the credit enhancement, noteholders will
bear their allocable share of deficiencies.
If credit enhancement is provided with respect to a series, the
accompanying prospectus supplement will include a description of:
. the amount payable under that credit enhancement;
. any conditions to payment not described here;
. the conditions, if any, under which the amount payable under that
credit enhancement may be reduced and under which that credit
enhancement may be terminated or replaced; and
. any material provision of any agreement relating to that credit
enhancement.
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The accompanying prospectus supplement may also set forth additional
information with respect to any credit enhancement provider, including:
. a brief description of its principal business activities;
. its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do business;
. if applicable, the identity of regulatory agencies which exercise
primary jurisdiction over the conduct of its business; and
. 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 accompanying prospectus supplement, credit
enhancement with respect to a series may be available to pay principal of the
notes of that series following the occurrence of one or more pay out events with
respect to that series. In this event, the credit enhancement provider will have
an interest in the cash flows in respect of the receivables to the extent
described in that prospectus supplement.
Excess Collateral Amount
If specified in the accompanying prospectus supplement, support for a
series may be provided by an excess collateral amount. The excess collateral
amount for any series will equal the collateral amount for that series
(calculated prior to any reduction to the collateral amount for amounts on
deposit in any principal accumulation account), minus the aggregate outstanding
principal amount of the notes of that series, after giving effect to all other
reductions through the date of determination. Because the collateral amount of a
series having an excess collateral amount will be higher than the outstanding
principal amount of the notes of that series, a greater amount of finance charge
collections and principal collections will be allocated to that series. In
addition, losses from defaulted receivables and uncovered dilution amounts
allocated to that series will first reduce the excess collateral amount before
reducing the principal amount ultimately paid on the notes. The excess
collateral amount for any series will be reduced by the amount of reallocated
principal collections applied to make payments for that series.
If your series is supported by an excess collateral amount, the
accompanying prospectus supplement will specify the required excess collateral
amount for your series. The required excess collateral amount for any series may
be decreased at any time with the consent of the rating agencies then rating
that series. During the controlled accumulation period or controlled
amortization period for a series, the portion of funds available but not
required to be deposited to the principal accumulation account or to make
principal payments to noteholders, as the case may be, on any distribution date
may be applied to make payments to us that will reduce the
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excess collateral amount for that series, but only to the extent that the excess
collateral amount exceeds the required excess collateral amount.
The excess collateral amount for a series may also be increased under the
circumstances described in the related prospectus supplement.
Subordination
If so specified in the accompanying prospectus supplement, one or more
classes of any series will be subordinated as described in the accompanying
prospectus supplement to the extent necessary to fund payments with respect to
the senior notes. The rights of the holders of these subordinated notes to
receive distributions of principal and/or interest on any distribution date for
that series will be subordinate in right and priority to the rights of the
holders of senior notes, but only to the extent set forth in the accompanying
prospectus supplement. If so specified in the accompanying prospectus
supplement, subordination may apply only in the event that a specified type of
loss is not covered by another credit enhancement.
The accompanying prospectus supplement will also set forth information
concerning:
. the amount of subordination of a class or classes of subordinated
notes in a series;
. the circumstances in which that subordination will be applicable;
. the manner, if any, in which the amount of subordination will decrease
over time; and
. the conditions under which amounts available from payments that would
otherwise be made to holders of those subordinated notes will be
distributed to holders of senior notes.
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 accompanying prospectus supplement will specify the manner and
conditions for applying that cross-support feature.
Letter of Credit
If so specified in the accompanying prospectus supplement, support for a
series or one or more of the related classes will be provided by one or more
letters of credit. A letter of credit may provide limited protection against
some losses in addition to or in lieu of other credit enhancement. The issuer of
the letter of credit, will be obligated to honor demands with respect to that
letter of credit, to the extent of the amount available thereunder, to provide
funds under the circumstances and subject to any conditions as are specified in
the accompanying prospectus supplement.
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The maximum liability of the issuer of a letter of credit under its letter
of credit will generally be an amount equal to a percentage specified in the
accompanying prospectus supplement of the initial collateral amount of a series
or a class of that series. The maximum amount available at any time to be paid
under a letter of credit will be set forth in the accompanying prospectus
supplement.
Cash Collateral Guaranty or Account
If so specified in the accompanying prospectus supplement, support for a
series or one or more of the related classes will be provided by a cash
collateral guaranty, secured by the deposit of cash or permitted investments in
a cash collateral account, reserved for the beneficiaries of the cash collateral
guaranty or by a cash collateral account alone. The amount available from 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
accompanying prospectus supplement. The accompanying 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 accompanying prospectus supplement, insurance with
respect to a series or one or more of the related classes will be provided by
one or more insurance companies and 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 accompanying prospectus supplement.
If so specified in the accompanying prospectus supplement, a surety bond
will be purchased for the benefit of the holders of any series or class of that
series to assure distributions of interest or principal with respect to that
series or class of notes in the manner and amount specified in the accompanying
prospectus supplement.
If an insurance policy or a surety bond is provided for any series or
class, the provider of the insurance policy or surety bond will be permitted to
exercise the voting rights of the noteholders of the applicable series or class
to the extent described in the prospectus supplement for that series. For
example, if specified in the related prospectus supplement, the provider of the
insurance policy or surety bond, rather than the noteholders of that series, may
have the sole right to:
. consent to amendments to the indenture, the pooling and servicing
agreement, the transfer and servicing agreement or any other
document applicable to that series;
. if an event of default occurs, accelerate the notes of that
series or direct the trustee to exercise any remedy available to
the noteholders; or
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. waive any event of default for that series.
Spread Account
If so specified in the accompanying prospectus supplement, support for a
series or one or more of the related classes will be provided by the periodic
deposit of all or a portion of available excess cash flow from the trust assets
into a spread account intended to assist with subsequent distribution of
interest and principal on the notes of that class or series in the manner
specified in the accompanying prospectus supplement.
Reserve Account
If so specified in the accompanying prospectus supplement, support for a
series or one or more of the related classes or any related enhancement will be
provided by a reserve account. The reserve account may be funded, to the extent
provided in the accompanying prospectus supplement, by an initial cash deposit,
the retention of a portion of periodic distributions of principal or interest or
both otherwise payable to one or more classes of notes, including the
subordinated notes, or the provision of a letter of credit, guarantee, insurance
policy or other form of credit or any combination of these arrangements. The
reserve account will be established to assist with the subsequent distribution
of principal or interest on the notes of that series or the related class or any
other amount owing on any related enhancement in the manner provided in the
accompanying prospectus supplement.
Note Ratings
Any rating of the notes by a rating agency will indicate:
. its view on the likelihood that noteholders will receive required
interest and principal payments; and
. its evaluation of the receivables and the availability of any credit
enhancement for the notes.
Among the things a rating will not indicate are:
. the likelihood that principal payments will be paid on a scheduled
date;
. the likelihood that a pay out event will occur;
. the likelihood that a U.S. withholding tax will be imposed on non-U.S.
noteholders;
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. the marketability of the notes;
. the market price of the notes; or
. whether the notes are an appropriate investment for any
purchaser.
A rating will not be a recommendation to buy, sell or hold the notes. A
rating may be lowered or withdrawn at any time by a rating agency.
We will request a rating of the notes offered by this prospectus and
the accompanying prospectus supplement from at least one rating agency. Rating
agencies other than those requested could assign a rating to the notes and, if
so, that rating could be lower than any rating assigned by a rating agency
chosen by us. Except as otherwise expressly stated, any reference in this
prospectus or the accompanying prospectus supplement to a rating agency refers
to a rating agency selected by us to rate the securities issued by the issuer or
First Consumers Master Trust.
Material Legal Aspects of the Receivables
Transfer of Receivables
In the pooling and servicing agreement and the transfer and servicing
agreement, we will represent and warrant that our transfer of receivables
constitutes a valid sale and assignment of all of our right, title and interest
in and to the receivables, except for the Seller Interest, or creates in favor
of the issuer a valid first-priority perfected security interest in our rights
in the receivables in existence at the time that the trust is formed or at the
time that receivables in additional accounts are transferred, as the case may
be, and a valid first-priority perfected security interest in our rights in the
receivables arising in accounts already designated for the trust portfolio on
and after their creation, in each case until termination of the trust. For a
discussion of the issuer's rights arising from these representations and
warranties not being satisfied, see "Description of the Notes--Representations
and Warranties" in this prospectus.
We will represent in the pooling and servicing agreement and the
transfer and servicing agreement that the receivables are "accounts" or "general
intangibles" for purposes of the UCC. Both the sale of accounts and the transfer
of accounts as security for an obligation are subject to the provisions of
Article 9 of the UCC. In addition, a transfer of general intangibles as security
for an obligation is subject to the provisions of Article 9 of the UCC.
Therefore, we will file appropriate UCC financing statements to perfect the
respective transferee's security interest in the receivables.
There are limited circumstances in which prior or subsequent
transferees of receivables coming into existence after a series closing date
could have an interest in those receivables with priority over the trust's
interest. Under the pooling and servicing agreement and the transfer and
servicing agreement, however, we will represent and warrant that we have
transferred the
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receivables to the trust free and clear of the lien of any third party other
than the indenture trustee, and we will covenant that we will not sell, pledge,
assign, transfer, or grant any lien on any receivable or any interest in any
receivable other than to the trust. Nevertheless, a tax, governmental or other
nonconsensual lien on our arising prior to the time a receivable comes into
existence may have priority over the interest of the trust in that receivable.
Furthermore, if the FDIC were appointed as our receiver or conservator,
administrative expenses of the receiver or conservator may have priority over
the interest of the trust in the receivables.
If the servicer has satisfied the conditions discussed in "Description
of the Notes--Application of Collections" in this prospectus, the servicer will
be permitted to make deposits of collections on a monthly or other periodic
basis. In that event, cash collections held by the servicer may be commingled
and used for the benefit of the servicer prior to each distribution date and, in
the event of the insolvency of the servicer or the lapse of a ten-day period
after receipt by the servicer of collections that have been commingled with
other funds, the trust may not have a first-priority perfected security interest
in those collections. In that event, the amount payable to you could be lower
than the outstanding principal and accrued interest on the notes, thus resulting
in losses to you.
Conservatorship and Receivership
We are chartered as a national banking association and is regulated and
supervised principally by the Office of the Comptroller of the Currency, which
is required to appoint the FDIC as conservator or receiver for us if specified
events occur relating to our financial condition or the propriety of our
actions. In addition, the FDIC could appoint itself as our conservator or
receiver.
In its role as conservator or receiver, the FDIC would have broad
powers to repudiate contracts to which we were party if the FDIC determined that
the contracts were burdensome and that repudiation would promote the orderly
administration of our affairs. In addition, no agreement that tended to diminish
or defeat the FDIC's interest in an asset acquired from us would be enforceable
against the FDIC unless the agreement were to meet certain legal requirements.
One of those requirements is that the agreement would have to have been executed
by us contemporaneously with our acquisition of the asset.
The FDIC has adopted a rule stating that the FDIC shall not use its
repudiation power to reclaim, recover or recharacterize as property of an
FDIC-insured bank any financial assets transferred by that bank in connection
with a securitization transaction. The same rule states that the FDIC shall not
seek to avoid an otherwise legally enforceable securitization agreement solely
because the agreement does not satisfy the contemporaneous execution
requirement. Although the FDIC has the power to repeal or amend its own rules,
the securitization rule states that any repeal or amendment of that rule will
not apply to any transfers of financial assets made in connection with a
securitization that was in effect before the repeal or modification.
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We have structured the issuance of the notes with the intention that
our transfers of receivables to the trust would have the benefit of this rule.
Nevertheless, if the FDIC were to assert that the transfers do not have the
benefit of the rule, or were to require the indenture trustee to go through the
administrative claims procedure established by the FDIC in order to obtain
payments on the notes, or were to request a stay of any actions by the indenture
trustee to enforce the pooling and servicing agreement or the transfer and
servicing agreement against us, delays in payments on outstanding series of
notes could occur. Furthermore, if the FDIC's assertions were successful,
possible reductions in the amount of those payments could occur.
In addition, regardless of the terms of the indenture, the FDIC as our
conservator or receiver may have the power to prevent the commencement of a
rapid amortization period, to prevent or limit the early liquidation of the
receivables and termination of the trust, or to require the continued transfer
of new principal receivables. Regardless of the instructions of those authorized
to direct the indenture trustee's action, moreover, the FDIC as our conservator
or receiver may have the power to require the early liquidation of the
receivables, to require the early termination of the trust and the retirement of
the notes, or to prohibit or limit the continued transfer of new principal
receivables.
In the event of our conservatorship or receivership, the conservator or
receiver may have the power to prevent either the indenture trustee or the
noteholders from appointing a successor servicer. See "Description of the
Notes--Servicer Default" in this prospectus.
If insolvency proceedings occur with respect to us, we will promptly
notify the indenture trustee and a pay out event will occur with respect to each
series. Under the pooling and servicing agreement and the transfer and servicing
agreement, newly created receivables will not be transferred to the trust on and
after any of these insolvency related events. Any principal receivables
transferred to the trust prior to the event, as well as collections on those
principal receivables and finance charge receivables accrued at any time with
respect to those principal receivables, will continue to be part of the trust
assets and will be applied as specified above in "Description of the
Notes--Application of Collections" and in the accompanying prospectus
supplement.
A conservator or receiver, however, may have the power to delay
application of collections or to require the continued transfer of principal
receivables to the trust. See "Risk Factors--If a conservator or receiver were
appointed for us, delays or reductions in payment of your notes could occur" in
this prospectus.
Application of federal and state insolvency and debtor relief laws
would affect the interests of the noteholders if those laws result in any
receivables being charged-off as uncollectible. See "Description of the
Notes--Defaulted Receivables; Rebates and Fraudulent Charges Investor
Charge-Offs" in this prospectus.
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Consumer Protection Laws
The relationship of the consumer and the provider of consumer credit is
extensively regulated by federal and state consumer protection laws. With
respect to credit accounts issued by us, the most significant federal laws
include the Federal Truth-in-Lending, Equal Credit Opportunity, Fair Credit
Reporting and Fair Debt Collection Practices Acts. These statutes impose various
disclosure requirements either before or when an account is opened, or both, and
at the end of monthly billing cycles, and, in addition, limit account holder
liability for unauthorized use, prohibit various discriminatory practices in
extending credit and regulate practices followed in collections. In addition,
account holders are entitled under these laws to have payments and credits
applied to the revolving credit account promptly and to request prompt
resolution of billing errors. Congress and the states may enact new laws and
amendments to existing laws to regulate further the consumer revolving credit
industry. The trust may be liable for violations of consumer protection laws
that apply to the receivables, either as assignee from us 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, an account holder may be entitled to assert those violations by way of
set-off against the obligation to pay the amount of receivables owing. All
receivables that were not created in compliance in all material respects with
the requirements of consumer protection laws, if the noncompliance has a
material adverse effect on the noteholders' interest therein, will be reassigned
to us. The servicer has also agreed in the pooling and servicing agreement and
the transfer and servicing agreement to indemnify the trust, among other things,
for any liability arising from those types of violations. For a discussion of
the trust's rights if the receivables were not created in compliance in all
material respects with applicable laws, see "Description of the Notes--
Representations and Warranties" in this prospectus.
Federal Income Tax Consequences
General
The following summary describes the material United States federal
income tax consequences of the purchase, ownership and disposition of the notes.
Additional federal income tax considerations relevant to a particular series may
be set forth in the accompanying prospectus supplement. The following summary
has been prepared and reviewed by Rooks, Pitts and Poust as special tax counsel
to the Issuer. The summary is based on the Internal Revenue Code of 1986, as
amended as of the date hereof, and existing final, temporary and proposed
Treasury regulations, revenue rulings and judicial decisions, all of which are
subject to prospective and retroactive changes. The summary is addressed only to
original purchases of the notes, deals only with notes held as capital assets
within the meaning of Section 1221 of the Internal Revenue Code and, except as
specifically set forth below, does not address tax consequences of holding notes
that may be relevant to investors in light of their own investment circumstances
or their special tax situations, for example:
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. banks and thrifts,
. insurance companies,
. regulated investment companies,
. dealers in securities,
. holders that will hold the offered notes as a position in a
"straddle" for tax purposes or as a part of a "synthetic security,"
"conversion transaction" or other integrated investment comprised
of the offered notes, and one or more other investments,
. trusts and estates, and
. pass-through entities, the equity holders of which are any of the
foregoing.
Further, this discussion does not address alternative minimum tax
consequences or any tax consequences to holders of interests in a noteholder.
Special tax counsel to the issuer is of the opinion that the following summary
of federal income tax consequences is correct in all material respects. An
opinion of special tax counsel to the issuer, however, is not binding on the
Internal Revenue Service or the courts, and no ruling on any of the issues
discussed below will be sought from the IRS. In addition, no transaction closely
comparable to the purchase of the notes has been the subject of any Treasury
Regulation, revenue ruling or judicial decision. Accordingly, we suggest that
persons considering the purchase of notes consult their own tax advisors with
regard to the United States federal income tax consequences of an investment in
the notes and the application of United States federal income tax laws, as well
as the laws of any state, local or foreign taxing jurisdictions, to their
particular situations.
Tax Classification of the Issuer and the Notes
Treatment of the Issuer as an Entity, Not Subject to Tax. Special tax
counsel to the issuer is of the opinion that, although no transaction closely
comparable to that contemplated herein has been the subject of any Treasury
Regulation, revenue ruling or judicial decision, the trust will not be
classified as an association or as a publicly traded partnership taxable as a
corporation for federal income tax purposes. As a result, special tax counsel to
the issuer is of the opinion that the issuer will not be subject to federal
income tax. However, as discussed above, this opinion is not binding on the IRS
and no assurance can be given that this classification will prevail.
The precise tax classification of the issuer for federal income tax
purposes is not certain. It might be viewed as merely holding assets on our
behalf as collateral for notes issued by the us. On the other hand, the issuer
could be viewed as a separate entity for tax purposes issuing its own notes.
This distinction may have a significant tax effect on particular noteholders as
stated below under "Possible Alternative Classifications."
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Treatment of the Notes as Debt. Special tax counsel to the issuer is of
the opinion that, although no transaction closely comparable to that
contemplated herein has been the subject of any Treasury regulation, revenue
ruling or judicial decision, the notes will be characterized as debt for United
States federal income tax purposes. The issuer agrees by entering into the
Indenture, and the noteholders agree by their purchase and holding of notes, to
treat the notes as debt for United States federal income tax purposes.
Possible Alternative Classifications. If, contrary to the opinion of
special tax counsel to the issuer, the IRS successfully asserted that a series
or class of notes did not represent debt for United States federal income tax
purposes, those notes might be treated as equity interests in the issuer or some
other entity for United States federal income tax purposes. If so treated,
investors could be treated for United States federal income tax purposes either
as partners in a partnership or, alternatively, as shareholders in a taxable
corporation. Treatment of a noteholder as a partner could have adverse tax
consequences to certain holders; for example, income to foreign persons
generally would be subject to United States tax and United States tax return
filing and withholding requirements, and individual holders might be subject to
limitations on their ability to deduct their share of partnership expenses. If
notes instead were treated as corporate stock, the taxable corporation would not
be able to reduce its taxable income by deductions for interest expense on notes
recharacterized as equity, and any increase in the corporate tax imposed with
respect to the taxable corporation could materially reduce cash available to
make payments on the notes; further, noteholders might not be entitled to any
dividends received deduction in respect of payments of interest on notes treated
as dividends. In addition, even if the notes are treated as debt, the issuer is
also able to issue other securities which may be treated as debt or as equity
interests in the issuer. The issuance of additional securities requires the
delivery of a new opinion of counsel generally to the effect that the new
issuance will not cause the issuer to become taxable as a separate entity for
federal income tax purposes; however, the new opinion would not bind the IRS,
and the issuer could become taxable as a corporation as a result of the new
issuance, potentially diminishing cash available to make payments on the notes.
We suggest that prospective investors consult with their own tax advisors with
regard to the consequences of each of the possible alternative characterizations
to them in their particular circumstances. The following discussion assumes that
the classifications of the notes as debt is correct.
Consequences to Holders of the Offered Notes
Interest and Original Issue Discount. In general, stated interest on a
note will be includible in gross income as it accrues or is received in
accordance with an noteholder's usual method of tax accounting. If a class of
notes is issued with original issue discount, the provisions of Sections 1271
through 1273 and 1275 of the Code will apply to those notes. Under those
provisions, a holder of a note issued with original issue discount--including a
cash basis holder--generally would be required to include the original issue
discount on a note in income for federal income tax purposes on a constant yield
basis, resulting in the inclusion of original issue discount in income in
advance of the receipt of cash attributable to that income. In general, a note
will be treated as having original issue discount to the extent that its "stated
redemption
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price" exceeds its "issue price," if that excess equals or exceeds 0.25 percent
multiplied by the weighted average life of the note, determined by taking into
account the number of complete years following issuance until payment is made
for each partial principal payment. Under Section 1272(a)(6) of the Internal
Revenue Code, special provisions apply to debt instruments on which payments may
be accelerated due to prepayments of other obligations securing those debt
instruments. However, no regulations have been issued interpreting those
provisions, and the manner in which those provisions would apply to the notes is
unclear, but the application of Section 1272(a)(6) could affect the rate of
accrual of original issue discount and could have other consequences to holders
of the notes. Additionally, the IRS could take the position based on Treasury
regulations that none of the interest payable on a note is "unconditionally
payable" and hence that all of the interest payable on the note should be
included in the note's stated redemption price at maturity. If sustained, that
treatment should not significantly affect tax liabilities for most holders of
the notes, but we suggest that prospective noteholders consult their own tax
advisors concerning the impact to them in their particular circumstances. The
issuer intends to take the position that interest on the notes constitutes
"qualified stated interest" and that the above consequences do not apply.
Disposition of the Notes: Defeasance. Upon the sale, exchange or
retirement of a note, the holder of the note generally will recognize taxable
gain or loss in an amount equal to the difference between (a) the amount
realized on the disposition, other than that part of the amount attributable to
accrued interest and (b) the holder's adjusted tax basis in the note. A taxable
exchange of a note could also occur as a result of our substitution of money or
investments for the receivables in the trust portfolio. See "Description of the
Notes--Defeasance" in this prospectus. The holder's adjusted tax basis in the
note generally will equal the cost of the note to that holder, increased by any
original issue discount previously included in income by that holder with
respect to the note, and decreased by the amount of any payments of principal or
original issue discount previously received by that holder with respect to its
note. Any related gain or loss generally will be capital gain or loss, and will
be long-term capital gain or loss if at the time of sale the note has been held
for more than one year.
Foreign Holders. Under United States federal income tax law now in
effect, payments of interest by the issuer to a holder of a note who, as to the
United States, is a nonresident alien individual or a foreign corporation (a
"foreign person") will be considered "portfolio interest," and will not be
subject to United States federal income tax and withholding tax provided:
. the interest is not effectively connected with the conduct of a
trade or business within the United States by the foreign person
and,
. the foreign person is not, for United States federal income tax
purposes, actually or constructively a "10 percent shareholder" of
us or the issuer, a "controlled foreign corporation" with respect
to which we or the issuer is a "related person" within the meaning
of the Internal Revenue Code, or a bank extending credit under a
loan agreement entered into in the ordinary course of its trade or
business, and,
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. the foreign person provides the person who is otherwise required to
withhold United States tax with respect to the notes with an
appropriate statement, on IRS Form W-8 or a new Form W-8BEN and
signed under penalties of perjury, certifying that the beneficial
owner of the note is a foreign person and providing the foreign
person's name and address.
If a note is held through a securities clearing organization or other
financial institutions, as is expected to be the case unless definitive notes
are issued, the organization or institution may provide the relevant signed
statement generally to the withholding agent. In that case, however, the signed
statement generally must be accompanied by an IRS Form W-8 or new Form W-8BEN
provided by the foreign person that owns the note. If the interest paid to the
foreign person is not portfolio interest, then it will be subject to United
States federal income and withholding tax at a rate of 30%, unless reduced or
eliminated by an applicable tax treaty or the interest is effectively connected
with the conduct of a trade or business within the United States and, in either
case, the appropriate statement has been provided. The new form referred to
above in this paragraph is included in the U.S. Treasury Department's recently
issued final Treasury Regulations, which revised some of the procedures whereby
a foreign person may establish an exemption from withholding generally beginning
January 1, 2001. We suggest that foreign persons consult their tax advisors
concerning the impact to them, if any, of those revised procedures.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a note by a foreign person will be exempt from United
States federal income tax and withholding tax, provided that (i) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person, and (ii) in the case of an individual foreign
person, the individual is not present in the United States for 183 days or more
in the taxable year.
Backup Withholding. Payments of principal and interest, as well as
payments of proceeds from the sale, retirement or disposition of a note, may be
subject to "backup withholding" tax under Section 3406 of the Internal Revenue
Code at a rate of 31% if a recipient of those payments fails to furnish to the
payor required identifying information. Any amounts deducted and withheld would
be allowed as a credit against the recipient's United States federal income tax
if appropriate proof is provided under rules established by the IRS.
Furthermore, penalties may be imposed by the IRS on a recipient of payments that
is required to supply information but does not do so in the proper manner.
Backup withholding will not apply with respect to payments made to exempt
recipients, such as corporations and financial institutions. Holders of the
notes are urged to consult their tax advisors regarding their qualification for
exemption from backup withholding and the procedure for obtaining an exemption.
The United States federal income tax discussion set forth above may not
be applicable depending upon a holder's particular tax situation, and does not
purport to address the issues described with the degree of specificity that
would be provided by a taxpayer's own tax advisor. We suggest that prospective
purchasers consult their own tax advisors with respect to the tax
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consequences to them of the purchase, ownership and disposition of the notes and
the possible effects of changes in federal tax laws.
State and Local Tax Consequences
The discussion above does not address the taxation of the trust or the
tax consequences of the purchase, ownership or disposition of an interest in the
notes under any state or local tax law. We suggest that each investor consult
its own tax adviser regarding state and local tax consequences.
ERISA Considerations
The prospectus supplement for each series of notes will specify whether
the notes offered by that prospectus supplement are eligible for purchase by
employee benefit plans. Subject to the considerations discussed below, unless
otherwise specified in the accompanying prospectus supplement the notes offered
under this registration statement are eligible for purchase by employee benefit
plans.
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended and Section 4975 of the Internal Revenue Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as an individual
retirement account or Keogh plan, from engaging in specified transactions with
persons that are "parties in interest" under ERISA or "disqualified persons"
under the Internal Revenue Code with respect to these benefit plans. A violation
of these "prohibited transaction" rules may result in an excise tax or other
penalties and liabilities under ERISA and the Internal Revenue Code for these
persons. Title I of ERISA also requires that fiduciaries of a benefit plan
subject to ERISA make investments that are prudent, diversified (unless clearly
prudent not to do so), and in accordance with governing plan documents.
Some transactions involving the purchase, holding or transfer of the
notes might be deemed to constitute prohibited transactions under ERISA and the
Internal Revenue Code if assets of the trust were deemed to be assets of a
benefit plan. Under a regulation issued by the United States Department of
Labor, the assets of the trust would be treated as plan assets of a benefit plan
for the purposes of ERISA and the Internal Revenue Code only if the benefit plan
acquires an "equity interest" in the trust and none of the exceptions contained
in the regulation is applicable. An equity interest is defined under the
regulation as an interest in an entity other than an instrument which is treated
as indebtedness under applicable local law and which has no substantial equity
features. Although there can be no assurances in this regard, it appears that,
at the time of their initial issuance, the notes should be treated as debt
without substantial equity features for purposes of the regulation. The debt
characterization of the notes could change after their initial issuance if the
trust incurs losses.
However, without regard to whether the notes are treated as an equity
interest for these purposes, the acquisition or holding of the notes by or on
behalf of a benefit plan could be
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considered to give rise to a prohibited transaction if we, the issuer, the owner
trustee, the servicer, the administrator or the indenture trustee, is or becomes
a party in interest or a disqualified person with respect to these benefit
plans. In that case, various exemptions from the prohibited transaction rules
could be applicable depending on the type and circumstances of the plan
fiduciary making the decision to acquire a note. Included among these exemptions
are:
. Prohibited Transaction Class Exemption 96-23, regarding
transactions effected by "in-house asset managers";
. Prohibited Transaction Class Exemption 90-1, regarding investments
by insurance company pooled separate accounts;
. Prohibited Transaction Class Exemption 95-60, regarding
transactions effected by "insurance company general accounts";
. Prohibited Transaction Class Exemption 91-38, regarding investments
by bank collective investment funds; and
. Prohibited Transaction Class Exemption 84-14, regarding
transactions effected by "qualified professional asset managers."
By your acquisition of a note, you will be deemed to represent and
warrant that your purchase and holding of the note will not result in a
non-exempt prohibited transaction under ERISA or the Internal Revenue Code.
Employee benefit plans that are governmental plans, as defined in
Section 3(32) of ERISA, and certain church plans, as defined in Section 3(33) of
ERISA, are not subject to ERISA requirements, but may be subject to state or
other federal law requirements which may impose restrictions similar to those
under ERISA and the Internal Revenue Code discussed above.
If you are a plan fiduciary considering the purchase of any of the
notes, you should consult your tax and legal advisors regarding whether the
assets of the trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
Plan of Distribution
Subject to the terms and conditions set forth in an underwriting
agreement to be entered into with respect to each series of notes, we will cause
the notes to be sold by the issuer to each of the underwriters named in that
underwriting agreement and in the accompanying prospectus supplement, and each
of those underwriters will severally agree to purchase from the issuer, the
principal amount of notes set forth in that underwriting agreement and in the
accompanying
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prospectus supplement, subject to proportional adjustment on the terms and
conditions set forth in the related underwriting agreement in the event of an
increase or decrease in the aggregate amount of notes offered by this prospectus
and by the accompanying prospectus supplement.
In each underwriting agreement, the several underwriters will agree,
subject to the terms and conditions set forth in that underwriting agreement, to
purchase all the notes offered by this prospectus and by the accompanying
prospectus supplement if any of those notes are purchased. In the event of a
default by any underwriter, each underwriting agreement will provide that, in
specified circumstances, purchase commitments of the nondefaulting underwriters
may be increased or the underwriting agreement may be terminated.
Each prospectus supplement will set forth the price at which each series of
notes or class being offered initially will be offered to the public and any
concessions that may be offered to dealers participating in the offering of
those notes. After the initial public offering, the public offering price and
those concessions may be changed.
Each underwriting agreement will provide that the seller will indemnify the
related underwriters against specified liabilities, including liabilities under
the Securities Act of 1933, as amended.
The place and time of delivery for any series of notes in respect of which
this prospectus is delivered will be set forth in the accompanying prospectus
supplement.
Reports to Noteholders
The servicer will prepare monthly and annual reports that will contain
information about the issuer. The financial information contained in the reports
will not be prepared in accordance with generally accepted accounting
principles. Unless and until definitive notes are issued, the reports will be
sent to Cede & Co. which is the nominee of The Depository Trust Company and the
registered holder of the notes. No financial reports will be sent to you. See
"Description of the Notes--Book-Entry Registration," " --Reports to Noteholders"
and " --Evidence as to Compliance" in this prospectus.
Where You Can Find More Information
We filed a registration statement relating to the notes with the SEC. This
prospectus is part of the registration statement, but the registration statement
includes additional information.
The servicer will file with the SEC all required annual, monthly and
special SEC reports and other information about the trust.
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You may read and copy any reports, statements or other information we file
at the SEC's public reference room in Washington, D.C. You can request copies of
these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at (800) SEC-0330 for further information on the operation
of the public reference rooms. Our SEC filings are also available to the public
on the SEC Internet site (http://www.sec.gov.).
The SEC allows us to "incorporate by reference" information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus. Information that we file later with the SEC will
be filed under the name of First Consumers National Bank and will automatically
update the information in this prospectus. In all cases, you should rely on the
later information over different information included in this prospectus or the
accompanying prospectus supplement. We incorporate by reference any future
annual, monthly and special SEC reports and proxy materials filed by or on
behalf of the issuer and First Consumers Master Trust until we terminate our
offering of the notes.
As a recipient of this prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents--unless the
exhibits are specifically incorporated by reference--at no cost, by writing or
calling us care of: [____________________], [______________________], Attention:
[__________], Telephone: (____) _______.
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Glossary of Terms for Prospectus
"Aggregate Principal Balance" means, on any date, the sum of (a) the total
amount of principal receivables, (b) the amount on deposit in the excess funding
account, after excluding any investment earnings and (c) the amount of principal
collections on deposit in the collection account, after excluding any investment
earnings, in each case as of that date.
"Eligible Account" means an account:
. that is payable in United States dollars;
. the cardholder of which has provided, as his or her most recent
billing address, an address located in the United States or its
territories or possessions;
. that the servicer has not finally determined to be counterfeit or
fraudulent;
. that does not have any receivables that have been charged off as
uncollectible by the servicer in accordance with its charge account
guidelines or its customary and usual servicing procedures;
. that was originated by us in the ordinary course of business, unless
each rating agency confirms that the designation of the account would
not impair its rating of any outstanding series or class of
securities;
. as to which we have good title, and which has not been sold or pledged
to any other party; and
. that does not have receivables that have been sold or pledged to any
other party other than us under the receivables purchase agreement.
"Eligible Receivable" means each receivable:
. that has arisen under an Eligible Account;
. which was created in compliance, in all material respects, with all
requirements of law applicable to us or the originator of the related
account pursuant to a credit card agreement (or, in the case of any
receivable in an account not originated by us, a comparable agreement
between the obligor and the originator of such account) which
complies, in all material respects, with all requirements of law
applicable to us or the originator of the related account;
. for which all consents, licenses, approvals or authorizations of, or
registrations with, any governmental authority required to be obtained
or given by us in connection with the creation of the receivable or
the execution, delivery and
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performance by us of the related credit card agreement have been duly
obtained or given and are in full force and effect as of the date of
the creation of that receivable;
. as to which, either we or the trust will have good title free and
clear of all liens and security interests, other than any lien for
municipal or other local taxes if those taxes are not then due and
payable or if we are then contesting the validity of those taxes in
good faith by appropriate proceedings and we have set aside on our
books adequate reserves with respect to those taxes;
. that is the legal, valid and binding payment obligation of the related
cardholder, enforceable against that cardholder in accordance with its
terms, subject to permitted insolvency-and equity-related exceptions;
. that constitutes either an "account" or a "general intangible" or
"chattel paper" under Article 9 of the Uniform Commercial Code as in
effect in the State of Illinois;
. that, at the time of transfer to the trust, has not been waived or
modified except as permitted by our charge account guidelines and
which waiver or modification has been reflected in the servicer's
computer files;
. that, at the time of transfer to the trust, is not, to our knowledge,
subject to any right of recission, setoff, counterclaim or defense,
including usury, that would require that receivable to be charged off
in accordance with our charge account guidelines, other than some
insolvency- and equity- related defenses; and
. as to which we have satisfied all obligations required to be satisfied
at the time it is transferred to the trust.
. with respect to receivables transferred to the issuer after the
termination of First Consumers Master Trust, in which all of our
right, title and interest has been validly transferred and assigned to
the issuer or in which a valid first priority perfected security
interest has been granted to the issuer; and
. with respect to receivables transferred to the issuer after the
termination of First Consumers Master Trust, as to which, at the time
of transfer of that receivable to the issuer, we have not taken any
action that would impair the rights of the issuer or the
noteholders.
"Minimum Aggregate Principal Balance" means, on any date of determination,
the greater of (a) the sum of the collateral amounts of all series outstanding
on the date of determination, plus the Minimum Seller Amount and (b) the sum of
the numerators used to
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calculate the allocation percentages for principal collections for all
outstanding series of securities on that date of determination.
"Minimum Seller Amount" will be calculated as follows:
<TABLE>
<S> <C> <C>
(i) the weighted average (by times (ii) the aggregate of the collateral
collateral and investor amounts) and investor amounts of all
of the Minimum Seller outstanding series of
Percentages for all outstanding securities
series of securities
</TABLE>
"Minimum Seller Percentage" means, for any series of securities, the amount
specified in the prospectus supplement for that series, or if not specified in
the related prospectus supplement, 0%.
"Qualified Account" means either:
. a non-interest bearing segregated account established with:
. a depository institution, which may include the trustee or the
indenture trustee, that:
(i) is organized under the laws of the United States or any one of
its states,
(ii) has FDIC deposit insurance, and
(iii) has a long-term unsecured debt rating or a certificate of
deposit rating acceptable to the rating agencies; or
(2) any other institution acceptable to the rating agencies, which
may include the servicer; or
(b) a non-interest bearing segregated trust account with the corporate trust
department of a depository institution that:
(1) is organized under the laws of the United States or any one of its
states,
(2) acts as trustee for funds deposited in the account, and
(3) has a credit rating from each rating agency in one of its generic
credit rating categories that signifies investment grade.
"Seller Amount" means, on any date, the difference between:
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(1) the Aggregate Principal Balance
minus
(2) the aggregate of the collateral amounts of all outstanding series of
notes and the outstanding investor amounts of all outstanding series
of investor certificates issued by First Consumers Master Trust other
than the collateral certificate.
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Annex I
Global Clearance, Settlement and Tax Documentation Procedures
Except in certain limited circumstances, the globally offered First
Consumers Credit Card Master Note Trust Asset Backed Notes (the "global
securities") to be issued in series from time to time will be available only in
book-entry form. Investors in the global securities may hold those global
securities through any of The Depository Trust Company, Clearstream or
Euroclear. The global securities will be tradable 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 Clearstream 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 Clearstream or Euroclear and DTC
participants holding notes will be effected on a delivery-against-payment basis
through the respective depositaries of Clearstream and Euroclear, in that
capacity, and as DTC participants.
Non-U.S. holders of global securities will be subject to U.S. withholding
taxes unless those 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, Clearstream and Euroclear will
hold positions on behalf of their participants through their respective
depositaries, which in turn will hold those positions in accounts as DTC
participants.
Investors electing to hold their global securities through DTC (other than
through accounts at Clearstream or Euroclear) 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 Clearstream or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds in
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registered form. Global securities will be credited to the securities custody
accounts on the settlement date against payment for value on the settlement
date.
Secondary Market Trading
Because the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
participants--other than Citibank, N.A. and Morgan Guaranty Trust Company of New
York as depositaries for Clearstream and Euroclear, respectively will be settled
using the procedures applicable to U.S. corporate debt obligations in same-day
funds.
Trading between Clearstream customers and/or Euroclear participants.
Secondary market trading between Clearstream customers or Euroclear participants
will be settled using the procedures applicable to conventional eurobonds in
same-day funds.
Trading between DTC seller and Clearstream customer or Euroclear purchaser.
When global securities are to be transferred from the account of a DTC
participant--other than Citibank and Morgan as depositaries for Clearstream and
Euroclear, respectively--to the account of a Clearstream customer or a Euroclear
participant, the purchaser must send instructions to Clearstream prior to
settlement date 12:30. Clearstream or Euroclear, as the case may be, will
instruct Citibank or Morgan, respectively, to receive the global securities for
payment. Payment will then be made by Citibank or Morgan, as the case may be, 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 Clearstream customer's or Euroclear participant's
account. Credit for the global securities 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 Clearstream or Euroclear cash
debit will be valued instead as of the actual settlement date.
Clearstream customers and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the global securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, Clearstream customers or Euroclear participants can elect not to
pre-position funds and allow
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<PAGE>
that credit line to be drawn upon the finance settlement. Under this procedure,
Clearstream customers or Euroclear participants purchasing global securities
would incur overdraft charges for one day, assuming they cleared the overdraft
when the global securities were credited to their accounts. However, interest on
the global securities would accrue from the value date. Therefore, in many cases
the investment income on the global securities earned during that one- day
period may substantially reduce or offset the amount of such overdraft charges,
although this result will depend on each Clearstream customer's or Euroclear
participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending global securities to
Citibank or Morgan for the benefit of Clearstream customers 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 from a trade between two DTC participants.
Trading between Clearstream or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Clearstream customers and Euroclear
participants may employ their customary procedures for transactions in which
global securities are to be transferred by the respective clearing system,
through Citibank or Morgan, to another DTC participant. The seller will send
instructions to Clearstream before settlement date 12:30. In these cases,
Clearstream or Euroclear will instruct Citibank or Morgan, as appropriate, to
credit the global securities to the DTC participant's account against payment.
The payment will then be reflected in the account of the Clearstream customer or
Euroclear participant the following day, and receipt of the cash proceeds in the
Clearstream customer's or Euroclear participant's account would be back-valued
to the value date, which would be the preceding day, when settlement occurred in
New York. If the Clearstream customer or Euroclear participant has a line of
credit with its respective clearing system and elects to draw on such line of
credit in anticipation of receipt of the sale proceeds in its account, the back-
valuation may substantially reduce or offset 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 Clearstream
customer's or Euroclear participant's account would instead be valued as of the
actual settlement date.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of global securities holding securities through
Clearstream, Euroclear or through DTC--if the holder has an address outside the
U.S.--will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest including original issue discount on registered debt issued
by U.S. Persons, unless, under currently applicable law, (i) each clearing
system, bank or other financial institution that holds customers' securities in
the ordinary course of its trade or business in the chain of intermediaries
between the beneficial owner and the U.S. entity required to withhold tax
complies with applicable certification requirements and (ii) the beneficial
owner takes one of the following steps to obtain an exemption or reduced tax
rate:
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<PAGE>
Exception for non-U.S. Persons (Form W-8 or new Form W-8BEN). Beneficial
owners of notes that are non-U.S. Persons generally 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 the change.
Exemption for non-U.S. Persons with effectively connected income (Form 4224
or new Form W-8ECI). 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 or new Form W-8BEN). Non-U.S. Persons that are note 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 note 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 note owner of a global
security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds. This is
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.
A new Form W-8BEN, if furnished with a taxpayer identification number, will
remain in effect until the status of the beneficial owner changes, or a change
in circumstances makes any information on the form incorrect. A new Form W-8BEN,
if furnished without a taxpayer identification number, and a new Form W-8ECI
will remain in effect for a period starting on the date the form is signed and
ending on the last day of the third succeeding calender year, unless a change in
circumstances makes any information on the form incorrect.
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, any state thereof, or any political subdivision of either
(including the District of Columbia), or (iii) an estate or trust the income of
which is includible 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 the global
securities. We suggest that investors consult their own tax advisors for
specific tax advice concerning their holding and disposing of the global
securities. Further, the U.S. Treasury Department recently finalized new
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<PAGE>
regulations that revise some aspects of the current system for withholding on
amounts paid to foreign persons, including the substitution of Form W-8BEN in
place of Form W-8. Under these regulations, interest or original issue discount
paid to a nonresident alien would continue to be exempt from U.S. withholding
taxes, including backup withholding, provided that the holder complies with the
new certification procedures.
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================================================================================
First Consumers Credit Card Master Note Trust
Issuer
First Consumers National Bank
Seller and Servicer
First Consumers National Bank
Originator of the Trust
Series 2001-__
$
Class A [Floating Rate] [___]% Asset Backed Notes
$
Class B [Floating Rate] [___]% Asset Backed Notes
$
Class C [Floating Rate] [___]% Asset Backed Notes
------------------
PROSPECTUS SUPPLEMENT
------------------
Underwriters of the Class A Notes
Underwriters of the Class B Notes
Underwriters of the Class C Notes
You should rely on the information contained or incorporated by reference in
this prospectus supplement and the accompanying prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the notes in any state where the offer is not permitted.
We do not claim the accuracy of the information in this prospectus supplement
and the accompanying prospectus as of any date other than the dates stated on
their respective covers.
Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the notes and with respect to their unsold allotments or
subscriptions. In addition, all dealers selling the notes will deliver a
prospectus supplement and prospectus until _________, 2001.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Estimated expenses in connection with the offering of the Securities being
registered herein are as follows:
<TABLE>
<S> <C>
Registration Statement fee.................................... $ 316,800.00
Legal fees and expenses....................................... $ 600,000.00
Accounting fees and expenses.................................. $ 150,000.00
Rating agency fees............................................ $ 780,000.00
Trustee fees and expenses..................................... $ 75,000.00
Blue Sky expenses............................................. $ 20,000.00
Printing and engraving........................................ $ 180,000.00
Miscellaneous................................................. $ 90,000.00
-------------
Total........................................ $2,211,800.00
-------------
</TABLE>
Item 15. Indemnification of Directors and Officers.
The Articles of Association of First Consumers National Bank include the
following provision:
Any person, his/her heirs, executors, or administrators may be indemnified
or reimbursed by the Association for reasonable expenses actually incurred in
connection with any action, suit or proceeding, civil or criminal, to which
he/she or they shall be made a party by reason of his/her being or having been a
Director, officer, or employee of the Association or of any firm, corporation,
or organization which he/she served in any such capacity at the request of this
Association. Provided; however, that no person shall be so indemnified or
-------- -------
reimbursed relative to any matter in such action, suit, or proceeding as to
which he/she shall finally be adjudged to have been guilty of or liable for
gross negligence, willful misconduct or criminal acts in the performance of
his/her duties to the Association; And, provided further, that no person shall
-------- -------
be so indemnified or reimbursed relative to any such matter in such action, suit
or proceeding which has been made the subject of a compromise settlement except
with the approval of a court of competent jurisdiction, or the holders of record
of a majority of the outstanding shares of the Association, or the Board of
Directors, acting by vote of Directors not parties to the same or substantially
the same action, suit or proceeding, constituting a majority of the whole number
of Directors. The foregoing right of indemnification or reimbursement shall not
be exclusive of other rights to which such persons, his/her heirs, executors, or
administrators, may be entitled as a matter of law.
Notwithstanding the foregoing no Director, officer or employee shall be
indemnified against expenses, penalties or other payment incurred in an
administrative proceeding or action instituted by an appropriate bank regulatory
agency which proceeding or action results in a final order assessing civil money
penalties or requiring affirmative action by an individual or individuals to the
Association.
Item 16. Exhibits.
1.1 --Form of Underwriting Agreement
3.1 --Articles of Association*
4.1 --Form of Master Indenture
4.2 --Form of Indenture Supplement, including form of Notes
4.3 --Form of Transfer and Servicing Agreement
4.4 --Form of Trust Agreement of First Consumers Credit Card Master Note
Trust
4.5 --Form of Administration Agreement
4.6 --Amended and Restated Pooling and Servicing Agreement*
4.7 --Form of Collateral Series Supplement, including Form of Collateral
Certificate
II-1
<PAGE>
5.1 --Opinion of Rooks, Pitts and Poust with respect to legality
8.1 --Opinion of Rooks, Pitts and Poust with respect to tax matters
23.1 --Consent of Rooks, Pitts and Poust (included in Exhibit 5.1)
24.1 --Power of Attorney (included on page II-5)*
25.1 --Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of The Bank of New York, as
indenture trustee under the Indenture
____________________
* Previously filed
Item 17. Undertakings
(a) As to Rule 415: The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
registration statement;
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar volume of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement;
provided, however, that the undertakings set forth in clauses (i) and (ii) above
do not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended, that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) As to documents subsequently filed that are incorporated by reference:
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, as amended, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) As to indemnification: Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended, may be permitted to
directors, officers and controlling persons of the registrant pursuant to the
provisions described in Item 15 herein, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the
II-2
<PAGE>
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, reasonably believes that the security
rating requirement for the asset-backed securities being registered on this form
will be met by the time of the sale and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago, Illinois, on the date of
January 16, 2001.
FIRST CONSUMERS NATIONAL BANK,
as Co-Registrant
By: /s/ John R. Steele
-------------------------------
John R. Steele
Treasurer
FIRST CONSUMERS MASTER TRUST,
as Co-Registrant
By: FIRST CONSUMERS NATIONAL BANK,
as originator of First Consumers Master Trust
By: /s/ John R. Steele
-------------------------------
John R. Steele
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed on January 16, 2001 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Michael R. Moran* Chairman and Director
------------------------------ (Principal Executive Officer)
Michael R. Moran
/s/ Gregory R. Aube* President and Director
------------------------------ (Principal Financial Officer)
Gregory R. Aube
/s/ John R. Steele* Treasurer
------------------------------ (Principal Accounting Officer)
John R. Steele
/s/ Robert S. Ball* Director
------------------------------
Robert S. Ball
/s/ Stephen T. Janik* Director
------------------------------
Stephen T. Janik
/s/ Robert L. Gill* Director
------------------------------
Robert L. Gill
</TABLE>
*By: /s/ John R. Steele
--------------------------
Name: John R. Steele
Title: Attorney-In-Fact
__________________
* Note: Power of Attorney appointing John R. Steele to sign any and all
amendments to this Registration Statement was previously filed with the
Securities and Exchange Commission.
II-4
