As filed with the Securities and Exchange Commission on September 3, 1996
Registration No. 333-07185
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
AMENDMENT NO. 2
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________
BRIDGESTONE/FIRESTONE MASTER TRUST
(Issuer of the Certificates)
_________________
FIRESTONE RETAIL CREDIT CORPORATION
(Originator of the Trust described herein and exact name
of registrant as specified in its government instrument.)
_________________
Massachusetts 6141 13-3205598
(State of (Primary Standard Industrial (IRS Employer Identification
Incorporation) Classification Code Number) Number)
R. Douglas Donaldson
One International Place, Suite 520
Boston, Massachusetts 02110-2624
(617) 951-7690
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
_________________
copies to:
Saul Solomon, Esq. Reed D. Auerbach, Esq.
Bridgestone/Firestone, Inc. Stroock & Stroock & Lavan
50 Century Boulevard Seven Hanover Square
Nashville, Tennessee 37214 New York, New York 10004-2696
(615) 872-1496 (212) 806-6648
Cathy Kaplan, Esq.
Brown & Wood LLP
1 World Trade Center
New York, New York 10048
(212) 839-5531
_________________
Approximate date of commencement of proposed sale to the public. As
soon as practicable on or after the effective date of this Registration
Statement, as determined by market conditions.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 of the Securities Act
of 1933, please check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
__________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount Being Offering Price Aggregate Offering Registration
Being Registered Registered(1) Per Unit(1) Price(1) Fee(2)
________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Class A Floating Rate Asset
Backed Certificates,
Series 1996-1 . . . . . . . . . $1,000,000 100% $1,000,000 $435
________________________________________________________________________________________________________________________
Class B Floating Rate Asset
Backed Certificates,
Series 1996-1 . . . . . . . . . $1,000,000 100% $1,000,000 $435
========================================================================================================================
</TABLE>
(1) Estimated solely for purposes of determining the registration fee.
(2) Total registration fee of $870.
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
the 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 Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
=============================================================================
CROSS REFERENCE SHEET
1. Forepart of the Registration Statement and
Outside Front Page of Prospectus . . . . . . Forefront of
Registration
Statement Outside
Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Pages Inside Front
of Prospectus . . . . . . . . . . . . . . . . Cover, Outside
Back Cover
Page of
Prospectus
3. Summary Information, RISK FACTORS, and . . . . Summary of
Ratio of Earnings to Fixed Charges Terms; RISK
FACTORS
4. Use of Proceeds . . . . . . . . . . . . . . Use of Proceeds
5. Determination of Offering Price . . . . . . . *
6. Dilution . . . . . . . . . . . . . . . . . . *
7. Selling Security Holders . . . . . . . . . . *
8. Plan of Distribution . . . . . . . . . . . . Underwriting
9. Description of Securities to be Registered The Trust;
Descrip-
tion of
the
Offered
Certificates and
the Agreement
10. Interests of Named Experts and Counsel . . *
11. Information with Respect to the Registrant. . The Transferor
and
Bridgestone/
Firestone
a. Description of Business . . . . . . . . The
Transferor
and
Bridgestone/
Firestone
b. Description of Property . . . . . . . . *
c. Legal Proceedings . . . . . . . . . . . *
d. Market Price of and Dividends on *
the Registrant's Common Equity
and Related Stockholder Matters . . . .
e. Financial Statements . . . . . . . . . *
f. Selected Financial Data . . . . . . . . *
g. Supplementary Financial *
Information . . . . . . . . . . . . .
h. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . *
i. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure . . . . . . . *
j. Directors and Executive Officers . . . . *
k. Executive Compensation . . . . . . . . . *
l. Security Ownership of Certain
Beneficial Owners and
Management . . . . . . . . . . . . . . . *
m. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . *
12. Disclosure of Commission Position on See Part II
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . . . . . .
13. Other Expenses of Income and See Part II
Issuance and Distribution . . . . . . . . . .
14. Indemnification of Directors and Officers . . See Part II
15. Recent Sales of Unregistered Securities . . . See Part II
16. Exhibits and Financial Schedules . . . . . . See Part II
17. Undertakings . . . . . . . . . . . . . . . . See Part II
__________________
*To be furnished by amendment.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold without
the delivery of a final Prospectus. This Prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any
sale of these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such State.
PROSPECTUS SUBJECT TO COMPLETION, DATED ______________, 1996
- - ----------
$_______
BRIDGESTONE/FIRESTONE MASTER TRUST
$___________ CLASS A FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1996-1
$___________ CLASS B FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 1996-1
Firestone Retail Credit Corporation Bridgestone/Firestone, Inc.
Transferor Servicer
Each Class A Floating Rate Asset Backed Certificates, Series 1996-1 (the
"Class A Certificates") and each Class B Floating Rate Asset Backed
Certificates, Series 1996-1 (the "Class B Certificates" and, together with
the Class A Certificates, the "Offered Certificates") will evidence an
undivided interest in the Bridgestone/Firestone Master Trust (the "Trust")
created pursuant to the Pooling and Servicing Agreement (the "Agreement"),
dated as of __________, as supplemented by the Series 1996-1 Series
Supplement, dated as of ________, and each among Firestone Retail Credit
Corporation, as transferor (the "Transferor"), Bridgestone/Firestone, Inc.,
as servicer (the "Servicer"), and The Fuji Bank and Trust Company, as trustee
(the "Trustee"). The Trust assets (the "Trust Assets") include (i) a
portfolio of account balances (the "Receivables") generated or to be
generated under a private label credit card program (the "Credit Card
Program") established by Credit First National Association (together with any
successor originator, the "Originator"), (ii) a portfolio of certain
designated Receivables to be generated by the Originator under other credit
card programs to be established by the Originator (the "Other Programs"),
(iii) all monies due or to become due under the Receivables, (iv) the right
to receive certain merchant fees attributed to cardholder charges giving rise
to Receivables, (v) all Recoveries on Defaulted Receivables, (vi) any
Enhancement issued with respect to any Series, (vii) the proceeds of the
Servicer Letter of Credit and the Transferor Letter of Credit, (viii) all of
the Transferor's right, title and interest in and to the Purchase and Sale
Agreement and the Participation Agreement, (ix) all moneys on deposit in the
Collection Account and any other accounts established for the benefit of any
other Series (which other accounts will not be available to
Certificateholders) and (x) all proceeds of any of the foregoing.
Concurrently with the issuance of the Offered Certificates, the Trust
will issue $______ principal amount Class C Floating Rate Asset Backed
Certificates, Series 1996-1 (the "Class C Certificates") and the Subordinated
Transferor Certificate (the "Subordinated Transferor Certificate" and,
together with the Class C Certificates and the Offered Certificates, the
"Certificates"). The fractional undivided interest in the Trust represented
by the Class B Certificates will be subordinated to the extent necessary to
fund payments with respect to the Class A Certificates as described herein.
The Class C Certificates and the Subordinated Transferor Certificate will be
subordinated to the extent necessary to fund payments with respect to the
Class B Certificates as described herein. See "Description of the Offered
Certificates and the Agreement." The Class C Certificates and the
Subordinated Transferor Certificate are not being offered hereby.
(Continued on the next page)
There currently is no secondary market for the Offered Certificates and
there can be no assurance that one will develop. Citicorp Securities, Inc.
expects, but is not obligated, to make a market in the Offered Certificates.
THERE CAN BE NO ASSURANCE THAT ANY SUCH MARKET WILL CONTINUE. POTENTIAL
INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET FORTH IN
"RISK FACTORS" ON PAGE 29 IN THE PROSPECTUS.
THE OFFERED CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF THE TRANSFEROR, THE
SERVICER, THE ORIGINATOR OR ANY AFFILIATE THEREOF. AN OFFERED
CERTIFICATE IS NOT A DEPOSIT AND NEITHER THE OFFERED
CERTIFICATES NOR THE UNDERLYING ACCOUNTS OR
RECEIVABLES ARE INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE (1) DISCOUNT TRANSFEROR(1)(2)
------------------ ------------ ----------------
<S> <C> <C> <C>
Per Class A Certificate . . . . . . . . . . . % % %
Per Class B Certificate . . . . . . . . . . . % % %
Total . . . . . . . . . . . . . . . . . . . . $ $ $
</TABLE>
(1) Plus accrued interest, at the Class A Certificate Rate or Class B
Certificate Rate, as applicable, from __________.
(2) Before deducting estimated expenses of $_______ payable by the
Transferor.
The Offered Certificates are offered by the Underwriters as described
in "Underwriting", subject to receipt and acceptance by it and subject to its
right to reject any order in whole or in part. It is expected that the
Offered Certificates will be delivered in book-entry form on or about ______
through the facilities of The Depository Trust Company, CEDEL S.A. and the
Euroclear System.
______________________________
Citicorp Securities, Inc Chase Securities Inc.
The date of this Prospectus is ________, 1996.
(Continued from the previous page)
The Class A Certificateholders and the Class B Certificateholders (the
"Offered Certificateholders") will be entitled to certain assets of the
Trust, including the right to receive a varying percentage of each month's
collections with respect to the Receivables at the times and in the manner
described herein. The Trust has also issued a certificate representing a one
percent interest in the Trust to Bridgestone/Firestone, Inc. (the
"Bridgestone/Firestone Certificate"). The Transferor will own the remaining
interest in the Trust not represented by the Certificates (subject to the
Participation Agreement with Bridgestone/Firestone), the
Bridgestone/Firestone Certificate and the interest of holders of other
outstanding Series. The Transferor has offered and from time to time may
offer other series of certificates that evidence undivided interests in the
Trust (each, a "Series"), which may have terms significantly different from
the Certificates, by exchanging a portion of its interest in the Trust.
Interest will accrue on the Class A Certificates from _____________
through __________ and with respect to each Interest Accrual Period (as
defined herein) thereafter, at the rate of ___% per annum above the London
interbank offered rate for (one-month) United States dollar deposits
("LIBOR"), determined as described herein, prevailing on the related LIBOR
Determination Date with respect to such Interest Accrual Period. Interest
will accrue on the Class B Certificates from _____________ through __________
and with respect to each Interest Accrual Period (as defined herein)
thereafter, at the rate of ___% per annum above LIBOR, determined as
described herein, prevailing on the related LIBOR Determination Date with
respect to such Interest Accrual Period. Interest with respect to the
Certificates is payable monthly on the __________ of each month (or, if such
day is not a business day, the next succeeding business day) (each, a
"Distribution Date"). Principal on the Class A Certificates is scheduled to
be distributed on each Distribution Date commencing on the Distribution Date
in __________ and ending on the Distribution Date in __________, but may be
paid earlier or later under certain limited circumstances described herein.
Principal on the Class B Certificates is scheduled to be distributed on each
Distribution Date commencing __________, but may be paid earlier or later
under certain limited circumstances described herein. No principal will be
payable to the Class B Certificates until the final principal payment has
been made to the Class A Certificates. No principal will be payable to the
Class C Certificates until the final payment has been made to the Class A
Certificates and Class B Certificates. No principal will be payable to the
Subordinated Transferor Certificate until the final payment has been made to
the Class A Certificates, the Class B Certificates and Class C Certificates.
See "Maturity Assumptions." The issuance of the Class B Certificates, the
Class C Certificates and the Subordinated Transferor Certificate are
conditions precedent to the issuance of the Class A Certificates. The
issuance of the Class C Certificates and the Subordinated Transferor
Certificate are conditions precedent to the issuance of the Class B
Certificates.
An application will be made to list the Offered Certificates on the
London Stock Exchange Limited.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
OFFERED CERTIFICATES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
____________________
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates (defined below) are issued,
monthly and annual reports, containing information concerning the Trust and
prepared by the Servicer, will be sent on behalf of the Trust to Cede & Co.
("Cede"), as registered holder of the Offered Certificates, pursuant to the
Agreement. On each Distribution Date a Payment Date Statement (as defined
herein) prepared by the Servicer will be provided setting forth information
regarding the Offered Certificates. Such reports will be made available on
a monthly basis by The Depository Trust Company to Participants (as
hereinafter defined), upon request by such Participants to The Depository
Trust Company, in accordance with the rules, regulations and procedures
creating and affecting The Depository Trust Company. Certificate Owners (as
hereinafter defined) may contact their Participants or the Trustee to receive
copies of such reports. See "Description of the Offered Certificates and the
Agreement--Book-Entry Registration" and "--Reports to Certificateholders."
Such reports will not contain information that has been examined and reported
on by independent public accountants and will not constitute financial
statements prepared in accordance with generally accepted accounting
principles. The Transferor does not intend to send any of its financial
reports to Certificateholders or to the owners of beneficial interests in the
Offered Certificates ("Certificate Owners"). The Servicer on behalf of the
Trust will file with the Commission such periodic reports with respect to the
Trust as are required under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations of the Commission
thereunder. However, in accordance with the Exchange Act and the rules and
regulations of the Commission thereunder, the Transferor expects that the
Trust's obligation to file such reports will be terminated following the end
of 1996.
AVAILABLE INFORMATION
The Transferor, as originator of the Trust, has filed a Registration
Statement under the Securities Act of 1933, as amended (the "Act"), with the
Securities and Exchange Commission (the "Commission") with respect to the
Offered Certificates offered pursuant to this Prospectus. For further
information, reference is made to the Registration Statement and amendments
and exhibits thereto, which are available for inspection without charge at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; 7 World Trade Center, New York, New
York 10048; and Citicorp Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of the Registration Statement and amendments and
exhibits thereto may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates and electronically through the Commission's Electronic Data Gathering
Analysis and Retrieval system at the Commission's Web site
(http:\\www.sec.gov).
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain
capitalized terms used in this summary are defined elsewhere in this
Prospectus. A listing of the pages on which some of such terms are defined
is found in the "Index of Terms" herein.
SECURITIES OFFERED . . . . $____________ Class A Floating Rate Asset Backed
Certificates, Series 1996-1 (the "Class A Certificates") to be fully paid by
________ __, 1999 and $_________________ Class B Floating Rate Asset Backed
Certificates, Series 1996-1 (the "Class B Certificates", together with the
Class A Certificates, the "Offered Certificates), to be fully paid by
________ __, 1999. The Offered Certificates will be issued pursuant to the
Pooling and Servicing Agreement, as supplemented by the Series 1996-1 Series
Supplement, dated as of ______, 1996 (collectively, the "Agreement"), among
Firestone Retail Credit Corporation, as transferor (the "Transferor"),
Bridgestone/Firestone, Inc. ("Bridgestone/Firestone"), as servicer (the
"Servicer") and The Fuji Bank and Trust Company, as trustee (the "Trustee").
The Class C Certificates and the Subordinated Transferor Certificate (herein
collectively referred to as the "Other Certificates"), to be issued pursuant
to the Pooling and Servicing Agreement (see "Description of the Offered
Certificates" below), are not being offered hereby. The issuance of the
Other Certificates is a condition precedent to the issuance of the Offered
Certificates. The Other Certificates, together with the Offered
Certificates, will be referred to herein as the "Certificates." Any
information contained herein regarding the Other Certificates is included
solely to permit a better understanding of the Offered Certificates. See
"Description of the Offered Certificates and the Agreement--General."
The Certificates represent beneficial interests in the Trust only and
do not represent interests in or recourse obligations of the Transferor, the
Servicer, Credit First National Association (the "Originator" or "CFNA") or
any affiliate thereof.
The Trust has previously issued several other Series. See "Annex I:
Outstanding Series" for a summary of all Series currently outstanding.
TRANSFEROR . . . . Firestone Retail Credit Corporation, a Massachusetts
corporation, is the transferor of the Receivables and the originator of the
Trust. The Transferor is a nominally capitalized special purpose corporation
and was organized for the limited purpose of purchasing, holding, owning and
selling receivables and any activities incidental to and necessary or
convenient for the accomplishment of the foregoing. The Transferor's
principal executive offices are located at One International Place, Suite
520, Boston, Massachusetts 02110. Its telephone number is (617) 951-7690.
See "The Transferor and Bridgestone/Firestone."
SERVICER . . . . The Receivables will be serviced by Bridgestone/Firestone,
Inc., an Ohio corporation. CFNA will perform certain sub-servicing functions
on behalf of the Servicer including, but not limited to the approval of new
account applications, the approval of all credit charge transactions
involving existing accounts and collection efforts.
TRUST ASSETS. . . The Trust Assets include (i) a portfolio of account balances
(the "Receivables") generated or to be generated by the Originator in the
ordinary course of its business and existing or arising in certain credit
card accounts (the "Accounts") established or to be established under a
private label credit card program described more fully herein (the "Credit
Card Program") established by the Originator for customers of (a)
Bridgestone/Firestone stores, which sell tires and automotive maintenance and
repair products and services, (b) dealers and marketers which have
contractual arrangements with Bridgestone/Firestone to market
Bridgestone/Firestone tires and related products as well as automotive
maintenance and repair services, and (c) certain other dealers and marketers
of automotive products, which include tires and automotive maintenance and
repair services, which dealers and marketers do not have such contractual
arrangements with Bridgestone/Firestone, (ii) a portfolio of certain
designated Receivables generated or to be generated by the Originator and
existing or arising under certain accounts to be established under other
credit card programs established or to be established by the Originator (the
"Other Programs"), (iii) all monies due or to become due under the
Receivables on or after the billing cycle cut-off dates occurring in the
Collection Period (defined below) from October 19, 1992 to November 18, 1992
(the "Cut-off Date"), (iv) the right to receive certain merchant fees
attributed to cardholder charges giving rise to Receivables pursuant to the
Merchant Fee Transfer Agreement (as defined below), (v) all Recoveries (as
defined below) on Defaulted Receivables (as defined below), (vi) any
Enhancement (as defined below) issued with respect to any Series, (vii) the
proceeds of the Servicer Letter of Credit and the Transferor Letter of Credit
(each as defined below), (viii) all of the Transferor's right, title and
interest in and to the Purchase and Sale Agreement and the Participation
Agreement (each as defined below), (ix) all moneys on deposit in the
Collection Account and any other accounts established for the benefit of any
other series (which other accounts will not be available to
Certificateholders) and (x) all proceeds of any of the foregoing.
The Accounts will include (i) all eligible credit card accounts
("Eligible Accounts") established under the Credit Card Program subsequent
to the Cut-off Date and (ii) all eligible additional accounts established
under Other Programs subsequent to the Cut-off Date which are designated by
the Transferor as Eligible Additional Accounts in accordance with selection
criteria relating to the addition of accounts. See "The Credit Card Program-
- - -General" and "--Addition of Accounts" herein.
The term "Defaulted Receivables" shall mean with respect to any
Collection Period, all Receivables in any Account which are written off as
uncollectible in such Collection Period in accordance with CFNA guidelines.
Notwithstanding the foregoing sentence, a Receivable shall be deemed a
Defaulted Receivable no later than the last day of the Collection Period
following the Collection Period in which it becomes 180 days delinquent. The
term "Recoveries", with respect to any Collection Period, shall mean all
amounts or payments received by the Servicer with respect to Receivables
which have previously become Defaulted Receivables in a prior Collection
Period, net of reasonable expenses of the Servicer incurred and deducted from
such amounts or payments. The Servicer may deduct reasonable expenses in
connection with such Recoveries. The term "Enhancement" shall
mean, with respect to any Series or class within a Series, any letter of
credit, guaranteed rate agreement, cash collateral account, cash collateral
guaranty, liquidity facility, maturity guaranty facility, tax protection
agreement, interest rate swap or other contract or agreement for the benefit
of the certificateholders of such Series.
The Receivables have been and will be purchased by the Transferor from
the Originator pursuant to a purchase and sale agreement, as amended and
restated as of October 3, 1989, as amended as of November 1, 1992, as amended
as of October 1, 1993, as amended and restated as of October 20, 1993, as
amended and restated as of ___________, 1996, among the Transferor,
Bridgestone/Firestone and the Originator (the "Purchase and Sale Agreement").
The Purchase and Sale Agreement provides that the Originator shall sell and
assign to the Transferor, and the Transferor will purchase from the
Originator, on each business day, all Receivables arising in the Accounts
under the Credit Card Program and certain Receivables arising in designated
Accounts under the Other Programs, provided, among other things, that the
Transferor is not in default thereunder and that no Servicer Event of Default
and no Originator insolvency shall have occurred. The right to receive
certain merchant fees attributed to cardholder charges giving rise to
Receivables will be transferred by the Originator to the Transferor pursuant
to a merchant fee purchase agreement, dated as of _______, 1996 (the
"Merchant Fee Transfer Agreement"), among the Transferor, the Originator and
Bridgestone/Firestone. The Transferor has transferred and will transfer such
Receivables and the merchant fees to the Trust pursuant to the Agreement.
See "Description of the Offered Certificates and the Agreement--Conveyance
of Receivables."
The Receivables consist of amounts charged by cardholders under the
Accounts for goods and services, and all late fees, returned check charges,
convenience checks and amounts charged in respect of credit-related insurance
and periodic finance charges as described herein.
A portion of the Collections (as defined below) received in any
applicable billing cycle for an Account (the monthly billing cycle periods
for the Accounts ending in the period of time commencing on the 19th calendar
day of each calendar month and ending on the 18th calendar day of the next
succeeding calendar month during the term of the Trust being collectively
referred to herein as a "Collection Period") allocable to Receivables will
be treated as "Finance Charge Collections" and a portion will be treated as
"Principal Collections." Under the Agreement, the Collections on the
Receivables for any Collection Period will be allocated such that all finance
charges billed or accrued in respect of Receivables in the prior Collection
Period (less certain rebates as described herein) will be deemed Finance
Charge Collections and the remaining amount of such Collections will be
deemed Principal Collections. Notwithstanding the foregoing, Recoveries
received in any Collection Period shall be treated as Finance Charge
Collections for such Collection Period for all purposes. In addition,
merchant fees received or accrued in any Collection Period shall be treated
as Finance Charge Collections for such Collection Period for all purposes.
As of the Collection Period ended on ___________, 1996 the amount of
Aggregate Receivables (as defined below) in the Trust was $_____________.
The total amount of Receivables and merchant fees in the Trust will fluctuate
from day to day as a result of the transfer of new Receivables to the Trust
and as a result of collections on existing Receivables ("Collections").
ADDITION OF ACCOUNTS . . . . The Accounts consist of all Accounts established
under the Credit Card Program subsequent to the Cut-off Date. In addition,
the Transferor is permitted (subject to certain limitations and conditions)
to designate from time to time additional eligible Accounts established under
Other Programs ("Eligible Additional Accounts") and to convey to the Trust
Receivables of such Eligible Additional Accounts, whether such Receivables
are then existing or thereafter created. On any date, the Transferor may
designate Eligible Additional Accounts and convey the Receivables arising
from such Eligible Additional Accounts. Unless the Transferor has obtained
the consent of the applicable rating agencies, as described below, any
Receivables arising from such Eligible Additional Accounts which exceed 10%
(the "10% Maximum") of the average amount of Aggregate Receivables in the
Trust as of the last day of each of the preceding twelve Collection Periods
shall be deemed to be "Ineligible Receivables" and shall not be transferred
to the Trust. Such Other Programs may include, but are not limited to, the
establishment of additional private label credit card programs and the
offering of general purpose credit cards. As of the date of the issuance of
the Certificates, the Originator has not established any of these Other
Programs. See "Description of the Offered Certificates and the Agreement--
Addition of Accounts."
The Transferor may request written confirmation from the applicable
rating agencies to transfer to the Trust all Accounts related to a designated
Other Program and all Receivables arising from such Accounts. Upon receiving
such written confirmation from the applicable rating agencies, none of the
Receivables arising from Eligible Accounts related to the designated Other
Program will be deemed to be "Ineligible Receivables" and the Receivables
from such Accounts will no longer be subject to the 10% Maximum. The
Transferor may continue to designate Eligible Additional Accounts from Other
Programs in accordance with the selection criteria relating to the Addition
of Accounts.
REMOVAL OF ACCOUNTS . . . . The Transferor has the right to accept Accounts
for removal from the Trust in an amount not greater than the excess of the
Transferor Amount (plus the B/F Amount and amounts available under the
Transferor Letter of Credit) over __% of the Aggregate Certificateholders'
Interest (as defined herein), provided, among other conditions, that the
Transferor has not employed a selection procedure adverse to the interests
of the Certificateholders and the Transferor reasonably believes that the
removal of such Accounts from the Trust will not result in the occurrence of
an Amortization Event. See "Description of the Offered Certificates and the
Agreement--Removal of Accounts."
DESCRIPTION OF THE
CERTIFICATES . . . . Payments received on the Trust's assets will be
allocated among the interest of the Class A Certificateholders (the "Class A
Interest"), the interest of the Class B Certificateholders (the "Class B
Interest"), the interest of the Class C Certificateholders (the "Class C
Interest") and the subordinated interest of the holder of the Subordinated
Transferor Certificate (the "Subordinated Transferor Interest," together with
the Class A Interest, the Class B Interest and the Class C Interest, the
"Certificateholders' Interest"), the interest of the holders of other
outstanding Series (together with the Certificateholders' Interest, the
"Aggregate Certificateholders' Interest"), the interest of
Bridgestone/Firestone as holder of the Bridgestone/Firestone Certificate (the
"B/F Interest") and the pari passu interest of the Transferor (the last
---- -----
being referred to as the "Transferor Interest"). The amount of the
Transferor Interest at any time (the "Transferor Amount") shall equal the
Aggregate Receivables at such time minus the sum of the invested amount of
the holders of other outstanding Series, the Class A, Class B and Class C
Invested Amounts, the Subordinated Transferor Amount and the amount of the
B/F Interest (the "B/F Amount").
The Transferor Interest will be evidenced by a certificate (the
"Exchangeable Transferor Certificate") which will evidence an undivided
interest in the Trust Assets allocated to the Transferor Interest. The
principal amount of the Transferor Interest will fluctuate as the amount of
the Receivables held by the Trust changes from time to time. The Transferor
Amount (plus the amount available under the Transferor Letter of Credit and
the B/F Amount) shall at all times equal ___% of the aggregate invested
amount of all outstanding Series of Certificates. The initial Transferor
Amount is equal to ________.
The Class A Certificates offered hereby will evidence undivided
interests in the Trust Assets allocated to the Class A Interest and will
represent the right to receive from such Trust Assets funds up to (but not
in excess of) the amounts required to make payments of interest at the rate
per annum equal to the London interbank offered rate for ____ month United
States dollar deposits ("LIBOR") plus ___% per annum (the "Class A Certificate
Rate") payable monthly on each Distribution Date, and the payment of principal
on each Distribution Date commencing ____________, or earlier or later under
certain circumstances, to the extent of the Class A Invested Amount (as
defined herein) (which may be less than the aggregate unpaid principal
balance of the Class A Certificates, in certain circumstances, if the
Investor Default Amount (as defined herein) exceeds available Finance Charge
Collections (as defined herein) and Reallocated Principal Collections (as
defined herein) and the Class B Invested Amount (as defined herein), the
Class C Invested Amount (as defined herein) and the Subordinated Transferor
Amount are each zero). For the definition and determination of LIBOR, see
"Description of the Offered Certificates and the Agreement--Determination of
LIBOR." See also "Description of the Offered Certificates and the
Agreement--General," "--Allocation Percentages," "--Reallocation of Cash
Flows," "--Distributions from the Collection Account" and "--Subordination of
the Class B Certificates."
The Class B Certificates offered hereby will evidence undivided
interests in the Trust Assets allocated to the Class B Interest and will
represent the right to receive from such Trust Assets funds up to (but not
in excess of) the amounts required to make payments of interest at the rate
per annum equal to LIBOR plus ____% per annum (the "Class B Certificate
Rate") payable monthly on each Distribution Date, and the payment of
principal on each Distribution Date commencing ____________, or earlier or
later under certain circumstances, to the extent of the Class B Invested
Amount (which may be less than the aggregate unpaid principal balance of the
Class B Certificates, in certain circumstances, if the Investor Default
Amount exceeds available Finance Charge Collections and Reallocated
Principal Collections and the Class C Invested Amount and the
Subordinated Transferor Amount are each zero). The Class B Certificates are
subordinate in right of payment to the Class A Certificates to the extent
necessary to fund payments with respect to the Class A Certificates. See
"Description of the Offered Certificates and the Agreement--General," "--
Allocation Percentages," "--Reallocation of Cash Flows," "--Distributions
from the Collection Account" and "--Subordination of the Class B
Certificates."
The Class C Certificates will evidence undivided interests in the Trust
Assets allocated to the Class C Interest and will represent the right to
receive from such assets funds up to (but not in excess of) the amounts
required to make payments of interest at a rate per annum equal to LIBOR plus
__% per annum (the "Class C Certificate Rate") and of principal with respect
to the Class C Certificates to the extent of the Class C Invested Amount
(which may be less than the aggregate unpaid principal balance of the Class
C Certificates, in certain circumstances, if the Investor Default Amount
exceeds available Finance Charge Collections and Reallocated Principal
Collections and the Subordinated Transferor Amount is zero) following the
final principal payment with respect to the Offered Certificates. The Class
C Certificates are subordinate in right of payment to the Offered
Certificates to the extent necessary to fund payments with respect to the
Offered Certificates. The Class C Certificates will be offered privately and
are not being offered hereby.
The Subordinated Transferor Certificate will evidence an undivided
interest in the Trust Assets allocated to the Subordinated Transferor
Interest and will represent the right to receive from such assets funds up
to (but not in excess of) the amounts required to make payments of principal
with respect to the Subordinated Transferor Certificate following the final
principal payment with respect to the Class C Certificates (which may be less
than the aggregate unpaid principal balance of the Subordinated Transferor
Certificate, in certain circumstances, if the Investor Default Amount exceeds
available Finance Charge Collections and Reallocated Principal Collections).
The holder of the Subordinated Transferor Certificate will not be entitled
to receive any payments of interest. The Subordinated Transferor Certificate
is subordinate in right of payment to the Offered Certificates and the Class
C Certificates to the extent necessary to fund payments with respect to the
Offered Certificates and the Class C Certificates. The Subordinated
Transferor Certificate will be retained by the Transferor and is not being
offered hereby.
The initial balance of the Subordinated Transferor Certificate will be
equal to ( )% of the sum of the initial Class A Invested Amount, Class B
Invested Amount and Class C Invested Amount.
The Series 1992-A Certificates and the Series 1992-B Certificates
(collectively, the "Series 1992 Certificates"), the Series 1995-A Asset
Backed Certificates, the Bridgestone/Firestone Certificate and the
Exchangeable Transferor Certificate are the only certificates that have been
issued by the Trust as of the date hereof. None of the Series 1992
Certificates, the Series 1995-A Certificates, the Class C Certificates, the
Subordinated Transferor Certificate, the Bridgestone/Firestone Certificate,
the Exchangeable Transferor Certificate are being offered hereby. Each
outstanding Series represents a pari passu interest in the Trust.
---- -----
The Class A Interest, the Class B Interest, the Class C Interest and the
Subordinated Transferor Interest will each include the right to receive (but
only to the extent needed to make required payments under the Agreement)
varying percentages of Finance Charge Collections and Principal Collections
during each Collection Period. Finance Charge Collections and Defaulted
Receivables will be allocated at all times to the Class A Interest, the Class
B Interest, the Class C Interest and the Subordinated Transferor Interest
based on the Floating Allocation Percentage applicable to such Class or
Interest during the related Collection Period. The "Class A Floating
Allocation Percentage", the "Class B Floating Allocation Percentage", the
"Class C Floating Allocation Percentage" and the "Subordinated Floating
Allocation Percentage" shall be equal to the percentage equivalent of the
ratio which the Class A, Class B, Class C Invested Amount or the Subordinated
Transferor Amount, as applicable, on the last day of the immediately
preceding Collection Period bears to the amount of Aggregate Receivables in
the Trust, or, with respect to Finance Charge Collections, bears to the sum
of the numerators used to calculate the invested percentage with respect to
Finance Charge Collections for all Series of certificates outstanding during
such Collection Period and the B/F Percentage. See "Description of the
Offered Certificates and the Agreement--Allocation Percentages."
During the Revolving Period (as defined below), subject to certain
limitations, all Principal Collections allocable to the Certificates (other
than Reallocated Principal Collections (as defined below) that are used to
pay interest due on the Class A, Class B and Class C Certificates) will be
paid to the Transferor. During the Controlled Amortization Period (as
defined below) and any Rapid Amortization Period (as defined below),
Principal Collections will be allocated to the Class A Interest, the Class
B Interest, the Class C Interest and the Subordinated Transferor Interest
based on the Fixed Allocation Percentage with respect to such Class or
Interest. See "Principal Payments; Controlled Amortization Period" herein.
The Floating Allocation Percentage and Fixed Allocation Percentage are
sometimes referred to herein as an "Invested Percentage."
EXCHANGES . . . . The Agreement authorizes the Trustee to issue three types of
certificates: (i) one or more Series of certificates which may be in one or
more classes and which may be transferable and have the characteristics
described below, (ii) the Bridgestone/Firestone Certificate which is
currently and will continue to be held by Bridgestone/Firestone and which is
not transferable, and (iii) the Exchangeable Transferor Certificate, which
is held by the Transferor and which was sold to Bridgestone/Firestone
pursuant to a Participation Agreement by and between the Transferor and
Bridgestone/Firestone (the "Participation Agreement"). The Agreement
also provides that, pursuant to any one or more supplements to the
Agreement (each, a "Supplement"), the Transferor may tender the Exchangeable
Transferor Certificate or, if permitted by the applicable Supplement,
certificates representing any Series of certificates and the Exchangeable
Transferor Certificate, to the Trustee and, upon satisfying certain other
terms and conditions, cause the Trustee to issue one or more new series and
reissue an Exchangeable Transferor Certificate (any such tender, an
"Exchange"). Any Exchange involving only the tender of the Exchangeable
Transferor Certificate to the Trustee will have the effect of decreasing the
Transferor Interest.
Under the Agreement, the Transferor may define, with respect to any
Series, the Principal Terms of the Series. The Transferor may offer any
Series to the public or other investors under a prospectus or other
disclosure document (a "Disclosure Document") in transactions either
registered under the Act or exempt from registration thereunder, directly or
through the Underwriters (as defined below) or one or more other underwriters
or placement agents, in fixed-price offerings or in negotiated transactions
or otherwise. See Annex I for a listing of all outstanding Series. The
Transferor may offer, from time to time, additional Series issued by the
Trust.
Under the Agreement and pursuant to a Supplement, an Exchange may occur
only upon delivery to the Trustee of the following: (i) a Supplement
specifying the Principal Terms (as defined below) of such Series, (ii) an
opinion of counsel to the effect that the certificates of such Series under
existing law will be characterized as indebtedness for Federal income tax
purposes and that the issuance of such Series will not materially adversely
affect the Federal income tax characterization of any outstanding Series,
(iii) if required by the related Supplement, a form of Enhancement and any
related agreement, (iv) written confirmation from the applicable Rating
Agency (see "Rating of the Offered Certificates" below) that the Exchange
will not result in such Rating Agency reducing or withdrawing its rating on
any then outstanding Series rated by it or otherwise adversely affect any
rating on any then outstanding Series, and (v) the existing Exchangeable
Transferor Certificate and, if applicable, the certificates representing the
Series to be exchanged. See "Description of the Offered Certificates and the
Agreement--Exchanges."
REGISTRATION OF THE OFFERED
CERTIFICATES . . . . The Class A Certificates will be issued in book-entry
form only in the initial principal amount of ($200,000,000) (the "Initial
Class A Invested Amount") (which will be decreased or reinstated under certain
circumstances as described herein). The Class A Certificates will initially
be represented by one or more Class A Certificates registered in the name of
Cede & Co. ("Cede") as the nominee of The Depository Trust Company ("DTC"),
in the United States, or Cedel Bank, soci t anonyme ("CEDEL") or the
Euroclear System ("Euroclear") in Europe. The Class B Certificates will be
issued in book-entry form only in the initial principal amount of
($50,000,000) (the "Initial Class B Invested Amount") (which will be
decreased or reinstated under certain circumstances as described herein and,
accordingly, the amount available to fund payments with respect to
the Class A Certificates may be decreased). The Class B Certificates will
initially be represented by one or more Certificates registered in the
name of Cede as the nominee of DTC, in the United States or CEDEL or
Euroclear in Europe. Transfers within DTC, CEDEL or Euroclear,
as the case may be, will be in accordance with the usual rules and operating
procedures of the relevant system. So long as Offered Certificates are in
book-entry form, such Offered Certificates will be evidenced by one or more
securities registered in the name of Cede, as the nominee of DTC or one or
the relevant depositaries (collectively, the "European Depositaries").
Cross-market transfers between persons holding directly or indirectly through
DTC, on the one hand, and counterparties holding directly or indirectly
through CEDEL or Euroclear, on the other, will be effected in DTC through
Citibank N.A. ("Citibank") or The Chase Manhattan Bank ("Chase"), the
relevant depositaries of CEDEL and Euroclear, respectively, and each a
participating member of DTC. See "Description of the Certificates--
Definitive Certificates." As used herein, the term "Class A
Certificateholders" refers to registered holders of the Class A Certificates,
the term "Class B Certificateholders" refers to registered holders of the
Class B Certificates, the term "Class C Certificateholders" refers to
registered holders of the Class C Certificates, and the term "Offered
Certificateholders" refers to the Class A Certificateholders and the Class
B Certificateholders collectively.
The holders of beneficial interests in the Class A Certificates and the
Class B Certificates (the "Certificate Owners") will not be entitled to
receive a definitive certificate representing such person's interest, except
in the event that Definitive Certificates are issued under the limited
circumstances described herein. In such event, interests in the Class A
Certificates and Class B Certificates will be available in denominations of
$1,000 and in integral multiples thereof. All references herein to Class A
Certificateholders, Class B Certificateholders or Offered Certificateholders
shall refer to Certificate Owners, except as otherwise specified herein. See
"Description of the Offered Certificates and the Agreement--Book-Entry
Registration" and "--Definitive Certificates."
INTEREST ON THE CLASS A
CERTIFICATES . . . . Interest will accrue on the unpaid principal amount of
the Class A Certificates at a per annum rate equal to the Class A Certificate
Rate and, except as otherwise provided herein, be distributed to Class A
Certificateholders monthly on each Distribution Date, commencing
_____________________ in an amount equal to the product of (i) the actual
number of days in the related Interest Accrual Period (as defined herein)
divided by 360, (ii) the Class A Certificate Rate and (iii) the outstanding
principal balance of the Class A Certificates as of the preceding Record Date
(or in the case of the first Distribution Date, as of the Closing Date).
With respect to any Distribution Date, the Interest Accrual Period is the
period from and including the first day of the preceding calendar month to
and including the last day of such preceding calendar month, except the
initial Interest Accrual Period shall be deemed to be the period from the
Closing Date through the last day of the calendar month preceding the initial
Distribution Date. Interest for any Distribution Date due but not paid on
any Distribution Date will be due on the next succeeding Distribution Date
together with, to the extent permitted by applicable law, additional interest
on such amount at the Class A Certificate Rate. Interest will be calculated
on the basis of the actual number of days elapsed in the Interest Accrual
Period and a 360-day year ("Actual/360 Basis"). See "Description of the
Offered Certificates and the Agreement--General" and "--Distributions from
the Interest Accrual Account."
INTEREST ON THE CLASS B
CERTIFICATES . . . . Interest will accrue on the unpaid principal amount of'
the Class B Certificates at a per annum rate equal to the Class B Certificate
Rate and, except as otherwise provided herein, be distributed to Class B
Certificateholders monthly on each Distribution Date, commencing
_____________________, in an amount equal to the product of (i) the actual
number of days in the related Interest Accrual Period divided by 360, (ii)
the Class B Certificate Rate and (iii) the outstanding principal balance of
the Class B Certificates as of the preceding Record Date (or in the case of
the first Distribution Date, as of the Closing Date). Interest for any
Distribution Date due but not paid on any Distribution Date will be due on
the next succeeding Distribution Date together with, to the extent permitted
by applicable law, additional interest on such amount at the Class B
Certificate Rate. Interest will be calculated on an Actual/360 Basis. See
"Description of the Offered Certificates and the Agreement--General" and "--
Distributions from the Collection Account."
RECORD DATE . . . The 15th day of the month immediately preceding any
Distribution Date.
REVOLVING PERIOD . . . . No principal will be payable to the Offered
Certificateholders until the Distribution Date occurring in _____________,
or upon the occurrence of an Amortization Event (as defined below) as
described herein, on the first Distribution Date following the Collection
Period during which an Amortization Event occurs. No principal will be
payable to the Class B Certificateholders until the final principal payment
has been made to the Class A Certificateholders. No principal will be
payable to the Class C Certificateholders until the final principal payment
has been made to the Offered Certificateholders. No principal will be
payable to the holder of the Subordinated Transferor Certificate until the
final principal payment has been made to the Offered Certificateholders and
the Class C Certificateholders. For each Collection Period during the period
beginning after the Cut-off Date and ending on the day prior to the day on
which the Controlled Amortization Period or the Rapid Amortization Period
commences (the "Revolving Period"), all Principal Collections otherwise
allocable to the Certificateholders' Interest (other than Shared Principal
Collections paid to holders of certificates of other Series and any
Reallocated Principal Collections that are used to pay interest due on the
Class A, Class B and Class C Certificates) will, subject to certain
limitations, be distributed to the Transferor.
PRINCIPAL PAYMENTS; CONTROLLED
AMORTIZATION PERIOD . . . . Unless or until an Amortization Event (as
defined below) has occurred, commencing on (the Distribution Date occurring
three years after the Closing Date) (the "Controlled Amortization Date") and
ending when the Class A Invested Amount has been paid in full or when the
Trust or Series otherwise terminates or on the day on which an Amortization
Event occurs or is deemed to have occurred (the "Controlled Amortization
Period"), Principal Collections and Shared Principal Collections allocable to
the Certificates (other than Reallocated Principal Collections that are used
to pay interest due on the Class A, Class B and Class C Certificates) will be
distributed monthly to the Class A Certificateholders, as provided herein,
on each Distribution Date beginning with the Distribution Date following the
Collection Period commencing on the Controlled Amortization Date. During the
Controlled Amortization Period, the amount of Principal Collections and
Shared Principal Collections allocable to the Certificates will equal the
product of such Principal Collections and the Fixed Allocation Percentage (as
defined below) which will be paid through to the Class A Certificateholders
to the extent of the lesser of such product and $ ____________ (the
"Controlled Amortization Amount"). The Class A Expected Final Payment Date
is ______________________. See "Description of the Offered Certificates and
the Agreement--General" and "--Distributions from Collection Account."
During either the Controlled Amortization Period or any Rapid
Amortization Period (described below), the amount of Principal Collections
allocable to the Certificateholders will equal an amount determined by
multiplying (A) a fraction, the numerator of which is the sum of the Class
A Invested Amount, the Class B Invested Amount, the Class C Invested Amount
and the Subordinated Transferor Amount (together, the "Invested Amount"),
each as of the end of the last day of the Revolving Period and the
denominator of which is the greater of (i) the amount of Receivables (minus
the amount of any Ineligible Receivables) in the Trust as of the last day of
the prior Collection Period less the amount of finance charges billed or
accrued in respect of such Receivables in such prior Collection Period
adjusted for finance charges rebated in such Collection Period (the
"Aggregate Receivables") or (ii) the sum of the numerators used to calculate
the invested percentage with respect to Principal Collections for all Series
of certificates outstanding for the current Distribution Date by (B) the
Principal Collections received during the related Collection Period (the
"Fixed Allocation Percentage").
The Class B Certificateholders will not receive any payments of
principal until the Class A Certificateholders have received all payments of
principal due to them. Once the Class A Invested Amount has been reduced to
zero, the Class B Invested Amount will be paid in full to the Class B
Certificateholders on _________ (the "Class B Expected Final Payment Date").
See "Description of the Offered Certificates and the Agreement--General" and
"--Distributions from Collection Account."
The Class C Certificateholders will not receive any payments of
principal until the Class A and the Class B Certificateholders have received
all payments of principal due to them. Once the Class A Invested Amount and
the Class B Invested Amount have been reduced to zero, the Class C Invested
Amount will be paid in full to the Class C Certificateholders on __________
(the "Class C Expected Final Payment Date").
The holder of the Subordinated Transferor Certificates will not receive
any payments of principal until the Class A, the Class B and the Class C
Certificateholders have received all payments of principal due to them. Once
the Class A Invested Amount, the Class B Invested Amount and the Class C
Invested Amount have been reduced to zero, the Subordinated Transferor Amount
will be paid in full to the holder of the Subordinated Transferor
Certificate. The Expected Final Payment Date for the Subordinated Transferor
Certificate is ______________.
RAPID AMORTIZATION PERIOD . . . . During the period from the earlier of the
date on which the Class A Invested Amount has been paid in full or an
Amortization Event occurs or is deemed to have occurred to the earlier of the
date on which the Invested Amount has been paid in full or the Final Series
1996 Termination Date (see "Final Payment of Principal; Termination of the
Trust" below) (the "Rapid Amortization Period"), Principal Collections and
Shared Principal Collections allocable to the Certificateholders' Interest
will no longer be distributed to the Transferor but instead will be
distributed as principal payments on each Distribution Date beginning with
the first Distribution Date following the Collection Period in which the
Class A Invested Amount has been paid in full or an Amortization Event occurs
or is deemed to have occurred. Such Principal Collections and Shared Principal
Collections will be distributed to the Class A Certificateholders (to the
extent not already paid in full) and, following the final principal payment
to the Class A Certificateholders, to the Class B Certificateholders and,
following the final principal payment to the Class B Certificateholders, to
the Class C Certificateholders, and, following the final principal payment
to the Class C Certificateholders, to the holder of the Subordinated
Transferor Certificate. See "Description of the Offered Certificates and the
Agreement--Amortization Events."
FLOW OF FUNDS . . . . Funds on deposit in the Collection Account allocable to
the Class A, Class B and Class C Certificates and the Subordinated Transferor
Certificate with respect to each Distribution Date shall be applied as in the
priority set forth below:
(a) the Class A Floating Allocation Percentage of Finance Charge
Collections will be distributed as follows:
(i) Class A Monthly Interest, plus the amount of any unpaid
interest due;
(ii) the Class A Investor Default Amount will be
distributed to the Transferor during the Revolving Period up to the amount
of the Transferor Interest after the purchase of new Receivables (and
thereafter will be included in the funds available to make principal
payments);
(iii) the Class A Monthly Servicing Fee (in the event
Bridgestone/Firestone is not the Servicer, this amount will be distributed
before the amount in clause (ii)); and
(iv) the balance will constitute a portion of Excess Finance
Charge Collections (as defined below) and will be allocated and distributed
as described under "Excess Finance Charge Collections."
(b) the Class B Floating Allocation Percentage of Finance Charge
Collections will be distributed as follows:
(i) Class B Monthly Interest, plus the amount of any unpaid
interest due;
(ii) the Class B Investor Default Amount will be
distributed to the Transferor during the Revolving Period up to the amount
of the Transferor Interest after the purchase of new Receivables (and
thereafter will be included in the funds available to make principal
payments);
(iii) the Class B Monthly Servicing Fee (in the event
Bridgestone/Firestone is not the Servicer, this amount will be distributed
before the amount in clause (ii)); and
(iv) the balance, if any, will constitute a portion of Excess
Finance Charge Collections and will be allocated and distributed as described
under "Excess Finance Charge Collections."
(c) the Class C Floating Allocation Percentage of Finance Charge
Collections will be distributed as follows:
(i) Class C Monthly Interest, plus the amount of any
unpaid interest due;
(ii) the Class C Investor Default Amount will be
distributed to the Transferor during the Revolving Period up to the amount
of the Transferor Interest after the purchase of new Receivables (and
thereafter will be included in the funds available to make principal
payments);
(iii) the Class C Monthly Servicing Fee (in the event
Bridgestone/Firestone is not the Servicer, this amount will be distributed
before the amount in clause (ii)); and
(iv) the balance, if any, will constitute a portion of
Excess Finance Charge Collections and will be allocated and distributed as
described under "--Excess Finance Charge Collections."
(d) the Subordinated Transferor Floating Allocation Percentage of
Finance Charge Collections will be distributed as follows:
(i) the Subordinated Transferor Monthly Servicing Fee; and
(ii) the balance, if any, will constitute a portion of
Excess Finance Charge Collections and will be allocated and distributed as
described under "--Excess Finance Charge Collections."
(e) For each Distribution Date with respect to the Revolving
Period, the remaining funds on deposit in the Collection Account allocable
to the Class A, Class B and Class C Certificates and the Subordinated
Transferor Certificate (other than certain Excess Finance Charge Collections
and Reallocated Principal Collections) will be applied as Shared Principal
Collections and the balance will be distributed to the Transferor.
(f) For each Distribution Date with respect to the Controlled
Amortization Period or any Rapid Amortization Period, the remaining funds on
deposit in the Collection Account allocable to the Class A, Class B and Class
C Certificates and the Subordinated Transferor Certificate (other than
certain Excess Finance Charge Collections and Reallocated Principal
Collections) will be distributed as follows:
(i) Class A Monthly Principal for such Distribution Date
until the Class A Invested Amount is paid in full;
(ii) once the Class A Invested Amount is paid in full,
the remaining amount will be distributed to the Class B Certificateholders
until the Class B Invested Amount is paid in full;
(iii) once the Class B Invested Amount is paid in full,
the remaining amount will be distributed to the Class C Certificateholders
until the Class C Invested Amount is paid in full;
(iv) once the Class C Invested Amount is paid in full,
the remaining amount will be distributed to the holder of the Subordinated
Transferor Certificate until the Subordinated Transferor Amount is paid in
full;
(v) an amount equal to the balance of any such remaining
funds on deposit in the Collection Account will be paid to the Transferor up
to the amount of the Transferor Interest; and
(vi) the balance will be applied as Shared Principal
Collections and the balance will be distributed to the Transferor.
"Class A Monthly Interest" means, with respect to any Distribution Date,
the Class A Monthly Interest equals the product of (i) the actual number of
days in the related Interest Accrual Period divided by 360, (ii) the Class
A Certificate Rate and (iii) the outstanding principal balance of the Class
A Certificates as of the preceding Distribution Date (after subtracting
therefrom the aggregate amount of all distributions of Class A Monthly
Principal made to the Class A Certificateholders on such Distribution Date)
or, with respect to the first Distribution Date, the Class A Initial Invested
Amount, provided, however, that with respect to the initial Distribution
Date, Class A Monthly Interest shall equal $_______________.
"Class B Monthly Interest" means, with respect to any Distribution Date,
the Class B Monthly Interest equals the product of (i) the actual number of
days in the related Interest Accrual Period divided by 360, (ii) the Class
B Certificate Rate and (iii) the outstanding principal balance of the Class B
Certificates as of the preceding Distribution Date (after subtracting
therefrom the aggregate amount of all distributions of Class B Monthly
Principal made to the Class B Certificateholders on such Distribution Date)
or, with respect to the first Distribution Date, the Class B Initial Invested
Amount, provided, however, that with respect to the initial Distribution Date,
Class B Monthly Interest shall equal $_______________.
"Class C Monthly Interest" means, with respect to any Distribution Date,
the Class C Monthly Interest equals the product of (i) the actual number of
days in the related Interest Accrual Period divided by 360, (ii) the Class
C Certificate Rate and (iii) the outstanding principal balance of the Class
C Certificates as of the preceding Distribution Date (after subtracting
therefrom the aggregate amount of all distributions of Class C Monthly
Principal made to the Class C Certificateholders on such Distribution Date)
or, with respect to the first Distribution Date, the Class C Initial Invested
Amount, provided, however, that with respect to the initial Distribution
Date, Class C Monthly Interest shall equal $_______________.
"Class A Investor Default Amount" means, a portion of all Defaulted
Receivables which will be allocated to the Class A Certificateholders for
each Distribution Date in an amount equal to the product of the Class A
Floating Allocation Percentage applicable during the immediately preceding
Collection Period and the amount of Defaulted Receivables for such Collection
Period.
"Class B Investor Default Amount" means, a portion of all Defaulted
Receivables which will be allocated to the Class B Certificateholders for
each Distribution Date in an amount equal to the product of the Class B
Floating Allocation Percentage applicable during the immediately preceding
Collection Period and the amount of Defaulted Receivables for such Collection
Period.
"Class C Investor Default Amount" means, a portion of all Defaulted
Receivables which will be allocated to the Class C Certificateholders for
each Distribution Date in an amount equal to the product of the Class C
Floating Allocation Percentage applicable during the immediately preceding
Collection Period and the amount of Defaulted Receivables for such Collection
Period.
"Subordinated Transferor Default Amount" means, a portion of all
Defaulted Receivables which will be allocated to the holder of the
Subordinated Transferor Certificate for each Distribution Date in an amount
equal to the product of the Subordinated Transferor Floating Allocation
Percentage applicable during the immediately preceding Collection Period and
the amount of Defaulted Receivables for such Collection Period.
"Monthly Servicing Fee" means, with respect to any distribution date,
the sum of (a) the Class A Monthly Servicing Fee, the Class B Monthly
Servicing Fee, the Class C Monthly Servicing Fee and the Subordinated
Transferor Monthly Servicing Fee and (b) the Servicing Fee allocable to the
Transferor Amount and the B/F Amount.
The portion of the Servicing Fee allocable to the Class A Interest on
each Distribution Date (the "Class A Monthly Servicing Fee"), to the
Class B Interest on each Distribution Date (the "Class B Monthly
Servicing Fee"), to the Class C Interest on each Distribution Date (the
"Class C Monthly Servicing Fee") and to the Subordinated Transferor Interest
on each Distribution Date (the "Subordinated Transferor Monthly Servicing
Fee") generally will be equal to one-twelfth of the product of 2.00% per
annum and the amount of the Class A Invested Amount, the Class B Invested
Amount, the Class C Invested Amount, or the Subordinated Transferor Amount,
as the case may be, on the last day of the second preceding Collection Period
(in the case of the first Distribution Date, the initial principal amount of
the Class A Certificates, Class B Certificates, the Class C Certificates or
the Subordinated Transferor Certificate, as the case may be).
"Class A Invested Amount" for any date means an amount equal to the
initial principal balance of the Class A Certificates, minus the amount of
principal payments made to Class A Certificateholders prior to such date and
minus the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs (as defined below) for all Distribution Dates preceding such date
over the aggregate amount of any reimbursements of Class A Investor
Charge-Offs for all Distribution Dates preceding such date.
"Class B Invested Amount" for any date means an amount equal to (i) the
initial principal balance of the Class B Certificates, minus (ii) the amount
of principal payments made to the Class B Certificateholders prior to such
date, minus (iii) the aggregate amount of Class B Investor Charge-Offs (as
defined below) for all prior Distribution Dates, minus (iv) the aggregate
amount of Class B Reallocated Principal Collections for all prior
Distribution Dates for which the Subordinated Transferor Amount and the Class
C Invested Amount have not been reduced, minus (v) an amount equal to the
aggregate amount by which the Class B Invested Amount has been reduced to
fund the Class A Investor Default Amount on all prior Distribution Dates as
described herein, and plus (vi) the amount of Excess Finance Charge
Collections applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (iii), (iv)
and (v).
"Class C Invested Amount" for any date means an amount equal to (i) the
initial principal balance of the Class C Certificates, minus (ii) the amount
of principal payments made to the Class C Certificateholders prior to such
date, minus (iii) the aggregate amount of Class C Investor Charge-Offs (as
defined below) for all prior Distribution Dates, minus (iv) the aggregate
amount of Class C Reallocated Principal Collections for all prior
Distribution Dates for which the Subordinated Transferor Amount has not been
reduced, minus (v) an amount equal to the aggregate amount by which the Class
C Invested Amount has been reduced to fund the Class A and Class B Investor
Default Amount on all prior Distribution Dates as described herein, and plus
(vi) the amount of Excess Finance Charge Collections applied on all prior
Distribution Dates for the purpose of reimbursing amounts deducted pursuant
to the foregoing clauses (iii), (iv) and (v).
"Subordinated Transferor Amount" for any date means an amount equal to
(i) the initial principal balance of the Subordinated Transferor Certificate,
minus (ii) the amount of principal payments made to the holder of the
Subordinated Transferor Certificate prior to such date, minus (iii) the
aggregate amount of Subordinated Transferor Charge-Offs (as defined below)
for all prior Distribution Dates, minus (iv) the aggregate amount of
Reallocated Principal Collections for all prior Distribution Dates,
minus (v) an amount equal to the aggregate amount by which the
Subordinated Transferor Amount has been reduced to fund the Class A,
Class B and Class C Investor Default Amount on all prior Distribution
Dates as described herein, and plus (vi) the amount of Excess Finance Charge
Collections applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (iii), (iv)
and (v).
"Excess Finance Charge Collections" shall mean, with respect to any
Distribution Date, an amount equal to the sum of the amounts described in
clause (a)(iv), clause (b)(iv), clause (c)(iv) and clause (d)(ii) above.
See "Description of the Offered certificates and the Agreement--
Distributions from the Collection Account."
EXCESS FINANCE
CHARGE COLLECTIONS . . . . Excess Finance Charge Collections will be applied
as follows:
(a) to fund the Class A Required Amount;
(b) Class A Investor Charge-Offs which have not been previously
reimbursed will be distributed to the Transferor during the Revolving Period
up to the amount of the Transferor Interest after the purchase of new
Receivables (and thereafter will be included in the funds available to make
principal payments);
(c) to fund the Class B Required Amount;
(d) an amount equal to the amount by which the Class B Invested
Amount has been reduced below the Initial Class B Invested Amount (for
reasons other than the payment of principal to the Class B
Certificateholders) will be distributed to the Transferor during the
Revolving Period, up to the amount of the Transferor Interest after the
purchase of new Receivables (and thereafter will be included in the funds
available to make principal payments);
(e) to fund the Class C Required Amount;
(f) an amount equal to the amount by which the Class C Invested
Amount has been reduced below the Initial Class C Invested Amount (for
reasons other than the payment of principal to the Class C
Certificateholders) will be distributed to the Transferor during the
Revolving Period up to the amount of the Transferor Interest after the
purchase of new Receivables (and thereafter will be included in the funds
available to make principal payments);
(g) the Subordinated Transferor Default Amount will be distributed
to the Transferor during the Revolving Period up to the amount of the
Transferor Interest after the purchase of new Receivables (and thereafter
will be included in the funds available to make principal payments);
(h) the amount by which the Subordinated Transferor Amount has been
reduced below the initial Subordinated Transferor Amount (for reasons other
than the payment of principal to the holder of the Subordinated Transferor
Certificate) will be distributed to the Transferor during the Revolving
Period up to the amount of the Transferor Interest after the purchase of new
Receivables (and thereafter will be included in the funds available to make
principal payments);
(i) the balance, if any, will be treated as Shared Excess Finance
Charge Collections to the extent necessary; and
(j) the balance, if any, will be treated as Shared Principal
Collections.
The "Class A Required Amount" means the amount, if any, by which the sum
of Class A Monthly Interest, any overdue Class A Monthly Interest (with
interest thereon), the Class A Investor Default Amount, the Class A Monthly
Servicing Fee for such Collection Period exceeds the funds allocable to the
Class A Certificates to pay such amounts.
The "Class B Required Amount" means the amount, if any, by which the sum
of Class B Monthly Interest, any overdue Class B Monthly Interest (with
interest thereon), the Class B Investor Default Amount, the Class B Monthly
Servicing Fee for such Collection Period exceeds the funds allocable to the
Class B Certificates to pay such amounts.
The "Class C Required Amount" means the amount, if any, by which the sum
of Class C Monthly Interest, any overdue Class C Monthly Interest (with
interest thereon), the Class C Investor Default Amount, the Class C Monthly
Servicing Fee for such Collection Period exceeds the funds allocable to the
Class C Certificates to pay such amounts.
The "Required Amount" shall equal the sum of the Class A, Class B and
Class C Required Amounts.
See "Description of the Offered Certificates and the Agreement--Excess
Finance Charge Collections."
REALLOCATED PRINCIPAL
COLLECTIONS . . . . Principal Collections allocable first to the Subordinated
Transferor Interest, then to the Class C Interest and then to the Class B
Interest with respect to a Collection Period will be applied as follows:
(a) an amount equal to the excess of (i) the Required Amount over
(ii) the Excess Finance Charge Collections will be used to fund the Required
Amount; and
(b) Collections not applied in the foregoing manner (and therefore
not constituting Reallocated Principal Collections) will during the Revolving
Period, be applied as Shared Principal Collections and, during the Controlled
Amortization Period or any Rapid Amortization Period, will be included in the
funds available to make principal payments.
The amounts described in the following paragraph will equal the
"Subordinated Transferor Reallocated Principal Collections", the "Class C
Reallocated Principal Collections" and the "Class B Reallocated Principal
Collections", as applicable. "Reallocated Principal Collections" will equal
the sum of Subordinated Transferor Reallocated Principal Collections, Class
C Reallocated Principal Collections and Class B Reallocated Principal
Collections.
With respect to any Collection Period during the Revolving Period,
Reallocated Principal Collections will be allocated to each of the
Subordinated Transferor Interest, the Class C Interest and the Class B
Interest based on the Subordinated Transferor Floating Allocation Percentage,
the Class C Floating Allocation Percentage or the Class B Floating Allocation
Percentage for such Collection Period, as applicable. With respect to any
Collection Period during the Controlled Amortization Period or any Rapid
Amortization Period, Reallocated Principal Collections will be allocated to
each of the Subordinated Transferor Interest, the Class C Interest and the
Class B Interest based on the Fixed Allocation Percentage of Principal
Collections for such Collection Period multiplied by a fraction the numerator
of which is equal to the Subordinated Transferor Amount, the Class C Invested
or the Class B Invested Amount, as applicable, as of the close of business
on the last day of the prior Collection Period and the denominator of which
is equal to the Invested Amount at the close of business on such day.
See "Description of the Offered Certificates and the Agreement--
Reallocation of Cash Flows."
ADDITIONAL AMOUNTS AVAILABLE
TO CERTIFICATEHOLDERS . . . . If Finance Charge Collections allocable to
interest for any Collection Period are insufficient to pay the Required
Amount, Excess Finance Charge Collections will be applied to fund the Required
Amount as described herein under "Excess Finance Charge Collections." If
Excess Finance Charge Collections available with respect to such Collection
Period are less than the Required Amount, Principal Collections for such
Collection Period will then be used to fund the remaining Required Amount as
described herein under "Reallocated Principal Collections."
If Reallocated Principal Collections with respect to any Collection
Period are insufficient to fund the remaining Class A Required Amount for
such Collection Period, then a portion of the Subordinated Transferor Amount
(after giving effect to reductions for any Subordinated Transferor Charge-
Offs and Reallocated Principal Collections for such Collection Period) equal
to such insufficiency (but not in excess of the Class A Investor Default
Amount for such Distribution Date) will be allocated to the Class A
Certificates to avoid a charge-off with respect to the Class A Certificates,
and the Subordinated Transferor Amount will be reduced by such amount.
If the Subordinated Transferor Amount is reduced to zero, the Class C
Invested Amount (after giving effect to reductions for any Class C Investor
Charge-Offs and any Class C Reallocated Principal Collections for such
Collection Period) will be reduced by the amount by which the Subordinated
Transferor Amount would have been reduced below zero (but not by more than
the excess of the Class A Investor Default Amount for such Distribution Date
over the amount of such reduction, if any, of the Subordinated Transferor
Amount for such Distribution Date) and such amount will be allocated to the
Class A Certificates to avoid a charge-off with respect to the Class A
Certificates.
If the Class C Invested Amount is reduced to zero, the Class B Invested
Amount (after giving effect to reductions for any Class B Investor Charge-
Offs and any Class B Reallocated Principal Collections for such Collection
Period) will be reduced by the amount by which the Class C Invested Amount
would have been reduced below zero (but not by more than the excess of the
Class A Investor Default Amount for such Distribution Date over the amount
of such reduction, if any, of the Subordinated Transferor Amount and the
Class C Invested Amount for such Distribution Date) and such amount will be
allocated to the Class A Certificates to avoid a charge-off with respect to
the Class A Certificates.
If the Class B Invested Amount is reduced to zero, the Class A Invested
Amount will be reduced by the amount by which the Class B Invested Amount
would have been reduced below zero, but not in excess of the Class A Investor
Default Amount for such Distribution Date (a "Class A Investor Charge-Off"),
and the Class A Certificateholders will bear directly the credit and other
risks associated with their undivided interest in the Trust.
After payment of the Class A Required Amount, if Class C Reallocated
Principal Collections and Subordinated Transferor Reallocated Principal
Collections with respect to any Collection Period are insufficient to fund
the remaining Class B Required Amount for such Collection Period, then a
portion of the Subordinated Transferor Amount (after giving effect to
reductions for any Subordinated Transferor Charge-Offs, Reallocated Principal
Collections and any adjustments made thereto for the benefit of the Class A
Certificateholders) equal to such insufficiency (but not in excess of the
Class B Investor Default Amount for such Distribution Date) will be allocated
to the Class B Certificates to avoid a charge-off with respect to the Class
B Certificates, and the Subordinated Transferor Amount will be reduced by
such amount.
If the Subordinated Transferor Amount is reduced to zero, the Class C
Invested Amount (after giving effect to reductions for any Class C Investor
Charge-Offs, Class C Reallocated Principal Collections and any adjustments
made thereto for the benefit of the Class A Certificateholders) will be
reduced by the amount by which the Subordinated Transferor Amount would have
been reduced below zero (but not by more than the excess of the Class B
Investor Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Subordinated Transferor Amount for such
Distribution Date) and such amount will be allocated to the Class B
Certificates to avoid a charge-off with respect to the Class B Certificates.
If the Class C Invested Amount is reduced to zero, the Class B Invested
Amount will be reduced by the amount by which the Class C Invested Amount
would have been reduced below zero, but not in excess of the Class B Investor
Default Amount for such Distribution Date (a "Class B Investor Charge-Off"),
and the Class B Certificateholders will bear directly the credit and other
risks associated with their undivided interest in the Trust.
After payment of the Class B Required Amount, if Subordinated Transferor
Reallocated Principal Collections with respect to any Collection Period are
insufficient to fund the remaining Class C Required Amount for such
Collection Period, then a portion of the Subordinated Transferor Amount
(after giving effect to reductions for any Subordinated Transferor Charge-
Offs, Reallocated Principal Collections and any adjustments made thereto for
the benefit of the Class B and Class A Certificateholders) equal to such
insufficiency (but not in excess of the Class C Investor Default Amount for
such Distribution Date) will be allocated to the Class C Certificates to
avoid a charge-off with respect to the Class C Certificates, and the
Subordinated Transferor Amount will be reduced by such amount.
If the Subordinated Transferor Amount is reduced to zero, the Class C
Invested Amount will be reduced by the amount by which the Subordinated
Transferor Amount would have been reduced below zero, but not in excess of
the Class C Investor Default Amount for such Distribution Date (a "Class C
Investor Charge-Off"), and the Class C Certificateholders will bear directly
the credit and other risks associated with their undivided interest in the
Trust.
On each Distribution Date, if the Subordinated Transferor Default Amount
for such Distribution Date exceeds the amount of Excess Finance Charge
Collections which is allocated and available to fund such amount as described
under "Excess Finance Charge Collections", the Subordinated Transferor Amount
(after giving effect to reductions for Reallocated Principal Collections and
the amount of any adjustments made thereto for the benefit of the Class A,
Class B or Class C Certificateholders) will be reduced but not in excess of
the Subordinated Transferor Default Amount (the "Subordinated Transferor
Charge-Off").
In the event that any of the Subordinated Transferor Amount, the Class
C Invested Amount, the Class B Invested Amount or the Class A Invested Amount
is reduced, such amount will thereafter be increased (but not in excess of
the unpaid principal balance of the Subordinated Transferor Certificate, the
Class C Certificates, the Class B Certificates or the Class A Certificates,
as applicable) on any Distribution Date by the amount of Excess Finance
Charge Collections allocated and available for that purpose as described
under "--Excess Finance Charge Collections."
The "Subordinated Transferor Amount" will initially be equal to
$___________ and the "Class C Invested Amount" will initially be equal to
$___________.
See "Description of the Offered Certificates--Additional Amounts
Available to Certificateholders."
PRINCIPAL PAYMENTS; CERTAIN
ALLOCATIONS . . . . Principal Collections with respect to any Collection
Period will be allocated on the related Determination Date on the basis of the
applicable Invested Percentage. Under the Agreement, such collections will be
either paid to the Transferor, as described above during the Revolving Period,
or to the holders of the Certificates in respect of the Class A Invested
Amount, Class B Invested Amount, the Class C Invested Amount or Subordinated
Transferor Amount, or to both the Transferor and the holders of the
Certificates. Such allocations will be performed during the Revolving
Period, Controlled Amortization Period and any Rapid Amortization Period.
In the event that other Series are offered by the Trust, such other
Series may or may not have amortization periods like the Controlled
Amortization Period or the Rapid Amortization Period or revolving periods
like the Revolving Period for the Certificates, and such periods may have
different lengths and begin on different dates than the Controlled
Amortization Period, the Rapid Amortization Period or the Revolving Period.
Thus, certain Series may be in their revolving periods, while others are in
periods during which Principal Collections are distributed to such Series.
Under certain circumstances, one or more Series may be in their amortization
periods, while other Series are not. In addition, other Series may allocate
Principal Collections based upon different invested percentages.
SHARED PRINCIPAL COLLECTIONS . . . . To the extent that Principal Collections
and other amounts that are allocated to the interest of the holders of any
class of any series (other than the Transferor Interest) are not needed to
make payments to the certificateholders of such class, they may be applied to
cover principal payments due to or for the benefit of certificateholders of
another Series ("Shared Principal Collections"). Any such reallocation will
not result in a reduction in the interest of the holders of the Series to
which such Principal Collections were initially allocated. In addition,
Principal Collections and certain other amounts otherwise allocable to other
Series, to the extent such collections are not needed to make payments to the
certificateholders of such other Series, may be applied to cover principal
payments due to or for the benefit of the holders of the Certificates. See
"Description of the Offered Certificates and the Agreement--Shared Principal
Collections."
SHARING OF EXCESS FINANCE
CHARGE COLLECTIONS . . . . Finance Charge Collections on any business day in
excess of the amounts necessary to make required payments on such business
day with respect to the Certificates will be applied to cover any shortfalls
with respect to amounts payable from Finance Charge Collections allocable to
any other Series then outstanding, pro rata based upon the amount of the
shortfall, if any, with respect to such other Series. In addition, Finance
Charge Collections in excess of the amounts necessary to make required
payments on such business day with respect to certificates of other
outstanding Series will be applied to cover any shortfalls with respect to
Finance Charge Collections allocable to the Certificates. Any Excess Finance
Charge Collections remaining after covering shortfalls with respect to all
outstanding Series will be paid to the Transferor. See "Description of the
Offered Certificates and the Agreement--Sharing of Excess Finance Charge
Collections."
DISCOUNT OPTION . . . . The Agreement provides that the Transferor may at any
time designate a fixed percentage or a variable percentage based on a formula
(the "Discount Percentage"), but in either case not to exceed (6)%, of
Receivables giving rise to Principal Collections ("Principal Receivables")
that are charges for goods or services or obligations for repayment of cash
advances, part of which have not previously been sold as Discount Option
Receivables, arising from then on to be treated as Receivables giving rise
to Finance Charge Collections ("Finance Charge Receivables"). Such
Receivables will be designated "Discount Option Receivables." On the date
of processing any Discount Option Receivables, an amount equal to the product
of (i) the Aggregate Certificateholders' Interest with respect to Finance
Charge Receivables and (ii) the amount of each Finance Charge Receivable will
be deposited by the Transferor into a finance charge account and an amount
equal to the product of the Transferor Interest and the amount of the
Discount Option Receivables will be paid to the holder of the Exchangeable
Transferor Certificate. Simultaneously with such reassignment, the
Transferor will retransfer the Receivable to the Trust, making the
representations and warranties with respect to such Receivable as if such
Receivable were a new Receivable created in an existing Account, and the
amount of the Transferor Interest will be increased to reflect the addition
of such Receivable to the Trust. Collections with respect to such Receivable
will be treated as Principal Collections. See "Description of the Offered
Certificates and the Agreement--Discount Option."
AMORTIZATION EVENTS . . . . An "Amortization Event" with respect to the
Certificates refers to any of the following events:
(i) failure on the part of the Servicer, the Originator or the
Transferor to make any payment or deposit required by the terms of the
Agreement on or before five business days after the date such payment or
deposit is required to be made thereunder;
(ii) the failure on the part of the Servicer, the Originator or the
Transferor duly to observe or perform in any material respect certain
covenants or agreements set forth in the Agreement or the Purchase and Sale
Agreement which, in the case of certain of such covenants or agreements,
continues unremedied for a period of 60 days after the date on which written
notice of such failure requiring the same to be remedied shall have been
given to the Servicer, the Originator or the Transferor, as applicable,
provided, however, that an Amortization Event shall not be deemed to occur
if the Transferor has accepted the transfer of the related Receivable (or all
of such Receivables, if applicable) during such period (or such longer period
as the Trustee may specify not to exceed an additional 60 days) in accordance
with the provisions of the Agreement or the Purchase and Sale Agreement;
(iii) any representation or warranty made by the Servicer, the
Originator or the Transferor in the Agreement or the Purchase and Sale
Agreement or any information required to be delivered by the Transferor shall
prove to have been incorrect in any material respect when made or when
delivered, which continues to be incorrect in any material respect for a
period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer, the
Originator or the Transferor, as applicable, and as a result of which the
interests of the certificateholders are materially and adversely affected;
provided, however, that such an Amortization Event shall not be deemed to
have occurred if the Transferor has accepted the transfer of the related
Receivable (or all of such Receivables, if applicable) during such period (or
such longer period as the Trustee may specify) in accordance with the
provisions of the Agreement;
(iv) certain events of insolvency, conservatorship, receivership
or bankruptcy with respect to the Originator, Bridgestone/Firestone or the
Transferor;
(v) the annualized percentage equivalent of a fraction, the
numerator of which is the amount of Finance Charge Collections for the
related Collection Period, calculated on a cash basis after subtracting the
Defaulted Amount, and the denominator of which is the Aggregate Receivables
as of the end of the preceding Collection Period, (the "Portfolio Yield")
averaged over any three consecutive Collection Periods is less than the sum
of the Class A Certificate Rate plus 2.00% per annum (the "Base Rate");
(vi) the Trust shall become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(vii) the Transferor Amount (plus the amount available under the
Transferor Letter of Credit and the B/F Amount) is less than __% of the
aggregate invested amount of all outstanding Series of certificates issued
by the Trust as of the last day of any Collection Period;
(viii) the sum of (a) the Transferor Amount, (b) the B/F Amount,
(c) the Subordinated Transferor Amount and (d) the invested amount of any
subordinated class of certificates of any other Series which, when issued,
is retained by the Transferor and with respect to which no legal opinion is
delivered characterizing such certificates as indebtedness is less than __%
of the Aggregate Receivables as of the last day of any Collection Period; or
(ix) any Servicer Event of Default shall occur which would have a
material adverse effect on the Certificateholders.
See "Description of the Offered Certificates and the Agreement--
Amortization Events."
FINAL PAYMENT OF PRINCIPAL;
TERMINATION OF THE TRUST . . . . The Certificates will be subject to
optional repurchase by the Transferor on any Distribution Date on or after
which the Invested Amount is reduced to an amount less than or equal to
$________ (5% of the sum of the initial Invested Amount), unless certain
events of bankruptcy, insolvency or receivership have occurred with respect to
the Transferor. The repurchase price will be equal to the Invested Amount plus
accrued and unpaid interest on the Certificates through the day preceding the
Distribution Date on which the repurchase occurs. After such date, neither
the Trust nor the Transferor will have any further obligation to pay
principal or interest on the Certificates. In any event, the final payment
of principal and interest on the Class A Certificates will be no later than
the _______________ Distribution Date (the "Final Class A Termination Date")
and the final payment of principal and interest on the Class B Certificates
will be no later than the ______ Distribution Date (the "Final Class B
Termination Date"). The final payment of principal and interest with respect
to the Other Certificates will be no later than ___________, _________ (the
"Final Series 1996 Termination Date").
SERVICING . . . . Under the Agreement, the Servicer (initially,
Bridgestone/Firestone) will be responsible for servicing, managing and making
collections on all Receivables in the Trust. Subject to certain conditions
including the availability of the Servicer Letter of Credit (as defined
below), the Servicer may use for its own benefit and not segregate
Collections of Receivables received in each Collection Period until the
business day preceding the Distribution Date for such Collection Period (the
"Transfer Date"). On the second business day preceding each Distribution
Date (each, a "Determination Date") or, at the Servicer's option, more
frequently, the Servicer will allocate as described herein all Collections
of Receivables received with respect to the related Collection Period to the
Certificates, any other applicable Series, Bridgestone/Firestone and the
Transferor and on the Transfer Date will deposit the portion allocable to the
Certificateholders and the holders of certificates of any other Series into
a segregated trust account held in the name of the Trustee for the benefit
of certificateholders (the "Collection Account"). In certain limited
circumstances, Bridgestone/Firestone may resign or be removed as Servicer,
in which event either the Trustee or a third-party servicer may be appointed
as successor Servicer (Bridgestone/Firestone or any such successor Servicer
is referred to herein as the "Servicer"). As servicing compensation from the
Trust, the Servicer will receive a Servicing Fee from allocations of Finance
Charge Collections based upon the outstanding principal amount, from time to
time, of certificates issued by the Trust. See "Description of the Offered
Certificates and the Agreement--Collection and Other Servicing Procedures,"
"--Servicer Covenants," "--Servicing Compensation and Payment of Expenses,"
"--Servicer Events of Default" and "--Certain Matters Regarding the
Servicer."
The Servicer may perform any of its obligations under the Agreement
through one or more Subservicers. The Servicer will remain liable for its
servicing duties and obligations as if the Servicer alone were servicing the
Receivables. CFNA shall initially act as a Subservicer.
SERVICER LETTER OF CREDIT . . . . The Servicer has obtained an irrevocable
letter of credit (the "Servicer Letter of Credit") issued by The Sumitomo
Bank, Limited, acting through its New York Branch (the "Letter of Credit
Bank"), in favor of the Trustee on behalf of certificateholders of all Series
(including the Series 1992 Certificates and the Certificates), to secure
timely remittance of Collections by the Servicer to the Trustee. The
Servicer Letter of Credit was initially in the stated amount of $45,000,000
and will expire on May 30, 1997, unless extended or earlier terminated by the
Letter of Credit Bank. During the period that Bridgestone/Firestone is the
Servicer, if aggregate Collections at any time held by Bridgestone/Firestone
exceed the amount available under the Servicer Letter of Credit, the Servicer
shall deposit all such Collections in excess of the amount available under
the Servicer Letter of Credit into the Collection Account no later than the
second business day after the date of processing thereof. In the event that
(i) the Letter of Credit Bank's unsecured short-term debt ratings are reduced
below A-I + or P-I or F-I+ by the applicable Rating Agency and either (x) a
substitute Servicer Letter of Credit is not delivered to the Trustee, (y) the
Servicer Letter of Credit is not drawn on in full as described in the
Prospectus or (z) the Servicer has not established a cash collateral
account in the name of the Trustee for the benefit of Certificateholders
or (ii) the Servicer is not Bridgestone/Firestone, the Servicer shall
deposit Collections into the Collection Account no later than the second
business day after the date of processing thereof. In addition, in the
event that a substitute Servicer Letter of Credit is not delivered to
the Trustee on or before the fifth business day prior to the expiration of
the Servicer Letter of Credit or a cash collateral account has not been
established, the Servicer shall commence depositing Collections into the
Collection Account no later than the second business day after the date of
processing thereof. See "The Letter of Credit Bank" and "Description of the
Offered Certificates and the Agreement--The Letters of Credit."
TRANSFEROR LETTER OF CREDIT . . . . The Transferor has obtained an irrevocable
letter of credit (the "Transferor Letter of Credit") issued by the Letter of
Credit Bank in favor of the Trustee, on behalf of Certificateholders, to
secure the obligation of the Transferor to make certain payments in respect
of returned merchandise and other credit adjustments on the Receivables. The
Transferor Letter of Credit was initially in the stated amount of $15,000,000
and will expire on May 30, 1997, unless extended or earlier terminated by the
Letter of Credit Bank. The Transferor Letter of Credit will be available,
up to its stated amount, to cover any shortfall in payments allocated to any
Series and required to be deposited into the Collection Account by the
Transferor. The proceeds of any drawing on the Transferor Letter of Credit
will be allocated in much the same manner as are the Collections (generally
speaking, such allocations to the Certificates will be based on the ratio of
the Invested Amount to the Aggregate Receivables). As a result, if other
Series of certificates are outstanding, such other Series will benefit from
drawings made on the Transferor Letter of Credit. Initially, the Invested
Amount of the Certificates will be approximately __% of the Aggregate
Receivables. See "The Letter of Credit Bank" and "Description of the Offered
Certificates and the Agreement--The Letters of Credit."
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES . . . . Special tax counsel to the Transferor has advised the
Transferor that, in its opinion, (i) the Offered Certificates will be treated
for Federal income tax purposes as indebtedness and (ii) the Trust will not
be treated as either an association or a publicly traded partnership taxable
as a corporation for Federal income tax purposes. Under the Agreement, the
Transferor, the Trustee and, pursuant to the terms of the Offered
Certificates by virtue of the acceptance thereof, the Offered
Certificateholders and the Certificate Owners agree to treat the Offered
Certificates as debt for Federal and state tax purposes. If the Offered
Certificates are not characterized as debt, there may be adverse tax
consequences for Certificate Owners. See "Federal Income Tax Consequences."
ERISA CONSIDERATIONS . . . . The Offered Certificates may not be purchased by
any employee benefit plan subject to the requirements of the fiduciary
responsibility provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the provisions of Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code"), including any individual
retirement account. See "ERISA Considerations" herein.
RATING OF THE OFFERED
CERTIFICATES . . . . It is a condition to the issuance of the Class A
Certificates that they be rated by at least one nationally recognized
rating agency in such agency's highest rating category. It is a condition to
the issuance of the Class B Certificates that they be rated "A" by at least
one nationally recognized rating agency. Such ratings are based primarily on
the quality of the Receivables and the terms of the subordination of the
Class B Certificates, the Class C Certificates and the Subordinated Transferor
Certificate, as applicable.
RISK FACTORS
Investors should consider, among other things, the following factors in
connection with the purchase of the Offered Certificates:
NO ASSURANCE THAT SECONDARY MARKET WILL DEVELOP. There currently is no
secondary market for the Offered Certificates, and there can be no assurance
that a secondary market will develop or, if it does develop, that it will
provide Offered Certificateholders with liquidity of investment or will
continue for the life of the Offered Certificates. Citicorp Securities, Inc.
expects, but is not obligated, to make a market in the Offered Certificates.
There can be no assurance that any such market will continue.
NON-RECOURSE OBLIGATION. Certificateholders will not have recourse for
payment of their Offered Certificates to any assets of the Transferor, the
Originator, Bridgestone/Firestone, the Servicer or any of their affiliates.
Consequently, the Certificateholders must rely solely upon payments on the
Receivables for the payment of principal of and interest on the Offered
Certificates. Furthermore, under the Agreement, the Certificateholders have
an interest in the Receivables and Collections with respect thereto only to
the extent of the Certificateholders' Interest. Should the Offered
Certificates not be paid in full on a timely basis, Certificateholders may
not look to any assets of any of the Transferor, Bridgestone/Firestone, the
Servicer, the Originator or any affiliates thereof to satisfy their claims.
COMMINGLING. While Bridgestone/Firestone is the Servicer, Collections
held by Bridgestone/Firestone may, subject to certain conditions, including
the availability of the Servicer Letter of Credit, be commingled and used for
Bridgestone/Firestone's own benefit prior to the business day preceding each
Distribution Date and, in the event of the bankruptcy or insolvency of
Bridgestone/Firestone or, in certain circumstances, the lapse of certain time
periods, the Trust may not have a perfected interest in such Collections and
such Collections are subject to risk of loss, including risk of loss due to
Bridgestone/Firestone's bankruptcy or insolvency. During the period that
Bridgestone/Firestone is the Servicer, if aggregate Collections at any time
held by Bridgestone/Firestone exceed the amount available under the Servicer
Letter of Credit, the Servicer shall deposit all such Collections in excess
of the amount available under the Servicer Letter of Credit into the
Collection Account no later than the second business day after the date of
processing thereof. In the event that either (x) the unsecured short-term
debt rating of the Letter of Credit Bank is reduced below A-1+, P-1 or F-1+
by the applicable Rating Agency (the "Required Ratings"), within 35 days of
notice thereof to the Servicer or (y) in the event that the Servicer Letter
of Credit is scheduled to expire within five business days, either (i)
Bridgestone/Firestone will begin depositing Collections received within two
business days of the date of processing thereof directly into the Collection
Account, (ii) Bridgestone/Firestone will provide the Trustee with a
substitute letter of credit substantially similar to the Servicer Letter of
Credit issued by a financial institution whose unsecured short-term debt
rating is A-1+, P-1 or F-1+ by the applicable Rating Agency or (iii) the
Trustee will, but only with respect to clause (x) hereof, make a demand under
the Servicer Letter of Credit for the full amount available thereunder and
deposit the proceeds of such demand into a segregated trust account to be
available to the Trustee in the event Bridgestone/Firestone fails to timely
remit Collections to the Collection Account. The Letter of Credit Bank's
unsecured short-term debt rating has been reduced to below the Required
Ratings and the full amount of the proceeds from the Servicer Letter of
Credit are currently held in a segregated trust account available to the
Trustee in the event Bridgestone/Firestone fails to timely remit Collections
to the Collection Account. See "Description of the Offered Certificates and
the Agreement--Allocation of Collections; Deposits in Collection Account."
POTENTIAL PRIORITY OF CERTAIN LIENS. The Originator warrants in the
Purchase and Sale Agreement that the sale or transfer of the Receivables
thereunder by it to the Transferor is free and clear of any lien, security
interest, encumbrance or other right, title or interest of any person and
that all filings and recordings required to perfect the title of the
Transferor in the Receivables have been accomplished and are in full force
and effect, and the Transferor warrants in the Agreement that the transfer
of such Receivables to the Trust is either a valid transfer and assignment
of the Receivables to the Trust or the grant to the Trust of a security
interest in the Receivables. The Originator and the Transferor will take all
actions as are required under Ohio and Massachusetts law to perfect the
Trust's interest in the Receivables and the Transferor warrants that if the
transfer by the Transferor to the Trust granted the Trust a security interest
in the Receivables, the Trust will at all times have a first priority
perfected security interest therein and, with certain exceptions, and for
certain limited periods of time, in proceeds thereof. Nevertheless, if the
sale or transfer of Receivables to the Transferor or the transfer of the
Receivables to the Trust is deemed to create a security interest therein
under the New York, Ohio and Massachusetts Uniform Commercial Code
(collectively, the "UCC"), a tax or government lien or other nonconsensual
lien on property of the Originator or the Transferor arising before any
Receivable comes into existence may have priority over the Transferor's or
the Trust's interest in such Receivables. The existence of such liens or the
rights of the receiver of the Transferor could reduce the amount payable on
the Receivables and result in possible reductions in the amounts of payments
on the Certificates. See "Certain Legal Aspects of the Receivables--Transfer
of Receivables."
INSOLVENCY OR BANKRUPTCY OF ORIGINATOR. The Originator and the
Transferor have treated and will treat the transfer of Receivables under the
Purchase and Sale Agreement as a sale. A court could treat such transactions
as assignments of collateral as security. To the extent that the Originator
has granted or will grant a security interest in the Receivables to the
Transferor and that security interest was validly perfected before any
insolvency of the Originator and was not granted or taken in or will not be
granted or taken in contemplation of insolvency or with the intent to hinder,
delay or defraud the Originator or its creditors, that security interest
should not be subject to avoidance in the event of the insolvency and
receivership of the Originator, and payments to the Transferor with respect
to the Receivables should not be subject to recovery by a conservator or
receiver for the Originator. If, however, the conservator or receiver were
to assert a contrary position, or were to require the Transferor to establish
its rights to those payments by submitting to and completing the
administrative claims procedure established under the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), or the conservator
or receiver were to request a stay of proceedings with respect to the
Originator as provided under FIRREA, delays in payments on the Offered
Certificates and possible reductions in the amount of such payments could
occur. If a conservator or receiver is appointed for the Originator,
pursuant to the Purchase and Sale Agreement, new Receivables would not be
sold to the Transferor and an Amortization Event would occur. Upon the
occurrence of an Amortization Event, if a conservator or receiver is
appointed for the Originator and no other Amortization Event other than such
conservatorship, receivership or insolvency of the Originator exists, the
conservator or receiver may have the power to prevent the commencement of the
Rapid Amortization Period. See "Certain Legal Aspects of the Receivables--
Certain Matters Relating to Bankruptcy."
SOLE REMEDY FOR BREACHES OF REPRESENTATIONS AND WARRANTIES RELATING TO
THE RECEIVABLES. The Transferor will make certain representations and
warranties relating to the validity and enforceability of the Accounts and
the Receivables. However, it is not anticipated that the Trustee will make
any examination of the Receivables or the records relating thereto for the
purpose of establishing the presence or absence of defects, compliance with
such representations and warranties, or for any other purpose. Pursuant to
the Agreement, in the event of a material breach of such representations and
warranties with respect to any Receivables, the Transferor will be obligated
to accept the transfer of such Receivables, whereupon such Receivables will
no longer be included in the Trust. With certain exceptions, such obligation
will constitute the sole remedy in the event of any such breach. Pursuant
to the agreement by which Bridgestone/Firestone purchased a participation
interest in the Exchangeable Transferor Certificate and will purchase a
participation interest in the Subordinated Transferor Certificate (the
"Participation Agreement"), Bridgestone/Firestone will agree, for the benefit
of the Trustee, to purchase from the Transferor any Ineligible Receivable
required to be repurchased by the Transferor from the Trust and certificates
purchased by the Transferor as described above. See "Description of the
Offered Certificates and the Agreement--Covenants, Representations and
Warranties."
EFFECTS OF CONSUMER PROTECTION AND BANKING LAWS. The Accounts and the
Receivables are subject to numerous Federal and state consumer protection
laws which impose requirements on the extension of consumer credit and
collections of such obligations. In addition, the extension of credit, and
the interest charged thereon, by national banks such as the Originator, is
subject to regulation under Federal law. Such laws, as well as any new laws,
rulings or decisions construing such laws or rulings which may be adopted,
whether Federal or state, may adversely affect the ability of the Servicer
to collect on the Receivables or maintain previous levels of monthly finance
charges and other charges. One effect of any legislation which regulates the
amount of interest and other charges that may be assessed on credit card
account balances would be to reduce the Portfolio Yield on Accounts. If a
significant reduction in Portfolio Yield occurred, an Amortization Event
could occur, in which case the Rapid Amortization Period would commence.
See "Certain Legal Aspects of the Receivables--Consumer Protection and
Banking Laws."
Application of Federal and state bankruptcy, debtor relief or consumer
protection laws would affect the interest of the Certificateholders in the
Receivables, if such laws result in any Receivables being written off as
uncollectible when there are no funds available from other sources to cover
any resulting shortfalls in amounts payable to Certificateholders. See
"Description of the Offered Certificates--Defaulted Receivables; Recoveries,
Rebates and Fraudulent Charges."
EFFECTS OF NEW LEGISLATION. From time to time, there are proposed in
the Congress and certain state legislatures new laws and amendments to
existing laws to regulate further the consumer credit industry. The
Transferor is unable to determine and has no basis on which to predict
whether or to what extent changes in laws or regulations will affect charge
use, payment patterns or revenues.
DEPENDENCE ON BRIDGESTONE/FIRESTONE. Because the credit cards issued
under the Credit Card Program are primarily used by customers of Bridgestone/
Firestone stores and dealers and marketers of Bridgestone/Firestone products,
the Trust is largely dependent upon Bridgestone/Firestone and such dealers
and marketers for the generation of Receivables. In addition to
manufacturing a full line of tires, Bridgestone/Firestone is a major retailer
of tires, automotive maintenance and repair services in the United States
with approximately ( ) company operated tire and automotive service
centers and is a major supplier of tires to several thousand independent
dealer outlets. However, there are thousands of competitors that compete
with Bridgestone/Firestone operated service centers and independent dealer
outlets. The automotive service and repair industry is highly competitive.
Many considerations enter into the competition for the customer's patronage,
including quality, service, product mix, convenience, price and credit
availability and terms. Further, there can be no assurance that Receivables
will continue to be generated under the Credit Card Program at the same rate
as in prior years or that the Originator will implement Other Programs.
COMPETITION IN THE CREDIT CARD INDUSTRY. The credit card market is
highly competitive and is experiencing increasing use of advertising, target
marketing and pricing competition in finance charges and other fees as
traditional and new credit card issuers seek to expand or enter the market.
The ability of the Credit Card Program and any Other Programs to compete in
the credit card industry will affect the Originator's ability to generate new
Receivables. Bridgestone/Firestone stores and dealers accept certain
third-party credit cards not issued by the Originator. If consumers choose
to use competing sources of payment or credit, the rate at which new
Receivables are generated in Accounts may be reduced and certain purchase and
payment patterns with respect to Receivables may be affected. If the rate
at which the new Receivables are generated declines significantly, an
Amortization Event could occur, in which case, a Rapid Amortization Period
would commence. See "The Credit Card Program."
SOCIAL, LEGAL AND ECONOMIC FACTORS. Changes in card use and payment
patterns by cardholders may result from a variety of legal, economic and
social factors, including the rate of unemployment and inflation and relative
interest rates offered for various types of loans. Such factors will also
be reflected in changes in consumer spending and payment patterns including
increased risk of default by cardholders. The Transferor is unable to
determine, and has no means of predicting, whether or to what extent legal
or economic factors will affect future credit purchases or repayment
patterns.
TIMING OF PAYMENTS AND MATURITY. A number of legal and economic factors
may affect payment patterns and there is no accurate means of predicting the
effect of such factors. The Receivables may be paid at any time and there
is no assurance that any particular pattern of cardholder repayments will
occur or that sufficient eligible Receivables will be generated to maintain
required levels of collateralization. A significant decline in the amount
of Receivables generated or the failure of the Transferor to maintain the
Aggregate Receivables as of the last day of each Collection Period at a level
sufficient to result in (i) the Transferor Amount (plus the amount available
to be drawn under the Transferor Letter of Credit and the B/F Amount) being
not less than __% of the aggregate invested amount of all outstanding Series
of certificates (including the Certificates) issued by the Trust or (ii) the
Transferor Amount plus the B/F Amount plus the Class B Invested Amount (plus
the invested amount of the Series 1992-B Certificates and any subordinated
class of certificates of additional Series which, when issued, is retained
by the Transferor and with respect to which no legal opinion is delivered
characterizing such certificates as indebtedness) being not less than __% of
Aggregate Receivables could result in the occurrence of an Amortization Event.
During either the Controlled Amortization Period or a Rapid Amortization
Period (either such period, an "Amortization Period"), a significant decrease
in the cardholder monthly payment rate could slow the return of principal.
See "The Credit Card Program" and "Maturity Assumptions."
EFFECT OF SUBORDINATION. The Class B Certificates will be subordinated
in right of payment of principal to the Class A Certificates. Payments of
principal in respect of the Class B Certificates will not commence until
after the Class A Invested Amount has been paid in full. Moreover, the Class
B Invested Amount is subject to reduction on any Determination Date if
Principal Collections allocable to the Class B Certificates are reallocated
to cover the Class A Required Amount or (b) if Reallocated Principal
Collections with respect to any Collection Period are insufficient to fund
the remaining Class A Required Amount and the Subordinated Transferor Amount
and the Class C Invested Amount have been reduced to zero. If the Class B
Invested Amount suffers such a reduction, Finance Charge Collections
allocable to the Class B Certificateholders' Interest in future Collection
Periods will be reduced. Moreover, to the extent the amount of such
reduction in the Class B Certificateholders is not reimbursed, the amount of
principal distributable to the Class B Certificateholders will be reduced.
See "Description of the Offered Certificates--Allocation Percentages," "--
Reallocated Principal Collections," "--Additional Amounts Available to
Certificateholders" and "--Subordination of the Class B Certificates."
THE ORIGINATOR'S ABILITY TO CHANGE TERMS OF RECEIVABLES OR POLICIES
RELATING TO THE ACCOUNTS. Subject to applicable law and with the consent of
Bridgestone/Firestone, the Originator reserves the right to amend the terms
or policies applicable to the Accounts, including, without limitation, the
level of finance charges and other fees applicable from time to time to the
Accounts and the minimum monthly payments required on the Accounts. Except
as specified in the next succeeding sentence, there are no restrictions on
the Originator's ability to change the terms or policies of the Accounts or
other credit card guidelines or policies, including policies on credit
approval. Under the Purchase and Sale Agreement, the Originator will agree
that, except as otherwise required by law or as is deemed by the Originator,
in its sole discretion, based upon a good faith assessment by it of the
nature of its competition, to be necessary or advisable, it will not reduce
the annual percentage rate of the monthly finance charge assessed on the
Receivables, if as a result of such reduction, its reasonable expectation is
that the Portfolio Yield (defined below) (see "Description of the Offered
Certificates and the Agreement--Amortization Events") would be a rate less
than the Class A Certificate Rate plus 2.00% per annum (the "Class A Base
Rate") or a rate less than the Class B Certificate Rate plus 2.00% per annum
(the "Class B Base Rate"), or reduce the minimum payment terms or otherwise
alter the terms of the Accounts or the policies applicable thereto, if, as
a result of such change, in its reasonable expectation, an Amortization Event
with respect to the Certificates or any other Series of certificates would
occur. While the Originator and Bridgestone/Firestone have no current
intention of changing the terms of the Accounts, there can be no assurance
that changes in applicable law, in the marketplace or prudent business
practice might not result in a determination by the Originator and
Bridgestone/Firestone to make or to consent to such a change.
MASTER TRUST CONSIDERATIONS AND THE EFFECT OF THE ISSUANCE OF ADDITIONAL
SERIES. The Trust, as a master trust, may issue additional Series from time
to time. While the Principal Terms of any Series will be specified in a
Supplement, the provisions of a Supplement and, therefore, the terms of any
additional Series, will not be subject to the prior review or consent of
holders of the certificates of any previously issued Series. Such Principal
Terms may include methods for determining applicable investor percentages and
allocating Collections, provisions creating different or additional security
or other credit enhancement, provisions subordinating such Series to another
Series or other Series (if the Supplement relating to such Series so permits)
to such Series, and any other amendment or supplement to the Agreement which
is made applicable only to such Series. As long as the Offered Certificates
are outstanding, a condition to the execution of any Supplement will be that
each applicable Rating Agency shall have advised the Trustee that the
issuance of such Series will not result in the reduction or withdrawal of
their rating of any prior outstanding Series (including the Offered
Certificates). See "Description of the Offered Certificates and the
Agreement--Exchanges." Any such determination by any such Rating Agency
would not, however, provide any assurance that the issuance of any such
Series would not, in fact, have a materially adverse effect on the Offered
Certificates. In addition, certain remedies require the consent of a
majority of the holders of all outstanding Series of certificates, and the
interest of the holders of one Series of certificates may conflict with
the interest of another Series of certificates. See "Description of the
Offered Certificates and the Agreement--Exchanges."
SCOPE OF CERTIFICATE RATING. It is a condition to the issuance of the
Class A Certificates that they be rated in the highest rating category by at
least one nationally recognized rating agency and to the issuance of the
Class B Certificates that they be rated "A" by at least one nationally
recognized rating agency (the rating agency or rating agencies requested by
the Transferor and initially rating any Series is herein referred to as the
"Rating Agency"). The rating of the Class A Certificates is based primarily
on the quality of the Receivables and the terms of the subordination of the
Class B Certificates, the Class C Certificates and the Subordinated
Transferor Certificate. The rating of the Class B Certificates is based
primarily on the quality of the Receivables and the terms of the
subordination of the Class C Certificates and the Transferor Subordinated
Certificate. The ratings of the Offered Certificates are not a
recommendation to purchase, hold or sell the Offered Certificates, and such
ratings do not comment as to market price or suitability for a particular
investor. There is no assurance that the rating will remain for any given
period of time or that the rating will not be lowered or withdrawn entirely
by the Rating Agency, if in its judgment circumstances in the future so
warrant.
DISCOUNT OPTION. Pursuant to the Agreement, the Transferor has the
option to designate a fixed or variable percentage of Receivables that
otherwise would be treated as Principal Receivables to be treated as Finance
Charge Receivables. Any such designation would result in an increase in the
amount of Finance Charge Receivables and a slower rate of payment of
collections in respect of Principal Receivables than otherwise would occur.
Pursuant to the Agreement, the Transferor can make such a designation without
notice to or the consent of the Certificateholders. The Transferor must
provide 30 days' prior written notice to the Servicer, the Trustee, and any
provider of Enhancement and each Rating Agency of any such designation, and
such designation will become effective only if (i) in the reasonable belief
of the Transferor such designation would not cause to occur a Series 1996-1
Amortization Event or an event which with notice or the lapse of time or both
would constitute a Series 1996-1 Amortization Event and (ii) each Rating
Agency confirms in writing its then current rating on any outstanding Series.
See "Description of the Offered Certificates--Discount Option."
EFFECTS OF BOOK-ENTRY REGISTRATION. The Offered Certificates initially
will be represented by Certificates registered in the name of Cede, the
nominee for DTC, and will not be registered in the names of the Certificate
Owners or their nominees. As a result, unless and until Definitive
Certificates are issued, Certificate Owners will not be recognized by the
Trustee as Certificateholders, as that term is used in the Agreement. Until
such time, Certificate Owners will only be able to receive payments from, and
exercise the rights of Certificateholders indirectly, through DTC, CEDEL or
Euroclear and their participating organizations, and, unless a Certificate
Owner requests a copy of any such report from the Trustee, Certificate Owners
will receive reports and other information provided for under the Agreement
only if, when and to the extent provided to Certificate Owners at such
Certificate Owners' request through DTC and its participating organizations.
In addition, the ability of Certificate Owners to pledge Offered Certificates
to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such Certificates, may be limited due
to the lack of physical certificates for such Certificates. See "Description
of the Offered Certificates and the Agreement--Book-Entry Registration" and
"--Definitive Certificates."
EFFECT OF THE ISSUANCE OF NEW SERIES. The Trust, as a master trust, is
expected to issue new Series from time to time. While the terms of any
Series will be specified in a Supplement, the provisions of a Supplement and,
therefore, the terms of any new Series, will not be subject to the prior
review or consent of holders of the Certificates of any previously issued
Series. Such terms may include methods for determining applicable investor
percentages and allocating collections, provisions creating different or
additional security or other enhancements, provisions subordinating such
Series to other Series or subordinating other Series (if the Supplement
relating to such Series so permits) to such Series, and any other amendment
or supplement to the Pooling and Servicing Agreement which is made only to
such Series. The obligation of the Trustee to issue any new Series is subject
to the condition that the Trustee shall have received the following: (a) a
Supplement in form satisfactory to the Trustee executed by the Transferor and
specifying the principal terms of such Series, (b) the applicable Enhancement,
if any, (c) an opinion of counsel to the effect that the newly issued Series
of Securities will be characterized as either indebtedness or an interest in
a partnership under existing law for Federal income tax purposes and that the
issuance of the newly issued Series of Securities will not have any material
adverse impact on the Federal income tax characterization of any outstanding
Series that have been the subject of a previous opinion of tax counsel, (d)
an agreement, if any, to provide Enhancement, (e) written confirmation from
each Rating Agency that such issuance will not result in the Rating Agency's
reducing or withdrawing its rating or otherwise adversely affect any rating
on any then outstanding Series rated by it and (f) the existing Exchangeable
Transferor Certificate or applicable Series, as the case may be. There can
be no assurance, however, that the issuance of any other Series, including
any Series issued from time to time hereafter, might not have an impact on
the timing or amount of payments received by a Certificateholder.
USE OF PROCEEDS
The net proceeds from the sale of the Series 1996-1 Asset Backed
Certificates will be used first to repay an outstanding Series of Investor
Certificates, the Series 1995-A Asset-Backed Certificates. The remaining
balance will be paid to the Transferor. The proceeds will be used for
general corporate purposes.
THE TRANSFEROR AND BRIDGESTONE/FIRESTONE
The Transferor was incorporated in Massachusetts on October 24, 1983
under the name 1200 Capital Corporation, which was later amended to Firestone
Consumer Funding Corporation. On October 3, 1989, Firestone Consumer Funding
Corporation filed a Certificate of Merger, merging it with Firestone Retail
Credit Corporation. The Transferor was the surviving corporation. The
Transferor is a nominally capitalized special purpose corporation and was
organized for the limited purpose of purchasing, holding, owning and selling
receivables and any activities incidental to and necessary or convenient for
the accomplishment of such purpose. The Transferor's principal executive
office is located c/o JH Management Corporation, One International Place,
Suite 520, Boston, Massachusetts 02110, telephone (617) 951-7690.
Bridgestone/Firestone, formerly named The Firestone Tire & Rubber
Company, was incorporated in Ohio on March 4, 1910 and is the successor to
the business founded by Harvey S. Firestone in 1900. Pursuant to a merger
which became effective on May 5, 1988, Bridgestone/Firestone became a direct
wholly owned subsidiary of Bridgestone Corporation, a corporation organized
under the laws of Japan. On August 1, 1989, Bridgestone/Firestone adopted
its current name.
Bridgestone/Firestone is a multinational organization whose principal
business is the development, manufacture and sale of a broad line of tires
for passenger, truck and agricultural vehicles, in both the original
equipment and replacement markets. It sells tires under Firestone,
Bridgestone, Dayton and other brand names through a large network of
independent dealers. Bridgestone/Firestone also provides a wide range of
automotive maintenance and repair services and sells tires and automotive
replacement parts and supplies through Bridgestone/Firestone operated retail
stores. Other products sold by Bridgestone/Firestone include single-ply
rubber roofing systems, synthetic rubber, air springs, and synthetic fibers
and textiles.
THE CREDIT CARD PROGRAM
GENERAL
The Receivables that the Originator has sold and will sell to the
Transferor pursuant to the Purchase and Sale Agreement and which the
Transferor has or will in turn transfer to the Trust pursuant to the
Agreement have been and will be generated primarily from purchases charged
under credit cards issued by the Originator pursuant to a private label
credit card program (the "Credit Card Program") established for customers of
(a) Bridgestone/Firestone stores, which sell tires and automotive maintenance
and repair products and services, (b) dealers and marketers which have
contractual arrangements with Bridgestone/Firestone to market
Bridgestone/Firestone tires and related products as well as automotive
maintenance and repair services and (c) certain other dealers and marketers
of automotive products, which include tires and automotive maintenance and
repair services, which dealers and marketers do not have such contractual
arrangements with Bridgestone/Firestone (collectively, the "Retail
Establishments"). The Receivables will also include a portfolio of certain
designated Receivables generated or to be generated by the Originator and
existing or arising under certain accounts to be established under other
credit card programs established or to be established by the Originator
(the "Other Programs"). See "Description of the Offered Certificates and the
Agreement--Addition of Accounts" herein.
The initial purpose of a credit card program was to support the
merchandising efforts of The Firestone Tire & Rubber Company, now known as
Bridgestone/Firestone, Inc. ("Bridgestone/Firestone"). Credit cards were
first issued in 1978 to revolving account holders at company operated stores.
In early 1979, the credit card program was extended to include customers of
independent authorized Firestone dealers. In 1983, the program was extended
again to include independent authorized dealers of Dayton and Road King
tires, which are associate brands manufactured by Bridgestone/Firestone.
Such credit card program was replaced in 1985 by the Credit Card Program
described herein.
In July 1989, the Credit Card Program was extended to customers of
Bridgestone dealers. In 1990, the Credit Card Program was extended to
unaffiliated third-parties including Merchants, Inc., and American Car Care
Centers, Inc. In 1992, the program was extended to certain customers of
independent dealers selling Bridgestone/Firestone manufactured private brand
tires. Prior to 1993, Society National Bank ("SNB") acted as originator of
the Credit Card Program. In 1993, Credit First National Association ("CFNA"
or the "Originator"), a wholly owned subsidiary of Bridgestone/Firestone, was
organized for the purpose of making credit card loans and activities
incidental to such purpose and replaced SNB. In 1994, the Credit Card
Program with American Car Care Center, Inc. terminated. Also, in 1994,
Bridgestone/Firestone introduced convenience checks drawn on the Originator
for use by existing Credit Card Program cardholders to purchase consumer
merchandise. Such cash advances made via convenience checks are estimated
to be less than 3% of total card sales. In 1995, the Credit Card Program was
further extended to Meineke Discount Muffler Shops, Inc., an unaffiliated
third-party.
As originator of the credit cards, the Originator is responsible for all
aspects of the Credit Card Program, including underwriting and granting of
credit, issuance of cards and direct customer service. BFS Credit Services
("Credit Services"), a stand-alone profit center of Bridgestone/Firestone
based in Brook Park, Ohio, provides certain administration and servicing
functions on behalf of the Originator. The Originator earns certain merchant
fees attributed to cardholder charges giving rise to Receivables. Such
merchant fees shall be transferred to the Transferor pursuant to the Merchant
Fee Transfer Agreement. The Transferor will transfer such merchant fees to
the trust pursuant to the Agreement.
The Accounts consist of all eligible credit card accounts ("Eligible
Accounts") established under the Credit Card Program as of the Cut-off Date
and accounts to be established under Other Programs subsequent to the Cut-off
Date which are designated by the Transferor as Eligible Accounts in
accordance with the selection criteria relating to the addition of accounts.
The Receivables will include all amounts payable by cardholders under the
Accounts as of the Cut-off Date and thereafter. The Initial Invested Amounts
were determined by taking into account, among other considerations, the
nature of the Accounts and the Receivables.
Account balances are created primarily by the purchase of merchandise
and service from the Retail Establishments. The Trust will consequently
depend on the continued ability of the Retail Establishments to generate
credit sales. In addition, since many of the Retail Establishments accept
other credit cards, such as American Express, Diner's Club and Carte Blanche
charge cards and Visa, MasterCard and Discover credit cards, the Trust also
will depend upon decisions of customers purchasing merchandise at the Retail
Establishments to use the cards of the Credit Card Program and any Other
Programs, rather than other credit cards. See "Risk Factors--Competition in
the Credit Card Industry." The following table shows the relationship between
Credit Card Program sales at Bridgestone/Firestone company operated stores
and total Credit Card Program sales for the periods indicated.
CREDIT CARD PROGRAM SALES AT
BRIDGESTONE/FIRESTONE COMPANY OPERATED STORES
<TABLE>
<CAPTION>
CREDIT CARD SALES AT PERCENT OF CREDIT CARD
BRIDGESTONE/FIRESTONE- SALES
OPERATED AT BRIDGESTONE/FIRESTONE-
YEAR STORES TOTAL CREDIT CARD SALES OPERATED STORES
- - ---- ----------------------- ----------------------- -------------------------
<S> <C> <C> <C>
1989 386,001 528,610 73.02%
1990 409,145 568,364 71.99%
1991 419,054 594,152 70.53%
1992 412,470 593,284 69.52%
1993 396,353 592,392 66.91%
1994 401,589 618,219 64.96%
1995 392,894 617,485 63.63%
</TABLE>
MARKETING AND ORIGINATION
CFNA is responsible for the marketing of the Credit Card Program. CFNA
works directly with the sales organizations of Bridgestone/Firestone and
other dealers and marketers of automotive products and services. CFNA
promotes each credit card program primarily through (i) communicating through
a wide variety of mediums (such as point of sale displays and mail
promotions) the advantages of using the credit card; (ii) coordinating the
activities of Credit Services' field account representatives; and (iii)
developing client incentive programs to increase credit card activity and
acquire new accountholders. In addition, CFNA directs and administers
various accountholder direct response programs, such as direct mail
merchandise programs and other services available to accountholders, which
promote the use of the credit card and generate additional revenue for the
credit card operations.
NEW ACCOUNT ORIGINATION
The Credit Authorization area ("Credit Authorization") of CFNA is
responsible for (i) processing credit applications to establish new accounts,
(ii) authorizing sales to existing accounts, and (iii) managing credit limits
and continually assessing credit risk. New accounts are generated primarily
through Retail Establishment operations. Credit card applications are
available in the Retail Establishments, whose personnel offer the Credit Card
Program to customers. Customers interested in purchasing specified
merchandise or services on credit may complete a credit card application in
the Retail Establishment. An application may be processed either by direct
telephone contact with Credit Authorization or by mailing a completed
application to Credit Authorization.
Most new accounts are opened at the point of sale in a Retail
Establishment. Through the use of a direct computer link with the major
credit bureaus and a computer supported credit scoring system, most decisions
on new credit applications are made within three to four minutes.
In accordance with CFNA credit card policies, Credit Authorization
evaluates the ability of an applicant to repay credit card balances by
applying a credit scoring model jointly developed by CFNA and outside
consultants. Credit scoring is intended to provide a general indication,
based upon available information (including credit bureau reports), of the
applicant's willingness and ability to repay account balances. The result
of the credit scoring computed for a prospective cardholder is the primary
factor in determining the approval decision and the initial credit limit.
The scores required for credit approval are established on the basis of
expected profitability from the accounts. Profitability is projected on the
basis of anticipated finance charge receipts as these may be offset by credit
losses sustained in the accounts. The probability of losses is predicted on
the basis of statistical evaluation performed by the credit scoring models
which are based on past performance, periodically reviewed for statistical
accuracy, of credit card accounts.
Initial credit limits, which are based on an applicant's risk, score
and, in certain cases, income, range from $300 to $2,500. Credit limits for
individual accounts may be adjusted periodically based upon an evaluation of
the cardholder's payment performance. Credit limits may be increased
annually for accounts that exceed a pre-determined score. Credit limits on
delinquent accounts may be reduced at any time if warranted by the risk
score. Decisions to adjust credit limits are based upon a customer's payment
history and/or credit bureau status.
BILLING AND PAYMENT
The accounts are grouped into billing cycles. Each billing cycle has
a separate monthly billing date on which the activity in the related accounts
during the month ended on such billing date is processed and billed to
cardholders. New accounts are assigned to billing cycles in a manner
generally intended, for purposes of administrative convenience, to equalize
the number of accounts in the billing cycles.
In connection with the servicing of the Credit Card Program, Credit
Services generates and mails to each cardholder at the end of each
cardholder's monthly billing cycle a statement summarizing account activity,
unless there is no balance, no payment due (as occurs in the "No Payment for
90 Days" payment plan described below) or no account activity. Accordingly,
cardholders must make a minimum monthly payment by the date shown on the
monthly statement. The minimum monthly payment is calculated by taking 5%
of the new balance resulting after a purchase of products and services that
are charged to the account and rounding that amount to an even $5.00
increment. To that amount Credit Services adds any past due to establish the
total minimum payment due. The minimum payment due will not be less than
$10.00 except where the remaining balance plus unpaid finance charges and
other fees is less than $10.00.
A monthly finance charge is assessed on the account when the account is
not paid in full. The periodic rate now ranges between 1.587% and 1.82%
monthly (or between 19.04% and 21.84% per annum). The finance charge is a
flat rate, based on competitive conditions. No finance charge is assessed
on unpaid finance charges. The monthly finance charge is calculated by
multiplying the periodic rate times the average daily balance. The average
daily balance is determined, where permitted by applicable state law, by
taking the beginning balance each day, subtracting any payments or credits
and adding any new purchases each day. All the daily balances are added for
the billing cycle and divided by the number of days in the billing cycle.
The Originator currently has a "No Payment for 90 Days" payment plan
where if the full amount of any qualifying purchase made under such plans is
not paid within the specified time (i.e., within 90 days from the initial
billing date), finance charges associated with the purchase will be imposed
from the date of purchase. A minimum monthly payment is not required under
this plan during the 90-day period. A pay-ahead option is also available for
cardholders who are not past due and who make a payment of at least twice the
amount of the minimum payment due. A minimum monthly payment will not be due
in the following month. There are also special promotions, in which certain
rights under the credit card agreement may be waived from time to time for
limited periods for qualifying purchases.
LOSS AND DELINQUENCY EXPERIENCE
CFNA performs certain collection activity on behalf of Credit Services.
Collection methods with regard to delinquent credit card receivables include
collection activity by company personnel, collection agencies and attorneys
in private practice.
Delinquent cardholders who do not make scheduled payments by the payment
due date may be subject to several actions. These actions include billing
statement notices, collection letters, automated telephone reminders,
telephone contact with collectors for accounts delinquent from 30-150 days
and placement with third-party collection agencies or collection attorneys
for accounts delinquent beyond 150 days. The specific action or actions
depend on the number of missed payments, the dollar amount of the outstanding
balance and a statistical probability of further delinquency which is
developed using a customized statistical scoring model.
An account generally is closed to further purchases when two payments
are past due. Current policy is to recognize charge-offs immediately
following notification and to recognize other contractual losses at 390 days
from the account billing date ("Losses"). Pursuant to the Agreement,
Receivables in any Account will be charged off on the last day of the
Collection Period following the Collection Period in which such Receivable
becomes 180 days delinquent or earlier upon the Servicer's receipt of notice
of bankruptcy.
Cardholders requesting financial relief may be given a reduction in
their minimum monthly payment if certain conditions are met and upon receipt
of the new monthly payment amount. If qualified, the account is re-aged to
current. Credit Card Program credit evaluation, servicing and charge-off
policies and collection practices may change at any time in accordance with
the Agreement, the Purchase and Sale Agreement and applicable law and the
business judgment of the Originator and the Servicer.
Losses and delinquencies are affected by a number of factors such as
competitive behavior and general economic conditions, including consumer debt
levels. Bridgestone/Firestone has informed the Transferor that it is unable
to determine the extent to which, if any, loss and delinquency experience
described herein reflects the influence of these or other factors.
The following tables set forth the historical loss and delinquency
experience for the Credit Card Program portfolio with respect to payments by
cardholders for each of the periods shown. There can be no assurance,
however, that loss and delinquency experience for the Receivables in the
future will be similar to the historical experience.
LOSS EXPERIENCE
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------
1995 1994 1993 1992
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Average Receivables Outstanding/1/ . . $444,867 $432,518 $425,140 $448,548
Losses/2/ . . . . . . . . . . . . . . . 31,612 26,940 28,877 36,088
Less Recoveries/3/ . . . . . . . . . (2,898) (2,726) (2,842) (2,874)
--------- ---------- --------- ---------
Net Losses . . . . . . . . . . . . . . $ 28,715 $ 24,214 $26,035 $33,214
Net Losses as a Percentage of Average
Receivables Outstanding . . . . . . . . 6.45% 5.60% 6.12% 7.40%
</TABLE>
________________________________
1 Average Receivables Outstanding is a thirteen-point average. It
averages the January 1 balance of the Receivables with the balance of the
Receivables as of the last day of the month for each month in the year shown.
2 Losses include bankruptcy charge-offs immediately following notification
and other contractual losses at 390 days from the account billing date. The
amounts reflected are before recoveries. Losses do not include charge-offs
due to fraud, returned goods or customer disputes.
3 Recoveries are gross account receivables recoveries. They are not net
of collection costs and commission.
AVERAGE DELINQUENCIES
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Average of Twelve Months Ended December 31,
1995 1994 1993 1992
---- ---- ---- ----
DELINQUENT DELINQUENT DELINQUENT DELINQUENT
AMOUNT PERCENTAGE(1) AMOUNT PERCENTAGE(1) AMOUNT PERCENTAGE(1) AMOUNT PERCENTAGE(1)
---------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1-30 Days
Delinquent $35,696 8.02% $34,635 8.01% $41,041 9.65% $45,239 10.09%
31-60 Days
Delinquent 12,775 2.87 11,007 2.54 12,944 3.04 14,679 3.27
61-90 Days
Delinquent 6,781 1.52 5,441 1.26 5,696 1.34 6,622 1.48
Over 90
Days Delinquent 24,624 5.55 19,473 4.50 19,470 4.59 22,979 5.12
Average
Receivables
Outstanding 444,867 100.00% 432,518 100.00% 425,140 100.00% 448,548 100.00%
</TABLE>
- - ----------------------
(1) The percentages are the result of dividing the Delinquent Amount by
Average Receivables Outstanding for the applicable period. Average
Receivables Outstanding is calculated as described in footnote 1 of the table
entitled "Loss Experience."
REVENUE EXPERIENCE
The following table sets forth the gross revenues of the Credit Card
Program portfolio from monthly finance charges billed to cardholders for each
of the four years in the period ended December 31, 1992, 1993, 1994 and 1995.
The historic gross revenue figures in the table are calculated on an as
billed basis and represent amounts billed to cardholders before deduction of
charge-offs, reductions due to fraud, returned goods and customer disputes
and other expenses. Future cash collections on Receivables may not reflect
the historical experience in the table. During periods of increasing
delinquencies, billings of monthly finance charges may exceed cash as amounts
collected on Receivables lag behind amounts billed to cardholders.
Conversely, as delinquencies decrease, cash may exceed billings of monthly
finance charges as amounts collected in a current period may include amounts
billed during prior periods. However, the Transferor believes that during
the periods shown, revenues on a billed basis closely approximated revenues
on a cash basis. Revenues from monthly finance charges on both a billed and
a cash basis will be affected by numerous factors, including the monthly
finance charges on principal receivables, the percentage of cardholders who
pay off their balances in full each month and do not incur monthly finance
charges on purchases, the number of promotional programs offered to
cardholders and changes in the delinquency rate on the Receivables.
The following table sets forth the gross revenue experience for the
Credit Card Program portfolio.
REVENUE EXPERIENCE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
1995 1994 1993 1992
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Average Receivables Outstanding (1) . . $444,867 $432,518 $425,140 $448,548
Finance Charges Billed (2) . . . . . . $ $ $ $
Average Finance Charges Billed as % of
Average Receivables Outstanding . . % % % %
</TABLE>
_______________
(1) Average Receivables Outstanding is the average of beginning and ending
accounts receivable balances for the period shown.
(2) Finance Charges Billed is net of rebated finance charges for 1992 and
1993.
PROMOTIONS
The Credit Card Program features a "No Payment for 90 Days" payment plan
which is intended to increase sales to existing cardholders and to generate
new accounts. Under this program, if customers pay the full purchase price
of merchandise or services within 90 days from the initial billing date, the
finance charges associated with the initial purchase will not be imposed on
the account. If the customer does not pay the full purchase price within the
specified 90-day period, finance charges associated with the purchase will
be imposed from the date of purchase.
Special financing programs are offered to customers from time to time
to promote merchandise and service sales and the greater utilization of the
Credit Card Program. The most frequently offered program is a deferred
payment program in which customers may be allowed to defer their payment
obligations for a period generally ranging from two to six months.
Typically, finance charges accrue during the deferral period.
THE ACCOUNTS
The following tables summarize the portfolio of Active and Creditworthy
Accounts in the Credit Card Program by various criteria as of May 31, 1996.
An Account is an "Active Account" if it currently has a balance. An Account
is a "Creditworthy Account" if it does not currently have a balance, but it
has had a balance within the last 17 months and is eligible for further sales.
Given the specialized nature of the eligible merchandise and services offered
under the Credit Card Program, customers typically use their credit cards
infrequently. Because the future composition of the Credit Card Program
portfolio will change over time, these tables are not necessarily indicative
of future results.
COMPOSITION OF ACTIVE AND CREDITWORTHY
ACCOUNTS BY TYPE OF RETAILER
AS OF MAY 31, 1996
<TABLE>
<CAPTION>
Percentage Percentage
of Total of Total
Number of Number Receivables Receivables
Card Program Participants Accounts of Accounts Outstanding Outstanding
- - ----------------------------------------- --------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Bridgestone/Firestone operated stores and
Participating Dealers . . . . . . . . . . 4,087,297 94.40% $417,846,531 96.80%
Third-Party Dealers and marketers
without contractual arrangements . . . 242,559 5.60% $13,846,199 3.20%
--------- ----------- ------------ -----------
Total . . . . . . . . . . . . . . . . . 4,329,856 100.00% $431,692,730 100.00%
</TABLE>
COMPOSITION OF ACTIVE AND CREDITWORTHY
ACCOUNTS BY CREDIT LIMIT
AS OF MAY 31, 1996
<TABLE>
<CAPTION>
Percentage Percentage
of Total of Total
Number of Number Receivables Receivables
Credit Limit(1) Accounts of Accounts Outstanding Outstanding
- - --------------------------- ------------ ------------- -------------- ---------------
<S> <C> <C> <C> <C>
$0(2) . . . . . . . . . . . 277,097 6.4% $60,437,793 14.0%
$100 to $500 . . . . . . . 375,578 8.7% 40,972,339 9.5%
$600 to 1,000 . . . . . . . 1,950,245 45.0% 155,953,143 36.1%
$1,100 to $1,500 . . . . . 1,042,712 24.1% 66,346,150 15.4%
$1,600 to $2,000 . . . . . 646,000 14.9% 103,489,838 24.0%
$2,100 and up . . . . . . . 38,224 0.9% 4,493,466 1.0%
------------ ------------- -------------- ---------------
Total . . . . . . . . . 4,329,856 100.0% $431,692,730 100.0%
</TABLE>
- - --------------------
(1) Credit limits are in increments of $100.
(2) Credit policy sets credit limit to $0 for any cardholder 90 days or more
delinquent.
COMPOSITION OF ACTIVE AND CREDITWORTHY
ACCOUNTS BY ACCOUNT BALANCE
AS OF MAY 31, 1996
<TABLE>
<CAPTION>
Percentage Percentage
of Total of Total
Number of Number Receivables Receivables
Account Balance Accounts of Accounts Outstanding Outstanding
- - --------------------------------- ------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
Credit Balance(1) . . . . . . . . 18,255 0.42% ($737,417) -0.17%
No Balance(2) . . . . . . . . . . 3,133,146 72.36% --
$.01 to $100 . . . . . . . . . . 221,832 5.12% 10,405,974 2.41%
$101 to $200 . . . . . . . . . . 191,879 4.43% 28,834,511 6.68%
$201 to $300 . . . . . . . . . . 184,295 4.26% 46,020,710 10.66%
$301 to $400 . . . . . . . . . . 164,314 3.79% 57,367,436 13.29%
$401 to $500 . . . . . . . . . . 130,931 3.02% 58,653,933 13.59%
$501 to $600 . . . . . . . . . . 87,527 2.02% 47,841,599 11.08%
$601 to $1,000 . . . . . . . . . 138,988 3.21% 104,868,100 24.29%
$1,001 and up . . . . . . . . . . 58,689 1.36% 78,437,884 18.17%
------------ ------------- ------------- --------------
Total . . . . . . . . . . . . . 4,329,856 100.0% $431,692,730 100.0%
</TABLE>
(1) Credit balances are a result of cardholder payments and credit
adjustments applied in excess of an Account's unpaid balance. Accounts
currently with a credit balance are included, as Receivables may be generated
with respect thereto in the future.
(2) Accounts currently with no balance are included, as Receivables may be
generated with respect thereto in the future.
COMPOSITION OF ACTIVE AND CREDITWORTHY
ACCOUNTS BY AGE
AS OF MAY 31, 1996
<TABLE>
<CAPTION>
Percentage Percentage
of Total of Total
Number of Number Receivables Receivables
Age(1) Accounts of Accounts Outstanding Outstanding
- - ------------------------------------- ------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
Under 6 months . . . . . . . . . . . 307,600 7.10% $47,074,538 10.90%
6 months to 1 year . . . . . . . . . 325,131 7.51% 45,376,129 10.51%
1-2 years . . . . . . . . . . . . . . 686,871 15.86% 73,482,123 17.02%
2-3 years . . . . . . . . . . . . . . 524,888 12.12% 42,073,904 9.75%
3-4 years . . . . . . . . . . . . . . 487,307 11.25% 30,203,440 7.00%
4-5 years . . . . . . . . . . . . . . 521,329 12.04% 27,399,330 6.35%
5-6 years . . . . . . . . . . . . . . 328,304 7.58% 23,262,222 5.39%
6-7 years . . . . . . . . . . . . . . 262,869 6.07% 21,252,812 4.92%
7-8 years . . . . . . . . . . . . . . 150,090 3.47% 14,485,288 3.36%
8-9 years . . . . . . . . . . . . . . 114,371 2.64% 12,169,120 2.82%
9-10 years . . . . . . . . . . . . . 104,428 2.41% 12,269,735 2.84%
10 years or older . . . . . . . . . . 516,668 11.93% 82,644,088 19.14%
------------ ------------- ------------- --------------
Total . . . . . . . . . . . . . . . 4,329,856 100.0% $431,692,730 100.0%
</TABLE>
__________________
(1) Age is calculated based on the initial opening of the account.
COMPOSITION OF ACTIVE AND CREDITWORTHY ACCOUNTS
BY GEOGRAPHIC DISTRIBUTION(1)
AS OF MAY 31, 1996
<TABLE>
<CAPTION>
Percentage Percentage
of Total of Total
Number of Number Receivables Receivables
State Accounts of Accounts Outstanding Outstanding
- - ----------------------------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Texas . . . . . . . . . . . . . . . 342,894 7.92% $45,931,479 10.64%
California . . . . . . . . . . . . 398,539 9.20% 38,901,457 9.01%
Florida . . . . . . . . . . . . . . 358,722 8.28% 39,801,013 9.22%
Ohio . . . . . . . . . . . . . . . 261,529 6.04% 24,961,943 5.78%
New York . . . . . . . . . . . . . 249,680 5.77% 21,311,315 4.94%
Virginia . . . . . . . . . . . . . 195,251 4.51% 17,523,233 4.06%
North Carolina . . . . . . . . . . 121,386 2.80% 15,997,742 3.71%
Illinois . . . . . . . . . . . . . 164,439 3.80% 14,366,058 3.33%
Georgia . . . . . . . . . . . . . . 117,930 2.72% 14,898,058 3.45%
Pennsylvania . . . . . . . . . . . 180,635 4.17% 13,542,505 3.14%
Other(2) . . . . . . . . . . . . . 1,938,851 44.78% 184,457,927 42.73%
- - ----------------------------------- ------------ ------------- ------------- -------------
Total . . . . . . . . . . . . . 4,329,856 100.0% $431,692,730 100.0%
</TABLE>
(1) Based on billing address
(2) No other state represents more than 3.14% of Total Receivables
Outstanding.
MATURITY ASSUMPTIONS
The Agreement provides that the Controlled Amortization Period will
commence on the Controlled Amortization Date and that the Rapid Amortization
Period will commence on the day on which an Amortization Event occurs or is
deemed to occur. Although it is anticipated that principal payments will be
made on the Class A Certificates in an amount equal to the Controlled
Amortization Amount beginning on the _________ Distribution Date and on the
Class B Certificates beginning on the __________ Distribution Date, no
assurance can be given in that regard. Payments of principal are scheduled
to be made on the Class A Certificates on each Distribution Date during the
Controlled Amortization Period in an amount equal to the lesser of (a) the
Controlled Amortization Amount and (b) the product of (i) the Fixed
Allocation Percentage and all Principal Collections in respect of the
applicable Collection Period (other than Reallocated Principal Collections
that are used to pay interest due on the Class A Certificates, Class B
Certificates and the Class C Certificates). Based on the following
assumptions, among others: cardholder monthly payment rates for the Accounts
being not less than ____% (which rate is below the average monthly payment
rate shown in the "Monthly Payment Rates" table below), Aggregate Receivables
being constant, the net charge-offs as a percentage of average receivables
remaining constant at the levels indicated in the tables above for the period
ended __________ and no Amortization Event, Servicer Event of Default
(defined below) or default by the Transferor under the Purchase and Sale
Agreement occurring during the Controlled Amortization Period, the Transferor
believes that there will be sufficient funds on each Distribution Date of the
Controlled Amortization Period to pay the Controlled Amortization Amount on
such date. However, the actual rate of payment of principal to
Certificateholders will depend, among other factors, on the rate of
repayment, the rate of default by cardholders and the amount of Aggregate
Receivables.
In the event of the occurrence of an Amortization Event, the Rapid
Amortization Period will begin on the day on which such Amortization Event
occurs or is deemed to occur. During the Rapid Amortization Period,
distributions of principal to Class A Certificateholders will not be subject
to the Controlled Amortization Amount. Principal Collections allocable to
the Certificateholders' Interest will no longer be distributed to the
Transferor but instead will be distributed as principal payments to the Class
A Certificateholders and, following the final principal payment to the Class
A Certificateholders, to the Class B Certificateholders. Although the
Transferor believes that the likelihood of an Amortization Event occurring
is remote, there can be no assurance that an Amortization Event will not
occur. See "Description of the Offered Certificates and the Agreement--
Amortization Events."
The following table sets forth the highest and lowest cardholder monthly
payment rates for the Credit Card Program portfolio during any month in the
period shown and the average cardholder monthly payment rates for all months
during the periods shown, in each case calculated as a percentage of total
Receivables outstanding at the beginning of the periods shown. Payments
shown in the table include amounts which would be deemed Principal
Collections and Finance Charge Collections (except recoveries on charged-off
Receivables, certain credit-related insurance proceeds and merchant fees)
under the Agreement.
MONTHLY PAYMENT RATES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
PAYMENT RATE 1995 1994 1993 1992
------------ ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Low . . . . . . . . . . . . . .
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The amount of Collections may vary from month to month due to seasonal
variations, general economic conditions and payment habits of individual
cardholders. Accordingly, there can be no assurance that future cardholder
monthly payment rate experience, and thus the rate at which
Certificateholders could expect to receive payments of principal on their
Offered Certificates during any Rapid Amortization Period, will be similar
to the historical experience shown above. See "Risk Factors."
THE LETTER OF CREDIT BANK
The Servicer Letter of Credit and Transferor Letter of Credit will be
issued by The Sumitomo Bank, Limited, New York Branch (the "Letter of Credit
Bank"), a New York state licensed branch of The Sumitomo Bank, Limited (the
"Bank"). (According to the American Banker, the Bank was Japan's second-
largest bank in terms of assets as of March 31, 1992. As of such date, the
Bank operated a network of 331 offices in Japan with 17 branches and 25
representative offices throughout the world.)
(As of March 31, 1992 the Bank had total assets exceeding (Yen)61.6
trillion (U.S. $463.7 billion), total liabilities exceeding (Yen)59.4
trillion (U.S. $447.4 billion) and total equity exceeding (Yen)2.2 trillion
(U.S. $16.6 billion). U.S. dollar figures were translated using an exchange
rate of 132.85 Japanese yen to each U.S. dollar.)
Upon request therefor, the Bank will provide without charge to each
person to whom this Prospectus is delivered, a copy of the annual report of
the Bank which contains the consolidated statements of the Bank for fiscal
year ended March 31, 1995. Written requests should be sent to (The Sumitomo
Bank, Limited, New York Branch, Suite 9651, One World Trade Center, New York,
NY 10048 Attention: Loan Operations.)
DESCRIPTION OF THE OFFERED
CERTIFICATES AND THE AGREEMENT
The Certificates will be issued pursuant to the Agreement, as
supplemented by the Series 1996-1 Supplement, entered into among the
Transferor, the Servicer and the Trustee, substantially in the forms filed
as exhibits to the Registration Statement of which this Prospectus is a part.
Pursuant to the Agreement, the Transferor may execute further Supplements
thereto between the Transferor and the Trustee in order to issue additional
Series. See "--Exchanges." The Trustee will provide a copy of the Agreement
(without exhibits or schedules), including any Supplements, to Class A and
Class B Certificateholders without charge upon written request. The
following summary describes certain terms of the Agreement and the
Series 1996-1 Series Supplement.
GENERAL
The Class A Certificates and the Class B Certificates will represent
undivided interests in the Trust, including the right to receive the Class
A Invested Percentage and the Class B Invested Percentage, respectively, of
all Collections received with respect to the Receivables in the Trust. The
Trust Assets will consist of the following: (i) the Receivables existing on
or created after the Cut-off Date under the Accounts established under the
Credit Card Program, (ii) Receivables arising under designated Accounts
established under Other Programs, (iii) all amounts due or to become due on
or after the Cut-off Date, (iv) all Recoveries with respect to previously
charged-off Receivables, net of reasonable expenses of the Servicer incurred
and deducted from such amounts or payments, (v) the right to receive certain
merchant fees attributed to cardholder charges giving rise to Receivables,
(vi) all of the Transferor's right, title and interest under the Purchase and
Sale Agreement and the Participation Agreement, (vii) the proceeds of the
Servicer Letter of Credit and the Transferor Letter of Credit, (viii) all
moneys on deposit in the Collection Account and any other accounts
established for the benefit of any other Series (which other accounts will
not be available to Certificateholders), (ix) payments made in respect of
Enhancements issued with respect to any other Series (the drawing on or
payment of such Enhancement not being available to Certificateholders) and
(x) all proceeds of any of the foregoing. The term "Enhancement" is defined
in the Agreement as any letter of credit, liquidity facility, guaranteed rate
agreement, maturity guaranty, facility, cash collateral account, cash
collateral guaranty, tax protection agreement, interest rate swap or other
contract or agreement for the benefit of the certificateholders of any Series
issued by the Trust. As of the Cut-off Date, the Class A Invested Amount
will be $__________ and the Class B Invested Amount will be $__________.
The Transferor will initially hold the interest (the "Transferor
Interest") not represented by the Certificates, the Subordinated Transferor
Certificate, the Bridgestone/Firestone Certificate and any other Series of
certificates to be issued. The Transferor Interest will be evidenced by the
Exchangeable Transferor Certificate and will represent an undivided interest
in the Trust, which may vary from month to month. The Transferor will
participate an interest in the Exchangeable Transferor Certificate to
Bridgestone/Firestone pursuant to the Participation Agreement. The issuance
of the Class B Certificates, the Class C Certificates and the Subordinated
Transferor Certificate are conditions to the issuance of the Class A
Certificates. The issuance of the Class C Certificates and the Subordinated
Transferor Certificate are conditions to the issuance of the Class B
Certificates.
Interest will accrue on the unpaid principal amount of the Class A
Certificates at a per annum rate equal to the Class A Certificate Rate and,
except as otherwise provided herein, be distributed to the Class A
Certificateholders monthly on each Distribution Date, commencing __________,
in an amount equal to the product of (i) the actual number of days in the
related Interest Accrual Period divided by 360, (ii) the Class A Certificate
Rate and (iii) the outstanding principal balance of the Class A Certificates
as of the preceding Record Date (or in the case of the first Distribution
Date, as of the Closing Date). Interest will accrue on the unpaid principal
amount of the Class B Certificates at a per annum rate equal to the Class B
Certificate Rate and, except as otherwise provided herein, be distributed to
the Class B Certificateholders monthly, commencing on __________ in an amount
equal to the product of (i) the actual number of days in the related Interest
Accrual Period divided by 360, (ii) the Class B Certificate Rate and (iii)
the outstanding principal balance of the Class A Certificates as of the
preceding Record Date (or in the case of the first Distribution Date, as of
the Closing Date). With respect to any Distribution Date, the Interest
Accrual Period is the period from and including the first day of the
preceding calendar month to and including the last day of such preceding
calendar month, except the initial Interest Accrual Period shall be deemed
to be the period from the Closing Date through the last day of the calendar
month preceding the initial Distribution Date. Interest will be calculated
on an Actual/360 Basis.
No principal payments will be made to the Class A Certificateholders
until the Distribution Date occurring in _________ or, upon the occurrence
of an Amortization Event as described herein. No principal payments will be
made to the Class B Certificateholders until the final principal payment has
been made to the Class A Certificateholders. No principal payments will be
made to the Class C Certificateholders until the final principal payment has
been made to the Class B Certificateholders. The holder of the Subordinated
Transferor Certificate will not receive any payments of principal until the
Class A, the Class B and the Class C Certificateholders have received all
payments of principal due them. On each Distribution Date with respect to
the Revolving Period (and, at the option of the Servicer, more frequently),
Principal Collections allocable to the Certificateholders' Interest will,
subject to certain limitations, including certain Excess Finance Charge
Collections and the reallocation of any Reallocated Principal Collections
with respect to the related Collection Period, be applied as Shared Principal
Collections and the balance will be paid to the Transferor to maintain the
Class A Invested Amount, the Class B Invested Amount, the Class C Invested
Amount and the Subordinated Transferor Amount.
Unless and until an Amortization Event shall have occurred, on each
Distribution Date with respect to the Controlled Amortization Period, all
Principal Collections allocable to the Certificateholders' Interest plus
certain other amounts comprising Class A Monthly Principal, Class B Monthly
Principal and Class C Monthly Principal (defined below) will no longer be
paid to the Transferor as described above but instead an amount thereof up
to the Controlled Amortization Amount will be distributed to the Class A
Certificateholders. Any such collections in excess of the Controlled
Amortization Amount will be paid to the Transferor.
Distributions of principal and interest on the Offered Certificates will
be made by the Trustee directly to Certificateholders in accordance with the
procedures set forth herein and in the Agreement. Interest payments and any
principal payments on each Distribution Date will be made to
Certificateholders in whose name the Offered Certificates were registered
(expected to be Cede, as nominee of DTC) at the close of business on the 15th
day of the calendar month preceding such Distribution Date (each a "Record
Date") (however, the final payment on any Offered Certificates will be made
only upon presentation and surrender of such Offered Certificate).
Distributions will be made to DTC in immediately available funds.
The Offered Certificates will initially be represented by one or more
Certificates registered in the name of the nominee of The Depository Trust
Company ("DTC") (together with any successor depository selected by the
Transferor, the "Depository") except as set forth below. The interests of
holders of beneficial interests in the Class A Certificates and the Class B
Certificates ("Certificate Owners") will be available for purchase in
denominations of $1,000 (representing 1/__________ of the undivided interest
of the Class A Certificateholders in the Trust and 1/__________ of the
undivided interest of the Class B Certificateholders in the Trust) and
integral multiples thereof in book-entry form only. The Transferor has been
informed by DTC that DTC's nominee will be Cede. Accordingly, Cede is
expected to be the holder of record of the Offered Certificates. Unless and
until Definitive Certificates are issued under the limited circumstances
described herein, no Certificate Owner will be entitled to receive a
certificate representing such person's interest in the Offered Certificates.
All references herein to actions by Certificateholders shall refer to actions
taken by DTC upon instructions from its participating organizations (the
"Participants") and all references herein to distributions, notices, reports
and statements to Certificateholders shall refer to distributions, notices,
reports and statements to DTC or Cede, as the registered holder of the Class
A Certificates and the Class B Certificates, as the case may be, for
distribution to Certificate Owners in accordance with DTC procedures. See
"--Book-Entry Registration" and "--Definitive Certificates."
BOOK-ENTRY REGISTRATION
Holders of the Certificates or the Offered Certificates (the "Offered
Certificates") may hold through DTC (in the United States) or, solely in the
case of the Offered Certificates, CEDEL or Euroclear (in Europe) if they are
participants of such systems, or indirectly through organizations that are
participants in such systems. The Certificates may not be held, directly or
indirectly, through CEDEL or Euroclear.
Cede, as nominee for DTC, will hold the Offered Certificates. CEDEL and
Euroclear will hold omnibus positions in the Offered Certificates on behalf
of the CEDEL Participants and the Euroclear Participants, respectively,
through customers' securities accounts in CEDEL's and Euroclear's names on
the books of their respective depositaries (collectively, the
"Depositaries"), which in turn will hold such positions in customers'
securities accounts in the Depositaries' names on the books of DTC.
Transfers between DTC's participating organizations (the "Participants")
will occur in accordance with DTC rules. Transfers between CEDEL
Participants and Euroclear Participants will occur in the ordinary way in
accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its
rules and procedures and within its established deadlines (European time).
The relevant European international clearing system will, if the transaction
meets its settlement requirements, deliver instructions to its Depositary to
take action to effect final settlement on its behalf by delivering or
receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
CEDEL Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing will be reported to the
relevant CEDEL Participant or Euroclear Participant on such business day.
Cash received in CEDEL or Euroclear as a result of sales of securities by or
through a CEDEL Participant or a Euroclear Participant to a Participant will
be received with value on the DTC settlement date but will be available in
the relevant CEDEL or Euroclear cash account only as of the business day
following settlement in DTC.
For a description of transfers between persons holding directly or
indirectly through DTC, see also "Global Clearance, Settlement and Tax
Documentation Procedures" in Annex II to this Prospectus.
Cedel Bank, societe anonyme ("CEDEL") is incorporated under the laws of
Luxembourg as a professional depository. CEDEL holds securities for its
participating organizations ("CEDEL Participants") and facilitates the
clearance and settlement of securities transactions between CEDEL
Participants through electronic book-entry changes in accounts of CEDEL
Participants, thereby eliminating the need for physical movement of certifi-
cates. Transactions may be settled in CEDEL in any of 28 currencies,
including United States dollars. CEDEL provides to its CEDEL Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. CEDEL interfaces with domestic markets in several countries. As
a professional depository, CEDEL is subject to regulation by the Luxembourg
Monetary Institute. CEDEL Participants are recognized financial institutions
around the world, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations
and may include the Underwriters. Indirect access to CEDEL is also available
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a CEDEL Participant, either
directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to clear
and settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need
for physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in
Euroclear in any of 32 currencies, including United States dollars. The
Euroclear System includes various other services, including securities
lending and borrowing, and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers
with DTC described in "Global Clearance, Settlement and Tax Documentation
Procedures" in Annex II of the Prospectus. The Euroclear System is operated
by Morgan Guaranty Trust Company of New York, Brussels, Belgium office (the
"Euroclear Operator" or "Euroclear"), under contract with Euroclear Clearance
System, S.C., a Belgian cooperative corporation (the "Cooperative"). All
operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with
the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear System on behalf of Euroclear Participants.
Euroclear Participants include banks (including central banks), securities
brokers and dealers and other professional financial intermediaries and may
include the Underwriters. Indirect access to the Euroclear System is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such,
it is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within the Euroclear
System, 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 the Terms and Conditions only
on behalf of Euroclear Participants and has no record of or relationship with
persons holding through Euroclear Participants.
Distributions with respect to Offered Certificates held through CEDEL
or Euroclear will be credited to the cash accounts of CEDEL Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions
will be subject to tax reporting in accordance with relevant United States
tax laws and regulations. See "Federal Income Tax Consequences" herein and
"Global Clearance, Settlement and Tax Documentation Procedures" in Annex II
to this Prospectus. CEDEL or the Euroclear Operator, as the case may be,
will take any other action permitted to be taken by a Certificateholder under
the Indenture on behalf of a CEDEL Participant or Euroclear Participant only
in accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, CEDEL and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Offered Certificates among
participants of DTC, CEDEL and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
In the event that any of DTC, CEDEL or Euroclear should discontinue its
services, the Administrator would seek an alternative depository (if
available) or cause the issuance of Definitive Securities to the owners
thereof or their nominees in the manner described in "Global Clearance,
Settlement and Tax Document Procedures" in Annex II to this Prospectus.
DEFINITIVE CERTIFICATES
The Offered Certificates will be issued in fully registered,
certificated form to Certificate Owners or their nominees (the "Definitive
Certificates"), rather than to DTC or its nominee, only if (i) the Transferor
advises the Trustee in writing that DTC is no longer willing or able to
discharge properly its responsibilities as Depository with respect to the
Offered Certificates, and the Trustee or the Transferor is unable to locate
a qualified successor, (ii) the Transferor, at its option, elects to
terminate the book-entry system through DTC, or (iii) after the occurrence
of a Servicer Event of Default, Certificate Owners representing in the
aggregate not less than a majority of the aggregate invested amount of all
Series then issued and outstanding advise the Trustee and DTC through
Participants in writing that the continuation of a book-entry system through
any Depository is no longer in the best interest of the Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee, through DTC, is required to notify all
Participants of the availability through DTC of Definitive Certificates.
Upon surrender by DTC to the Trustee of the Definitive Certificates
representing the Offered Certificates and instructions for re-registration,
the Trustee will issue the Offered Certificates as Definitive Certificates,
and thereafter the Trustee will recognize the holders of such Definitive
Certificates as holders under the Agreement ("Holders").
Distributions of principal and interest on the Offered Certificates will
be made by the Paying Agent directly to Holders of Definitive Certificates
in accordance with the procedures set forth herein and in the Agreement.
Interest and principal payments on each Distribution Date will be made to
Holders in whose names the Definitive Certificates were registered at the
close of business on the related Record Date. Distributions will be made by
check mailed to the address of such Holder as it appears on the certificate
register. The final payment on any Offered Certificate (whether Definitive
Certificates or the Offered Certificates registered in the name of Cede
representing the Offered Certificates), however, will be made only upon
presentation and surrender of such Offered Certificate at the office or
agency specified in the notice of final distribution to Certificateholders.
The Trustee will provide such notice to registered Certificateholders not
later than the day of such final distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the transfer agent and registrar, which shall initially be the
Trustee. No service charge will be imposed for any registration of transfer
or exchange, but the transfer agent and registrar may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection therewith.
CONVEYANCE OF RECEIVABLES
Upon creation of the Trust, the Transferor transferred and assigned to
the Trust all of its right, title and interest in and to Receivables in the
Accounts outstanding as of the Cut-off Date, all of the Receivables
thereafter created under the Accounts and the proceeds of all of the
foregoing (including Recoveries with respect to previously charged-off
Receivables). Prior to such transfer and assignment, and pursuant to the
Purchase and Sale Agreement, the Originator sold to the Transferor all
Receivables existing under the Accounts as of the Cut-off Date. Pursuant to
the Purchase and Sale Agreement, provided, among other things, that the
Transferor is not in default of its obligations under the Purchase and Sale
Agreement and no Servicer Event of Default or Originator insolvency shall
have occurred, the Originator sell and assigned to the Transferor, and the
Transferor purchase from the Originator, on each business day, all
Receivables arising in the Accounts. On the Closing Date, and concurrently
with the transfer of the Receivables to the Trust, the Trustee will
authenticate the Offered Certificates and deliver such Offered Certificates
to the Transferor which will in turn deliver the Offered Certificates to the
Underwriters against payment of the net proceeds of the sale of the Offered
Certificates. The Trustee will also deliver a newly issued Exchangeable
Transferor Certificate and the Subordinated Transferor Certificate to the
Transferor, and the Class C Certificate to the purchaser thereof.
In connection with the sale of the Receivables by the Originator to the
Transferor and the transfer of the Receivables by the Transferor to the
Trust, the Originator and Bridgestone/Firestone will indicate in their
computer files that the Receivables have been sold to the Transferor and then
transferred to the Trust and the Transferor will indicate in its files that
the Receivables have been transferred from the Transferor to the Trust.
Bridgestone/Firestone, as initial Servicer, will retain and will not deliver
to the Trustee any other records or agreements relating to the Accounts or
the Receivables. Except as set forth above, the records and agreements
relating to the Accounts and the Receivables will not be segregated from
those relating to other consumer accounts and receivables and neither the
computer files nor the physical documentation relating to the Accounts or
Receivables will be stamped or marked to reflect the transfer of Receivables
to the Trust. The Trustee will have reasonable access to such records and
agreements as required by applicable law or to enforce the rights of the
Certificateholders. The Originator will file one or more UCC-1 financing
statements in accordance with Ohio state law to perfect the Transferor's
interest in the Receivables. The Transferor, in turn, will file one or more
UCC-1 financing statements in accordance with Massachusetts state law to
perfect the Trust's interest in the Receivables. See "Risk Factors" and
"Certain Legal Aspects of the Receivables."
ADDITION OF ACCOUNTS
The Transferor is permitted (subject to certain limitations and
conditions) to designate from time to time additional eligible Accounts
established under Other Programs ("Eligible Additional Accounts") and to
convey to the Trust Receivables in such Eligible Additional Accounts, whether
such Receivables are then existing or thereafter created. On any date, the
Transferor may designate Eligible Additional Accounts and convey the
Receivables arising from such Eligible Additional Accounts, without obtaining
the consent of the holders of any series of Certificates or the rating
agencies. Unless the Transferor has obtained the consent of the applicable
rating agencies, any Receivables arising from such Eligible Additional
Accounts which exceed 10% (the "10% Maximum") of the average amount of
Aggregate Receivables in the Trust as of the last day of each of the
preceding twelve Collection Periods shall be deemed to be "Ineligible
Receivables" and shall not be transferred to the Trust. Such Other Programs
may include, but are not limited to, the establishment of additional private
label credit card programs and the offering of general purpose credit cards.
As of the date of the issuance of the Certificates, the Originator has not
established any of these Other Programs.
The Transferor may request written confirmation from the applicable
rating agencies to transfer to the Trust all Accounts related to a designated
Other Program and all Receivables arising from such Accounts. Upon receiving
such written confirmation, none of the Receivables arising from Accounts
related to the designated Other Program will be deemed to be "Ineligible
Receivables" and the Receivables from such Accounts will no longer be subject
to the 10% Maximum. The Transferor may continue to designate Additional
Accounts from Other Programs in accordance with the selection criteria
relating to the Addition of Accounts.
REMOVAL OF ACCOUNTS
Subject to the conditions set forth in the next succeeding sentence, on
each Determination Date on which the Transferor Amount (plus the B/F Amount
and any amounts available under the Transferor Letter of Credit) exceeds __%
of the aggregate invested amount of all outstanding Series of certificates
issued by the Trust, the Transferor may, but shall not be obligated to,
accept all Receivables and proceeds thereof from certain Accounts offered to
it by the Trustee ("Removed Accounts"), without notice to the
Certificateholders. The Transferor may, at its sole discretion, accept such
offer in an aggregate amount equal to an amount not greater than the excess
of the Transferor Amount (plus the B/F Amount and any amounts available under
the Transferor Letter of Credit) over __% of the aggregate invested amount
of all outstanding Series of certificates issued by the Trust. The
Transferor is permitted to designate and require reassignment to it of the
Receivables from Removed Accounts only upon satisfaction of the following
conditions: (i) the Trustee shall have executed and delivered to the
Transferor a written reassignment and the Transferor shall have delivered a
computer file or microfiche list containing a true and complete list of all
Accounts in the Trust after such removal, the Accounts to be identified by
account number, (ii) the Transferor shall represent and warrant that no
selection procedure used by the Transferor which is adverse to the interests
of the certificateholders was utilized in selecting the Removed Accounts,
(iii) the removal of any Receivables of any Removed Accounts shall not, in
the reasonable belief of the Transferor, cause an Amortization Event to
occur, (iv) the Transferor shall have delivered written notice twenty days
prior to such removal to each Rating Agency which has rated any outstanding
Series and prior to the date on which such Receivables are to be removed the
Trustee shall have received confirmation from each Rating Agency of its
intention not to reduce or withdraw the rating of any Series of certificates
as a result of such removal and (v) the Transferor shall have delivered to
the Trustee an officer's certificate confirming the items set forth in
clauses (i) through (iv) above.
EXCHANGES
The Agreement provides for the Trustee to issue four types of
certificates: (i) one or more Series of certificates which generally are
transferable and have the characteristics described below, (ii) the
Bridgestone/Firestone Certificate, which is currently and will continue to
be held by Bridgestone/Firestone and which generally is not transferable,
(iii) the Exchangeable Transferor Certificate, a certificate which evidences
the Transferor Interest, and (iv) the Subordinated Transferor Certificate,
a certificate of the Transferor which evidences an interest subordinate to
the Transferor Certificate. The Exchangeable Transferor Certificate was
initially held by the Transferor and participated to Bridgestone/Firestone
pursuant to a Participation Agreement by and between the Transferor and
Bridgestone/Firestone (the "Participation Agreement"). The Subordinated
Transferor Certificate will also be participated to Bridgestone/Firestone
pursuant to the Participation Agreement. The Agreement also provides that,
pursuant to any one or more Supplements, the Transferor may tender the
Exchangeable Transferor Certificate, or the Exchangeable Transferor
Certificate and the certificates evidencing any Series of certificates to the
Trustee in exchange for one or more new Series and a reissued Exchangeable
Transferor Certificate. Under the Agreement, the Transferor may define, with
respect to any newly issued Series: (i) its name or designation, (ii) its
initial principal amount (or method for calculating such amount), (iii) its
coupon rate (or formula for the determination thereof), (iv) the interest
payment date or dates and the date or dates from which interest shall accrue,
(v) the method for allocating collections to certificateholders, (vi) the
names of any accounts to be used by such Series and the terms governing the
operation of any such accounts, (vii) the percentage used to calculate
monthly servicing fees, (viii) the minimum transferor interest percentage,
(ix) the minimum amount of Aggregate Receivables required to be maintained
by the Transferor, (x) the issuer and terms of any Enhancement with respect
thereto, (xi) the base rate applicable to such Series, (xii) the terms on
which the certificates of such Series may be repurchased by the Transferor
or remarketed to other investors, (xiii) the Series termination date, (xiv)
any deposit into any account maintained for the benefit of
certificateholders, (xv) the number of classes of such Series, and if more
than one class, the rights and priorities of each such class, (xvi) the
extent to which the certificates of such Series will be issuable in bearer
form and any limitations imposed thereon, (xvii) whether discount revenue or
commissions will be included in funds available to certificateholders,
(xviii) the priority of any Series with respect to any other Series, (xix)
the rights of the holder of the Exchangeable Transferor Certificate that have
been transferred to the holders of such Series and (xx) any other relevant
terms (all such terms, the "Principal Terms" of such Series). None of the
Transferor, the Servicer, the Trustee or the Trust is required to obtain the
consent of any Certificateholder to issue any additional Series. However,
as a condition of an Exchange, the Transferor will deliver to the Trustee
written confirmation that the Exchange will not result in the applicable
Rating Agency reducing or withdrawing its rating of any outstanding Series
or otherwise adversely affect any rating on any then outstanding Series,
including the Offered Certificates. The Transferor may offer any Series to
the public under a Disclosure Document in transactions either registered
under the Act or exempt from registration thereunder directly, through the
Underwriters or one or more other underwriters or placement agents, in
fixed-price offerings or in negotiated transactions or otherwise. Any such
Series may be issued in fully registered or book-entry form in minimum
denominations determined by the Transferor. See Annex I for a listing of
Outstanding Series. The Transferor may offer, from time to time, additional
Series.
The Agreement provides that the Transferor may perform Exchanges and
define Principal Terms such that each Series has a period during which
amortization of the principal amount thereof is intended to occur which may
have a different length and begin on a different date than such period for
any other Series. Further, one or more Series may be in their amortization
periods while other Series are not. Thus, certain Series may be in their
revolving periods, while other Series are amortizing. Moreover, each Series
may have the benefits of a form of Enhancement issued by issuers different
from the issuers of the form of Enhancement with respect to any other Series.
Under the Agreement, the Trustee shall hold any such Enhancement only on
behalf of the Series with respect to which each relates. Likewise, with
respect to each such Enhancement, the Transferor may deliver a different form
of Enhancement agreement. The Agreement also provides that the Transferor
may specify different coupon rates and monthly servicing fees with respect
to each Series. Finance Charge Collections not used to pay interest on the
certificates, the monthly servicing fee, the investor default amount or
investor charge-offs with respect to any Series will be allocated as provided
in such form of Enhancement agreement, if applicable. The Transferor also
has the option under the Agreement to vary between Series the terms upon
which a Series may be repurchased by the Transferor or remarketed to other
investors. Additionally, certain Series may be subordinated to other Series,
or classes within a Series may have different priorities. No Series of
certificates may be senior to this Series of Certificates. The Class B
Certificates will be subordinate to the Class A Certificates but not to any
other Series of certificates. The Class C Certificates and the Subordinated
Transferor Certificates will be subordinate to the Class B Certificates but
not to any other Series of Certificates. There is no limit to the number of
Exchanges that the Transferor may perform under the Agreement. The Trust
will terminate only as provided in the Agreement.
Under the Agreement and pursuant to a Supplement, an Exchange may only
occur upon the satisfaction of certain conditions provided in the Agreement.
Under the Agreement, the Transferor may perform an Exchange by notifying the
Trustee, at least five days in advance of the date upon which the Exchange
is to occur. Under the Agreement, the notice will state the designation of
any Series to be issued on the date of the Exchange and, with respect to each
such Series: (i) its initial principal amount (or method for calculating such
amount), (ii) its certificate rate and (iii) the issuer of the form of
Enhancement, if any, which is expected to provide credit support with respect
to it. On the date of the Exchange, the Agreement provides that the Trustee
will issue any such Series only upon delivery to it of the following: (i) a
Supplement in form satisfactory to the Trustee signed by the Transferor and
specifying the Principal Terms of such Series, (ii) an opinion of counsel to
the effect that certificates of such Series will be characterized as either
indebtedness or an interest in a partnership under existing law for Federal
income tax purposes and that the issuance of such Series will not materially
adversely impact the Federal income tax characterization of any outstanding
Series, (iii) the Enhancement, if any, and the form of Enhancement agreement,
if any, with respect thereto executed by the Transferor and the provider of
the form of Enhancement, (iv) written confirmation from the applicable Rating
Agency that the Exchange will not result in such Rating Agency reducing or
withdrawing its rating on any outstanding Series or otherwise adversely
affect any rating on any then outstanding Series and (v) the existing
Exchangeable Transferor Certificate and the applicable certificates of the
Series to be exchanged, if applicable. Upon satisfaction of such conditions,
the Trustee will cancel the existing Exchangeable Transferor Certificate and
the certificates of the exchange Series, if applicable, and issue the new
Series and a new Exchangeable Transferor Certificate.
COVENANTS, REPRESENTATIONS AND WARRANTIES
The Transferor will covenant to the Trustee for the benefit of all
certificateholders of all Series which from time to time may have an interest
in the Trust that, as to the Receivables and the Accounts, unless cured
within 60 days from the earlier to occur of the discovery of such event by
the Transferor or Bridgestone/Firestone or receipt of notice by the
Transferor or Bridgestone/Firestone from the Trustee, the Servicer or the
Originator, the Transferor will accept the transfer of any Receivable which
is determined to be an Ineligible Receivable. Additionally, the Transferor
covenants in the Agreement to accept, under certain conditions, the transfer
of each Receivable which is subject to certain specified liens immediately
upon the discovery of such liens.
The Transferor shall accept the transfer of any Receivable as described
above (an "Ineligible Receivable") by paying the principal balance of such
Receivables to the Trust (the "Transfer Deposit Amount"). In the event that
such payment is not made, the principal balance of such Receivables shall be
deducted from the amount of Aggregate Receivables used to calculate the
Transferor Interest; provided, however, that if such deduction would reduce
the Transferor Interest below zero or would otherwise not be permitted by
law, the principal balance of such Receivables shall be deducted from the B/F
Amount. Any such deposit shall be treated as a collection of such Receivable
and be allocated as provided in the Agreement. Such remedy with respect to
such breach will constitute the sole remedy of the Certificateholders in the
event of any such breach.
In the Agreement, the Transferor has made additional representations and
warranties as to the following: (i) the organization and good standing of the
Transferor and the legality and enforceability of the Agreement against the
Transferor, (ii) that the Agreement constitutes a valid transfer to the Trust
of all right, title and interest of the Transferor in and to the Receivables,
whether then existing or thereafter created in the applicable Accounts, and
the proceeds thereof (including amounts in any of the accounts established
for the benefit of the Certificateholders) or the grant of a first priority
perfected security interest in such Receivables and the proceeds thereof
(including amounts in any of the accounts established for the benefit of
the Certificateholders), which is effective as to each Receivable upon the
transfer thereof to the Trust or upon its creation, as the case may be, (iii)
that all material information with respect to the Accounts and Receivables
provided to the Trustee was true and correct in all material respects as of
the Cut-off Date, (iv) each Receivable conveyed to the Trust is free and
clear of liens (except for liens which may be permitted by the Agreement),
(v) the Transferor has obtained all consents, licenses, approvals or
authorizations required in connection with the conveyance of the Receivables
to the Trust, (vi) the due qualification of the Transferor, (vii) the due
authorization of the Transferor to execute and deliver the Purchase and Sale
Agreement, the Agreement and the Certificates, (viii) the creation of a
binding obligation of the Transferor by the Purchase and Sale Agreement and
the Agreement, (ix) the non-violation by the execution and delivery of the
Purchase and Sale Agreement, the Agreement and the Certificates of any
agreement binding the Transferor or its property, (x) the non-existence of
any proceedings threatening the transfer of the Receivables or the issuance
of the Certificates and (xi) the eligibility of each Receivable. In the
event that any of the representations and warranties described in clauses
(ii), (iii), (iv), (v) and (viii) above are not true and correct and such
event has a material adverse effect on the interests of holders of the
certificates of all Series, either the Trustee or the holders of certificates
evidencing undivided interests in the Trust aggregating more than 50% of the
outstanding principal balance of all Series, by written notice to the
Transferor (and to the Trustee and the Servicer, if given by the
certificateholders), may direct the Transferor to purchase all certificates
of all Series outstanding (including the Certificates) within 60 days of such
notice. The Transferor shall be obligated to purchase all Series on a
Distribution Date occurring within such applicable period, unless the
representations and warranties shall then be satisfied in all material
respects and any adverse effect on the certificateholders caused thereby
shall have been cured. The purchase price for the certificates shall be
equal to the aggregate invested amount of all Series on the Record Date
related to the applicable payment date on which the purchase is scheduled to
be made plus an amount equal to all interest accrued but unpaid on all Series
at the applicable certificate rates through the end of the interest accrual
periods of such Series. The payment of such purchase price into the
Collection Account in immediately available funds will be considered a
prepayment in full of all Receivables and will be paid in full to the
certificateholders upon presentation and surrender of their certificates.
The obligations described above shall be the sole remedies respecting the
foregoing representations, warranties and events available to the Trustee or
the certificateholders. Pursuant to the Participation Agreement,
Bridgestone/Firestone will agree, for the benefit of the Trustee, to purchase
from the Transferor any Ineligible Receivable repurchased by the Transferor
from the Trust and any certificates purchased by the Transferor as described
above.
A "Receivable" is defined to mean each receivable (i) which has risen
under an Eligible Account or an Eligible Additional Account (as defined
below), (ii) which was created in compliance with all requirements of law and
pursuant to an accountholder agreement which complies with all requirements
of law in either case other than those with respect to which there is no
reasonable likelihood that a failure to comply could have a material adverse
effect upon certificateholders, (iii) with respect to which all consents,
licenses, approvals or authorizations of, or registrations with, any
governmental authority required to be obtained or given in connection with
the creation of such Receivable or the execution, delivery and performance
of the related accountholder agreement have been duly obtained or given and
are in full force and effect as of such date of creation, (iv) as to which
the Trust will at all times have good and marketable title, free and clear
of all liens, encumbrances, charges and security interests (except those
permitted by the Agreement), (v) which has been the subject of either a valid
transfer and assignment from the Transferor to the Trust of all of the
Transferor's right, title and interest therein or the grant to the Trust
of a perfected security interest therein (and in the proceeds thereof) which
is prior to any interest of all third-parties, effective until the
termination of the Trust, (vi) which will at all times be the legal, valid
and binding payment obligation of the accountholder thereof enforceable
against such accountholder in accordance with its terms, subject to certain
bankruptcy and equity related exceptions, (vii) which constitutes either an
"account" or a "general intangible" under and as defined in Article 9 of the
UCC as then in effect in the States of New York and Ohio and the Commonwealth
of Massachusetts, (viii) which, at the time of its transfer to the Trust, has
not been waived or modified except as permitted by the Agreement, (ix) which
is not subject to any right of rescission, setoff, counterclaim or other
defense (including the defense of usury), other than certain bankruptcy and
equity related defenses and adjustments permitted by the Agreement to be made
by the Servicer, (x) as to which each of the Originator and the Transferor
has satisfied all obligations to be fulfilled pursuant to the credit card
agreement or in connection with the transfer of the Receivable at the time
of transfer of the Receivable to the Trust or at the time of sale of such
Receivable to the Transferor and (xi) as to which the Originator and the
Transferor have done nothing, at the time of its transfer to the Trust, to
impair the rights of the Trust or certificateholders therein. An "Eligible
Account" is defined to mean an account (i) which has been established under
the Credit Card Program, (ii) which is denominated in U.S. dollars, (iii) the
credit card or cards related to which have not been reported lost or stolen,
(iv) the obligor on which has provided, as its most recent billing address,
an address with a zip code in the United States or its territories or
possessions, (v) which is not an account of an obligor in bankruptcy or an
account as to which the Servicer has any confirmed record of any
fraud-related activity, and (vi) the Receivables in which have not been
charged off or the account itself has not been closed prior to its billing
cycle cut-off date. An "Eligible Additional Account" is defined to mean an
account (i) which has been established under an Other Program subsequent to
the Cut-off Date, (ii) which has been designated by the Transferor in
accordance with the criteria relating to the Addition of Accounts, (iii)
which is denominated in U.S. dollars, (iv) the credit card or cards related
to which have not been reported lost or stolen, (v) the obligor on which has
provided, as its most recent billing address, an address with a zip code in
the United States or its territories or possessions, (vi) which is not an
account of an obligor in bankruptcy or an account as to which the Servicer
has any confirmed record of any fraud-related activity; and (vii) the
Receivables in which have not been charged off or the account itself has not
been closed prior to its billing cycle cut-off date.
It is not required or anticipated that the Trustee will make any initial
or periodic general examination of the Receivables or any records relating
to the Receivables for the purpose of establishing the presence or absence
of defects, compliance with the Transferor's representations and warranties
or for any other purpose. In addition, it is not anticipated or required
that the Trustee will make any initial or periodic general examination of the
Servicer for the purpose of establishing the compliance by the Servicer with
its representations or warranties or the performance by the Servicer of its
obligations under the Agreement for any other purpose. The Servicer,
however, is required to deliver to the Trustee on or before March 31 of each
year beginning in 1994 an opinion of counsel with respect to the necessity
of filing additional UCC financing statements or other filings as may be
required under state law to continue the Trust's perfection of the security
interest of the Trust in and to the Receivables and certain other components
of the Trust.
COLLECTION ACCOUNT
The Trustee has caused to be established and maintained an account with
respect to the Certificates (the "Collection Account") for deposit of
Collections received from the Servicer. Funds on deposit in the Collection
Account shall be invested in one or more Permitted Investments maturing no
later than the next succeeding Transfer Date. Net investment earnings on
funds in the Collection Account will be paid monthly to the Transferor. The
Servicer has the revocable power to withdraw funds from the Collection
Account and to instruct the Trustee to make withdrawals and payments from the
Collection Account for the purpose of carrying out the Servicer's or the
Trustee's duties under the Agreement.
The term "Permitted Investments" means (a) investments having maturities
at the date of purchase of not later than the next succeeding Transfer Date
in the following: (i) obligations issued by, or the principal of and interest
on which is fully guaranteed by, the United States of America; (ii)
commercial paper rated A-1+ by Standard & Poor's Corporation ("S&P"), F-1+
by Fitch Investors Service, Inc. ("Fitch") and P-1 by Moody's Investors
Service, Inc. ("Moody's"); (iii) certificates of deposit, other deposits or
bankers' acceptances, which are rated A-1+ by S&P, F-1+ by Fitch and P-1 by
Moody's, or money market funds rated A-1+ by S&P, F-1+ by Fitch and P-1 by
Moody's, (iv) investments in money market funds having the highest long-term
rating granted by the applicable Rating Agency and maintained by commercial
banks having unimpaired capital and unimpaired surplus of at least
$500,000,000; (v) eurodollar time deposits that have been rated A-1+ by S&P
and F-1+ by Fitch and P-1 by Moody's; and (vi) repurchase agreements
involving any of the Permitted Investments described in clauses (i) through
(iv) above so long as the other party to the repurchase agreement
has the rating described in clause (ii) above and (vii) any other investment
the applicable Rating Agency confirms will not adversely affect any ratings
of the Certificates and (b) demand deposit or time deposits in any
institution described in clause (iii) above.
SUBORDINATION OF THE CLASS B CERTIFICATES
The Class B Certificate will be subordinated to the extent necessary to
fund certain payments with respect to the Class A Certificates. Certain
principal payments otherwise allocable to the Class B Certificateholders may
be reallocated to cover amounts in respect of the Class A Certificates and
the Class B Invested Amount may be reduced if the Class C Invested Amount is
equal to zero. To the extent the Class B Invested Amount is reduced, the
percentage of collections of Finance Charge Receivables allocated to the
Class B Certificates in subsequent Collection Periods will be reduced.
Moreover, to the extent the amount of such reduction in the Class B Invested
Amount is not reimbursed, the amount of principal distributable to, and the
amounts available to be distributed with respect to interest on, the Class
B Certificateholders will be reduced. No principal will be paid to the Class
B Certificateholders until the Class A Invested Amount is paid in full. See
"Risk Factors--Effect of Subordination" and "--Allocation Percentages," "--
Reallocated Principal Collections" and "--Additional Amounts Available to
Certificateholders."
ALLOCATION PERCENTAGES
Pursuant to the Agreement, for each Collection Period the Servicer will
allocate Finance Charge Collections (including Recoveries on Defaulted
Receivables and merchant fees), all Principal Collections and the amount of
all Defaulted Receivables (defined below) (see "--Defaulted Receivables;
Recoveries; Rebates and Fraudulent Charges") among the Class A Interest, the
Class B Interest, the Class C Interest, the Subordinated Transferor Interest,
any other Series of certificates issued by the Trust, the B/F Interest and,
in the case of Principal Collections and the amount of Defaulted Receivables,
the Transferor Interest. Finance Charge Collections will be allocated at all
times to the Class A Interest, the Class B Interest, the Class C Interest and
the Subordinated Transferor Interest based on the percentage equivalent of
the ratio which the amount of the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount or the Subordinated Transferor
Amount, as applicable, on the last day of the immediately preceding
Collection Period bears to the amount of Aggregate Receivables in the Trust,
or, with respect to Finance Charge Collections, bears to the sum of the
numerators used to calculate the Invested Percentage with respect to Finance
Charge Collections for all Series of certificates outstanding during such
Collection Period and the B/F Percentage (the "Class A Floating Allocation
Percentage," the "Class B Floating Allocation Percentage," the "Class C
Floating Allocation Percentage" and the "Subordinated Transferor Floating
Allocation Percentage," in each case with respect to Finance Charge
Collections). The amount of Defaulted Receivables will be allocated to the
Class A Interest, the Class B Interest, the Class C Interest and the
Subordinated Transferor Interest based on the percentage equivalent of the
ratio which the Class A Invested Amount, the Class B Invested Amount, the
Class C Invested Amount and the Subordinated Transferor Amount, as
applicable, on the last day of the immediately preceding Collection Period
bears to the Aggregate Receivables on the last day of the immediately
preceding Collection Period (the "Class A Floating Allocation Percentage,"
the "Class B Floating Allocation Percentage," the "Class C Floating
Allocation Percentage" and the "Subordinated Transferor Floating Allocation
Percentage," in each case with respect to the amount of Defaulted
Receivables). During the initial Collection Period following the date of
issuance of the Certificates, the Class A Floating Allocation Percentage, the
Class B Floating Allocation Percentage, the Class C Floating Allocation
Percentage and the Subordinated Transferor Floating Allocation Percentage
will be calculated by reference to the date of such issuance. During the
Revolving Period, all Principal Collections will be allocated and paid to the
Transferor (except for Reallocated Principal Collections used to pay interest
on the Class A Certificates, Class B Certificates and Class C Certificates,
as described under "--Reallocation of Cash Flows" and Shared Principal
Collections distributable to the holder of the Bridgestone/Firestone
Certificate in accordance with its interest in the Trust) but not exceeding
the Transferor Interest after giving effect to any purchases of Receivables.
During the Controlled Amortization Period and any Rapid Amortization Period,
all Principal Collections will be allocated to the Class A Interest, the
Class B Interest, the Class C Interest and the Subordinated Transferor
Interest based on the percentage equivalent of the ratio which the Class A
Invested Amount, the Class B Invested Amount, the Class C Invested Amount and
the Subordinated Transferor Amount, as applicable, each as of the last day
of the Revolving Period, bears to the greater of (a) the Aggregate
Receivables on the last day of the prior Collection Period and (b) the sum
of the numerators used to calculate the Invested Percentage with respect to
Principal Collections for all Series of certificates outstanding for such
Collection Period (the "Fixed Allocation Percentage") and the remainder will
be allocated to the Transferor Interest and to the B/F Interest.
"Class A Invested Amount" for any date means an amount equal to the
initial principal balance of the Class A Certificates, minus the amount of
principal payments made to Class A Certificateholders prior to such date and
minus the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs (as defined below) for all Distribution Dates preceding such date
over the aggregate amount of any reimbursements of Class A Investor
Charge-Offs for all Distribution Dates preceding such date.
"Class B Invested Amount" for any date means an amount equal to (i) the
initial principal balance of the Class B Certificates, minus (ii) the amount
of principal payments made to Class B Certificateholders prior to such date,
minus (iii) the aggregate amount of Class B Investor Charge-Offs (as defined
below) for all prior Distribution Dates, minus (iv) the aggregate amount of
Class B Reallocated Principal Collections for all prior Distribution Dates
for which the Subordinated Transferor Amount and the Class C Invested Amount
have not been reduced, minus (v) an amount equal to the aggregate amount by
which the Class B Invested Amount has been reduced to fund the Class A
Investor Default Amount on all prior Distribution Dates as described herein
and plus (vi) the amount of Excess Finance Charge Collections applied on all
prior Distribution Dates for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (iii), (iv) and (v).
"Class C Invested Amount" for any date means an amount equal to (i) the
initial principal balance of the Class C Certificates, minus (ii) the amount
of principal payments made to the Class C Certificateholders prior to such
date, minus (iii) the aggregate amount of Class C Investor Charge-Offs (as
defined below) for all prior Distribution Dates, minus (iv) the aggregate
amount of Class C Reallocated Principal Collections for all prior
Distribution Dates for which the Subordinated Transferor Amount has not been
received, minus (v) an amount equal to the aggregate amount by which the
Class C Invested Amount has been reduced to fund the Class A and Class B
Investor Default Amount on all prior Distribution Dates as described herein,
and plus (vi) the amount of Excess Finance Charge Collections applied on all
prior Distribution Dates for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (iii), (iv) and (v).
"Subordinated Transferor Amount" for any date means an amount equal to
(i) the initial principal balance of the Subordinated Transferor Certificate,
minus (ii) the amount of principal payments made to the holder of the
Subordinated Transferor Certificate prior to such date, minus (iii) the
aggregate amount of Subordinated Transferor Charge-Offs (as defined below)
for all prior Distribution Dates, minus (iv) the aggregate amount of
Reallocated Principal Collections for all prior Distribution Dates, minus (v)
an amount equal to the aggregate amount by which the Subordinated Transferor
Amount has been reduced to fund the Class A, Class B and Class C Investor
Default Amount on all prior Distribution Dates as described herein, and plus
(vi) the amount of Excess Finance Charge Collections applied on all prior
Distribution Dates for the purpose of reimbursing amounts deducted pursuant
to the foregoing clauses (iii), (iv) and (v).
"Invested Amount" means the sum of the Class A Invested Amount, the
Class B Invested Amount, the Class C Invested Amount and the Subordinated
Transferor Amount and
"Transferor Percentage" means (i) when used with respect to Principal
Collections during the Revolving Period and the amount of Defaulted
Receivables, 100% minus the sum of the applicable Floating Allocation
Percentages with respect to all Series of certificates then issued and
outstanding and 1% (the "B/F Percentage") and (ii) when used with respect to
Principal Collections during the Controlled Amortization Period and any Rapid
Amortization Period, 100% minus the sum of the Fixed Allocation Percentages
with respect to all Series of certificates then issued and outstanding and
the B/F Percentage.
As a result of the Class A Floating Allocation Percentage, the Class B
Floating Allocation Percentage, the Class C Floating Allocation Percentage
and the Subordinated Transferor Floating Allocation Percentage, Finance
Charge Collections allocated to the Class A, Class B, Class C and the
Subordinated Transferor Certificateholders may change each Collection Period
based on the relationship between the amount of the Class A Invested Amount,
the Class B Invested Amount and the Class C Invested Amount to the aggregate
invested amount of all Series of certificates issued by the Trust. In
addition, the portion of Defaulted Receivables allocated to the Class A,
Class B, Class C and the Subordinated Transferor Certificateholders will
change each Collection Period based in part on the relationship of the amount
of the Class A Invested Amount, the Class B Invested Amount, the Class C
Invested Amount and the Subordinated Transferor Amount to the Aggregate
Receivables on the last day of the immediately preceding Collection Period.
The numerator used to calculate the Fixed Allocation Percentage each day
during the Controlled Amortization Period or any Rapid Amortization Period
will remain fixed; however, the denominator used to calculate such percentage
may increase or decrease from time to time.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT
The Servicer, no later than the second business day following the date
of processing, will deposit into the Collection Account any payment collected
by the Servicer on the Receivables and will make the allocations and payments
described below to the Collection Account and the parties shown below on the
day of such deposit; provided, however, that for so long as Bridgestone/
Firestone is the Servicer, and either (i) the unsecured short-term debt
ratings of the Letter of Credit Bank have not been reduced below A-1+ or F-1+
by the applicable Rating Agency or withdrawn by the Rating Agency for a
period in excess of 35 days of notice to the Servicer thereof, and at least
five business days remain prior to the expiration of the Servicer Letter of
Credit, (ii) the Servicer has delivered to the Trustee a substitute Servicer
Letter of Credit issued by a financial institution whose unsecured short-term
debt ratings are A-1+ and F-1+ by the applicable Rating Agency and at least
five business days remain prior to the expiration of such substitute Servicer
Letter of Credit or (iii) the Trustee has drawn the full amount available
under the Servicer Letter of Credit and deposited the proceeds of such demand
into a segregated trust account available to the Trustee in the event the
Servicer fails to timely remit Collections to the Collection Account, then
the Servicer may use for its own benefit all such Collections up to the
amount of the Servicer Letter of Credit until the business day preceding the
Distribution Date, at which time the Servicer will make a deposit to the
Collection Account in an amount equal to the net amount of such deposits and
withdrawals which would have been made had the conditions of this proviso not
applied.
While Collections are held by the Servicer pending deposit into the
Collection Account, the Servicer shall be permitted to use such funds for its
own benefit and the certificateholders of all Series (including the
Certificateholders) are subject to risk of loss, including risk of loss
resulting from the bankruptcy or insolvency of the Servicer. The Servicer
Letter of Credit will be available in the event that Bridgestone/Firestone
as Servicer fails to deposit the required amount of Collections into the
Collection Account on the business day prior to any Distribution Date,
including any such failure caused by the bankruptcy or insolvency of
Bridgestone/Firestone as Servicer. The Servicer will not pay to the Trust
any fee for use of the Collections. See "Risk Factors--Commingling." Under
the Agreement, the Collections on the Receivables for any Collection Period
will be allocated such that all finance charges billed or accrued in respect
of Receivables in the prior Collection Period (less the aggregate amount of
finance charges billed or accrued on Accounts in prior periods which are
rebated to cardholders during such Collection Period) will be deemed Finance
Charge Collections and the remaining amount of such Collections will be
deemed Principal Collections. Notwithstanding the foregoing, Recoveries
received in any Collection Period shall be treated as Finance Charge
Collections for such Collection Period for all purposes. In addition,
merchant fees received or accrued in any Collection Period shall be treated
as Finance Charge Collections for such Collection Period for all purposes.
If the amount in respect of Finance Charge Collections to be deposited
into the Collection Account on any Distribution Date pursuant to the
preceding sentence exceeds the sum of (a) the Class A Monthly Interest for
such Distribution Date, any overdue Class A Monthly Interest (plus any
additional interest accrued on such overdue Class A Monthly Interest), the
Class A Investor Default Amount, the Class B Monthly Interest for such
Distribution Date, any overdue Class B Monthly Interest (plus any additional
interest accrued on such overdue Class B Monthly Interest), the Class B
Investor Default Amount, the Class C Monthly Interest for such Distribution
Date and any overdue Class C Monthly Interest (plus any additional interest
accrued on such overdue Class C Monthly Interest for such Distribution Date)
and (b) the Class A Monthly Servicing Fee, the Class B Monthly Servicing Fee,
the Class C Monthly Servicing Fee and the Subordinated Monthly Servicing Fee
(collectively, the "Monthly Servicing Fee"), the Servicer may deduct the
Monthly Servicing Fee (see "--Servicing Compensation and Payment of
Expenses"), and during the Revolving Period, the Class A Investor Default
Amount, the Class B Investor Default Amount, the Class C Investor Default
Amount and the Subordinated Transferor Default Amount (which will be
distributed to the Transferor, but not in an amount exceeding the Transferor
Interest on such day (after giving effect to any new Receivables transferred
to the Trust on such day)) from the net amount to be deposited into the
Collection Account.
APPLICATION OF COLLECTIONS
Any amounts in respect of Principal Collections not distributed to the
Transferor because such Principal Collections would exceed the Transferor
Interest (after giving effect to any new Receivables transferred to the Trust
for the Collection Period relating to such Determination Date) ("Unallocated
Principal Collections") will be held in the Collection Account until
distributable to the Transferor or, if the Controlled Amortization Period or
the Rapid Amortization Period has commenced, on each Distribution Date all
or a portion thereof will be treated as part of Class A Monthly Principal.
Any Transfer Deposit Amounts, Adjustment Payments and the proceeds of any
sale, disposition or liquidation of Receivables following the occurrence of
an Amortization Event caused by the bankruptcy or insolvency of the
Transferor or Bridgestone/Firestone or in connection with the Final Series
1996-A Termination Date will also be deposited into the Collection Account
immediately upon receipt and will be allocated as Principal Collections or
Finance Charge Collections, as applicable.
THE LETTERS OF CREDIT
Bridgestone/Firestone as Servicer will deliver to the Trustee on the
Closing Date the Servicer Letter of Credit. The Servicer Letter of Credit
will be available, up to its stated amount, to cover any shortfall in
Collections allocated to any Series and required to be deposited into the
Collection Account by the Servicer. The Servicer Letter of Credit shall
provide that the Trustee may make a demand thereunder on any day on which
Bridgestone/Firestone as Servicer fails to remit to the Collection Account
the full amount of Collections required to be remitted pursuant to the
Agreement. The amount of any such demand shall be equal to the difference
between the total Collections required to be so deposited and the total
Collections actually so deposited. The initial stated amount of the Servicer
Letter of Credit shall be $45,000,000. The proceeds of any drawing on the
Servicer Letter of Credit will be allocated among all outstanding Series of
certificates (including the Certificates issued by the Trust). Initially,
the Invested Amount of the Certificates will be approximately ____% of the
Aggregate Receivables. Such allocations will be performed in much the same
manner as are allocations of Collections (generally speaking, such
allocations will be based on the ratio of the Invested Amount to the
Aggregate Receivables). During the period that Bridgestone/Firestone is the
Servicer, if aggregate Collections at any time held by the Servicer exceed
the amount available under the Servicer Letter of Credit, the Servicer shall
deposit all such Collections in excess of the amount available under the
Servicer Letter of Credit into the Collection Account no later than the
second business day after the date of processing thereof.
In the event that either the unsecured short-term debt rating of the
Letter of Credit Bank is lowered below A-1+, P-1 or F-1+ by the applicable
Rating Agency, then within 35 days of notice to the Servicer of such event
(or immediately if such rating is reduced to or below A-2, P-2 or F-2 by the
applicable Rating Agency) or in the event that five business days or less
remain prior to the expiration of the Servicer Letter of Credit, Bridgestone/
Firestone shall either (i) commence depositing Collections into the
Collection Account within two business days of the date of processing thereof
or (ii) deliver to the Trustee an irrevocable letter of credit substantially
identical to the Servicer Letter of Credit (a "Substitute Servicer Letter of
Credit") issued by a financial institution whose unsecured short-term debt
is rated A-1+, P-1 or F-1+ by the applicable Rating Agency or (iii) only in
the event that the unsecured short-term debt rating of the Servicer Letter
of Credit Bank is lowered below A-1+, P-1, or F-1+ by the applicable Rating
Agency, the Trustee shall draw on the Servicer Letter of Credit in full and
deposit the proceeds of such drawing in a segregated trust account maintained
for the benefit of the certificateholders of all Series. Any amounts on
deposit in such account shall be invested in Permitted Investments. The
Trustee shall withdraw funds from such account under the same circumstances
as it would have drawn under the Servicer Letter of Credit. Upon the earlier
of (x) the delivery to the Trustee of a Substitute Servicer Letter of Credit
meeting the requirements described in clause (ii) above or (y) the originally
scheduled expiration date of the Servicer Letter of Credit, the Trustee shall
release to the Letter of Credit Bank any funds on deposit in such account.
The Transferor Letter of Credit will be delivered to the Trustee on the
Closing Date. The Transferor Letter of Credit will be available, up to its
stated amount, to cover any shortfall in payments allocated to any Series and
required to be deposited into the Collection Account by the Transferor. The
Transferor Letter of Credit shall provide that the Trustee may make a demand
thereunder on any day on which the Transferor fails to make any required
deposit to the Collection Account in respect of Adjustment Payments (see "--
Defaulted Receivables; Recoveries; Rebates and Fraudulent Charges" below).
The amount of any such demand shall be the difference between the amount of
any required Adjustment Payment and the amount in respect thereof actually
deposited into the Collection Account. The Transferor Letter of Credit shall
be issued by the Letter of Credit Bank and shall have an initial stated amount
of $15,000,000. The proceeds of any drawing on the Transferor Letter of
Credit will be allocated among all outstanding Series of certificates
(including the Certificates issued by the Trust). Initially, the Invested
Amount of the Certificates will be approximately ___% of the
Aggregate Receivables. Such allocations will be performed in much the same
manner as are allocations of Collections (generally speaking, such
allocations will be based on the ratio of the Invested Amount to the
Aggregate Receivables).
In the event that either the unsecured short-term debt rating of the
Letter of Credit Bank is lowered below A-1+, P-1 or F-1+ by the applicable
Rating Agency, then within 35 days of notice to the Servicer of such event
(or immediately if such rating is reduced to or below A-2, P-2 or F-2 by the
applicable Rating Agency) or in the event that five business days or less
remain prior to the expiration of the Transferor Letter of Credit, either
(i) there shall be delivered to the Trustee an irrevocable letter of credit
substantially similar to the Transferor Letter of Credit (a "Substitute
Transferor Letter of Credit") issued by a financial institution whose
unsecured short-term debt is rated A-1+ and F-1+ by the applicable Rating
Agency or (ii) only in the event that the unsecured short-term debt rating
of the Letter of Credit Bank has been lowered below A-1+, P-1 or F-1+ by the
applicable Rating Agency, the Trustee shall draw on the Transferor Letter of
Credit in full and deposit the proceeds of such drawing in a segregated trust
account maintained for the benefit of the certificateholders of all Series.
Any amounts on deposit in such account shall be invested in Permitted
Investments. The Trustee shall withdraw funds from such account under the
same circumstances as it would have drawn under the Transferor Letter of
Credit. Upon the earlier of (x) the delivery to the Trustee of a Substitute
Transferor Letter of Credit meeting the requirements described in clause (i)
above or (y) the originally scheduled expiration date of the Transferor
Letter of Credit, the Trustee shall release to the Letter of Credit Bank any
funds on deposit in such account. If the Transferor Letter of Credit expires
and is not replaced, an Amortization Event may occur if the sum of the
Transferor Amount and the B/F Amount does not equal at least __% of the
aggregate invested amounts of the outstanding Series of certificates issued
by the Trust. See "--Amortization Events."
After any drawing under either the Servicer Letter of Credit or the
Transferor Letter of Credit for any reason other than a clerical error by the
Servicer or Transferor or a drawing resulting from a lowering of the Letter
of Credit Bank's short-term debt rating, then (i) Bridgestone/Firestone will
begin daily deposits of Collections into the Collection Account, (ii) the
Letter of Credit Bank may, at its option, terminate the Servicer Letter of
Credit upon 21 days advance notice to the Servicer and (iii) the Transferor
shall purchase Class A REMARCs in order to increase the Transferor Amount to
a level such that the sum of the Transferor Amount and the B/F Amount equals
at least __% of the aggregate invested amounts of the outstanding Series of
certificates issued by the Trust, after which time the Transferor Letter of
Credit may be terminated.
REALLOCATION OF CASH FLOWS
On each Determination Date, the Servicer will determine the Class A
Required Amount, the Class B Required Amount and the Class C Required Amount.
The "Class A Required Amount" means the amount, if any, by which the sum of
Class A Monthly Interest, any overdue Class A Monthly Interest (with interest
thereon), the Class A Investor Default Amount and the Class A Monthly
Servicing Fee for such Collection Period exceeds the funds allocable to the
Class A Certificates to pay such amounts. The "Class B Required Amount"
means the amount, if any, by which the sum of Class B Monthly Interest, any
overdue Class B Monthly Interest (with interest thereon), the Class B
Investor Default Amount and the Class B Monthly Servicing Fee for such
Collection Period exceeds the funds allocable to the Class B Certificates to
pay such amounts. The "Class C Required Amount" means the amount, if any,
by which the sum of Class C Monthly Interest, any overdue Class C Monthly
Interest (with interest thereon), the Class C Investor Default Amount and the
Class C Monthly Servicing Fee for such Collection Period exceeds the funds
allocable to the Class C Certificates to pay such amounts. The "Required
Amount" shall equal the sum of the Class A, Class B and Class C Required
Amounts.
If Finance Charge Collections allocable to interest for any Collection
Period are insufficient to pay the Required Amount, Excess Finance Charge
Collections will be used to pay the Required Amount with respect to such
Distribution Date. See "--Excess Finance Charge Collections." If such
Excess Finance Charge Collections are insufficient to pay the Required
Amount, Principal Collections allocable to the Subordinated Transferor
Interest, the Class C Interest and the Class B Interest will then be used to
fund the remaining Required Amount. See "--Reallocated Principal
Collections." If Reallocated Principal Collections with respect to any
Collection Period are insufficient to fund the remaining Required Amount for
such Collection Period, then a portion of the Subordinated Transferor Amount,
the Class C Invested Amount and the Class B Invested Amount, as applicable,
may be reduced for the benefit of Certificates senior to such Certificates.
In the event of such reductions, Excess Finance Charge Collections, if any,
will be used to increase the Class B Invested Amount, Class C Invested Amount
and the Subordinated Transferor Amount, as applicable (but not in excess of
the initial invested amounts). See "--Additional Amounts Available to
Certificateholders."
In certain instances, Principal Collections and certain other amounts
otherwise allocable to other Series, to the extent such collections are not
needed to make payments to the certificateholders of such other series, may
be applied to cover principal payments due to or for the benefit of the
holders of the Certificates. See "--Shared Principal Collections." In
addition, Finance Charge Collections in excess of the amounts necessary to
make required payments with respect to certificates of other outstanding
series will be applied to cover shortfalls with respect to Finance Charge
Collections allocable to the Certificates. See "--Sharing of Excess Finance
Charge Collections."
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT
On any day on which the Servicer makes a deposit into the Collection
Account with respect to the Revolving Period, the Servicer will withdraw from
the Collection Account and pay to the Transferor an amount equal to the
aggregate amount of such deposits in respect of Principal Collections (other
than Reallocated Principal Collections used to pay interest due on the Class
A Certificates, Class B Certificates and the Class C Certificates), but not
exceeding the Transferor Interest on such day (after giving effect to any new
Receivables transferred to the Trust on such day). On any day on which the
Servicer makes a deposit into the Collection Account with respect to the
Controlled Amortization Period and any Rapid Amortization Period, the
Servicer will withdraw from the Collection Account and pay to the Transferor
an amount equal to the Transferor's Percentage of the amount of such deposits
in respect of Principal Collections, except that the amount of such payments
with respect to Principal Collections shall not exceed the amount of the
Transferor Interest on such day (after giving effect to any new Receivables
transferred to the Trust on such day). On any such day, the Servicer shall
also withdraw from the Collection Account and pay to Bridgestone/Firestone,
as holder of the Bridgestone/Firestone Certificate, the B/F Percentage of the
aggregate amount of such deposits in respect of Principal Collections and
Finance Charge Collections.
There will also be deposited into the Collection Account, Collections
which are not allocable to the Certificates, the Bridgestone/Firestone
Certificate or the Transferor (i.e., such Collections will be allocable to
other Series, including the Series 1992-B Certificates). Such Collections
will be distributed as provided in the Supplement to the Agreement relating
to such other Series and will not be available for distribution to the
Certificateholders.
The Servicer shall apply or shall cause the Trustee to apply the funds
on deposit in the Collection Account allocable to the Certificates with
respect to each Distribution Date shall be applied as in the priority set
forth below:
(a) An amount equal to the Class A Floating Allocation Percentage of
Finance Charge Collections deposited in the Collection Account for the
collection Period immediately preceding such Distribution Date will be
distributed in the following priority:
(i) an amount equal to the Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest previously
due but not paid on a prior Distribution Date, plus any additional interest
for such Distribution Date, plus the amount of any additional interest with
respect to interest amounts that were due but not paid on a prior
Distribution Date, will be distributed to the Class A Certificateholders;
(ii) an amount equal to the aggregate Class A Investor Default
Amount for such Distribution Date will be distributed to the Transferor on
Distribution Dates with respect to the Revolving Period (unless such amount
has been previously netted against deposits to the Collection Account), but
not exceeding the Transferor Interest (after giving effect to any new
Receivable transferred to the Trust on such date) and thereafter will be
included in the funds available to make principal payments;
(iii) an amount equal to the Class A Monthly Servicing Fee for
such Distribution Date will be distributed to the Servicer (unless such
amount has been previously netted against deposits to the Collection Account)
(in the event Bridgestone/Firestone is not the Servicer, amounts described in
this clause (iii) shall have priority over the amounts described in clause
(ii) above); and
(iv) the balance, if any, will constitute a portion of Excess
Finance Charge Collections and will be allocated and distributed as described
under "--Excess Finance Charge Collections."
(b) An amount equal to the Class B Floating Allocation Percentage of
Finance Charge Collections deposited in the Collection Account for the
Collection Period immediately preceding such Distribution Date will be
distributed in the following priority:
(i) an amount equal to the Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest previously
due but not paid on a prior Distribution Date, plus any additional interest
for such Distribution Date, plus the amount of any additional interest with
respect to interest amounts that were due but not paid on a prior
Distribution Date, will be distributed to the Class B Certificateholders;
(ii) an amount equal to the aggregate Class B Investor Default
Amount for such Distribution Date will be distributed to the Transferor on
Distribution Dates with respect to the Revolving Period (unless such amount
has been previously netted against deposits to the Collection Account), but
not exceeding the Transferor Interest (after giving effect to any new
Receivable transferred to the Trust on such date) and thereafter will be
included in the funds available to make principal payments;
(iii) an amount equal to the Class B Monthly Servicing Fee for
such Distribution Date will be distributed to the Servicer (unless such
amount has been previously netted against deposits to the Collection Account)
(in the event Bridgestone/Firestone is not the Servicer, amounts described
in this clause (iii) shall have priority over the amounts described in clause
(ii) above); and
(iv) the balance, if any, will constitute a portion of Excess
Finance Charge Collections and will be allocated and distributed as described
under "--Excess Finance Charge Collections."
(c) An amount equal to the Class C Floating Allocation Percentage of
Finance Charge Collections deposited in the Collection Account for the
collection Period immediately preceding such Distribution Date will be
distributed in the following priority:
(i) an amount equal to the Class C Monthly Interest for such
Distribution Date, plus the amount of any Class C Monthly Interest previously
due but not paid on a prior Distribution Date, plus any additional interest
for such Distribution Date, plus the amount of any additional interest with
respect to interest amounts that were due but not paid on a prior
Distribution Date, will be distributed to the Class C Certificateholders;
(ii) an amount equal to the aggregate Class C Investor Default
Amount for such Distribution Date will be distributed to the Transferor on
Distribution Dates with respect to the Revolving Period (unless such amount
has been previously netted against deposits to the Collection Account), but
not exceeding the Transferor Interest (after giving effect to any new
Receivable transferred to the Trust on such date) and thereafter will be
included in the funds available to make principal payments;
(iii) an amount equal to the Class C Monthly Servicing Fee for
such Distribution Date will be distributed to the Servicer (unless such
amount has been previously netted against deposits to the Collection Account)
(in the event Bridgestone/Firestone is not the Servicer, amounts described
in this clause (iii) shall have priority over the amounts described in clause
(ii) above); and
(iv) the balance, if any, will constitute a portion of Excess
Finance Charge Collections and will be allocated and distributed as described
under "--Excess Finance Charge Collections."
(d) An amount equal to the Subordinated Transferor Floating Allocation
Percentage of Finance Charge Collections deposited in the Collection Account
for the Collection Period immediately preceding such Distribution Date will
be distributed in the following priority:
(i) an amount equal to the Subordinated Transferor Monthly
Servicing Fee for such Distribution Date will be distributed to the Servicer
(unless such amount has been previously netted against deposits to the
Collection Account); and
(ii) the balance, if any, will constitute a portion of Excess
Finance Charge Collections and will be allocated and distributed as described
under "--Excess Finance Charge Collections."
(e) For each Distribution Date with respect to the Revolving Period, the
remaining funds on deposit in the Collection Account allocable to the Class
A, Class B and Class C Certificates and the Subordinated Transferor
Certificate (other than certain Excess Finance Charge Collections and
Reallocated Principal Collections) will be applied as Shared Principal
Collections and the balance will be distributed to the Transferor.
(f) For each Distribution Date with respect to the Controlled
Amortization Period or any Rapid Amortization Period, the remaining funds on
deposit in the Collection Account allocable to the Class A, Class B and Class
C Certificates and the Subordinated Transferor Certificate (other than
certain Excess Finance Charge Collections and Reallocated Principal
Collections) will be distributed as follows:
(i) an amount equal to Class A Monthly Principal for such
Distribution Date will be distributed to the Class A Certificateholders until
the Class A Invested Amount is paid in full;
(ii) once the Class A Invested Amount is paid in full, the
remaining amount will be distributed to the Class B Certificateholders until
the Class B Invested Amount is paid in full;
(iii) once the Class B Invested Amount is paid in full, the
remaining amount will be distributed to the Class C Certificateholders until
the Class C Invested Amount is paid in full;
(iv) once the Class C Invested Amount is paid in full, the
remaining amount will be distributed to the holder of the Subordinated
Transferor Certificate until the Subordinated Transferor Amount is paid in
full;
(v) an amount equal to the balance of any such remaining funds on
deposit in the Collection Account will be paid to the Transferor up to the
amount of the Transferor Interest; and
(vi) an amount equal to the balance will be applied as Shared
Principal Collections and the balance will be distributed to the Transferor.
Class A Monthly Interest means, with respect to any Distribution Date,
the Class A Monthly Interest equals the product of (i) the actual number of
days in the related Collection Period divided by 360, (ii) the Class A
Certificate Rate and (iii) the outstanding principal balance of the Class A
Certificates as of the preceding Distribution Date (after subtracting
therefrom the aggregate amount of all distributions of Class A Monthly
Principal made to the Class A Certificateholders on such Distribution Date)
or, with respect to the first Distribution Date, the Class A Initial Invested
Amount, provided, however, that with respect to the initial Distribution
Date, Class A Monthly Interest shall equal $_______________.
Class B Monthly Interest means, with respect to any Distribution Date,
the Class B Monthly Interest equals the product of (i) the actual number of
days in the related Collection Period divided by 360, (ii) the Class B
Certificate Rate and (iii) the outstanding principal balance of the Class B
Certificates as of the preceding Distribution Date (after subtracting
therefrom the aggregate amount of all distributions of Class B Monthly
Principal made to the Class B Certificateholders on such Distribution Date)
or, with respect to the first Distribution Date, the Class B Initial Invested
Amount, provided, however, that with respect to the initial Distribution
Date, Class B Monthly Interest shall equal $_______________.
Class C Monthly Interest means, with respect to any Distribution Date,
the Class C Monthly Interest equals the product of (i) the actual number of
days in the related Collection Period divided by 360, (ii) the Class C
Certificate Rate and (iii) the outstanding principal balance of the Class C
Certificates as of the preceding Distribution Date (after subtracting
therefrom the aggregate amount of all distributions of Class C Monthly
Principal made to the Class C Certificateholders on such Distribution Date)
or, with respect to the first Distribution Date, the Class C Initial Invested
Amount, provided, however, that with respect to the initial Distribution
Date, Class C Monthly Interest shall equal $_______________.
Class A Investor Default Amount means, a portion of all Defaulted
Receivables which will be allocated to the Class A Certificateholders for
each Distribution Date in an amount equal to the product of the Class A
Floating Allocation Percentage applicable during the immediately preceding
Collection Period and the amount of Defaulted Receivables for such Collection
Period.
Class B Investor Default Amount means, a portion of all Defaulted
Receivables which will be allocated to the Class B Certificateholders for
each Distribution Date in an amount equal to the product of the Class B
Floating Allocation Percentage applicable during the immediately preceding
Collection Period and the amount of Defaulted Receivables for such Collection
Period.
Class C Investor Default Amount means, a portion of all Defaulted
Receivables which will be allocated to the Class C Certificateholders for
each Distribution Date in an amount equal to the product of the Class C
Floating Allocation Percentage applicable during the immediately preceding
Collection Period and the amount of Defaulted Receivables for such Collection
Period.
Subordinated Transferor Default Amount means, a portion of all Defaulted
Receivables which will be allocated to the holder of the Subordinated
Transferor Certificate for each Distribution Date in an amount equal to the
product of the Subordinated Transferor Floating Allocation Percentage
applicable during the immediately preceding Collection Period and the amount
of Defaulted Receivables for such Collection Period.
Monthly Servicing Fee means, with respect to any distribution date, the
sum of (a) the Class A Monthly Servicing Fee, the Class B Monthly Servicing
Fee, the Class C Monthly Servicing Fee and the Subordinated Transferor
Monthly Servicing Fee and (b) the Servicing Fee allocable to the Transferor
Amount and the B/F Amount.
The portion of the Servicing Fee allocable to the Class A Interest on
each Distribution Date (the "Class A Monthly Servicing Fee"), to the Class
B Interest on each Distribution Date (the "Class B Monthly Servicing Fee"),
to the Class C Interest on each Distribution Date (the "Class C Monthly
Servicing Fee") and to the Subordinated Transferor Interest on each
Distribution Date (the "Subordinated Transferor Monthly Servicing Fee")
generally will be equal to one-twelfth of the product of 2.00% per annum and
the amount of the Class A Invested Amount, the Class B Invested Amount, the
Class C Invested Amount, or the Subordinated Transferor Amount, as the case
may be, on the last day of the second preceding Collection Period (in the
case of the first Distribution Date, the initial principal amount of the
Class A Certificates, Class B Certificates or the Class C Certificates, as
the case may be).
Class A Monthly Principal with respect to any Distribution Date relating
to the Controlled Amortization Period or any Rapid Amortization Period will
equal the sum of (i) an amount equal to the Fixed Allocation Percentage of
Principal Collections received during the Collection Period immediately
preceding such Distribution Date (other than Reallocated Principal
Collections used to pay the interest amount due on the Class A Certificates),
(ii) the amount of Shared Principal Collections allocated to the Class A
Certificates with respect to the preceding Collection Period equal to the
product of (a) a fraction, the numerator of which is the Invested Amount and
the denominator of which is the aggregate invested amounts of all Series then
accumulating or amortizing principal and (b) the amount, if any, of
Unallocated Principal Collections on deposit in the Collection Account on
such Distribution Date, (iii) the amount, if any, of Transfer Deposit Amounts
and Adjustment Payments with respect to such Distribution Date and allocable
to the Certificates and (iv) the amount, if any, of Finance Charge
Collections and Excess Finance Charge Collections allocated and available on
such Distribution Date to (A) fund the Class A Investor Default Amount and
the Class B Investor Default Amount with respect to such Distribution Date
and (B) reimburse Class A Investor Charge-Offs and previous reductions in the
Class B Invested Amount; provided, however, that for each Distribution Date
with respect to the Controlled Amortization Period (unless and until an
Amortization Event shall have occurred), Class A Monthly Principal may not
exceed the Controlled Distribution Amount for such Distribution Date; and
provided further, that with respect to any Termination Payment Date, Class
A Monthly Principal will be an amount equal to the Class A Invested Amount.
Class B Monthly Principal with respect to any Distribution Date,
beginning with the Distribution Date on which the Class A Invested Amount is
paid in full, shall equal (a) the sum of (i) an amount equal to the Fixed
Allocation Percentage of Principal Collections received during the Collection
Period immediately preceding such Distribution Date (or portion thereof, in
the case of an Amortization Event which occurs during such Collection
Period), (ii) the amount of Shared Principal Collections allocated to the
Class B Certificates with respect to the preceding Collection Period, and
(iii) the amount, if any, of Excess Finance Charge Collections to be
distributed to the Class B Certificates with respect to such Distribution
Date, minus (b) the Class A Monthly Principal, if any, with respect to such
Distribution Date.
Class C Monthly Principal with respect to any Distribution Date,
beginning with the Distribution Date on which the Class B Invested Amount is
paid in full, shall equal (a) the sum of (i) an amount equal to the Fixed
Allocation Percentage of Principal Collections received during the Collection
Period immediately preceding such Distribution Date (or portion thereof, in
the case of an Amortization Event which occurs during such Collection
Period), (ii) the amount of Shared Principal Collections allocated to the
Class C Certificates with respect to the preceding Collection Period, and
(iii) the amount, if any, of Excess Finance Charge Collections to be
distributed to the Class C Certificates with respect to such Distribution
Date, minus (b) the Class B Monthly Principal, if any, with respect to such
Distribution Date.
Controlled Distribution Amount for any Distribution Date with respect
to the Controlled Amortization Period shall mean an amount equal to the sum
of the Controlled Amortization Amount and any existing Deficit Controlled
Amortization Amount.
Controlled Amortization Amount means $_______________.
Deficit Controlled Amortization Amount shall mean, on the first
Distribution Date with respect to the Controlled Amortization Period, the
excess, if any, of the Controlled Amortization Amount over the amount
distributed as Class A Monthly Principal for such Distribution Date and, on
each subsequent Distribution Date with respect to the Controlled Amortization
Period, the excess, if any, of the Controlled Amortization Amount and any
then existing Deficit Controlled Amortization Amount over the aggregate Class
A Monthly Principal distributed on such Distribution Date.
Excess Finance Charge Collections shall mean, with respect to any
Distribution Date, an amount equal to the sum of the amounts described in
clause (a)(iv), clause (b)(iv) and clause (c)(iv) under "--Distributions from
the Collection Account" above.
Termination Payment Date shall mean the earlier of the first
Distribution Date following the liquidation or sale of the Receivables as a
result of an insolvency event as described under "--Amortization Events" or
the occurrence of the Final Series 1996-1 Termination Date.
DETERMINATION OF LIBOR
The Servicer will determine LIBOR for each applicable Interest Accrual
Period on the second business day prior to commencement of such Interest
Accrual Period (or in the case of the initial Interest Accrual Period, the
second business day prior to the Closing Date) on which such Interest Period
commences (each a "LIBOR Determination Date"). For purposes of calculating
LIBOR, a business day is any day on which dealings in deposits in U.S.
Dollars are transacted in the London interbank market.
LIBOR means, as of any LIBOR Determination Date, the rate for deposits
in U.S. Dollars for a period of the Designated Maturity (commencing on the
first day of the relevant Interest Accrual Period) which appears on the
Telerate Page 3750 as of 11:00 a.m., London Time, on such date. If such rate
does not appear on Telerate Page 3750, the rate for that day will be
determined on the basis of the rates at which deposits in U.S. Dollars are
offered by the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a period of the
Designated Maturity (commencing on the first day of the relevant
Interest Period.) The Servicer will request the principal London office of
each of the Reference Banks to provide a quotation of its rate. If at least
two such quotations are provided, the rate for that day will be the
arithmetic mean of the quotations. If fewer than two quotations are provided
as requested, the rate for that day will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in U.S.
Dollars to leading European banks for a period of the Designated Maturity
(commencing on the first day of the relevant Interest Accrual Period).
Designated Maturity shall mean, for any LIBOR Determination Date, (a)
with respect to the Class A Certificates, prior to the occurrence of an
Amortization Event, (three months), and after the occurrence of an
Amortization Event, (one month) and (b) with respect to the Class B
Certificates, (one month).
Telerate Page 3750 means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
Reference Banks means four major banks in the London interbank market
selected by the Servicer.
EXCESS FINANCE CHARGE COLLECTIONS
On each Distribution Date, the Servicer will apply or cause the Trustee
to apply Excess Finance Charge Collections with respect to the Collection
Period immediately preceding such Distribution Date, to make the following
distributions in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with respect
to such Collection Period will be used to fund the Class A Required Amount;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed (after giving effect
to the allocation on such Distribution Date of certain other amounts applied
for that purpose) will be distributed to the Transferor on Distribution Dates
with respect to the Revolving Period, but not in an amount exceeding the
Transferor Interest (after giving effect to any new Receivables transferred
to the Trust on such date) and thereafter will be included in the funds
available to make principal payments;
(c) an amount equal to the Class B Required Amount, if any, with respect
to such Collection Period will be used to fund the Class B Required Amount;
(d) an amount equal to the amount by which the Class B Invested Amount
has been reduced below the Initial Class B Invested Amount (for reasons other
than the payment of principal to the Class B Certificateholders), if any, for
such Distribution Date will be distributed to the Transferor on Distribution
Dates with respect to the Revolving Period, but not in an amount exceeding
the Transferor Interest (after giving effect to any new Receivables
transferred to the Trust on such date) and thereafter will be included in the
funds available to make principal payments;
(e) an amount equal to the Class C Required Amount, if any, with respect
to such Collection Period will be used to fund the Class C Required Amount;
(f) an amount equal to the amount by which the Class C Invested Amount
has been reduced below the Class C Initial Invested Amount (for reasons other
than the payment of principal to the Class C Certificateholders) will be
distributed to the Transferor on Distribution Dates with respect to the
Revolving Period, but not in an amount exceeding the Transferor Interest on
such day (after giving effect to any new Receivables transferred to the Trust
on such date) and thereafter will be included in the funds available to make
principal payments;
(g) an amount equal to the Subordinated Transferor Default Amount will
be distributed to the Transferor on Distribution Dates with respect to the
Revolving Period, but not in an amount exceeding the Transferor Interest
(after giving effect to any new Receivables transferred to the Trust on such
date) and thereafter will be included in the funds available to make
principal payments;
(h) an amount equal to the amount by which the Subordinated Transferor
Amount has been reduced below the initial Subordinated Transferor Amount (for
reasons other than the payment of principal to the holder of the Subordinated
Transferor Certificate) will be distributed to the Transferor on Distribution
Dates with respect to the Revolving Period, but not in an amount exceeding
the Transferor Interest on such day (after giving effect to any new
Receivables transferred to the Trust on such date) and thereafter will be
included in the funds available to make principal payments)
(i) the balance, if any, will be treated as Shared Excess Finance Charge
Collections to the extent necessary; and
(j) the balance, if any, will be treated as Shared Principal
Collections.
REALLOCATED PRINCIPAL COLLECTIONS
On each Distribution Date, the Servicer will apply or cause the Trustee
to apply Principal Collections allocable first to the Subordinated Transferor
Interest (the "Subordinated Transferor Reallocated Principal Collections")
then to the Class C Interest (the "Class C Reallocated Principal
Collections") and, then to the Class B Interest (the "Class B Reallocated
Principal Collections") with respect to the Collection Period immediately
preceding such Distribution Date in the following priority (such Collections
applied in accordance with (a) below are collectively called "Reallocated
Principal Collections"):
(a) an amount equal to the excess, if any, of (i) the Required Amount,
if any, with respect to such Collection Period over (ii) the amount of Excess
Finance Charge Collections with respect to such Collection Period will be
used to fund the Required Amount; and
(b) any such Collections not applied in the foregoing manner (and
therefore not constituting Reallocated Principal Collections) will, on
Distribution Dates with respect to the Revolving Period, be applied as Shared
Principal Collections and thereafter will be included in the funds available
to make principal payments.
With respect to any Collection Period during the Revolving Period,
Reallocated Principal Collections will be allocated to each of the
Subordinated Transferor Interest, the Class C Interest and the Class B
Interest based on the Subordinated Transferor Floating Allocation Percentage,
the Class C Floating Allocation Percentage or the Class B Floating Allocation
Percentage for such Collection Period, as applicable. With respect to any
Collection Period during the Controlled Amortization Period or any Rapid
Amortization Period, Reallocated Principal Collections will be allocated to
each of the Subordinated Transferor Interest, the Class C Interest and the
Class B Interest based on the Fixed Allocation Percentage of Principal
Collections for such Collection Period multiplied by a fraction the numerator
of which is equal to the Subordinated Transferor Amount, the Class C Invested
Amount or the Class B Invested Amount, as applicable, as of the close of
business on the last day of the prior Collection Period and the denominator
of which is equal to the Invested Amount at the close of business on such
day.
ADDITIONAL AMOUNTS AVAILABLE TO CERTIFICATEHOLDERS
If Reallocated Principal Collections with respect to any Collection
Period are insufficient to fund the remaining Class A Required Amount for
such Collection Period, then a portion of the Subordinated Transferor Amount
(after giving effect to reductions for any Subordinated Transferor Charge-
Offs and Reallocated Principal Collections for such Collection Period) equal
to such insufficiency (but not in excess of the Class A Investor Default
Amount for such Distribution Date) will be allocated to the Class A
Certificates to avoid a charge-off with respect to the Class A Certificates,
and the Subordinated Transferor Amount will be reduced by such amount.
If the Subordinated Transferor Amount is reduced to zero, the Class C
Invested Amount (after giving effect to reductions for any Class C Investor
Charge-Offs and any Class C Reallocated Principal Collections for such
Collection Period) will be reduced by the amount by which the Subordinated
Transferor Amount would have been reduced below zero (but not by more than
the excess of the Class A Investor Default Amount for such Distribution Date
over the amount of such reduction, if any, of the Subordinated Transferor
Amount for such Distribution Date) and such amount will be allocated to the
Class A Certificates to avoid a charge-off with respect to the Class A
Certificates.
If the Class C Invested Amount is reduced to zero, the Class B Invested
Amount (after giving effect to reductions for any Class B Investor Charge-
Offs and any Class B Reallocated Principal Collections for such Collection
Period) will be reduced by the amount by which the Class C Invested Amount
would have been reduced below zero (but not by more than the excess of the
Class A Investor Default Amount for such Distribution Date over the amount
of such reduction, if any, of the Subordinated Transferor Amount and the
Class C Invested Amount for such Distribution Date) and such amount will be
allocated to the Class A Certificates to avoid a charge-off with respect to
the Class A Certificates.
If the Class B Invested Amount is reduced to zero, the Class A Invested
Amount will be reduced by the amount by which the Class B Invested Amount
would have been reduced below zero, but not in excess of the Class A Investor
Default Amount for such Distribution Date (a "Class A Investor Charge-Off"),
and the Class A Certificateholders will bear directly the credit and other
risks associated with their undivided interest in the Trust.
After payment of the Class A Required Amount, if Class C Reallocated
Principal Collections and Subordinated Transferor Reallocated Principal
Collections with respect to any Collection Period are insufficient to fund
the remaining Class B Required Amount for such Collection Period, then a
portion of the Subordinated Transferor Amount (after giving effect to
reductions for any Subordinated Transferor Charge-Offs, Reallocated Principal
Collections and any adjustments made thereto for the benefit of the Class A
Certificateholders) equal to such insufficiency (but not in excess of the
Class B Investor Default Amount for such Distribution Date) will be allocated
to the Class B Certificates to avoid a charge-off with respect to the Class
B Certificates, and the Subordinated Transferor Amount will be reduced by
such amount.
If the Subordinated Transferor Amount is reduced to zero, the Class C
Invested Amount (after giving effect to reductions for any Class C Investor
Charge-Offs, Class C Reallocated Principal Collections and any adjustments
made thereto for the benefit of the Class A Certificateholders) will be
reduced by the amount by which the Subordinated Transferor Amount would have
been reduced below zero (but not by more than the excess of the Class B
Investor Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Subordinated Transferor Amount for such
Distribution Date) and such amount will be allocated to the Class B
Certificates to avoid a charge-off with respect to the Class B Certificates.
If the Class C Invested Amount is reduced to zero, the Class B Invested
Amount will be reduced by the amount by which the Class C Invested Amount
would have been reduced below zero, but not in excess of the Class B Investor
Default Amount for such Distribution Date (a "Class B Investor Charge-Off"),
and the Class B Certificateholders will bear directly the credit and other
risks associated with their undivided interest in the Trust.
After payment of the Class B Required Amount, if Subordinated Transferor
Reallocated Principal Collections with respect to any Collection Period are
insufficient to fund the remaining Class C Required Amount for such
Collection Period, then a portion of the Subordinated Transferor Amount
(after giving effect to reductions for any Subordinated Transferor Charge-
Offs, Reallocated Principal Collections and any adjustments made thereto for
the benefit of the Class B and Class A Certificateholders) equal to such
insufficiency (but not in excess of the Class C Investor Default Amount for
such Distribution Date) will be allocated to the Class C Certificates to
avoid a charge-off with respect to the Class C Certificates, and the
Subordinated Transferor Amount will be reduced by such amount.
If the Subordinated Transferor Amount is reduced to zero, the Class C
Invested Amount will be reduced by the amount by which the Subordinated
Transferor Amount would have been reduced below zero, but not in excess of
the Class C Investor Default Amount for such Distribution Date (a "Class C
Investor Charge-Off"), and the Class C Certificateholders will bear directly
the credit and other risks associated with their undivided interest in the
Trust.
On each Distribution Date, if the Subordinated Transferor Default Amount
for such Distribution Date exceeds the amount of Excess Finance Charge
Collections which is allocated and available to fund such amount as described
under "Excess Finance Charge Collections", the Subordinated Transferor Amount
(after giving effect to reductions for Reallocated Principal Collections and
the amount of any adjustments made thereto for the benefit of the Class A,
Class B or Class C Certificateholders) will be reduced but not in excess of
the Subordinated Transferor Default Amount (the "Subordinated Transferor
Charge-Off").
In the event that any of the Subordinated Transferor Amount, the Class
C Invested Amount, the Class B Invested Amount or the Class A Invested Amount
is reduced, such amount will thereafter be increased (but not in excess of
the unpaid principal balance of the Subordinated Transferor Certificate, the
Class C Certificates, the Class B Certificates or the Class A Certificates,
as applicable) on any Distribution Date by the amount of Excess Finance
Charge Collections allocated and available for that purpose as described
under "--Excess Finance Charge Collections."
The "Subordinated Transferor Amount" will initially be equal to
$___________ and the "Class C Invested Amount" will initially be equal to
$___________.
SHARED PRINCIPAL COLLECTIONS
To the extent that Principal Collections and other amounts that are
allocated to the interest of the holders of any class of any series (other
than the Transferor Interest) are not needed to make payments to the
certificateholders of such class, they may be applied to cover principal
payments due to or for the benefit of certificateholders of another Series
("Shared Principal Collections"). Any such reallocation will not result in
a reduction in the interest of the holders of the Series to which such
Principal Collections were initially allocated. In addition, Principal
Collections and certain other amounts otherwise allocable to other Series,
to the extent such collections are not needed to make payments to the
certificateholders of such other Series, may be applied to cover principal
payments due to or for the benefit of the holders of the Certificates.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS
Finance Charge Collections on any business day in excess of the amounts
necessary to make required payments on such business day with respect to the
Certificates will be applied to cover any shortfalls with respect to amounts
payable from Finance Charge Collections allocable to any other Series then
outstanding, pro rata based upon the amount of the shortfall, if any, with
respect to such other Series. In addition, Finance Charge Collections in
excess of the amounts necessary to make required payments on such business
day with respect to certificates of other outstanding Series will be applied
to cover any shortfalls with respect to Finance Charge Collections allocable
to the Certificates. Any Excess Finance Charge Collections remaining after
covering shortfalls with respect to all outstanding Series will be paid to
the Transferor.
DISTRIBUTIONS TO THE CERTIFICATEHOLDERS
Payments to the Certificateholders will be made from the Collection
Account. In addition to the amounts deposited in the Collection Account as
described above, (the proceeds of any optional repurchase of the Class A
Interest by the Transferor will be deposited in the Collection Account on the
Distribution Date on which such repurchase occurs.)
The Servicer shall instruct the Trustee or the Paying Agent to
distribute from the Collection Account on each Distribution Date the amounts
described under "--Distributions from the Collection Account" above.
The paying agent (the "Paying Agent") shall initially be the Trustee.
The Paying Agent shall have the revocable power to withdraw funds from the
Collection Account for the purpose of making distributions to the
Certificateholders.
On each Distribution Date, the Servicer will pay to the Transferor any
investment earnings (net of losses and investment expenses) with respect to
the Collection Account.
Distribution Date shall mean (__________, 1996), and the first day of
each calendar month thereafter, or, if such first day is not a business day,
the next succeeding business day.
DEFAULTED RECEIVABLES; RECOVERIES; REBATES AND FRAUDULENT CHARGES
"Defaulted Receivables" for any Collection Period are Receivables in any
Account which were written off as uncollectible in such Collection Period in
accordance with CFNA Guidelines. Receivables in any Account will be
considered charged off for the purposes of the Agreement on the earlier of
(i) the last day of the Collection Period immediately following the
Collection Period in which such Receivable becomes 180 days delinquent and
(ii) the cycle billing date on which such Account is charged off in
accordance with the customary and usual servicing procedures of the Servicer.
The amount of Defaulted Receivables for any Collection Period will be an
amount equal to the principal amount of the Receivables that became Defaulted
Receivables in such Collection Period less the full amount of any Defaulted
Receivables for which the Transferor or the Servicer becomes obligated to
accept reassignment for such Collection Period unless certain events of
bankruptcy, insolvency or receivership have occurred with respect to the
Transferor or the Servicer. A portion of all Defaulted Receivables will be
allocated to the Class A Certificateholders, the Class B Certificateholders,
the Class C Certificateholders and the Subordinated Transferor
Certificateholder. See "--Distributions from the Collection Account."
The term "Recoveries", with respect to any Collection Period, shall mean
all amounts or payments received by the Servicer with respect to Receivables
which have previously become Defaulted Receivables in a prior Collection
Period, net of reasonable expenses of the Servicer incurred and deducted from
such amounts or payments. The Servicer may deduct reasonable expenses in
connection with such Recoveries.
If the Servicer makes a downward adjustment of the amount of any
Receivable because of a rebate, refund, unauthorized charge, billing error
or certain other noncash items to a cardholder, or if the Servicer otherwise
adjusts downward the amount of any Receivable without receiving Collections
therefor or without charging off such amount as uncollectible, or any
Receivable is discovered as having been created through a fraudulent or
counterfeit action the Transferor will be obligated to make a deposit into
the Collection Account in immediately available funds in an amount equal to
any such adjustment or principal amount of the fraudulent or counterfeit
Receivable. If the Transferor fails to make any such deposit the Trustee
shall make a drawing under the Transferor Letter of Credit (any such payment
or proceeds of a drawing under the Transferor Letter of Credit, "Adjustment
Payments"). If funds are not available under the Transferor Letter of
Credit, the Transferor Amount will be reduced by the amount of the adjustment
or the principal amount of the fraudulent or counterfeit Receivable;
provided, however, that if such deduction would reduce the Transferor Amount
below zero or would otherwise not be permitted by law, the B/F Amount will
be reduced by the amount of any such adjustment or the principal amount of
the fraudulent or counterfeit Receivable. Any Adjustment Payments so paid
by the Transferor or the proceeds of any drawing under the Transferor Letter
of Credit in respect thereof shall be allocated in respect of Finance Charge
Collections and Principal Collections as provided in the Agreement.
DISCOUNT OPTION
The Agreement provides that the Transferor may at any time designate a
fixed percentage or a variable percentage based on a formula (the "Discount
Percentage"), but in either case not to exceed (6)%, of Receivables giving
rise to Principal Collections ("Principal Receivables") that are charges for
goods or services or obligations for repayment of cash advances, part of
which have not previously been sold as Discount Option Receivables, arising
from then on to be treated as Receivables giving rise to Finance Charge
Collections ("Finance Charge Receivables"). Such Receivables will be
designated "Discount Option Receivables". On the date of processing any
Discount Option Receivables, an amount equal to the product of (i) the
Aggregate Certificateholders' Interest with respect to Finance Charge
Receivables and (ii) the amount of each Finance Charge Receivable will be
deposited by the Transferor into a finance charge account and an amount equal
to the product of the Transferor Interest and the amount of the Discount
Option Receivables will be paid to the holder of the Exchangeable Transferor
Certificate. Simultaneously with such reassignment, the Transferor will
retransfer the Receivable to the Trust, making the representations and
warranties with respect to such Receivable as if such Receivable were a new
Receivable created in an existing Account, and the amount of the Transferor
Interest will be increased to reflect the addition of such Receivable to the
Trust. Collections with respect to such Receivable will be treated as
Principal Collections.
FINAL PAYMENT OF PRINCIPAL; TERMINATION OF TRUST
The Certificates will be subject to optional repurchase by the
Transferor on any Distribution Date on or after which the Invested Amount is
reduced to an amount less than or equal to $_____________ (5% of the initial
Invested Amount), unless certain events of bankruptcy, insolvency or
receivership have occurred with respect to the Transferor. The repurchase
price will be equal to the Invested Amount plus accrued and unpaid interest
on the Certificates through the day preceding the Distribution Date on which
the repurchase occurs. After such date, neither the Trust nor the Transferor
will have any further obligation to pay principal or interest of the
Certificates.
Subject to prior termination as provided above, the Agreement provides
that the final distribution of principal and interest on the Class A
Certificates will be made no later than the ______________ Distribution Date
(the "Final Class A Termination Date") and the final payment of principal and
interest on the Class B Certificates will be made no later than the
__________ Distribution Date (the "Final Class B Termination Date"). The
final payment of principal and interest with respect to the Other
Certificates will no later than ______ (the "Final Series 1996-1 Termination
Date"). In the event that the Invested Amount of the Certificates is greater
than zero on the Final Series 1996-1 Termination Date, the Trustee will sell
or cause to be sold, and apply the proceeds to the extent necessary to pay
such remaining amounts to all Certificateholders pro rata as final payment
of the Certificates, an amount of Receivables at the close of business on
such date, as provided in the Agreement. The proceeds of any such sale will
be treated as Collections on the Receivables allocable to the Certificates
and applied as provided above in "--Application of Collections." Such
proceeds will be allocated first to pay amounts due to the Class A
Certificateholders and then to pay amounts due to the Class B
Certificateholders.
Subject to laws of general applicability regarding trusts, unless the
Transferor instructs the Trustee otherwise, the Trust will only terminate on
the earlier to occur of: (a) the day after the Distribution Date following
the date on which funds shall have been deposited in the Collection Account
for the payment to certificateholders outstanding sufficient to pay in full
the aggregate investor interest of all Series outstanding plus interest
thereon at the applicable certificate rates to the next Distribution Date and
(b) (September 15, 2092) (the "Final Trust Termination Date"). Upon the
termination of the Trust and the surrender of the Exchangeable Transferor
Certificate, the Trustee shall convey to the Transferor all right, title and
interest of the Trust in and to the Receivables and other funds of the Trust
(other than amounts in the accounts maintained by the Trust for the final
payment of principal and interest to Certificateholders).
AMORTIZATION EVENTS
The Revolving Period will continue through the end of the Collection
Period related to the _______________ Distribution Date and the Controlled
Amortization Period will begin at such time, unless an Amortization Event
occurs. The Rapid Amortization Period will commence on the day on which an
Amortization Event occurs or is deemed to occur. An "Amortization Event"
with respect to the Certificates refers to any of the following events:
(i) failure on the part of the Servicer or the Transferor to make
any payment or deposit required by the terms of the Agreement or before five
business days after the date such payment or deposit is required to be made
thereunder;
(ii) the failure on the part of the Servicer, the Originator or the
Transferor duly to observe or perform in any material respect certain
covenants or agreements set forth in the Agreement or the Purchase and Sale
Agreement which, in the case of certain of such covenants or agreements,
continues unremedied for a period of 60 days after the date on which written
notice of such failure requiring the same to be remedied shall have been
given to the Servicer, the Originator or the Transferor, as applicable,
provided, however, that an Amortization Event shall not be deemed to occur
if the Transferor has accepted the transfer of the related Receivable (or all
of such Receivables, if applicable) during such period (or such longer period
as the Trustee may specify not to exceed an additional 60 days) in accordance
with the provisions of the Agreement or the Purchase and Sale Agreement;
(iii) any representation or warranty made by the Servicer, the
Originator or the Transferor in the Agreement or the Purchase and Sale
Agreement or any information required to be delivered by the Transferor shall
prove to have been incorrect in any material respect when made or when
delivered, which continues to be incorrect in any material respect for a
period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer,
the Originator or the Transferor, as applicable, and as a result of which the
interests of the certificateholders are materially and adversely affected;
provided, however, that such an Amortization Event shall not be deemed to
have occurred if the Transferor has accepted the transfer of the related
Receivable (or all of such Receivables, if applicable) during such period (or
such longer period as the Trustee may specify) in accordance with the
provisions of the Agreement;
(iv) certain events of insolvency, conservatorship, receivership
or bankruptcy with respect to the Originator, Bridgestone/Firestone or the
Transferor;
(v) the Portfolio Yield averaged over any three consecutive
Collection Periods is less than the Base Rate;
(vi) the Trust shall become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(vii) the Transferor Amount (plus the amount available under the
Transferor Letter of Credit and the B/F Amount) is less than __% of the
aggregate invested amount of all outstanding Series of certificates issued
by the Trust as of the last day of any Collection Period;
(viii) the sum of the Transferor Amount plus the B/F Amount plus
the Class B Invested Amount (plus the invested amount of the Series 1992-B
Certificates and any subordinated class of certificates of additional Series
which, when issued, is retained by the Transferor and with respect to which
no legal opinion is delivered characterizing such certificates as
indebtedness) is less than __% of the Aggregate Receivables as of the last
day of any Collection Period; or
(ix) any Servicer Event of Default shall occur which would have a
material adverse effect on the Certificateholders;
then, (a) in the case of any event described in subparagraphs (i), (ii),
(iii) or (ix), after the applicable grace period, if any, either the Trustee
or the Certificateholders evidencing interests aggregating not less than 50%
of the Invested Amount by written notice to the Transferor (and to the
Trustee if given by the Certificateholders) may declare that an Amortization
Event has occurred with respect to the Certificates as of the date of such
notice, or (b) in the case of any event described in subparagraphs (iv) or
(vi) an Amortization Event with respect to all series of certificates,
including the Certificates, or (c) in the case of subparagraphs (v), (vii)
or (viii), an Amortization Event with respect to the Certificates, shall
occur immediately upon the occurrence of such event, without any notice or
other action on the part of the Trustee or the Certificateholders. The Rapid
Amortization Period will commence on the day on which an Amortization Event
occurs or is deemed to occur. Monthly distributions of principal to the
Class A Certificateholders will begin (if they have not already) on the
Distribution Date with respect to the Collection Period in which an
Amortization Event occurs or is deemed to have occurred. Following the final
principal payment to the Class A Certificateholders, the Class B
Certificateholders will begin to receive monthly distributions of principal.
Thus, Class A and Class B Certificateholders may begin receiving
distributions of principal earlier than they otherwise would have, which may
shorten the final maturity of the Class A Certificates and Class B
Certificates. If the only Amortization Event to occur is either the
insolvency of the Transferor or the appointment of a receiver or bankruptcy
trustee for the Transferor, the receiver or bankruptcy trustee for the
Transferor may have the power to delay or prevent commencement of the Rapid
Amortization Period.
In addition to the consequences of an Amortization Event discussed
above, if the Transferor or Bridgestone/Firestone voluntarily files a
bankruptcy petition or goes into liquidation or any person is appointed a
receiver or bankruptcy trustee of the Transferor or Bridgestone/Firestone,
on the day of such appointment the Transferor will immediately cease
transferring Receivables to the Trust and promptly give notice to the Trustee
of such appointment. Within 15 days, the Trustee will publish a notice of
the liquidation or the appointment stating that the Trustee intends to sell,
dispose of or otherwise liquidate the Receivables in a commercially
reasonable manner and to the best of its ability. Unless otherwise
instructed within a specified period by the certificateholders representing
undivided interests aggregating more than 50% of the aggregate principal
amount of each Series (or in the case of a series having more than one class
of investor certificates, each class of such Series), the Trustee will sell,
dispose of or otherwise liquidate the Receivables in a commercially
reasonable manner and on commercially reasonable terms. The proceeds from
the sale, disposition or liquidation of the Receivables will be treated as
Collections and such proceeds will be distributed to certificateholders.
If the portion of such proceeds allocable to the Certificateholders' Interest
and the proceeds of any Collections in the Collection Account are not
sufficient to pay in full the remaining amount due on the Class A and
Class B Certificates, the Class A and Class B Certificateholders will
suffer a corresponding loss. See "Certain Legal Aspects of the
Receivables--Certain Matters Relating to Bankruptcy."
INDEMNIFICATION
The Agreement will provide that, subject to certain exceptions specified
therein, the Servicer will indemnify the Trust, for the benefit of
certificateholders, and the Trustee, including its officers, directors and
employees, from and against any loss (excluding any investment loss),
liability, expense, damage or injury suffered or sustained and arising out
of activities of the Trust or the Trustee (or such other Person) pursuant to
the Agreement on any supplement, including those arising out of the
Servicer's actions or omissions with respect to the Trust pursuant to the
Agreement or any Supplement.
Under the Agreement, the Transferor and Bridgestone/Firestone will
indemnify an injured party for the entire amount of any losses, claims,
damages or liabilities arising out of or based on the Agreement or the
actions of the Servicer taken pursuant to the Agreement as though the
Agreement created a partnership under the Uniform Partnership Act. The
Transferor and Bridgestone/Firestone will also indemnify each
certificateholder for any such losses, claims, damages or liabilities (other
than those incurred by a certificateholder as a result of defaults on the
Receivables) except to the extent that they arise from any action by any
certificateholder. In the event of a Service Transfer (defined below), the
successor Servicer will indemnify the Transferor for any losses, claims,
damages and liabilities of the Transferor as described in this paragraph
arising from the grossly negligent actions or omissions of such successor
Servicer.
The Agreement provides that none of the Transferor, the Servicer or any
of their directors, officers, employees or agents will be under any other
liability to the Trust, the Trustee, the certificateholders, any Enhancement
provider or any other person for any action taken, or for refraining from
taking any action, in good faith pursuant to the Agreement. However, none
of the Transferor, the Servicer or any of their directors, officers,
employees or agents will be protected against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence of any such person in the performance of their duties or by reason
of reckless disregard of their obligations and duties thereunder.
In addition, the Agreement provides that the Servicer is not under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its servicing responsibilities under the Agreement. The
Servicer may, in its sole discretion, undertake any such legal action which
it may deem necessary or desirable for the benefit of certificateholders with
respect to the Agreement and the rights and duties of the parties thereto and
the interest of the certificateholders thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Agreement, the Servicer will be responsible for
servicing, collecting, enforcing and administering the Receivables in
accordance with the policies and procedures and the degree of skill and care
applied or exercised with respect to revolving credit receivables owned or
serviced by the Servicer. 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 receivables covering such
actions and in such amounts as the Servicer believes to be reasonable from
time to time.
Servicing activities performed by the Servicer with respect to the
Accounts include collecting and recording payments, communicating with
cardholders, investigating payment delinquencies, providing billing records
to cardholders and maintaining internal records. Managerial and custodial
services performed by the Servicer on behalf of the Trust include providing
assistance in any inspections of the documents and records relating to the
Accounts and Receivables by the Trustee pursuant to the Agreement,
maintaining the agreements, documents and files relating to the Accounts and
Receivables as custodian for the Trust and providing related data processing
and reporting services for Certificateholders and on behalf of the Trustee.
The Agreement provides that the Servicer may delegate its duties under
that agreement to any entity (a "Subservicer") that agrees to conduct such
duties in accordance with the Agreement and the credit account guidelines set
forth therein. CFNA shall initially act as a Subservicer. Notwithstanding
any such delegation the Servicer will continue to be liable for all of its
obligations under the Agreement.
SERVICER COVENANTS
In the Agreement, the Servicer will covenant to the Certificateholders
and the Trustee as to each Receivable and related Account that: (i) it will
duly fulfill all obligations on its part to be fulfilled under or in
connection with the Receivable or Account, and will maintain in effect all
qualifications required in order to service the Receivable or Account and
will comply with all requirements of law in connection with servicing the
Receivable and the Account the failure to comply with which would have a
material adverse effect on Certificateholders; (ii) it will not permit any
rescission or cancellation of the Receivable, except as ordered by a court
of competent jurisdiction and (iii) it will do nothing to impair the rights
of the Certificateholders in the Receivables and will not reschedule, revise
or defer payments due on any Receivable, except in accordance with the
Servicer's usual and customary servicing practices.
Under the terms of the Agreement, the Servicer is obligated to accept
the transfer of any Receivable if it discovers, or receives written notice
from the Trustee, that (i) any covenant of the Servicer set forth above has
not been complied with, with respect to such Receivable or (ii) the Servicer
has not complied in all material respects with all requirements of law
applicable to the Receivable or Account, and in either case such
noncompliance has not been cured within 60 days thereafter and the Receivable
has been charged off as uncollectible or the proceeds of the Receivable are
not available to the Trust. Such assignment and transfer will be made when
the Servicer deposits an amount equal to the amount of such Receivable
(including monthly finance charges thereon through the end of the related
Collection Period) in the Collection Account on the business day preceding
the Distribution Date following the Collection Period during which such
obligation arises. The amount of such deposit shall be deemed a payment in
respect of the related Receivable and will be treated under the Agreement in
the same manner as are payments received by the Servicer from cardholders
under the Accounts. Any amounts so paid by the Servicer shall be allocated
in respect of Finance Charge Collections and Principal Collections as
provided in the Agreement.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities is a monthly
servicing fee (the "Servicing Fee") in an amount, on any Distribution Date,
equal to the sum of, with respect to all Series, one-twelfth of the sum for
each Series of the product of (a) the applicable servicing fee percentages
with respect to each Series and (b) the sum of an allocable portion of the
amount of the Transferor Amount and the B/F Amount and the aggregate invested
amount with respect to each Series on the last day of the second preceding
Collection Period. The Servicing Fee will be allocated among the Transferor
Amount, the B/F Amount, the Certificateholders and certificateholders of all
of the other Series. The portion of the Servicing Fee allocable to the Class
A Interest on each Distribution Date (the "Class A Monthly Servicing Fee")
to the Class B Interest on each Distribution Date (the "Class B Monthly
Servicing Fee") and to the Class C Interest on each Distribution Date (the
"Class C Monthly Servicing Fee") generally will be equal to one-twelfth of
the product of 2.00% per annum and the amount of the Class A Invested Amount,
the Class B Invested Amount or the Class C Invested Amount, as the case may
be, on the last day of the second preceding Collection Period (in the case
of the first Distribution Date, the initial principal amount of the Class A
Certificates, Class B Certificates or the Class C Certificates, as the case
may be). The remaining portion of the Servicing Fee will be allocable to the
Transferor Amount and the B/F Amount. The Class A Monthly Servicing Fee,
Class B Monthly Servicing Fee and the Class C Monthly Servicing Fee will be
paid with respect to each Collection Period from the Collection Account
(unless such amount has been netted against deposits to the Collection
Account) as described under "Distributions from the Collection Account"
above.
The Servicer may perform any of its obligations under the Agreement
through one or more subservicers. The Servicer shall remain liable for its
servicing duties and obligations as if the Servicer alone were servicing the
Receivables. The Servicer shall be responsible for the fees and expenses of
any such subservicer.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Accounts and the Receivables
including, without limitation, expenses related to enforcement of the
Receivables, payment of fees and disbursements of the Trustee and independent
accountants, payment of fees and expenses of any subservicer and all other
fees and expenses which are not expressly stated in the Agreement to be
payable by the Trust or the Certificateholders other than Federal, state and
local income and franchise taxes, if any, of the Trust.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the
Agreement, except upon determination that such duties are no longer
permissible under applicable law or upon the appointment of a successor
Servicer in the business of servicing credit card receivables with a net
worth of at least $100,000,000 and delivery of written confirmation that the
ratings of the Certificates will not be withdrawn or reduced as a result of
such Service Transfer (defined below) and that there will not be a material
adverse impact on the Federal income tax characteristics of the Certificates.
No such resignation will become effective until the Trustee or a successor
to the Servicer has assumed the Servicer's responsibilities and obligations
under the Agreement. Under circumstances described in "--Conveyance of
Accounts" below, the obligation of the Servicer may be transferred to a new
servicer.
Any person into which, in accordance with the Agreement, the Transferor
or the Servicer may be merged or consolidated or any person resulting from
any merger or consolidation to which the Transferor or the Servicer is a
party, or any person succeeding to the business of the Transferor or the
Servicer, will be the successor to the Transferor or the Servicer, as the
case may be, under the Agreement.
SERVICER EVENTS OF DEFAULT
Pursuant to the terms of the Agreement, a "Servicer Event of Default"
refers to any of the following events:
(i) failure by the Servicer to make any payment, transfer or
deposit, or to give instructions to the Trustee to make any withdrawal, on
the date the Servicer is required to do so under the Agreement or any
Supplement (or within a five business day grace period);
(ii) failure on the part of the Servicer to observe or perform any
other term, covenant, condition or agreement provided for in the Agreement
or any Supplement or breach by the Servicer of any representation or warranty
in the Agreement if such failure or breach has a material adverse effect on
the certificateholders, which continues unremedied for a period of 60 days
after the earlier of discovery by the Servicer or the date on which written
notice has been given and which continues to materially adversely affect the
rights of the certificateholders of any Series then outstanding for such
period, or the Servicer assigns its duties under the Agreement, except as
specifically permitted thereunder;
(iii) any representation, warranty or certification made by the
Servicer in the Agreement or any Supplement or in any certificate delivered
pursuant to the Agreement or any Supplement proves to have been incorrect
when made, which has a material adverse effect on the rights of the
certificateholders, and which material adverse effect continues for the
certificateholders for a period of 60 days after written notice and which
continues to materially adversely affect the rights of the certificateholders
of any Series then outstanding for such period; and
(iv) the occurrence of certain events of bankruptcy, insolvency or
receivership of the Servicer.
In the event of any Servicer Event of Default, either the Trustee or
certificateholders evidencing undivided interests aggregating more than 50%
of the aggregate invested amount of all Series, by written notice to the
Servicer (and to the Trustee, if given by the certificateholders), may
terminate all of the rights and obligations of the Servicer, in its capacity
as servicer under the Agreement, to all of the Receivables held by the Trust
with respect to all Series, and the proceeds thereof, and appoint a new
Servicer (a "Service Transfer"). The Transferor may grant to any Enhancement
provider the right to exercise such rights on behalf of any related Series.
The Trustee shall as promptly as possible appoint (with the consent of the
Originator) a successor Servicer and if no successor Servicer has been
appointed by the Trustee and has accepted such appointment by the time the
Servicer ceases to act as Servicer, all authority, power and obligations of
the Servicer under the Agreement will pass to, and be vested in, the Trustee.
Prior to any Service Transfer, the Trustee will seek to obtain bids from
potential Servicers meeting certain eligibility requirements set forth in the
Agreement to serve as a successor Servicer for servicing compensation not in
excess of the Servicing Fee. In the event that a successor Servicer has not
been appointed and has not accepted its appointment at the time when the
Servicer ceases to act as Servicer, the Trustee without further action will
automatically be appointed the successor Servicer. Notwithstanding the above,
the Trustee will, if it is legally unable so to act, petition a court of
competent jurisdiction to appoint any established financial institution
having a net worth of not less than $100,000,000 and whose regular business
includes the servicing of credit card receivables as the successor Servicer.
Upon its appointment, the successor Servicer shall be the successor in
all respects to the Servicer with respect to servicing functions under the
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and
provisions thereof, and all references in the Agreement to the Servicer will
be deemed to refer to the successor Servicer. The successor Servicer shall
expressly be authorized to delegate any of its duties under the Agreement to
the Servicer on and after the date of any transfer of servicing pursuant to
the Agreement.
In connection with such appointment and assumption, the successor
Servicer shall be entitled to servicing compensation not in excess of the
Servicing Fee. The Transferor and Bridgestone/Firestone have agreed that if
a successor Servicer shall be appointed, such successor Servicer may withhold
from amounts otherwise payable to the Transferor or Bridgestone/Firestone an
amount equal to the Monthly Servicing Fee with respect to the Transferor
Interest and the B/F Interest for such related Collection Period.
REPORTS TO CERTIFICATEHOLDERS
No later than the second business day prior to each Distribution Date,
the Servicer will forward to the Trustee a statement (the "Monthly Servicer's
Certificate") prepared by the Servicer setting forth certain information with
respect to the Trust and the Certificates, including, among other things: (a)
the aggregate amount of Collections, the aggregate amount of Finance Charge
Collections and the aggregate amount of Principal Collections processed
during the immediately preceding Collection Period; (b) the Class A Floating
Allocation Percentage, the Class B Floating Allocation Percentage and the
Class C Floating Allocation Percentage for such Collection Period and, during
the Controlled Amortization Period and any Rapid Amortization Period, the
Fixed Allocation Percentage; (c) the aggregate outstanding balance of the
Accounts which were delinquent by 30 days to 60 days and by 61 days or more
as of the end of the immediately preceding Collection Period; (d) the Class
A Investor Default Amount, Class B Investor Default Amount and the Class C
Investor Default Amount for such Distribution Date; (e) the amount of Class
A Investor Charge-Offs, Class B Investor Charge-Offs and Class C Investor
Charge-Offs and the amount of reimbursements of each for such Distribution
Date; (f) the amount of the Class A Monthly Servicing Fee, Class B Monthly
Servicing Fee and Class C Monthly Servicing Fee for such Distribution Date;
(g) the existing Deficit Controlled Amortization Amount; (h) the Aggregate
Receivables at the close of business on the last day of the Collection Period
preceding such Distribution Date; (i) the Class A Invested Amount, the Class
B Invested Amount and the Class C Invested Amount at the close of business
on the last day of the Collection Period immediately preceding such
Distribution Date; and (j) the amount of Reallocated Principal Collections
for such Distribution Date. The Trustee will make such statement available
to the Certificateholders upon request.
On each Distribution Date, the Paying Agent, on behalf of the Trustee,
will forward to each Class A Certificateholder and Class B Certificateholder
of record a statement (the "Payment Date Statement") prepared by the Servicer
setting forth the information with respect to the Offered Certificates set
forth in the Monthly Servicer's Certificate supplied to the Trustee as
described in the preceding paragraph since the immediately preceding
Distribution Date and the following additional information (which, in the
case of (a), (b) and (c) below, will be stated on the basis of an original
principal amount of $1,000 per Class A Certificate or Class B Certificate,
as applicable): (a) the total amount distributed; (b) the amount of such
distribution allocable to principal on the Offered Certificates; (c) the
amount of such distribution allocable to interest on the Offered
Certificates; (d) the amount, if any, by which the principal balance of the
Class A Certificates exceeds the Class A Invested Amount and the Class B
Certificates exceed the Class B Invested Amount as of the Record Date with
respect to such Distribution Date, as the case may be; and (e) the "Class A
Pool Factor" and "Class B Pool Factor" as of the end of the Record Date with
respect to such Distribution Date (consisting of an eight-digit decimal
expressing the Class A Invested Amount or Class B Invested Amount, as
applicable, as of such Record Date (determined after taking into account any
increase or decrease in the Class A Invested Amount or Class B Invested
Amount, as applicable, which will occur on the following Distribution Date)
as a proportion of the Class A Initial Invested Amount or Class B Initial
Invested Amount). The Payment Date Statement and the Monthly Servicer's
Certificate will be available to Certificate Owners, as described under
"Special Considerations--Book Entry Registration" and "Available Information."
On or before January 31 of each calendar year, the Paying Agent, on
behalf of the Trustee, will furnish or cause to be furnished to each person
who at any time during the preceding calendar year was a Certificateholder
of record (or, if so provided in applicable Treasury regulations, made
available to Certificate Owners) a statement prepared by the Trustee
containing the information required to be provided by an issuer of
indebtedness under the Code for such calendar year or the applicable portion
thereof during which such person was a Certificateholder, together with such
other customary information as the Servicer deems necessary or desirable to
enable the Certificateholders to prepare their tax returns. See "Federal
Income Tax Consequences."
EVIDENCE AS TO COMPLIANCE
The Agreement provides that on or before March 31 of each calendar year,
the Servicer will cause a firm of independent public accountants to furnish
a report to the effect that such firm has applied certain agreed-upon
procedures to certain documents and records relating to the servicing of the
Receivables and that, based upon such agreed-upon procedures, no matters came
to their attention that caused them to believe that such servicing was not
conducted in compliance with certain applicable terms and conditions set
forth in the Agreement except for such exceptions or errors as such firm
shall believe to be immaterial and such other exceptions as shall be set
forth in such statement. In addition, on or before March 31 of each calendar
year such accountants will compare the mathematical calculations of the
amounts contained in the Monthly Servicer's Certificates and other
certificates delivered during such year with the computer reports of the
Servicer and statements of any agents engaged by the Servicer to perform
servicing activities which were the source of such amounts and deliver a
certificate to the Trustee confirming that such amounts are in agreement
except for such exceptions as they believe to be immaterial and such other
exceptions which shall be set forth in such report.
The Agreement provides for delivery to the Trustee on or before March
31 of each calendar year, of a statement signed by an officer of the Servicer
to the effect that the Servicer has, or has caused to be, fully performed its
obligations in all material respects under the Agreement throughout the
preceding year or, if there has been a default in the performance of any such
obligation, specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the
Trustee may be obtained by a request in writing delivered to the Trustee.
CONVEYANCE OF ACCOUNTS
Subject to the conditions set forth in the succeeding sentence, the
Originator may transfer or otherwise convey its interest in the Accounts,
including the Receivables in such Accounts (subject to the interest of the
Transferor and the Trustee on behalf of the certificateholders), in whole or
in part. The Originator will be permitted to convey Accounts only upon
satisfaction of the following conditions: (i) the acquiring person will (a)
be organized and existing under the laws of the United States of America or
any state or the District of Columbia, and be a bank or other entity that is
not subject to the Bankruptcy Code of 1978 which may be established by and
owned by Bridgestone/Firestone, and (b) expressly assume by an agreement
supplemental to the Purchase and Sale Agreement the performance of the
Originator's obligations with respect to such Accounts; (ii) the Transferor
will deliver to the Trustee opinions of counsel (a) stating that all
conditions precedent to the conveyance have been complied with and (b) to the
effect that the conveyance will not adversely affect the treatment of the
Certificates as debt for Federal and applicable state income tax purposes or
materially adversely impact the Federal income tax consequences that affect
any certificateholder and generally to the effect that the transfer would not
affect the Federal income tax ownership of the Receivables; and (iii) the
Transferor will obtain from each Rating Agency a letter confirming that the
rating of all outstanding Series of certificates, after such conveyance, will
not be lowered or withdrawn.
AMENDMENTS
The Agreement and any Supplement may be amended by the Transferor, the
Servicer and the Trustee, without certificateholder consent, to cure any
ambiguity, to correct or supplement any provision therein which may be
inconsistent with any other provision therein or to add any other provisions
with respect to matters or questions arising under the Agreement or any
Supplement which are not inconsistent with the provisions of the Agreement
or any Supplement; provided, however, that such action shall not, as
evidenced by an opinion of counsel, adversely affect in any material respect
the interests of any of the holders of certificates.
The Agreement and any Supplement may also be amended from time to time
by the Servicer, the Transferor and the Trustee, without the consent of any
of the certificateholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement,
or of modifying, in any manner the rights of the holders of certificates;
provided that (i) the Servicer will have provided an officer's certificate
to the Trustee and any Enhancement provider to the effect that such amendment
will not materially and adversely affect the interests of the
certificateholders, (ii) such amendment will not, as evidenced by an opinion
of counsel, cause the Trust to be characterized for Federal income tax
purposes as an association taxable as a corporation or otherwise have any
material adverse impact on the Federal income taxation of any outstanding
Series of certificates or any Certificate Owner and (iii) the Rating Agencies
shall confirm that such amendment will not cause a reduction or withdrawal
of the rating of any outstanding Series of certificates; provided, further,
that such amendment will not reduce in any manner the amount of, or delay the
timing of, distributions which are required to be made on any certificate of
such Series without the consent of the related certificateholder, change the
definition of or the manner of calculating the interest of any
certificateholder of such Series without the consent of the related
certificateholder or reduce the percentage pursuant to the next paragraph
required to consent to any such amendment, in each case without the consent
of all such certificateholders; provided, further, that (x) the transfer of
the Accounts and/or the servicing functions with respect thereto as described
above under "--Conveyance of Accounts" and the appointment of an entity as
Servicer under the Agreement in connection with such transfer, (y) any
transaction effected in accordance with the merger and consolidations
provisions of the Agreement relating to the Servicer, (z) any other
transactions related, supplemental or incidental thereto will be deemed not
to materially and adversely affect the interests of the certificateholders
and will not require the delivery of an officer's certificate pursuant to
clause (i) above.
The Agreement and any Supplement may be amended by the Transferor, the
Servicer and the Trustee with the consent of the holders of certificates
evidencing undivided interests aggregating not less than 662/3% of the
principal amount of all Series adversely affected, for the purpose of adding
any provisions to, changing in any manner or eliminating any of the
provisions of the Agreement or any Supplement or of modifying in any manner
the rights of certificateholders of any Series then issued and outstanding.
No such amendment, however, may (i) reduce in any manner the amount of, or
delay the timing of, distributions required to be made on such Series, (ii)
change the definition or the manner of calculating the interest of any
certificateholder of such Series, or (iii) reduce the aforesaid percentage
of undivided interests the certificateholders of which are required to
consent to any such amendment, in each case without the consent of all
certificateholders of all Series adversely affected. Promptly following the
execution of any amendment to the Agreement or any Supplement, the Trustee
will furnish written notice of the substance of such amendment to each
certificateholder of all Series (or with respect to an amendment of a
Supplement, to the applicable Series).
Pursuant to the Series Supplement providing for the issuance of the
Series 1992-B Certificates, the enhancement providers with respect to the
Series 1992-B Certificates (of which there are two providing unequal amounts
of enhancement) shall be entitled to vote as if such enhancement providers
were Certificateholders under the Agreement to the exclusion of the holders
of the Series 1992-B Certificates.
LIST OF CLASS A AND CLASS B CERTIFICATEHOLDERS
Upon written request of three or more Class A Certificateholders of
record or any Class A Certificateholder or group of Class A
Certificateholders of record representing undivided interests in the Trust
aggregating not less than 5% of the Class A Invested Amount, the Trustee will
afford such Class A Certificateholders access during business hours to the
current list of Class A Certificateholders of the Trust for purposes of
communicating with other Class A Certificateholders with respect to their
rights under the Agreement.
Upon written request of three or more Class B Certificateholders of
record or any Class B Certificateholder or group of Class B
Certificateholders of record representing undivided interests in the Trust
aggregating not less than 5% of the Class B Invested Amount, the Trustee will
afford such Class B Certificateholders access during business hours to the
current list of Class B Certificateholders of the Trust for purposes of
communicating with other Class B Certificateholders with respect to their
rights under the Agreement.
The Agreement does not provide for any annual or other meetings of Class
A and Class B Certificateholders.
THE TRUSTEE
The Fuji Bank and Trust Company is Trustee under the Agreement. The
Transferor, the Servicer and their respective affiliates may from time to
time enter into normal banking and trustee relationships with the Trustee and
its affiliates. The Trustee, the Transferor, the Servicer and any of their
respective affiliates may hold Certificates in their own names; however, any
Certificates so held shall not be entitled to participate in any decisions
made or instructions given to the Trustee by the Certificateholders as a
group. The Trustee's address is Two World Trade Center, 81st Floor, New
York, New York 10048, Attention: Trust Administration Department.
For purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee will have the power to appoint a co-trustee or
separate trustees of all or any part of the Trust. In the event of such
appointment, all rights, powers, duties and obligations conferred or imposed
upon the Trustee will be conferred or imposed upon and exercised or performed
by the Trustee and such separate trustee or co-trustee jointly, or, in any
jurisdiction in which the Trustee will be incompetent or unqualified to
perform certain acts, singly upon such separate trustee or co-trustee who
shall exercise and perform such rights, powers, duties and obligations solely
at the direction of the Trustee.
The Trustee may resign at any time, in which event the Transferor will
be obligated to appoint a successor Trustee. The Servicer may also remove
the Trustee, if the Trustee ceases to be eligible to continue as such under
the Agreement or if the Trustee becomes insolvent. In such circumstances,
the Servicer will be obligated to appoint a successor Trustee. Any
resignation or removal of the Trustee and appointment of a successor Trustee
does not become effective until acceptance of the appointment by the
successor Trustee.
DESCRIPTION OF THE PURCHASE
AND SALE AGREEMENT
The Receivables originated under the Accounts established under the
Credit Card Program transferred to the Trust by the Transferor and existing
as of the Cut-off Date and Receivables originated under the Accounts
established under the Credit Card Program transferred to the Trust by the
Transferor and originated after the Cut-off Date have or will be purchased
by the Transferor from the Originator pursuant to the Purchase and Sale
Agreement. Receivables originated under Eligible Additional Accounts will
also be purchased by the Transferor from the Originator pursuant to the
Purchase and Sale Agreement. (A copy of the Purchase and Sale Agreement is
filed as an exhibit to the Registration Statement of which this Prospectus
is a part.) The following summary describes certain terms of the Purchase and
Sale Agreement.
SALE OF RECEIVABLES
Under the Purchase and Sale Agreement, the Originator has sold
Receivables originated on and before the Cut-off Date and, provided that the
Transferor is not in default thereunder and that no Servicer Event of Default
shall have occurred, for so long as any Series of certificates is
outstanding, the Originator will sell, as applicable, to the Transferor all
its right, title and interest in and to the Receivables originated under the
Accounts existing on and originated after the Cut-off Date. Pursuant to the
Agreement, all such Receivables will be transferred by the Transferor to the
Trust, and the Transferor will assign its rights in, to and under the
Purchase and Sale Agreement with respect to such Receivables to the Trust.
The purchase price of the purchased Receivables will be payable by the
Transferor in cash.
The Purchase and Sale Agreement provides that the Originator may convey
its interest in the Accounts (subject to the interest of the Transferor and
the Trustee on behalf of certificateholders). See "Description of the
Offered Certificates and the Agreement--Conveyance of Accounts" above.
In connection with the Purchase and Sale Agreement, the Originator has
indicated and will indicate in its records, including any computer files,
that the Receivables arising under the Accounts have been or will be sold to
the Transferor by the Originator and that such Receivables have been
transferred by the Transferor to the Trust. The records and agreements
relating to such Accounts and Receivables will not be segregated by
Bridgestone/Firestone from other documents and agreements relating to other
charge accounts and receivables and will not be stamped or marked to reflect
the sale thereof to the Transferor. The Originator has filed UCC financing
statements meeting the requirements of state law in Ohio with respect to such
Receivables. See "Risk Factors--Potential Priority of Certain Liens" and
"Certain Legal Aspects of the Receivables."
REPRESENTATIONS AND WARRANTIES
The Originator represents and warrants to the Transferor to the effect,
among other things, that as of the Closing Date: (a) the Originator is duly
organized and validly existing in good standing under the laws of the United
States as a national banking association, (b) the Purchase and Sale Agreement
constitutes a legal, valid and binding obligation of the Originator and (c)
the sale by the Originator of Receivables pursuant to the Purchase and Sale
Agreement and the performance of its obligations has been duly authorized by
all requisite corporate action.
The Originator has also agreed to indemnify the Transferor and to hold
the Transferor harmless from and against any and all losses, damages and
expenses (including reasonable attorneys' fees) suffered or incurred by the
Transferor as a result of the breach by the Originator of any representation,
warranty, covenant or agreement set forth in the Purchase and Sale Agreement.
In addition, the Originator expressly acknowledges and consents to the
Transferor's assignment of its rights relating to the interests sold by the
Originator under the Purchase and Sale Agreement to the Trustee for the
benefit of the Certificateholders.
TERMINATION
If pursuant to certain provisions of Federal law, the Originator becomes
party to any insolvency or similar proceeding (other than as a claimant) and,
if such proceeding is not voluntary and it is not dismissed within 90 days
of its institution, or if a receiver is appointed for the Originator, the
Originator will immediately cease selling Receivables to the Transferor.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
At the time of the formation of the Trust, pursuant to the Purchase and
Sale Agreement, the Originator sold to the Transferor all its right, title
and interest in and to those Receivables existing under the Eligible Accounts
as of the Cut-off Date and, provided that the Transferor is not in default
thereunder and no Servicer Event of Default shall have occurred, its right,
title and interest to those Receivables arising under the Eligible Accounts
from time to time thereafter. The Transferor conveyed to the Trust, without
recourse, all Receivables existing under the Eligible Accounts, as of the
Cut-off Date and thereafter created. The Transferor has covenanted and
warranted that such transfer constitutes either a valid transfer and
assignment to the Trust of all right, title and interest of the Transferor
in and to the Receivables, except for the interest of the Transferor as
holder of the Exchangeable Transferor Certificate, or a grant of a security
interest to the Trust in and to the Receivables. The Transferor also
covenanted and warranted to the Trust in the Agreement that, in the event the
transfer of Receivables by the Transferor to the Trust is deemed to create
a security interest under the UCC and assuming that the Transferor is not at
the time the subject of any insolvency proceedings, there exists a valid,
subsisting and enforceable first priority perfected security interest in the
Receivables in existence since the time of the formation of the Trust in
favor of the Trust and a valid, subsisting and enforceable first priority
perfected security interest in the Receivables created thereafter and, with
certain exceptions, and for certain limited time periods, the proceeds
thereof, in favor of the Trust on and after their creation. For a discussion
of the Trust's rights arising from these covenants and warranties not being
satisfied, see "Description of the Offered Certificates and the Agreement--
Covenants, Representations and Warranties."
The Receivables are "accounts" or "general intangibles" as defined in
Article 9 of the UCC. To the extent the Receivables constitute accounts,
both the absolute transfer of such Receivables and the transfer of such
Receivables as security for an obligation are treated under Article 9 of the
UCC as creating a security interest therein and are subject to its
provisions, including the filing of financing statements to perfect the
Trust's security interest. To the extent Receivables constitute general
intangibles and the transfer of such Receivables is deemed
to be a transfer as security for an obligation, Article 9 of the UCC is
applicable to the same extent as it is applicable to Receivables constituting
accounts. Financing statements covering the Receivables will be filed under
the UCC as in effect in Massachusetts to protect the Transferor and the
Trust. In the event the transfer by the Transferor to the Trust of any
general intangibles is deemed to be an absolute transfer, then the UCC is not
applicable, and no further action is required to perfect the Trustee's
interest in such Receivables from third-party claims.
There are certain limited circumstances under the UCC in which prior or
subsequent transferees of Receivables coming into existence after the Closing
Date could have an interest in such Receivables with priority over the
Trust's interest. A tax or other government lien on property of the
Transferor arising prior to the time a Receivable comes into existence may
also have priority over the interest of the Trust in such Receivables. In
addition, under the Agreement, the Transferor will covenant to accept the
reassignment of the Receivables in any Account containing a Receivable
transferred to the Trust that is not free and clear of the lien of any third-
party, except certain permitted tax liens. Furthermore, the Transferor
covenants that it will not sell, pledge, assign, transfer or grant any lien
on any Receivable (or any interest therein) other than to the Trust.
Unless continuation statements are filed within five years of the
original filings the time specified in the UCC in respect of the security
interest of either the Transferor or the Trust in the Receivables, the
perfection of such security interest will lapse. Pursuant to the Agreement,
the Servicer will be required to cause such statements to be filed.
Because the Trust's interest in certain of the Receivables is dependent
upon the Transferor's interest in such Receivables, any adverse change in the
priority or perfection of the Transferor's security interest would
correspondingly affect the Trust's interest in the affected Receivables.
Collections of Receivables will, except in certain circumstances, be
available for use by the Servicer until deposited into the Collection Account
on the business day preceding each Distribution Date. In the event of
insolvency or receivership of the Servicer or, in certain circumstances, the
lapse of certain time periods, the Trust may not have a perfected interest
in such cash Collections.
CERTAIN MATTERS RELATING TO BANKRUPTCY
The Agreement provides that, upon the appointment of a receiver or
bankruptcy trustee for the Transferor or Bridgestone/Firestone, the
Transferor or Bridgestone/Firestone, respectively, will promptly give notice
thereof to the Trustee, and an Amortization Event with respect to all Series
will occur. Under the Agreement no new Receivables will be transferred to
the Trust and, unless otherwise instructed within a specified period by the
holders of certificates representing undivided interests aggregating more
than 50% of the aggregate principal amount of each Series or unless otherwise
required by the receiver or bankruptcy trustee for the Transferor, the
Trustee will proceed to sell, dispose of or otherwise liquidate the
Receivables in a commercially reasonable manner and on commercially
reasonable terms. The proceeds from the sale of the Receivables would then
be treated by the Trustee as Collections on the Receivables. If the only
Amortization Event to occur is the appointment of a receiver or bankruptcy
trustee for the Transferor, such receiver or bankruptcy trustee may have the
power to continue to require the Transferor to continue to transfer new
Receivables to the Trust, as applicable, and to prevent the early sale,
liquidation or disposition of the Receivables and the commencement of a Rapid
Amortization Period. See "Description of the Offered Certificates and the
Agreement--Amortization Events."
CONSUMER PROTECTION AND BANKING LAWS
The relationship between the consumer and the provider of consumer
credit is extensively regulated by Federal and state consumer protection
laws. With respect to the credit cards issued under the Credit Card Program
the most significant Federal laws include the Federal Truth-In-Lending, Equal
Credit Opportunity Acts, Fair Credit Billing, Fair Credit Reporting, Fair
Credit and Charge Card Disclosure and Fair Debt Collection Practices Acts and
state consumer protection and retail installment sales laws. Such statutes
may also apply to the credit cards issued under Other Programs. These
statutes impose disclosure requirements before and when an Account is opened
and at the end of monthly billing cycles. In addition, cardholders are
entitled under these laws to have payments and credits applied to the account
promptly and to require billing errors to be resolved promptly. The Trust
may be liable for certain violations of consumer protection laws that apply
to the Receivables, either as assignee from the Transferor with respect to
obligations arising before transfer of the Receivables to the Trust or as the
party directly responsible for obligations arising after the transfer. In
addition, cardholders may be entitled to assert such violations by way of set
off against the obligation to pay the amount of Receivables owing. The
Transferor has agreed to accept the transfer of all Receivables that were not
created in compliance in all material respects with the requirements of such
laws. The Servicer has also agreed in the Agreement to indemnify the Trust,
among other things, for any liability arising from such 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 Offered Certificates and the Agreement--Covenants, Representations and
Warranties."
Application of Federal and state bankruptcy and debtor relief laws would
affect the interests of the Certificateholders, if such laws result in any
Receivables being charged off as uncollectible in excess of the Class B
Invested Amount available to be allocated to the Class A Certificates and in
excess of the Class C Invested Amount available to be allocated to the Class
B Certificates. See "Description of the Offered Certificates and the
Agreement--Defaulted Receivables; Recoveries; Rebates and Fraudulent
Charges."
The Originator, and the Originator's extension of credit under the
Credit Card Program, is extensively regulated under Federal law. Any change
in such laws, or in the rules, regulations and decisions (both judicial and
administrative) thereunder, could affect the Servicer's ability to collect
the Receivables or maintain previous levels of monthly finance and other
charges.
PROPOSED LEGISLATION
Congress and the states may enact new laws and amendments to existing
laws to regulate further the consumer revolving credit industry or to reduce
finance charges or other fees or charges applicable to consumer revolving
credit accounts. The potential effect of any such legislation could be to
reduce the yield on the Accounts. If such yield is reduced, an Amortization
Event could occur, and the Rapid Amortization Period would commence. See
"Description of the Offered Certificates--Amortization Events."
LEGAL MATTERS AND LITIGATION
Pursuant to the Pooling and Servicing Agreement, if the interest of the
Certificateholders in a Receivable is materially adversely affected by the
failure of the Receivable to comply in all material respects with applicable
requirements of law, the interest of such Certificateholders in all
Receivables in the affected Account will be reassigned to the Transferor. On
each Series Closing Date, the Transferor will make certain other
representations and warranties relating to the validity and enforceability
of the Accounts and the Receivables. The sole remedy, if any such
representation or warranty is breached and such breach has a material adverse
effect on the interest of Certificateholders in any Receivable and continues
beyond the applicable cure period, is that the interest of the
Certificateholders in the Receivables affected thereby will be reassigned to
the Transferor or assigned to the Servicer, as the case may be. In addition,
in the event of the breach of certain representations and warranties, the
Transferor may be obligated to accept the reassignment of all of the
Receivables in the Accounts in the Trust portfolio.
CLAIMS AND DEFENSES OF CARDHOLDERS AGAINST TRUST
The UCC provides that (a) unless an obligor has made an enforceable
agreement not to assert defenses or claims arising out of a sale, the rights
of the Trust, as assignee, are subject to all the terms of the contract
between the Originator and the obligor and any defense or claim arising
therefrom and to any other defense or claim of the obligor against the
Originator which accrues before the obligor receives notification of the
assignment and (b) any obligor is authorized to continue to pay the
Originator until (i) the obligor receives notification, reasonably
identifying the rights assigned, that the amount due or to become due has
been assigned and that payment is to be made to the Trustee and (ii) if
requested by the obligor, the Trustee has furnished reasonable proof of the
assignment.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
Set forth below is a discussion of material income tax consequences to
Certificate Owners who are original owners of the Offered Certificates and
hold the Offered Certificates as capital assets under the Internal Revenue
Code of 1986, as amended (the "Code"). This discussion does not purport to
be complete or to deal with all aspects of Federal income taxation that may
be relevant to Certificate Owners in light of their particular circumstances,
nor to certain types of Certificate Owners subject to special treatment under
the Federal income tax laws (for example, banks and life insurance
companies). This discussion is based upon present provisions of the Code,
the regulations promulgated thereunder and judicial and ruling authorities,
all of which are subject to change, which change may be retroactive.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH
REGARD TO THE FEDERAL TAX CONSEQUENCES TO SPECIAL CATEGORIES OF INVESTORS IN
THE OFFERED CERTIFICATES WITH RESPECT TO THE PURCHASE, OWNERSHIP OR
DISPOSITION OF INTERESTS IN THE OFFERED CERTIFICATES, AS WELL AS THE TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, FOREIGN COUNTRY OR OTHER
TAXING JURISDICTION.
Characterization of the Offered Certificates as Indebtedness. The
Transferor, the Trustee, the Class A Certificateholders and the Class B
Certificateholders express in the Agreement their intent that, for tax
purposes the Offered Certificates will be indebtedness secured by the
Receivables. The Transferor, the Class A Certificateholders and the Class
B Certificateholders, by acquiring an interest in an Offered Certificate,
agree to treat the Offered Certificates as indebtedness for Federal, state
and local tax purposes. However, because different criteria are used to
determine the non-tax accounting characterization of the transaction, the
Transferor will treat the transaction, for financial accounting purposes, as
a sale of an ownership interest in the Receivables and not as the issuance
of a debt obligation.
Based upon the application of existing law to the facts of the
transaction as set forth in the Agreement and other relevant documents, Brown
& Wood LLP, special tax counsel to the Transferor ("Tax Counsel"), has
advised the Transferor that, in its opinion, (i) the Offered Certificates
will be treated for Federal income tax purposes as indebtedness and (ii) the
Trust will not be treated as either an association or a publicly traded
partnership taxable as a corporation for Federal income tax purposes.
However, opinions of counsel are not binding on the Internal Revenue Service
(the "IRS"), and there can be no assurance that the IRS could not
successfully challenge this conclusion.
In general, the characterization of a transaction for Federal income tax
purposes is based upon economic substance, and the substance of the
transaction in which the Offered Certificates are issued is consistent with
the treatment of the Offered Certificates as debt for Federal income tax
purposes. Although there are certain judicial precedents holding that under
appropriate circumstances a taxpayer should be required to treat a
transaction in accordance with the form chosen by the taxpayer, regardless
of the transaction's substance, the operative provisions of the transaction
and the Agreement are not inconsistent with treating the Offered Certificates
as debt and, accordingly, these authorities would not be applied to require
sale characterization.
Based on the foregoing, Tax Counsel has concluded that the
characterization of the Offered Certificates, for Federal income tax
purposes, would be governed by the substance of the transaction, which is the
issuance of debt.
Other Characterizations of the Offered Certificates. If the Agreement
does not create a debt obligation for Federal income tax purposes, the
arrangement among the Transferor, the Class A Certificateholders and the
Class B Certificateholders could be classified, for Federal income tax
purposes, alternatively as a partnership, a publicly traded partnership
taxable as a corporation, or as an association taxable as a corporation.
Because, in the opinion of Tax Counsel, the Offered Certificates will be
characterized as debt for Federal income tax purposes, no attempt will be
made to comply with any reporting or tax payment requirements which might be
applicable if the arrangement between the Transferor and the Certificate
Owners were treated as creating a partnership or a corporation. No IRS
ruling on the Federal income tax characterization of the arrangement among
the Transferor, the Class A Certificateholders and the Class B
Certificateholders will be sought.
If the arrangement created by the Agreement were characterized as a
partnership among the Transferor and the Certificate Owners, such a
partnership would not be subject to Federal income tax, but each item of
income, gain, loss, deduction and credit generated through the ownership of
the Receivables by such a partnership would generally be passed through to
the Transferor and the Certificate Owners as partners in such a partnership
according to their respective interests therein. The amount, timing, and
character of income reportable by the Certificate Owners as partners could
differ materially from the income reportable by the Certificate Owners if the
Offered Certificates are characterized as debt.
If the arrangement were treated as a publicly traded partnership taxable
as a corporation or as an association taxable as a corporation, it would be
subject to Federal income tax at corporate tax rates on its taxable income
generated by ownership of the Receivables. Such a tax could result in
reduced distributions to Certificate Owners. Distributions to the Transferor
and, unless the Offered Certificates were treated as debt of the corporation
if the arrangement were treated as an association taxable as a corporation,
to the Certificate Owners, would not be deductible in computing the taxable
income of the corporation. In addition, if the Offered Certificates were not
treated as debt of the corporation, all or a portion of any such
distributions would, to the extent of the current and accumulated earnings
and profits of such corporation, be treated as dividend income to the
Certificate Owners.
In addition, if the arrangement were treated as a publicly traded
partnership, any income allocated to a Certificate Owner that is a tax-exempt
entity will constitute "unrelated business taxable income", at least where
the publicly traded partnership is taxed as a partnership.
TAXATION OF INTEREST AND DISCOUNT INCOME OF CERTIFICATE OWNERS
Assuming that the Certificate Owners are owners of debt obligations for
Federal income tax purposes, in the opinion of Tax Counsel, interest
generally will be taxable as ordinary income for Federal income tax purposes
when received by the Certificate Owners utilizing the cash method of
accounting and when accrued by Certificate Owners utilizing the accrual
method of accounting. Interest received on the Offered Certificates may also
constitute "investment income" for purposes of certain limitations of the
Code concerning the deductibility of investment interest expense.
While it is not anticipated that the Offered Certificates will be issued
at a greater than de minimis discount, in the opinion of Tax Counsel, under
the Treasury regulations (the "OID Regulations"), it is possible that the
Offered Certificates could nevertheless be deemed to have been issued with
original issue discount ("OID"). This could be the case, for example, if
interest payments were not deemed to be "qualified stated interest payments"
because, for example, the initial interest period was longer than subsequent
interest periods. If such regulations were to apply, in general, all of the
taxable income to be recognized with respect to the Offered Certificates
would be includible in income of Certificate Owners as OID, but would not be
includible again when the interest is actually received. If the Offered
Certificates are in fact issued at a greater than de minimis discount or are
treated as having been issued with OID under the OID Regulations, the
following general rules will apply.
The excess of the "stated redemption price at maturity" of the Class A
Certificates or Class B Certificates, as applicable, (generally equal to
their principal amount as of the date of original issuance plus all interest
other than "qualified stated interest payments" payable prior to or at
maturity) over the applicable original issue price (in this case, the initial
offering price at which a substantial amount of the Class A or Class B
Certificates, as applicable, are sold to the public) will constitute OID.
A Certificate Owner must include OID in income over the term of the Offered
Certificates under a constant yield method. In general, OID must be included
in income in advance of the receipt of cash representing that income. In the
case of a debt instrument as to which the repayment of principal may be
accelerated as a result of the prepayment of other obligations securing the
debt instrument, the periodic accrual of OID is determined by taking into
account both the prepayment assumptions used in pricing the debt instrument
and the prepayment experience. If this provision applies to the Offered
Certificates, the amount of OID which will accrue in any given "accrual
period" may either increase or decrease depending upon the actual prepayment
rate.
Certificate Owners should be aware that the resale of an Offered
Certificate may be affected by the market discount rules of the Code. These
rules generally provide that, subject to a de minimis exception, if a holder
of a an Offered Certificate acquires it at a market discount (i.e., at a
price below its stated redemption price at maturity or its "revised issue
price" if it was issued with OID) and thereafter recognizes gain upon a
disposition of the Offered Certificate, the lesser of such gain or the
portion of the market discount that accrued while the Offered Certificate was
held by such holder will be treated as ordinary interest income realized at
the time of the disposition.
Each Certificate Owner should consult his own tax advisor regarding the
impact of the original issue discount and market discount rules.
SALES OR DEEMED SALES OF OFFERED CERTIFICATES
In the opinion of Tax Counsel, in general, a Certificate Owner will
recognize gain or loss upon the sale, exchange, redemption or other taxable
disposition of an Offered Certificate measured by the difference between (i)
the amount of cash and the fair market value of any property received (other
than amounts attributable to, and taxable as, accrued stated interest) and
(ii) the owner's tax basis in the Class A Certificate or Class B Certificate,
as applicable (as increased by any OID or market discount previously included
in income by the holder and decreased by any deductions previously allowed
for amortizable bond premium and by any payments reflecting principal or OID
received with respect to such Class A Certificate or Class B Certificate, as
applicable). Subject to the market discount rules discussed above and to the
one-year holding requirement for long-term capital gain treatment, any such
gain or loss generally will be long-term capital gain or loss, provided that
the Class A Certificate or Class B Certificate, as applicable was held as a
capital asset. The Federal income tax rates applicable to capital gains for
taxpayers other than individuals, estates and trusts are currently the same
as those applicable to ordinary income; however, the maximum ordinary income
rate for individuals, estates and trusts has increased to 39.6%, whereas the
maximum long-term capital gains rate for such taxpayers remains at 28%.
Moreover, capital losses generally may be used only to offset capital gains.
BACKUP WITHHOLDING
In the opinion of Tax Counsel, a Certificate Owner may be subject to
backup withholding at the rate of 31% with respect to interest paid on the
Offered Certificates if the Certificate Owner, upon issuance, fails to supply
the Trustee or his broker with his taxpayer identification number, fails to
report interest, dividends, or other "reportable payments" (as defined in the
Code) properly, or under certain circumstances, fails to provide the Trustee
or his broker with a certified statement, under penalty of perjury, that he
is not subject to backup withholding. Information returns will be sent
annually to the IRS and to each Class A and Class B Certificateholder setting
forth the amount of interest paid on the Offered Certificates and the amount
of tax withheld thereon.
STATE AND LOCAL AND FOREIGN TAXATION
The discussion above does not address the tax treatment of the Trust,
the Offered Certificates or the Certificate Owners under state and local tax
laws or foreign tax laws. Prospective investors are urged to consult their
own tax advisors regarding the state and local tax treatment of the Trust and
the Offered Certificates, and the consequences of purchase, ownership or
disposition of the Offered Certificates under any state or local tax law or
any foreign tax law, if applicable.
ERISA CONSIDERATIONS
ERISA imposes certain restrictions on employee benefit plans subject to
ERISA ("Plans") and on persons who are parties in interest or disqualified
persons (collectively, "parties in interest") with respect to such Plans.
Section 406 of ERISA prohibits parties in interest with respect to a Plan
from engaging in certain transactions involving a Plan and its assets unless
a statutory or administrative exemption applies to the transaction, and
Section 4975 of the Code (or, in some cases, Section 502(1) of ERISA) imposes
excise taxes (or civil fines) on parties in interest with respect to Plans,
individual retirement accounts or Keogh plans covering no common law
employees (collectively, "Benefit Plans") which engage in non-exempt
prohibited transactions.
The Offered Certificates may not be acquired by or on behalf of a
Benefit Plan including any purchase taking assets of a Benefit Plan held in
an insurance company's general account. By purchasing, holding or acquiring
any interest in an Offered Certificate, the Offered Certificateholder, or the
Beneficial owner thereof, shall be deemed to have represented and warranted
that it is not a Benefit Plan and is not purchasing the Offered Certificate,
or the interest therein, on behalf of a Benefit Plan.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Transferor has agreed to sell to Citicorp Securities, Inc. and
Chase Securities, Inc. (the "Underwriters") and the Underwriters have agreed
to purchase the Offered Certificates.
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the Offered Certificates,
if any are taken. Pursuant to the Underwriting Agreement, it is a condition
to the issuance of the Offered Certificates that the Class C Certificates and
the Subordinated Transferor Certificate be issued simultaneously therewith.
The Transferor has been advised by the Underwriters that it proposes
initially to offer the Offered Certificates to the public at the price set
forth on the cover page hereof and to certain dealers at such price less a
concession not in excess of ____% of the Class A Certificate denomination
and not in excess of ____% of the Class B Certificate denomination. The
Underwriters may allow and such dealers may reallow a concession not in
excess of ____% of the Class A Certificate denomination and not in excess
of ____% of the Class B Certificate denomination to certain other dealers.
After the initial public offering, the public offering price and such
concessions may be changed.
Bridgestone/Firestone and the Transferor have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Offered
Certificates for the Transferor will be passed upon by Stroock & Stroock &
Lavan, New York, New York, special New York counsel to the Transferor.
Certain legal matters relating to the issuance of the Offered Certificates
for the Underwriters will be passed upon by Brown & Wood LLP, New York, New
York. Certain legal matters relating to the Federal income tax consequences
of the issuance of the Certificates will be passed upon for the Transferor by
Brown & Wood LLP, New York, New York.
INDEX OF TERMS
PAGE
----
10% Maximum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,47
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,31
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,8,53
Active Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Actual/360 Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Additional Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 4,47
Adjustment Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Aggregate Certificateholders' Interest . . . . . . . . . . . . . . . . . . 4
Aggregate Receivables . . . . . . . . . . . . . . . . . . . . . . . . 11,33
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,30
Amortization Event . . . . . . . . . . . . . . . . . . . . . . . . . . 22,66
Amortization Period . . . . . . . . . . . . . . . . . . . . . . . . . 30,33
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
B/F Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,33
B/F Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,57
B/F Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Bridgestone/Firestone . . . . . . . . . . . . . . . . . . . . . . . . . 1,33
Bridgestone/Firestone Certificate . . . . . . . . . . . . . . . . . . 2,5,47
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,8,35
CEDEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,45
Cedel Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Certificateholders' Interest . . . . . . . . . . . . . . . . . . . . . 4,30
Certificate Owners . . . . . . . . . . . . . . . . . . . . . . . . . 2,9,35
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,31
CFNA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,33
Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Citibank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,33
Class A Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Class A Certificateholders . . . . . . . . . . . . . . . . . . . . . . 8,45
Class A Certificate Rate . . . . . . . . . . . . . . . . . . . . . . . 5,33
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 1,33
Class A Floating Allocation Percentage . . . . . . . . . . . . . . . . 6,52
Class A Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,57
Class A Invested Amount . . . . . . . . . . . . . . . . . . . . . . . . 15,53
Class A Investor Charge-Off . . . . . . . . . . . . . . . . . . . . . . 19,63
Class A Investor Default Amount . . . . . . . . . . . . . . . . . . . . 14,58
Class A Monthly Interest . . . . . . . . . . . . . . . . . . . . . . . 14,60
Class A Monthly Servicing Fee . . . . . . . . . . . . . . . . . . . . 15,60
Class A Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Class A Required Amount . . . . . . . . . . . . . . . . . . . . . . . . 17,56
Class B Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Class B Certificate Rate . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class B Certificateholders . . . . . . . . . . . . . . . . . . . . . . 8,33
Class B Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 1,32
Class B Expected Final Payment Date . . . . . . . . . . . . . . . . . . . 11
Class B Floating Allocation Percentage . . . . . . . . . . . . . . . . 6,52
Class B Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,57
Class B Invested Amount . . . . . . . . . . . . . . . . . . . . . . . . 15,53
Class B Investor Charge-Off . . . . . . . . . . . . . . . . . . . . . . 20,63
Class B Investor Default Amount . . . . . . . . . . . . . . . . . . . . 14,58
Class B Monthly Interest . . . . . . . . . . . . . . . . . . . . . . . . 14
Class B Monthly Servicing Fee . . . . . . . . . . . . . . . . . . . . . 15,69
Class B Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Class B Reallocated Principal Collections . . . . . . . . . . . . . . . 18,62
Class C Certificate Rate . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class C Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . 8
Class C Expected Final Payment Date . . . . . . . . . . . . . . . . . . . 11
Class C Floating Allocation Percentage . . . . . . . . . . . . . . . . 7,52
Class C Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Class C Investor Default Amount . . . . . . . . . . . . . . . . . . . . . 14
Class C Invested Amount . . . . . . . . . . . . . . . . . . . . . . 16,20,53
Class C Investor Charge-Off . . . . . . . . . . . . . . . . . . . . . . 20,63
Class C Monthly Interest . . . . . . . . . . . . . . . . . . . . . . . . 14
Class C Monthly Servicing Fee . . . . . . . . . . . . . . . . . . . 15,60,69
Class C Reallocated Principal Collections . . . . . . . . . . . . . . . 18,62
Class C Required Amount . . . . . . . . . . . . . . . . . . . . . . . . 17,56
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . 24,50
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,33
Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,30
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Controlled Amortization Amount . . . . . . . . . . . . . . . . . . . . 10,45
Controlled Amortization Date . . . . . . . . . . . . . . . . . . . . . 10,45
Controlled Amortization Period . . . . . . . . . . . . . . . . . . . . 10,33
Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Credit Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Credit Card Program . . . . . . . . . . . . . . . . . . . . . . . . . 1,2,33
Credit Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Creditworthy account . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,87
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,44
Defaulted Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 2,65
Definitive Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 47
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . 24,34
Disclosure Document . . . . . . . . . . . . . . . . . . . . . . . . . . 7,53
Discount Option Receivables . . . . . . . . . . . . . . . . . . . . . . . 22
Discount Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . 22,65
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . 2,5,30
DOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,51
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . 2,50,33
Eligible Additional Account . . . . . . . . . . . . . . . . . . . . . . . 50
Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,43
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,80
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,45
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . 45
European Depositories . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Excess Finance Charge Collections . . . . . . . . . . . . . . . . . . . 16,48
Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,90
Exchangeable Transferor Certificate . . . . . . . . . . . . . . . . . . 5,31
Final Class A Termination Date . . . . . . . . . . . . . . . . . . . . 23,66
Final Class B Termination Date . . . . . . . . . . . . . . . . . . . . 23,66
Final Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Final Series 1996-1 Termination Date . . . . . . . . . . . . . . . . . 23,66
Final Trust Termination Date . . . . . . . . . . . . . . . . . . . . . . 67
Finance Charge Collections . . . . . . . . . . . . . . . . . . . . . . 3,33
Finance Charge Receivables . . . . . . . . . . . . . . . . . . . . . . 22,65
FIRREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Fitch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Fixed Allocation Percentage . . . . . . . . . . . . . . . . . . . . . . 11,53
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Ineligible Receivable . . . . . . . . . . . . . . . . . . . . . . . . . 4,50
Initial Class A Invested Amount . . . . . . . . . . . . . . . . . . . . . . 8
Initial Class B Invested Amount . . . . . . . . . . . . . . . . . . . . . . 8
Interest Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Invested Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Invested Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . 7,59
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Letter of Credit Bank . . . . . . . . . . . . . . . . . . . . . . . . . 24,42
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,62
LIBOR Determination Date . . . . . . . . . . . . . . . . . . . . . . . . 62
Merchant Fee Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . 3
Monthly Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . 71
Monthly Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . 15,54
Moody's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Morgan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
No Payment for 90 Days . . . . . . . . . . . . . . . . . . . . . . . . . 35
Offered Certificateholders . . . . . . . . . . . . . . . . . . . . . . . 2,8
Offered Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 1,44
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
OID Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Originator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,33
Other Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Other Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,33
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Participation Agreement . . . . . . . . . . . . . . . . . . . . . . . 7,28,48
Parties-in-Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Payment Date Statement . . . . . . . . . . . . . . . . . . . . . . . . . 71
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Principal Collections . . . . . . . . . . . . . . . . . . . . . . . . . 3,33
Principal Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 22,65
Principal Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Purchase and Sale Agreement . . . . . . . . . . . . . . . . . . . . . . 3,30
Rapid Amortization Period . . . . . . . . . . . . . . . . . . . . . . . 11,31
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,31
Reallocated Principal Collections . . . . . . . . . . . . . . . . . . . . 62
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,2,50
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,65
Removed Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Required Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,56
Required Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Retail Establishments . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Revolving Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,48
S&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,33
Series 1992 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 6
Shared Principal Collections . . . . . . . . . . . . . . . . . . . . . . 60
Service Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,24
Servicer Event of Default . . . . . . . . . . . . . . . . . . . . . . . . 70
Servicer Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . 24,30
Shared Principal Collections . . . . . . . . . . . . . . . . . . . . . 21,64
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SFB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Shared Principal Collections . . . . . . . . . . . . . . . . . . . . . 21,64
Subordinated Transferor Certificate . . . . . . . . . . . . . . . . . . . . 1
Subordinated Transferor Interest . . . . . . . . . . . . . . . . . . . . . 4
Allocation Percentage . . . . . . . . . . . . . . . . . . . . . . . . . 7,52
Subordinated Transferor Floating Allocation Percentage . . . . . . . . . 53
Subordinated Transferor Default Amount . . . . . . . . . . . . . . . . . 15
Subordinated Transferor Monthly Servicing Fee . . . . . . . . . . . . . 15,66
Subordinated Transferor Amount . . . . . . . . . . . . . . . . . 16,20,53,64
Subordinated Transferor Reallocated Principal Collections . . . . . . . 18,62
Subordinated Transferor Charge-Off . . . . . . . . . . . . . . . . . . 20,64
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Substitute Servicer Letter of Credit . . . . . . . . . . . . . . . . . . 55
Substitute Transferor Letter of Credit . . . . . . . . . . . . . . . . . 56
Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,56
Transfer Deposit Amount . . . . . . . . . . . . . . . . . . . . . . . . . 50
Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,30
Transferor Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,53
Transferor Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 5,43
Transferor Letter of Credit . . . . . . . . . . . . . . . . . . . . . . 25,33
Transferor Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,30
UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Unallocated Principal Collections . . . . . . . . . . . . . . . . . . . . 55
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ANNEX I
Outstanding Series
The table below sets forth the principal characteristics of the other
Series previously issued by the Trust and currently outstanding as of April
30, 1996.
1. Series 1995-A Asset Backed Certificates*
Class A Invested Amount . . . . . . . . . . . . . . . $199,200,000
Class B Invested Amount** . . . . . . . . . . . . . . . $38,095,238
Servicing Fee Percentage . . . . . . . . . . . . . . . . . . 2.00%
Series Issuance Date . . . . . . . . . . . . . . . . June 5, 1995
2. Series 1992-B Certificates
Class A REMARCS . . . . . . . . . . . . . . . . . . . $152,746,000
Class B REMARCS . . . . . . . . . . . . . . . . . . . $ 29,377,581
Servicing Fee Percentage . . . . . . . . . . . . . . . . . 2.00%
Series Issuance Date . . . . . . . . . . . . . . . January 4, 1993
* The proceeds from the issuance of the Series 1996-1 Asset Backed
Certificates will be used to retire the Series 1995-A Asset Backed
Certificates.
** Issued pursuant to Series 1992-A Asset Backed Certificates.
ANNEX II
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally Offered
Certificates (the "Global Securities") will be available only in book-entry
form. Investors in the Global Securities may hold such Global Securities
through any of DTC, CEDEL or Euroclear. The Global Securities will be
traceable as home market instruments in both the European and U.S. domestic
markets. Initial settlement and all secondary trades will settle in same-day
funds.
Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Offered Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of CEDEL
and Euroclear (in such capacity) and DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, CEDEL and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts
as DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to prior debt issues. Investors
securities custody accounts will be credited with their holdings against
payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payments in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to book-entry
securities in same-day funds.
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and CEDEL or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
to the account of a CEDEL Participant or a Euroclear Participant, the
purchaser will send instructions to CEDEL or Euroclear through a CEDEL
Participant or Euroclear Participant at least one business day prior to
settlement. CEDEL or Euroclear, as applicable, will instruct its Depositary
to receive the Global Securities against payment. Payment will include
interest accrued on the Global Securities from and including the last coupon
payment date to and excluding the settlement date. Payment will then be made
by such Depositary to the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the applicable clearing system and by the clearing system,
in accordance with its usual procedures, to the CEDEL Participant's or
Euroclear Participant's account. The Global Securities credit will appear
the next day (European time) and the cash debit will be back-valued to, and
the interest on the Global Securities will accrue from, the value date (which
would be the preceding day when settlement occurred in New York). If settlement
is not completed on the intended value date (i.e., the trade fails), the CEDEL
or Euroclear cash debit will be valued instead as of the actual settlement
date.
CEDEL Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing lines
of credit, as they would for any settlement occurring within CEDEL or
Euroclear. Under this approach, they may take on credit exposure to CEDEL
or Euroclear until the Global Securities are credited to their accounts one
day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit
to them, CEDEL Participants or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, CEDEL Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for
one day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income
on the Global Securities earned during that one-day period may substantially
reduce or offset the amount of such overdraft charges, although this result
will depend on each CEDEL Participant'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 the respective Depositary for the benefit of CEDEL Participants or
Euroclear Participants. The sale proceeds will be available to the DTC
seller on the settlement date. Thus, to the DTC Participant a cross-market
transaction will settle no differently than a trade between two DTC
Participants.
Trading between CEDEL or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, CEDEL Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing systems,
through their respective Depositaries, to a DTC Participant. The seller will
send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. In
these cases, CEDEL or Euroclear will instruct their respective Depositaries,
as appropriate, to deliver the bonds to the DTC Participant's account against
payment. Payment will include interest accrued on the Global Securities from
and including the last coupon payment date to and excluding the settlement
date. The payment will then be reflected in the account of the CEDEL
Participant or Euroclear Participant the following day, and receipt of the
cash proceeds in the CEDEL Participant'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). Should the CEDEL Participant or
Euroclear Participant have a line of credit with its clearing system and
elect to be in debit in anticipation of receipt of the sale proceeds in its
account, the back-valuation will extinguish any overdraft charges incurred
over that one-day period. If settlement is not completed on the intended
value date (i.e., the trade fails), receipt of the cash proceeds in the CEDEL
Participant's or Euroclear Participant's account would instead be valued as
of the actual settlement date. Finally, day traders that use CEDEL or
Euroclear and that purchase Global Securities from DTC Participants for
delivery to CEDEL Participants or Euroclear Participants should note that
these trades would automatically fail on the sale side unless affirmative
action were taken. At least three techniques should be readily available to
eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the purchase
side of the day trade is reflected in their CEDEL or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their CEDEL or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the CEDEL Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through CEDEL
or Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (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 such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes
one of the following steps to obtain an exemption or reduced tax rate:
Exemption of non-U.S. Persons (Form W-8). Beneficial owners of Offered
Certificates 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 such change.
Exemption for non-U.S. Person with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a
U.S. branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business
in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of
Offered Certificates residing in a country that has a tax treaty with the
United States can obtain an exemption or reduced tax rate (depending on the
treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate
Certificate). If the treaty provides only for a reduced rate, withholding
tax will be imposed at that rate unless the filer alternatively files Form
W-8. Form 1001 may be filed by the beneficial owner of Offered Certificates
or such owner's 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 beneficial owner of
a Global Security or, in the case of a Form 1001 or a Form 4224 filer, such
owner's agent, files by submitting the appropriate form to the person through
whom it holds the security (the clearing agency, in the case of persons
holding directly on the books of the clearing agency). Form W-8 and Form
1001 are effective for three calendar years and Form 4224 is effective for
one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of
the United States or any political subdivision thereof or (ii) 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. Investors are advised to consult
their own tax advisors for specific tax advice concerning their holding and
disposing of the Global Securities.
======================================== ==================================
No dealer, salesperson or other
individual has been authorized to
give any information or to make any
representations other than those $
contained or incorporated by
reference in this Prospectus in
connection with this offer made by Bridgestone/Firestone
this Prospectus and, if given or Master Trust
made, such information or
representations must not be relied
upon as having been authorized by
Bridgestone/Firestone, Inc., $_____ Class A Floating Rate Asset
Firestone Retail Credit Corporation Backed Certificates, Series 1996-1
or the Underwriter. Neither the
delivery of this Prospectus nor any
sale made hereunder shall under any $____ Class B Floating Rate Asset
circumstance create an implication Backed Certificates, Series 1996-1
that there has been no change in the
affairs of Bridgestone/Firestone,
Inc., Firestone Retail Credit
Corporation, or the Receivables since
the date thereof. This Prospectus
does not constitute an offer or
solicitation by anyone in any state
in which such offer or solicitation
is not authorized or in which the
person making such offer or
solicitation is not qualified to do
so or to anyone to whom it is
unlawful to make such offer or
solicitation.
TABLE OF CONTENTS Firestone Retail Credit
Page Corporation
Reports to Certificateholders . . . . Transferor
Available Information . . . . . . . .
Summary of Terms . . . . . . . . . 1
Risk Factors . . . . . . . . . . . 27
Use of Proceeds . . . . . . . . . . .
The Transferor and Bridgestone/Firestone, Inc.
Bridgestone/Firestone . . . . . . 32 Servicer
The Credit Card Program . . . . . . 32
Maturity Assumptions . . . . . . . 41
The Letter of Credit Bank . . . . . 42 _____________________
Description of the Offered
Certificates and P R O S P E C T U S
the Agreement . . . . . . . . . . 42
Description of the Purchase and Sale _____________________
Agreement . . . . . . . . . . . . 74
Certain Legal Aspects of the
Receivables . . . . . . . . . . . 75
Federal Income Tax Consequences . . 78
ERISA Considerations . . . . . . . 80
Underwriting . . . . . . . . . . . 82
Legal Matters . . . . . . . . . . . 82
Index of Terms . . . . . . . . . . 83
Annex I Outstanding Series . . . . A-1
Annex II Global Clearance, Settlement
and Tax Documentation Procedures. A-2
Until _____ (90 days after the date CITICORP SECURITIES, INC.
of this Prospectus), all dealers
effecting transactions in the Offered CHASE SECURITIES INC.
Certificates, whether or not
participating in this distribution,
may be required to deliver a _______________, 1996
Prospectus. This delivery
requirement is in addition to the
obligation of dealers to deliver a
Prospectus when acting as an
underwriter and with respect to their
unsold allotments or subscriptions.
======================================== ==================================
PART II
INFORMATION
NOT REQUIRED
IN PROSPECTUS
ITEM 13. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with
the offering of the Securities being registered under this Registration
Statement, other than underwriting discounts and commissions:
Registration Fee $ 870
Printing and Engraving *
Trustee's Fees *
Legal Fees and Expenses *
Blue Sky Fees and Expenses *
Accountants' Fees and Expenses *
Rating Agency Fees *
Miscellaneous Fees *
--------
Total $ *
_____________
*To be furnished by Amendment
ITEM 14. Indemnification of Directors and Officers.
Chapter 156B Section 67 of the Business Corporations Law of
Massachusetts provides that:
"Indemnification of directors, officers, employees and other agents of
a corporation, and persons who serve at its request as directors, officers,
employees or other agents of another organization, or who serve at its
request in any capacity with respect to any employee benefit plan, may be
provided by it to whatever extent shall be specified in or authorized by (i)
the articles of organization or (ii) a by-law adopted by the stockholders or
(iii) a vote adopted by the holders of a majority of the shares of stock
entitled to vote on the election of directors. Except as the articles of
organization or by-laws otherwise require, indemnification of any persons
referred to in the preceding sentence who are not directors of the
corporation may be provided by it to the extent authorized by the directors.
Such indemnification may include payment by the corporation of expenses
incurred in defending a civil or criminal action or proceeding in advance of
the final disposition of such action or proceeding, upon receipt of an
undertaking by the person indemnified to repay such payment if he shall be
adjudicated to be not entitled to indemnification under this section which
undertaking may be accepted without reference to the financial ability of
such person to make repayment. Any such indemnification may be provided
although the person to be indemnified is no longer an officer, director,
employee or agent of the corporation or of such other organization or no
longer serves with respect to any such employee benefit plan.
No indemnification shall be provided for any person with respect to any
matter as to which he shall have been adjudicated in any proceeding not to
have acted in good faith in the reasonable belief that his action was in the
best interest of the corporation or to the extent that such matter relates
to service with respect to any employee benefit plan, in the best interests
of the participants or beneficiaries of such employee benefit plan.
The absence of any express provision for indemnification shall not limit
any right of indemnification existing independently of this section.
A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or other
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or other agent of another
organization or with respect to any employee benefit plan, against any
liability incurred by him in any such capacity, or arising out of his status
as such, whether or not the corporation would have the power to indemnify him
against such liability."
Section 8a of the Amended and Restated By-Laws of the Registrant
provides that:
"The corporation shall, to the extent legally possible, indemnify
each of its directors and officers (including persons who serve at its
request as directors, officers or trustees of another organization, or in any
capacity with respect to any employee benefit plan) against all liabilities
and expenses, including amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees, reasonably incurred
by him in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, in which he may be involved or
with which he may be threatened, while in office or thereafter, by reason of
his being or having been such a director or officer, except with respect to
any matter as to which he shall have been adjudicated in any proceeding not
to have acted in good faith in the reasonable belief that his action was in
the best interest of the corporation (any person serving another organization
in one or more of the indicated capacities at the request of the corporation
who shall have acted in good faith in the reasonable belief that his action
was in the best interest of such organization to be deemed as having acted
in such manner with respect to the organization) or, to the extent that such
matter relates to service with respect to any employee benefit plan, in the
best interest of the participants or beneficiaries of such employee benefit
plan; provided, however, that as to any matter disposed of by a compromise
payment by such director or officer, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless such compromise shall be approved as in the
best interest of the corporation, after notice that it involves such
indemnification: (a) by a disinterested majority of the directors then in
office; or (b) by a majority of the disinterested directors then in office,
provided that there has been obtained an opinion in writing of independent
legal counsel to the effect that such director or officer appears to have
acted in good faith in the reasonable belief that his action was in the best
interest of the corporation; or (c) by the holders of a majority of the
outstanding stock at the time entitled to vote for directors, voting as a
single class, exclusive of any stock owned by any interested director
or officer. Expenses, including counsel fees, reasonably incurred by any
director or officer in connection with the defense or disposition of any
such action, suit or other proceeding may be paid from time to time by the
corporation in advance of the final disposition thereof upon receipt of an
undertaking by such director or officer to repay the amounts so paid to the
corporation if it is ultimately determined that indemnification for such
expenses is not authorized under this section. The right of
indemnification hereby provided shall not be exclusive of or affect any
other rights to which any director or officer may be entitled. As used in
this section, the terms "director" and "officer" include the relevant
individual's heirs, executors and administrators, and an "interested"
director or officer is one against whom in such capacity the proceedings
in question or another proceeding on the same or similar grounds is then
pending. Nothing contained in this section shall affect any rights to
indemnification to which corporate personnel other than directors and
officers may be entitled by contract or otherwise under law."
Bridgestone/Firestone, Inc. has agreed to indemnity the officers and
directors of the Registrant with respect to certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
The Underwriter has agreed to indemnify the Registrant and its officers
and directors against liabilities under the Securities Act of 1933, as
amended, in respect of written material provided by the Underwriter to the
Registrant specifically for use in the prospectus filed as part of this
Registration Statement.
ITEM 15. Recent Sales of Unregistered Securities.
Series 1995-A Asset Backed Certificates
- Series Issuance Date: June 5, 1995
- Class A Invested Amount: $199,200,000
- Class B Invested Amount: $38,095,238
- Proceeds from issuance of Series 1996-1 Asset Backed
Certificates will be used to retire Series 1995-A Asset
Backed Certificates.
ITEM 16. Exhibits and Financial Statements.
(a) Exhibits
*1.1 - Form of Underwriting Agreement.
*3.1 - Certificate of Incorporation of Firestone Retail Credit
Corporation, as currently in effect.
*3.2 - Amended and Restated By-Laws, as currently in effect.
4.1 - Form of Pooling and Servicing Agreement and certain other
related agreements as Exhibits thereto.
4.2 - Form of Supplement, including form of Series 1996-1
Certificates and certain other related agreements as
Exhibits thereto.
*4.3 - Form of Amended Purchase and Sale Agreement and certain other
related agreements as Exhibits thereto.
*4.4 - Form of Servicer Letter of Credit.
*4.5 - Form of Transferor Letter of Credit.
*5.1 - Opinion of Brown & Wood with respect to legality.
*8.1 - Opinion of Brown & Wood with respect to tax matters.
*23.1 - Consent of Brown & Wood (included in its opinion filed
as Exhibit 5.1).
*23.3 - Consent of Brown & Wood (included in its opinion filed
as Exhibit 8.1).
_____________________
*To be furnished by Amendment.
(b) Financial Statements Inapplicable.
ITEM 17. Undertakings.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions
or otherwise, the Registrant has been advised in the opinion of the
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the questions
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
(4) The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required
by the underwriter to permit prompt delivery to each purchaser.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Firestone Retail Credit Corporation has duly caused this Amendment No. 2 to
be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Boston, the Commonwealth of Massachusetts on
September 3, 1996.
FIRESTONE RETAIL CREDIT CORPORATION
/s/ Nancy D. Smith
-------------------------------------------
Nancy D. Smith, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 2 has been signed below by the following persons in the
capacities indicated on September 3, 1996.
/s/ Nancy D. Smith President and Director September 3, 1996
- - ----------------------------
Nancy D. Smith (principal executive
officer)
/s/ R. Douglas Donaldson Treasurer September 3, 1996
- - ----------------------------
R. Douglas Donaldson (principal financial
officer and principal
accounting officer)
/s/ Louise E. Colby Director and Secretary September 3, 1996
- - -----------------------------
Louise E. Colby
INDEX TO EXHIBITS
EXHIBITS
- - --------
1.1 - Form of Underwriting Agreement.
3.1 - Certificate of Incorporation.
3.2 - Amended and Restated By-Laws.
4.1 - Form of Pooling and Servicing Agreement and certain other
related agreements as Exhibits thereto.
4.2 - Form of Supplement, including form of Series 1996-1
Certificates, and certain other related agreements
as Exhibits thereto.
4.3 - Form of Purchase and Sale Agreement and certain other related
agreements as Exhibits thereto.
4.4 - Form of Servicer Letter of Credit.
5.1 - Opinion of Brown & Wood with respect to legality.
8.1 - Opinion of Brown & Wood with respect to tax matters.
23.1 - Consent of Brown & Wood (included in its opinion filed as
Exhibit 5.1).
23.3 - Consent of Brown & Wood (included in its opinion filed as
Exhibit 8.1).
EXHIBIT 4.1
Brown & Wood
Draft 8/30/96
_____________________________________________________________________________
FIRESTONE RETAIL CREDIT CORPORATION,
Transferor,
BRIDGESTONE/FIRESTONE, INC.
and
THE FUJI BANK AND TRUST COMPANY,
Trustee
on behalf of the Certificateholders
BRIDGESTONE/FIRESTONE MASTER TRUST
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of __________, 1996
to the
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1992
_____________________________________________________________________________
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Other Definitional Provisions . . . . . . . . . . . . . . 21
ARTICLE II CONVEYANCE; ISSUANCE OF CERTIFICATES . . . . . . . . . . . 21
Section 2.01 Conveyance . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.02 Acceptance by Trustee . . . . . . . . . . . . . . . . . . 24
Section 2.03 Representations and Warranties of the
Transferor Relating to the Transferor . . . . . . . . . 25
Section 2.04 Representations and Warranties Relating to
the Agreement and the Receivables . . . . . . . . . . . 27
Section 2.05 Addition of Accounts . . . . . . . . . . . . . . . . . . . 29
Section 2.06 Transfer of Ineligible Receivables . . . . . . . . . . . . 30
Section 2.07 Purchase of Certificates . . . . . . . . . . . . . . . . . 31
Section 2.08 Covenants of the Transferor . . . . . . . . . . . . . . . 33
Section 2.09 Authentication of Certificates . . . . . . . . . . . . . . 37
Section 2.10 Removal of Accounts . . . . . . . . . . . . . . . . . . . 37
Section 2.11 Discount Option . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01 Acceptance of Appointment and Other Matters
Relating to the Servicer . . . . . . . . . . . . . . . . 40
Section 3.02 Servicing Compensation . . . . . . . . . . . . . . . . . . 42
Section 3.03 Representations, Warranties and Covenants of
the Servicer . . . . . . . . . . . . . . . . . . . . . . 43
Section 3.04 Reports and Records for the Trustee; Bank
Account Statements . . . . . . . . . . . . . . . . . . . 46
Section 3.05 Annual Servicer's Certificate . . . . . . . . . . . . . . 47
Section 3.06 Annual Independent Public Accountants'
Servicing Report . . . . . . . . . . . . . . . . . . . . 47
Section 3.07 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 48
Section 3.08 Notices to Bridgestone/Firestone . . . . . . . . . . . . . 48
Section 3.09 Adjustments . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS, ALLOCATION
AND APPLICATION OF COLLECTIONS AND SERVICER
AND TRANSFEROR LETTERS OF CREDIT
Section 4.01 Establishment of Collection Account and
Allocations with Respect to the Exchangeable
Transferor Certificate . . . . . . . . . . . . . . . . . 51
Section 4.01A Servicer Letter of Credit . . . . . . . . . . . . . . . . 55
Section 4.01B Transferor Letter of Credit . . . . . . . . . . . . . . . 59
ARTICLE V (ARTICLE V IS RESERVED AND MAY BE SPECIFIED IN
ANY SUPPLEMENT WITH RESPECT TO ANY SERIES)
ARTICLE VI THE CERTIFICATES
Section 6.01 The Certificates . . . . . . . . . . . . . . . . . . . . . 64
Section 6.02 Authentication of Certificates . . . . . . . . . . . . . . 64
Section 6.03 Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.04 Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . . . . . . . . 67
Section 6.05 Persons Deemed Owners . . . . . . . . . . . . . . . . . . 67
Section 6.06 Appointment of Paying Agent . . . . . . . . . . . . . . . 68
Section 6.07 Access to List of Certificateholders' Names
and Addresses . . . . . . . . . . . . . . . . . . . . . 69
Section 6.08 Authenticating Agent . . . . . . . . . . . . . . . . . . . 70
Section 6.09 Tender of Exchangeable Transferor
Certificate . . . . . . . . . . . . . . . . . . . . . . 71
Section 6.10 (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.11 Book-Entry Certificates . . . . . . . . . . . . . . . . . 73
Section 6.12 Notices to Clearing Agency . . . . . . . . . . . . . . . . 74
Section 6.13 Definitive Certificates . . . . . . . . . . . . . . . . . 74
ARTICLE VII OTHER MATTERS RELATING
TO THE TRANSFEROR
Section 7.01 Liability of the Transferor . . . . . . . . . . . . . . . 76
Section 7.02 Merger or Consolidation of, or Assumption of
the Obligations of, the Transferor . . . . . . . . . . . 76
Section 7.03 Limitation on Liability of the Transferor . . . . . . . . 77
Section 7.04 Liabilities . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE VIII OTHER MATTERS RELATING TO THE SERVICER
Section 8.01 Liability of the Servicer . . . . . . . . . . . . . . . . 78
Section 8.02 Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer . . . . . . . . . . . . 78
Section 8.03 Limitation on Liability of the Servicer and
Others . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.04 Servicer Indemnification of the Trust and the
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.05 The Servicer Not to Resign . . . . . . . . . . . . . . . . 80
Section 8.06 Access to Certain Documentation and
Information Regarding the Receivables . . . . . . . . . 80
Section 8.07 Delegation of Duties . . . . . . . . . . . . . . . . . . . 81
Section 8.08 Examination of Records . . . . . . . . . . . . . . . . . . 81
ARTICLE IX AMORTIZATION EVENTS
Section 9.01 Amortization Events . . . . . . . . . . . . . . . . . . . 82
Section 9.02 Additional Rights Upon the Occurrence of
Certain Events . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE X SERVICER DEFAULTS
Section 10.01 Servicer Defaults . . . . . . . . . . . . . . . . . . . . 84
Section 10.02 Trustee to Act; Appointment of Successor . . . . . . . . . 86
Section 10.03 Notification to Certificateholders . . . . . . . . . . . . 88
Section 10.04 Waiver of Past Defaults . . . . . . . . . . . . . . . . . 88
ARTICLE XI THE TRUSTEE
Section 11.01 Duties of Trustee . . . . . . . . . . . . . . . . . . . . 89
Section 11.02 Rights of the Trustee . . . . . . . . . . . . . . . . . . 90
Section 11.03 Trustee Not Liable for Recitals in
Certificates . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.04 Trustee May Own Certificates . . . . . . . . . . . . . . . 91
Section 11.05 The Servicer to Pay Trustee's Fees and
Expenses . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.06 Eligibility Requirements for Trustee . . . . . . . . . . . 91
Section 11.07 Resignation or Removal of Trustee . . . . . . . . . . . . 92
Section 11.08 Successor Trustee . . . . . . . . . . . . . . . . . . . . 92
Section 11.09 Merger or Consolidation of Trustee . . . . . . . . . . . . 94
Section 11.10 Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 11.11 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . 96
Section 11.12 Trustee May Enforce Claims Without
Possession of Certificates . . . . . . . . . . . . . . . 96
Section 11.13 Suits for Enforcement . . . . . . . . . . . . . . . . . . 97
Section 11.14 Rights of Certificateholders to Direct
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 11.15 Representations and warranties of Trustee . . . . . . . . 97
Section 11.16 Maintenance of Office or Agency . . . . . . . . . . . . . 98
ARTICLE XII TERMINATION
Section 12.01 Termination of Trust . . . . . . . . . . . . . . . . . . . 99
Section 12.02 Optional Purchase and Final Termination Date
of Investor Certificates of any Series . . . . . . . . . 99
Section 12.03 Final Payment with Respect to any Series . . . . . . . . 100
Section 12.04 Transferor's Termination Rights . . . . . . . . . . . . 102
ARTICLE XIII MISCELLANEOUS PROVISIONS
Section 13.01 Amendment . . . . . . . . . . . . . . . . . . . . . . . 103
Section 13.02 Protection of Right, Title and Interest to
Trust . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 13.03 Limitation on Rights of Certificateholders . . . . . . . . 106
Section 13.04 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 107
Section 13.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 13.06 Severability of Provisions . . . . . . . . . . . . . . . . 108
Section 13.07 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 13.08 Certificates Nonassessable and Fully Paid . . . . . . . . 108
Section 13.09 Further Assurances . . . . . . . . . . . . . . . . . . . . 108
Section 13.10 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . 108
Section 13.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 109
Section 13.12 Third Party Beneficiaries . . . . . . . . . . . . . . . . 109
Section 13.13 Actions by Certificateholders . . . . . . . . . . . . . . 109
Section 13.14 Merger and Integration . . . . . . . . . . . . . . . . . . 109
Section 13.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 13.16 Voting, Waiver and Consents . . . . . . . . . . . . . . . 110
EXHIBITS
- - --------
Exhibit A-1: Form of Exchangeable Transferor Certificate
Exhibit A-2: Form of Bridgestone/Firestone Certificate
Exhibit B: Form of Assignment of Receivables in
Additional Accounts
Exhibit C: Form of Reassignment of Receivables in
Removed Accounts
Exhibit D: Irrevocable Servicer Letter of Credit
Exhibit E: Form of Annual Servicer's Certificate
Exhibit F: Form of Opinion of Counsel - Provisions to
be Included in Opinion of Counsel Delivered
Pursuant to Subsection 2.05(b)(vi)
Exhibit G: Irrevocable Transferor Letter of Credit
No. _____
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT, dated as of
__________, 1996 to the POOLING AND SERVICING AGREEMENT, dated as of November
1, 1992, by and among FIRESTONE RETAIL CREDIT CORPORATION, a corporation
organized and existing under the laws of the Commonwealth of Massachusetts,
as Transferor; BRIDGESTONE/FIRESTONE, INC., a corporation organized and
existing under the laws of the State of Ohio, individually and as Servicer;
and THE FUJI BANK AND TRUST COMPANY, a banking corporation organized and
existing under the laws of the State of New York, as Trustee.
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties and for the benefit
of the Certificateholders to the extent provided herein:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Whenever used in this Agreement, the
-----------
following words and phrases shall have the following meanings:
"Account" shall mean (a) each credit card account generated or to be
-------
generated by the Originator in the ordinary course of its business and
existing or arising under the Credit Card Program, and (b) subject to
(Section 2.05(b)(ii)), as of each Addition Date, each Additional Account
identified in each list delivered to the Trustee by the Transferor pursuant
to Section 2.05. The definition of Account shall include each Transferred
Account into which an Account shall be transferred provided that such
transfer was made in accordance with all objective criteria of the Credit
Card Guidelines. The term "Account" shall be deemed to refer to an
Additional Account only from and after the Addition Date with respect
thereto.
"Accumulation Period" shall have, with respect to any Series, the
-------------------
meaning, if any, specified in the applicable Supplement.
"Addition Date" shall mean each date as of which Additional Accounts
-------------
will be included as Accounts pursuant to Section 2.05.
"Addition Notice Date" shall mean, with respect to any Additional
--------------------
Account, the last day in the month preceding the month in which the Addition
Date for such Additional Account occurs.
"Additional Accounts" shall have the meaning set forth in Section 2.05.
-------------------
"Additional Receivables" shall mean Receivables arising from Additional
----------------------
Accounts.
"Adjustment Payment" shall have the meaning set forth in Section
------------------
3.09(a).
"Affiliate" of any Person shall mean any other Person controlling,
---------
controlled by or under common control with such Person.
"Aggregate Invested Amount" shall mean the sum of the Invested Amounts
-------------------------
with respect to all Series then issued and outstanding.
"Aggregate Invested Percentage" shall mean the sum of the applicable
-----------------------------
Invested Percentages with respect to all Series then issued and outstanding.
"Aggregate Receivables" shall mean, at any time, (a) the aggregate
---------------------
amount of Eligible Receivables as of the end of the prior Collection Period
for each Account minus Defaulted Receivables, minus (b)(i) an amount equal
to the finance charges billed in respect of the Receivables in such prior
Collection Period, minus (ii) finance charges credited as a rebate during
such prior Collection Period minus (iii) amounts billed with respect to
Receivables that are Discount Option Receivables.
"Agreement" shall mean this Pooling and Servicing Agreement and all
---------
amendments hereof and supplements hereto, including any Supplement.
"Alternative Programs" shall mean programs, other than the Credit Card
--------------------
Program which exists as of ______________, 1996, which may include, but are
not limited to, the establishment of private label credit card programs and
the offering of general purpose credit cards.
"Amortization Event" shall have, with respect to each Series, the
------------------
meaning specified in Section 9.01 and in any Supplement for the related
Series.
"Amortization Period" shall mean, with respect to any Series, the period
-------------------
following the Revolving Period which may be the Accumulation Period,
Controlled Amortization Period, Early Amortization Period or Rapid
Amortization Period (each as defined in any related Supplement).
"Applicants" shall have the meaning specified in Section 6.07.
----------
"Appointment Date" shall have the meaning specified in Section 9.02.
----------------
"APR" shall mean the annual percentage rate or rates determined in the
---
manner described in the Credit Card Agreement applicable to each Account.
"Assignment" shall have the meaning set forth in Section 2.05(b)(ii).
----------
"Authorized Newspaper" shall mean any newspaper of general circulation
--------------------
in the Borough of Manhattan, the City of New York, or in such other location
as may be specified in a Supplement for a particular Series, printed in the
English language, or the official language of the country of publication, and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
"Available Letter of Credit Amount" shall have, with respect to the
---------------------------------
Servicer Letter of Credit, the meaning specified in the Servicer Letter of
Credit and, with respect to the Transferor Letter of Credit, the meaning
specified in the Transferor Letter of Credit.
"Base Rate" shall mean, with respect to any Series, the amount stated
---------
in the applicable Supplement.
"B/F Amount" shall mean that portion of Aggregate Receivables
----------
represented by the B/F Percentage except as reduced pursuant to Section
2.06(c) or Section 3.09(a).
"B/F Percentage" shall mean 1%.
--------------
"Book-Entry Certificates" shall mean an Investor Certificate,
-----------------------
registered in the name of a Clearing Agency or a nominee thereof as described
in Section 6.11; provided that after the occurrence of a condition whereupon
book-entry registration and transfer are no longer permitted and Definitive
Certificates are to be issued to the Certificate Owners, such certificates
shall no longer be "Book-Entry Certificates."
"Bridgestone/Firestone" shall mean Bridgestone/Firestone, Inc., a
---------------------
corporation organized and existing under the laws of the State of Ohio.
"Bridgestone/Firestone Certificate" shall mean the certificate executed
---------------------------------
by the Transferor and authenticated by the Trustee, substantially in the form
of Exhibit A-2.
-----------
"Business Day" shall mean any day other than (a) a Saturday or a Sunday,
------------
or (b) a day on which banking institutions or trust companies in the Cities
of Cleveland, Ohio, Nashville, Tennessee, or New York, New York, or, as
specified in a Supplement for a particular Series, any other place where
payment on the Certificates is authorized for such Series, are authorized or
obligated by law, executive order or governmental decree to be closed.
"Certificate" shall mean one of any Series of Investor Certificates, the
-----------
Bridgestone/Firestone Certificate, or the Exchangeable Transferor
Certificate.
"Certificate Owner" shall mean, with respect to a Book-Entry
-----------------
Certificate, the Person who is the owner of a beneficial interest in such
Book-Entry Certificate, as reflected on the books of the Clearing Agency, or
on the books of a Person maintaining an account with such Clearing Agency.
"Certificate Rate" shall mean, with respect to any Series, the
----------------
percentage (or formula on the basis of which such rate shall be determined)
stated in the applicable Supplement.
"Certificate Register" shall mean the register maintained pursuant to
--------------------
Section 6.03, providing for the registration of the applicable Certificates
and transfer and exchange thereof.
"Certificateholder" or "Holder" shall mean the Person in whose name a
----------------- ------
Certificate is registered in the Certificate Register or, if applicable, the
Clearing Agency in whose name are registered any Book-Entry Certificates.
"Certificateholders' Interest" shall have the meaning specified in
----------------------------
Article IV of any Supplement for the related Series.
"Class" shall mean, with respect to any Series, any one of the Classes
-----
of Certificates of that Series as specified in the related Supplement.
"Clearing Agency" shall mean an organization registered as a "clearing
---------------
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the date of
------------
issuance of such Series, as specified in the related Supplement.
"Collection Account" shall have the meaning specified in Section 4.01.
------------------
"Collection Period" shall mean, with respect to each Account, each
-----------------
monthly billing cycle period ending in the period commencing on the 19th
calendar day of each calendar month and ending on the 18th calendar day of
the next succeeding calendar month during the term of the Trust.
"Collections" shall mean all payments by or on behalf of Obligors
-----------
(including Recoveries, Insurance Premiums and Insurance Proceeds) received
by the Servicer, the Originator or the Transferor in respect of the
Receivables, in the form of cash, checks or any other form of payment in
accordance with the Credit Card Agreement in effect from time to time.
"Controlled Amortization Period" shall have, with respect to any Series,
------------------------------
the meaning specified in the applicable Supplement.
"Corporate Trust Office" shall mean the principal office of the Trustee
----------------------
at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at Two World Trade Center, 81st Floor, New York, New York 10048
(Attn: Trust Administration Department).
"Credit Card Agreement" shall mean, with respect to each Account, and
---------------------
collectively with respect to all Accounts, the agreements between the
Originator and each Obligor, governing the terms and conditions of the
applicable revolving credit card account or any successor credit card account
designations used by the Originator, Bridgestone/Firestone or the Transferor
as such agreements may be amended, modified or otherwise changed from time
to time and as distributed (including any amendments and revisions thereto)
to holders of such consumer revolving credit card accounts. The form of
agreement relating to Accounts generated by the Originator under the Credit
Card Program is as set forth in Exhibit G (or in a form substantially similar
to Exhibit G).
"Credit Card Guidelines" shall mean the written policies and procedures
----------------------
relating to the operation of the credit card business applicable to the
Credit Card Program or any Alternative Program, including, without
limitation, the written policies and procedures for determining the
creditworthiness of credit card customers, the extension of credit to credit
card customers, and the maintenance of credit card accounts and collection
of credit card receivables, as such policies and procedures may be amended
from time to time in conformance with all Requirements of Law, the failure
to comply with which would have a material adverse effect on Investor
Certificateholders.
"Credit Card Program" shall mean the private label credit card program
-------------------
established for customers of Retail Establishments which may include certain
credit features or enhancements including cash advances or convenience
checks, existing as of __________________________.
"Credit First" shall mean Credit First National Association, a national
------------
banking association organized and existing under the laws of the United
States.
"Cut-Off Date" shall mean, for each Account, the billing cycle closing
------------
date occurring during the period commencing on October 19, 1992 and ending
on November 18, 1992.
"Date of Processing" shall mean, with respect to any transaction, the
------------------
business day after such transaction is first output in written form, under
the Servicer's customary and usual servicing practices, from the Servicer's
computer file of consumer revolving credit card accounts (without regard to
the effective date of such recordation).
"Debtor Relief Laws" shall mean the Bankruptcy Code of the United States
------------------
of America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payment or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally.
"Defaulted Amount" shall mean, with respect to any Distribution Date,
----------------
the sum for all the Accounts of the amount of Receivables which became
Defaulted Receivables in the Collection Period for such Distribution Date,
less the full amount of such Defaulted Receivables which are subject to a
transfer obligation of the Transferor under Section 2.06(b) or of the
Servicer under Section 3.03 with respect to such Distribution Date; provided,
--------
however, that if any of the events described in Section 9.01(a) occurs with
- - -------
respect to the Transferor or Bridgestone/Firestone, the amount of such
Defaulted Receivables which are subject to transfer pursuant to Section
2.06(b) shall not be so subtracted and if any of the events described in
Section 10.01(d) occurs with respect to the Servicer, the amount of such
Defaulted Receivables which are subject to transfer pursuant to Section 3.03
shall not be so subtracted.
"Defaulted Receivables" shall mean, with respect to any Collection
---------------------
Period, all Receivables (other than Ineligible Receivables) in any Account
which are written off as uncollectible in such Collection Period, in
accordance with the applicable Credit Card Guidelines. Notwithstanding the
foregoing sentence, a Receivable (other than an Ineligible Receivable) shall
become a Defaulted Receivable on the day on which such Receivable is recorded
as written off on the Servicer's computer master file of consumer revolving
credit card accounts but, in any event, shall be deemed a Defaulted
Receivable no later than the last day of the Collection Period following the
Collection Period in which it becomes 180 days delinquent (210 days after the
date of the initial billing statement).
"Definitive Certificates" shall have the meaning specified in Section
-----------------------
6.11.
"Definitive Registered Certificates" shall mean Definitive Certificates
----------------------------------
issued in registered form.
"Depository Agreement" shall mean the agreement among the Transferor,
--------------------
the Trustee and the Clearing Agency, in the form attached hereto as
Exhibit H.
- - ---------
"Determination Date" shall mean the 2nd Business Day preceding each
------------------
Distribution Date.
"Discount Option Receivables" shall mean, after the date on which the
---------------------------
Transferor's exercise of its discount option pursuant to Section 2.11 takes
effect, the sum of (a) the aggregate Discount Option Receivables at the end
of the prior day (which amount, prior to the date on which the Transferor's
exercise of its discount option takes effect and with respect to Receivables
generated prior to such date, shall be zero) plus (b) any New Discount Option
----
Receivables created on such day minus (c) any Discount Option Receivables
-----
Collections received on such Date of Processing.
"Discount Option Receivable Collections" shall mean on any Determination
--------------------------------------
Date, on and after the date on which the Transferor's exercise of its
discount option pursuant to Section 2.11 takes effect, the product of (a) a
fraction the numerator of which is the amount of Discount Option Receivables
and the denominator of which is the sum of the Aggregate Receivables and the
Discount Option Receivables in each case (for both numerator and denominator)
at the end of the prior Date of Processing, (b) Collections of Aggregate
Receivables and Discount Option Receivables received on such Date of
Processing and (c) a fraction the numerator of which is the aggregate amount
of Aggregate Receivables arising on each Date of Processing falling on or
after the date on which the Transferor exercises its discount option and the
denominator of which is the Aggregate Receivables on such Date of Processing.
"Discount Percentage" shall mean the fixed percentage, if any,
-------------------
designated by the Transferor pursuant to Section 2.11.
"Distribution Date" shall mean unless otherwise specified in any
-----------------
Supplement for the related Series, the 1st day of each calendar month or, if
such 1st day is not a Business Day, the next succeeding Business Day,
beginning on the date specified in such Supplement.
"Dollars", "$" or "U.S.$" shall mean United States dollars.
------- - -----
"Early Amortization Period" shall mean, with respect to any Series, the
-------------------------
period specified in the related Supplement.
"Eligible Account" shall mean an Account (a) which has been established
----------------
under the Credit Card Program; (b) which is denominated in Dollars; (c) the
credit card or cards related to which have not been reported lost or stolen;
(d) the Obligor on which has provided, as its most recent billing address,
an address with a zip code in the United States or its territories or
possessions; (e) which is not an account of an Obligor in bankruptcy or an
account as to which the Servicer has any confirmed record of any
fraud-related activity; and (f) the Receivables in which have not been
charged-off or the account itself has not been closed prior to its billing
cycle cut-off date.
"Eligible Additional Account" shall mean, as of the relevant Addition
---------------------------
Notice Date, an Account (a) which has been established under an Alternative
Program and designated by the Transferor as an Additional Account pursuant
to Section 2.03; (b) which is denominated in Dollars; (c) the credit card or
cards related to which have not been reported lost or stolen; (d) the Obligor
on which has provided, as its most recent billing address, an address with
a zip code in the United States or its territories or possessions; (e) which
is not an account of an Obligor in bankruptcy or an account as to which the
Servicer has any confirmed record of any fraud-related activity; and (f) the
Receivables in which have not been charged-off or the account itself has not
been closed prior to its billing cycle cut-off date.
"Eligible Institution" shall mean a depository institution (which may
--------------------
be the Trustee or the Originator or an Affiliate of either) organized under
the laws of the United States or any one of the states thereof, including the
District of Columbia, which at all times has the highest short-term rating
of at least two nationally recognized statistical rating agencies one at
which is A-1+ from Standard & Poor's and which is a member of the FDIC;
provided, however, that an institution which shall have corporate trust
- - -------- -------
powers and which maintains the Collection Account, any principal funding
account, any interest funding account or any other account maintained for the
benefit of Certificateholders as a fully segregated trust account with the
trust department of such institution shall not be required to meet the
foregoing rating requirements.
"Eligible Receivable" shall mean each Receivable:
-------------------
(a) which has arisen under (1) an Eligible Account (whether such
Account was initially an Eligible Account or was deemed to be an Eligible
Account upon the receipt of rating agency approval or (2) an Eligible
Additional Account and the transfer of such Receivable by the Transferor to
the Trust, or the sale of such Receivable by the Originator to the
Transferor, does not cause the aggregate amount of Additional Receivables
arising from Eligible Additional Accounts to exceed 10% of the average amount
of Aggregate Receivables as of the last day of each of the preceding 12
Collection Periods (the "Ten Percent Maximum");
(b) which was created in compliance with all Requirements of Law
applicable to the Originator and the Servicer, other than those with respect
to which there is no reasonable likelihood that a failure to comply could
have a material adverse effect upon Investor Certificateholders and pursuant
to a Credit Card Agreement which complies with all Requirements of Law
applicable to the Originator and the Servicer, other than those with respect
to which there is no reasonable likelihood that a failure to comply could
have a material adverse effect on Investor Certificateholders;
(c) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority required to be obtained, effected or given in connection with the
creation of such Receivable or the execution, delivery and performance of the
Credit Card Agreement pursuant to which such Receivable was created, have
been duly obtained, effected or given and are in full force and effect as of
such date of creation;
(d) as to which at all times following the transfer of such
Receivable to the Trust, the Trust will have good and marketable title
thereto free and clear of all Liens arising prior to the transfer or arising
at any time under or through the Originator, the Servicer or the Transferor
or its Affiliates (which Affiliates shall not include the Trust) other than
Liens permitted pursuant to Section 2.08(b);
(e) which has been the subject of either a valid transfer and
assignment from the Transferor to the Trust of all of the Transferor's right,
title and interest therein or the grant to the Trust of a perfected security
interest which is prior to any interest of all third parties therein (and in
the proceeds thereof), effective until the termination of the Trust;
(f) which will at all times be the legal, valid and binding
payment obligation of the Obligor thereon enforceable against such Obligor
in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting the enforcement of
creditors' rights in general and except as such enforceability may be limited
by general principles of equity (whether considered in a suit at law or in
equity);
(g) which constitutes either an "account" or a "general
intangible" under and as defined in Article 9 of the UCC as then in effect
in the Commonwealth of Massachusetts and the States of New York and Ohio;
(h) which, at the time of transfer to the Trust, has not been
waived or modified except as permitted in accordance with Section 3.03(i);
(i) which is not subject to any right of rescission, setoff,
counterclaim or any other defense (including defenses arising out of
violations of usury laws) of the Obligor, other than defenses arising out of
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or equity) or as to which the Servicer
may, as described in Section 3.03(i), make an adjustment;
(j) as to which, at the time of transfer of such Receivable by the
Transferor to the Trust, or at the time of sale of such Receivable by the
Originator to the Transferor, each of the Transferor and the Originator has
satisfied all obligations on its part with respect to such Receivable
required to be fulfilled pursuant to the Credit Card Agreement or in
connection with the transfer and any applicable agreement pursuant to which
such transfer occurs; and
(k) as to which, at the time of transfer of such Receivable by the
Transferor to the Trust, or at the time of sale of such Receivable by the
Originator to the Transferor, each of the Transferor and the Originator has
not taken any action which would impair or failed to take any action
necessary to avoid impairing the rights of the Trust or the
Certificateholders therein.
"Eligible Servicer" shall mean the Trustee or a national banking
-----------------
association formed by Bridgestone/Firestone to own credit card accounts and
receivables or an entity which, at the time of its appointment as Servicer,
(i) is servicing a portfolio of consumer revolving credit card accounts, (ii)
is legally qualified and has the capacity to service the Accounts, (iii) has
demonstrated the ability to service professionally and completely a portfolio
of similar accounts in accordance with high standards of skill and care and
(iv) is qualified to use the software that the Servicer is then currently
using to service the Accounts or obtains the right to use or has its own
software which is adequate to perform its duties under this Agreement.
"Enhancement" shall mean, with respect to any Series, the letter of
-----------
credit, liquidity facility, guaranteed rate agreement, maturity guaranty
facility, tax protection agreement, interest rate swap or any other contract
or agreement for the benefit of Certificateholders of such Series as
designated in the applicable Supplement.
"Enhancement Provider" shall mean, with respect to any Series, that
--------------------
Person designated as such in the applicable Supplement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
-----
as amended.
"Escrow Account" shall have the meaning specified in Section 4.01A(e).
--------------
"Exchange" shall mean either of the procedures described under Section
--------
6.09.
"Exchangeable Transferor Certificate" shall mean the certificate
-----------------------------------
executed by the Transferor and authenticated by the Trustee, substantially
in the form of Exhibit A-1 and exchangeable as provided in Section 6.09.
-----------
"Exchange Date" shall have the meaning, with respect to any Series
-------------
issued pursuant to an Exchange, specified in Section 6.09.
"Exchange Notice" shall have the meaning, with respect to any Series
---------------
issued pursuant to an Exchange, specified in Section 6.09.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
----
"Final Trust Termination Date" shall have the meaning specified in
----------------------------
Section 12.01.
"Finance Charge Collections" shall mean, with respect to any Collection
--------------------------
Period, the amount of Collections allocated as Finance Charge Collections
pursuant to Section 4.01(e).
"Fitch" shall mean Fitch Investors Service, Inc.
-----
"Fixed Allocation Percentage" shall (i) have with respect to any Series,
---------------------------
the meaning specified in the applicable Supplement and (ii) with respect to
the Bridgestone/Firestone Certificate, mean 1%.
"Floating Allocation Percentage" shall (i) have with respect to any
------------------------------
Series, the meaning specified in the applicable Supplement and (ii) with
respect to the Bridgestone/Firestone Certificate, mean 1%.
"Governmental Authority" shall mean the United States of America, any
----------------------
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Ineligible Receivable" shall have the meaning specified in Section
---------------------
2.06.
"Initial Closing Date" shall mean December 2, 1992.
--------------------
"Initial Invested Amount" shall mean, with respect to any Series, the
-----------------------
amount stated in the applicable Supplement.
"Insurance Agreement" shall mean any insurance policy for the benefit
-------------------
of the Originator or Bridgestone/Firestone covering any Obligor with respect
to Receivables under such Obligor's Account.
("Insurance Premiums" shall mean the amounts specified in the Insurance
------------------
Agreement applicable to each Account for insurance on such Account which are
retained by the Originator, the Servicer or Bridgestone/Firestone from
payments by the applicable Obligor or remitted to the Originator, the
Servicer or Bridgestone/Firestone by the applicable insurance provider.)
"Insurance Proceeds" shall mean any amounts received by the Servicer,
------------------
the Originator or the Transferor from the applicable insurance providers
pursuant to any insurance policies covering any Obligor with respect to
Receivables under such Obligor's Account.
"Interest Accrual Period" shall mean, with respect to any Series, the
-----------------------
period during which interest accrues on such Series as specified in the
related Supplement.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
---------------------
as amended from time to time.
"Invested Amount" shall have, with respect to any Series, the meaning
---------------
specified in the applicable Supplement.
"Invested Percentage" shall have, with respect to any Series, the
-------------------
meaning specified in the applicable Supplement.
"Investor Certificate" shall mean any one of the certificates
--------------------
(including, without limitation, the Book-Entry Certificates or the Registered
Certificates) executed by the Transferor and authenticated by or on behalf
of the Trustee, substantially in the form attached to the applicable
Supplement.
"Investor Certificateholder" shall mean the holder of record of an
--------------------------
Investor Certificate.
"Investor Default Amount" shall have, with respect to any Series, the
-----------------------
meaning specified in the applicable Supplement.
"Investor Exchange" shall have the meaning specified in Section 6.09.
-----------------
"Issuance Date" shall mean, with respect to any Series, the date of
-------------
initial issuance of such Series as specified in the related Supplement.
"Late Fees" shall have the meaning specified in the Credit Card
---------
Agreement applicable to each Account for late fees or similar terms.
"Letter of Credit Bank" shall mean The Sumitomo Bank, Limited, acting
---------------------
through its New York Branch, and the issuer of any substitute Servicer Letter
of Credit delivered pursuant to Section 4.01A(c) or substitute Transferor
Letter of Credit delivered pursuant to Section 4.01B(c).
"Letter of Credit Reimbursement Agreement" shall mean the Letter of
----------------------------------------
Credit Reimbursement Agreement, dated as of December 2, 1992, between
Bridgestone/Firestone and the Letter of Credit Bank, as from time to time
amended, or any similar agreement between Bridgestone/Firestone and the
issuer of any substitute Servicer Letter of Credit delivered pursuant to
Section 4.01A(c) or Transferor Letter of Credit delivered pursuant to Section
4.01B(c).
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
----
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that any
-------- -------
assignment permitted by Section 7.02 shall not be deemed to constitute a
Lien; provided, further, however, that the Lien created by the Agreement
-------- ------- -------
shall not be deemed to constitute a Lien.
"Merchant Fees" shall mean all fees paid to the Originator in its
-------------
capacity as credit card issuer, by Retail Establishments in connection with
the Credit Card Program or any Alternative Program which are transferred by
the Originator to the Transferor pursuant to the Merchant Fee Transfer
Agreement.
"Merchant Fee Transfer Agreement" shall mean the Merchant Fee Transfer
-------------------------------
Agreement, dated __________, 1996, among the Transferor, the Originator and
Bridgestone/Firestone, as the same may be supplemented, modified, amended or
amended and restated from time to time.
"Minimum Transferor Interest Percentage" shall mean, with respect to any
--------------------------------------
Collection Period with respect to any Series, the percentage specified in the
Supplement in respect of such Series of Certificates.
"Monthly Periodic Rate" shall mean the APR divided by 12.
---------------------
"Monthly Servicing Fee" shall have, with respect to each Series, the
---------------------
meaning specified in Section 3.02.
"Monthly Servicer's Certificate" shall have the meaning set forth in
------------------------------
Section 3.04(b).
"Moody's" shall mean Moody's Investors Service, Inc.
-------
"Net Losses" shall mean, with respect to any Collection Period, the
----------
annualized percentage equivalent of a fraction the numerator of which is the
Defaulted Amount less the amount of Recoveries with respect to such
Collection Period and the denominator of which is the Aggregate Receivables
as of the end of the preceding Collection Period.
"New Discount Option Receivables" shall mean, on any Date of Processing
-------------------------------
on and after the date on which the Transferor's exercise of its discount
option pursuant to Section 2.11 takes effect, the product of the amount of
any Aggregate Receivables created on such Date of Processing (without
reducing the amount of Aggregate Receivables by the amount of Receivables
attributed to finance charges which are Discount Option Receivables) and the
Discount Percentage.
"Obligor" shall mean, with respect to any Account, the Person or Persons
-------
obligated to make payments with respect to such Account, including any
guarantor thereof, but excluding any merchants.
"Officers' Certificate" shall mean, unless otherwise specified in the
---------------------
Agreement, a certificate signed by a Chairman of the Board, President or any
Vice President and a Treasurer, Secretary, Assistant Secretary, or Assistant
Treasurer or, in the case of a Successor Servicer, a certificate signed by
a Vice President and the financial controller (or an officer holding an
office with equivalent or more senior responsibilities) of such Successor
Servicer, and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
------------------
be counsel of the Transferor and who shall be reasonably acceptable to the
Trustee; provided, however, that any opinion of counsel regarding federal
-------- -------
income tax consequences shall be rendered by independent outside counsel.
"Originator" shall mean Credit First (successor to Society National
----------
Bank) or any successor originator of Accounts as herein provided.
"Participation Agreement" shall mean the Participation Agreement by and
-----------------------
between Bridgestone/Firestone and the Transferor, as the same may be
supplemented, modified, amended or amended and restated from time to time.
"Paying Agent" shall mean any paying agent appointed pursuant to Section
------------
6.06 and shall initially be the Trustee.
"Payoff Date" shall have the meaning specified in Section 4.01A(e).
-----------
"Periodic Finance Charges" shall have the meaning specified in the
------------------------
Credit Card Agreement applicable to each Account for finance charges (based
on a periodic rate) or similar term.
"Permitted Investments" shall mean (a) negotiable instruments or
---------------------
securities represented by instruments in bearer or registered form which
evidence (i) obligations fully guaranteed as to timely payment by the United
States of America; (ii) certificates of deposit of, or bankers' acceptances
issued by, any depository institution or trust company incorporated or
licensed under the laws of the United States of America or any state thereof
and subject to supervision and examination by federal or state banking or
depository institution authorities (which may be the Trustee or the
Originator or an Affiliate of either); provided, however, that at the time
-------- -------
of the Trust's investment or reinvestment or contractual commitment to invest
or reinvest therein, such depository institution or trust company shall have
the highest short-term rating granted by each Standard & Poor's and Moody's;
(iii) commercial paper having, at the time of the Trust's investment or
reinvestment or contractual commitment to invest or reinvest therein, a
rating from each Standard & Poor's and Moody's in the highest short-term
category granted by Standard & Poor's or Moody's, as applicable; (iv)
investments in money market funds having the highest long-term rating granted
by each Standard & Poor's and Moody's and maintained by commercial banks
having unimpaired capital and unimpaired surplus of at least $500,000,000;
(v) eurodollar time deposits having the highest long-term rating granted by
each Standard & Poor's and Moody's; (vi) repurchase agreements involving any
of the Permitted Investments described in clauses (i) through (iv) above so
long as the other party to the repurchase agreement has the rating described
in clause (iii) above; and (vii) any other investment, if each Standard &
Poor's and Moody's confirms in writing that such investment will not
adversely affect any ratings with respect to any Series of Investor
Certificates, and (b) demand deposits or time deposits in the name of the
Trust or the Trustee in any depository institution or trust company referred
to in (a)(ii) above. For the purpose of this definition, "highest short-term
rating" when used in respect of Standard Poor's shall mean "A-1+".
"Person" shall mean any legal person, including any individual,
------
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Pool Factor" shall mean, unless any Series is issued in more than one
-----------
Class as stated in any related Supplement, with respect to any Series and any
Record Date, a number (carried out to eight decimal places) representing the
quotient of (i) the applicable Invested Amount as of such Record Date
(determined after taking into account any reduction in the applicable
Invested Amount which will occur on the following Distribution Date) and (ii)
the applicable Initial Invested Amount.
"Portfolio Yield" shall mean, with respect to any Collection Period, the
---------------
annualized percentage equivalent of a fraction the numerator of which is the
amount of Finance Charge Collections for such Collection Period, calculated
on an accrual basis after subtracting the Defaulted Amount, and the
denominator of which is the Aggregate Receivables as of the end of the
preceding Collection Period.
"Principal Collections" shall mean that portion of Collections not
---------------------
deemed to be Finance Charge Collections.
"Principal Shortfalls" shall mean, with respect to any Collection Period
--------------------
and any outstanding Series, the amount which the related Supplement specifies
as the "Principal Shortfall" for such Business Day.
"Principal Terms" shall have the meaning, with respect to any Series
---------------
issued pursuant to an Exchange, specified in Section 6.09(c).
"Purchase and Sale Agreement" shall mean the Restated Purchase and Sale
---------------------------
Agreement by and among the Originator, Bridgestone/Firestone and the
Transferor, dated as of ________________, as the same has been and may be
further supplemented, modified, amended or amended and restated from time to
time.
"Rapid Amortization Period" shall mean, with respect to any Series of
-------------------------
Certificates, the period specified in the related Supplement.
"Rating Agency" shall mean, with respect to each Series, the rating
-------------
agency or rating agencies that rated such Series, including Fitch, Moody's
and Standard & Poor's.
"Reassignment" shall have the meaning specified in Section 2.10.
------------
"Receivables" shall mean all amounts transferred to the Transferor,
-----------
payable by Obligors on any Account, from time to time as shown on the
Servicer's records, including, without limitation, amounts payable for
purchases of goods or services and, if applicable, amounts payable for
Periodic Finance Charges, Late Fees, Returned Check Fees, returned
convenience check fees, cash advance fees and credit related insurance.
"Record Date" shall mean with respect to any Distribution Date, unless
-----------
otherwise provided in any Supplement for the related Series, the fifteenth
day of the preceding calendar month.
"Recoveries" shall mean all amounts or payments received by the Servicer
----------
with respect to Receivables which have previously become Defaulted
Receivables net of reasonable expenses.
"Registered Certificates" shall have the meaning specified in Section
-----------------------
6.01.
"REMARC Purchase Agreement" shall mean each purchase agreement with
-------------------------
respect to the Series 1992-B Class A REMARCs, as such agreements may be
amended or supplemented from time to time.
"Removal Date" shall have the meaning specified in Section 2.10.
------------
"Removal Notice Date" shall mean, with respect to any Removed Account,
-------------------
the last day in the month preceding the month in which the Removal Date for
such Removed Account occurs.
"Removed Accounts" shall have the meaning specified in Section 2.10.
----------------
"Repurchase Terms" shall mean, with respect to any Series issued
----------------
pursuant to an Exchange, the terms and conditions under which the Transferor
may repurchase such Series pursuant to Section 12.02 as modified by the
related Supplement.
"Requirements of Law" for any Person shall mean the certificate of
-------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, in each case applicable to or binding
upon such Person or to which such Person is subject, whether Federal, state
or local (including, without limitation, usury laws, the Federal Truth in
Lending Act and Regulation Z and Regulation B of the Board of Governors of
the Federal Reserve System).
"Responsible Officer" when used with respect to the Trustee shall mean
-------------------
any officer within the Corporate Trust Office (or any successor group of the
Trustee) including any vice president, assistant vice president, assistant
secretary or any other officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Retail Establishments" shall mean Bridgestone/Firestone stores and
---------------------
dealers and marketers of Bridgestone/Firestone products and certain other
dealers and marketers of automotive products and services, which are
unaffiliated with Bridgestone/Firestone.
"Returned Check Fee" shall have the meaning specified in the Credit Card
------------------
Agreement applicable to each Account for returned check fees or similar
terms.
"Revolving Period" shall mean, with respect to any Series, the period
----------------
specified in the related Supplement.
"Series" shall mean any series of Investor Certificates.
------
"Series Termination Date" shall mean, with respect to any Series, the
-----------------------
date stated in the related Supplement.
"Service Transfer" shall have the meaning specified in Section 10.01.
----------------
"Servicer" shall initially mean Bridgestone/Firestone and thereafter any
--------
Person appointed as successor as herein provided to service the Receivables.
"Servicer Default" shall have the meaning specified in Section 10.01.
----------------
"Servicer Letter of Credit" shall mean a letter of credit for the
-------------------------
benefit of the Trustee issued by the Letter of Credit Bank in substantially
the form of Exhibit D hereto.
---------
"Servicing Fee" shall have the meaning specified in Section 3.02.
-------------
"Servicing Fee Percentage" shall mean, with respect to any Series, the
------------------------
percentage specified in the related Supplement.
"Servicing Officer" shall mean any officer of the Servicer involved in,
-----------------
or responsible for, the administration and servicing of the Receivables whose
name appears on a list of servicing officers furnished to the Trustee by the
Servicer, as such list may from time to time be amended.
("Shared Excess Finance Charge Collections" shall mean, with respect to
----------------------------------------
any Determination Date, the aggregate amount of Excess Finance Charge
Collections for all outstanding Series that the related Supplements specify
are to be treated as "Shared Excess Finance Charge Collections" available to
be allocated to other Series for the related Collection Period.)
"Shared Principal Collections" shall mean, with respect to any
----------------------------
Determination Date, the aggregate amount of Principal Collections for all
outstanding Series that the related Supplements specify are to be treated as
"Shared Principal Collections" available to be allocated to other Series for
the related Collection Period.
"Special Drawing" shall mean a drawing under the Servicer Letter of
---------------
Credit or Transferor Letter of Credit, as the case may be, made pursuant to
Section 4.01A or 4.01B hereof.
"Standard & Poor's" shall mean Standard & Poor's Corporation.
-----------------
"Stated Amount" shall have, with respect to the Servicer Letter of
-------------
Credit, the meaning specified in the Servicer Letter of Credit and, with
respect to the Transferor Letter of Credit, the meaning specified in the
Transferor Letter of Credit.
"Successor Servicer" shall have the meaning specified in Section 10.02.
------------------
"Supplement" shall mean, with respect to any Series, a supplement to
----------
this Agreement complying with the terms of Section 6.09, executed in
conjunction with any issuance of any Series.
"Termination Date" shall have the meaning specified in the Servicer
----------------
Letter of Credit.
"Termination Notice" shall have, with respect to any Series, the meaning
------------------
specified in Section 10.01.
"Transfer Agent and Registrar" shall have the meaning specified in
----------------------------
Section 6.03 and shall initially be the Trustee.
"Transfer Date" shall mean, with respect to any Distribution Date, the
-------------
Business Day next preceding such Distribution Date.
"Transfer Deposit Amount" shall mean, with respect to any Receivable for
-----------------------
any Distribution Date, an amount equal to the amount of the Receivable at the
end of the Collection Period for such Distribution Date, plus finance charges
at the APR on the balance for such Receivable from the last date billed
through the end of such Collection Period to the extent not included in the
amount of the Receivable.
"Transferor" shall mean Firestone Retail Credit Corporation, a
----------
corporation organized and existing under the laws of the Commonwealth of
Massachusetts.
"Transferor Amount" shall mean, with respect to any day, Aggregate
-----------------
Receivables for such day minus the Aggregate Invested Amount (less the
-----
principal amount on deposit in any principal funding accounts) and the B/F
Amount.
"Transferor Escrow Account" shall have the meaning specified in Section
-------------------------
4.01B(d).
"Transferor Exchange" shall have the meaning specified in Section 6.09.
-------------------
"Transferor Interest" shall have the meaning specified in Section
-------------------
4.01(a).
"Transferor Letter of Credit" shall mean a letter of credit for the
---------------------------
benefit of the Trustee issued by the Letter of Credit Bank in substantially
the form of Exhibit I hereto.
---------
"Transferor Percentage" shall mean when used with respect to Finance
---------------------
Charge Collections, Principal Collections and the amount of Defaulted
Receivables, 100% minus the sum of the applicable Invested Percentages with
-----
respect to all Series then issued and outstanding and the B/F Percentage.
"Transferor Retained Certificates" shall mean Investor Certificates of
--------------------------------
any Series which the Transferor is required to retain pursuant to the terms
of any Supplement.
"Transferred Account" shall mean a credit card account (including an
-------------------
account arising from an Alternative Program) with respect to which a new
credit card account number has been issued by the Servicer because (i) a
credit card was lost or stolen, (ii) separate accounts were merged into a
single joint account, (iii) multiple accounts for a single individual were
merged into a single individual account, or (iv) a joint account vas
converted to an individual account as a result of divorce or the death of a
spouse, each under circumstances not requiring standard application and
credit evaluation procedures under the Credit Card Guidelines and which can
be traced or identified by reference to or by way of the lists delivered to
the Trustee in disc or tape format pursuant to Sections 2.01 and 2.05, as an
account into which an Account has been transferred.
"Trust" shall mean the trust created by this Agreement.
-----
"Trust Assets" shall have the meaning specified in Section 2.01.
------------
"Trustee" shall mean The Fuji Bank and Trust Company, a banking
-------
corporation organized and existing under the laws of the State of New York,
and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor Trustee at the time serving as successor Trustee hereunder.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
---
time, as in effect in any specified or applicable jurisdiction.
"Unallocated Principal Collections" shall have the meaning described in
---------------------------------
Section ( ) 4.01(f).
"Undivided Interest" shall mean the undivided interest of any
------------------
Certificateholder in the Trust.
"Vice President" when used with respect to the Originator,
--------------
Bridgestone/Firestone or the Transferor shall mean any vice president whether
or not designated by a word or number of words added before or after the
title "vice president."
Section 1.02 Other Definitional Provisions.
-----------------------------
(a) All terms defined in any Supplement or this Agreement shall
have the defined meanings when used in any certificate or other document made
or delivered pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in
Section 1.01 of the Agreement, and accounting terms partly defined in Section
1.01 of the Agreement to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To
the extent that the definitions of accounting terms herein are inconsistent
with the meanings of such terms under generally accepted accounting
principles, the definitions contained herein shall control.
(c) The agreements, representations and warranties of the
Transferor and the Servicer in this Agreement shall be deemed to be the
agreements, representations and warranties of the Transferor and the
Servicer, respectively, solely in each such capacity for so long as either
of them acts in each such capacity under this Agreement.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to any Supplement or
this Agreement as a whole and not to any particular provision of such
Supplement or this Agreement, as the case may be; and Article, Section,
Subsection, Schedule and Exhibit references contained in this Agreement or
any Supplement are references to Articles, Sections, Subsections, Schedules
and Exhibits in or to this Agreement or any Supplement unless otherwise
specified.
(END OF ARTICLE I)
ARTICLE II
CONVEYANCE; ISSUANCE OF CERTIFICATES
Section 2.01 Conveyance. By execution of this Agreement, the
----------
Transferor does hereby transfer, assign, set over and otherwise convey to the
Trust for the benefit of the Certificateholders, without recourse (except as
specifically provided herein), all of its right, title and interest in, to
and under the Receivables now existing and hereafter created in any Eligible
Accounts or any Eligible Receivables hereafter created in any Eligible
Additional Accounts whether now existing or hereafter created on or after the
Cut-off Date, all amounts due or to become due on or after the Cut-Off Date
and all amounts received with respect thereto, including all Recoveries
relating thereto (net of related expenses), Insurance Proceeds (net of
related expenses), all of its right, title and interest in, to and under the
Participation Agreement, the Purchase and Sale Agreement and any Insurance
Premiums paid under any Insurance Agreements and all proceeds of any
Insurance Agreement. Such property, together with the Collection Account and
all amounts on deposit in or credited to the Collection Account (excluding
any investment earnings on any such deposited amount) and any other account
or accounts maintained for the benefit of the Certificateholders and
available under any Enhancement to be provided by an Enhancement Provider for
any Series for payment to Certificateholders and all proceeds (as defined in
Section 9-306 of the UCC as in effect in the State of New York and the
Commonwealth of Massachusetts) of any of the foregoing shall constitute the
assets of the Trust (the "Trust Assets"). The foregoing transfer,
------------
assignment, set-over and conveyance does not constitute and is not intended
to result in a creation or an assumption by the Trust, the Trustee or any
Investor Certificateholder of any obligation of the Transferor or the
Servicer or any other Person in connection with the Accounts, the Receivables
or under any agreement or instrument relating thereto, including, without
limitation, any obligation to any merchants, Obligors or insurers.
In connection with such conveyance, the Transferor agrees to record and
file, at its own expense, any financing statements (and continuation
statements with respect to such financing statements when applicable) with
respect to the Receivables now existing and hereafter created for the
transfer of accounts meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect the transfer and
assignment of the Receivables to the Trust, and to deliver a file-stamped
copy of such financing statements or other evidence of such filings to the
Trustee on or prior to the date of issuance of the Certificates. The Trustee
shall be under no obligation whatsoever to file such financing statements or
make any other filings under the UCC in connection with such conveyance.
The Trustee shall be entitled to rely upon the filings made by the Transferor.
In connection with such conveyance, the Transferor further agrees, at
its own expense, on or prior to the Initial Closing Date (a) to indicate on
its books and records that all Receivables created in connection with the
Accounts have been conveyed to the Trust pursuant to this Agreement for the
benefit of the Certificateholders and (b) to deliver to the Trustee a true
and complete list of all such Accounts specifying for each such Account, as
of the Cut-Off Date its account number. Such list shall be marked as
Schedule 1 to this Agreement and is hereby incorporated into and made a part
- - ----------
of this Agreement. The Transferor shall subsequently deliver to the Trustee
on each Transfer Date a true and complete listing of all new Accounts and
account numbers as of the last day of the Collection Period ending
immediately prior to such date. Each such list shall be added as an addendum
to this Agreement and is hereby incorporated by reference.
Section 2.02 Acceptance by Trustee.
---------------------
(a) The Trustee hereby acknowledges its acceptance on behalf of
the Trust of all right, title and interest to the Trust Assets, now existing
and hereafter created, conveyed to the Trust pursuant to Section 2.01, and
declares that it shall maintain such right, title and interest, upon the
trust herein set forth, for the benefit of all Certificateholders. The
Trustee further acknowledges that, prior to or simultaneously with the
execution and delivery of this Agreement, the Transferor delivered to the
Trustee the list described in the last paragraph of Section 2.01.
(b) The Trustee hereby agrees not to disclose to any Person any
of the account numbers or other information, if any, contained in the lists
marked as Schedule 1 delivered to the Trustee by the Transferor pursuant to
----------
Section 2.01 or Section 2.05, except as may be required by law, as is
required in connection with the performance of its duties hereunder or in
enforcing the rights of the Certificateholders or to a Successor Servicer
appointed pursuant to Section 10.02. The Trustee agrees to take such
measures as shall be reasonably requested by the Transferor to protect and
maintain the security and confidentiality of such information, and, in
connection therewith, shall allow the Transferor to inspect the Trustee's
security and confidentiality arrangements from time to time during normal
business hours. The Trustee shall make reasonable efforts to provide the
Transferor with written notice five days prior to any disclosure pursuant to
this Section 2.02(b).
(c) The Trustee shall have no power to create, assume or incur
indebtedness, beneficial interests or other liabilities in the name of the
Trust other than as contemplated in this Agreement.
(d) Without prejudice to Section 2.01, the parties hereto intend
that this Agreement, which constitutes a security agreement under the UCC,
is a grant of a "security interest" (as defined in the UCC as in effect in
the State of New York) in the Receivables and the proceeds thereof to the
Trust.
Section 2.03 Representations and Warranties of the Transferor Relating
---------------------------------------------------------
to the Transferor. The Transferor hereby represents and warrants to the
- - -----------------
Trustee, on behalf of the Trust, with respect to any Series, as of its
Closing Date, unless otherwise stated in such Supplement, that:
(a) Organization and Good Standing. The Transferor is a
------------------------------
corporation duly organized and validly existing in good standing under the
laws of the Commonwealth of Massachusetts, and has the corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and the transactions contemplated under this Agreement and to
execute and deliver to the Trustee pursuant hereto the Certificates and, in
all material respects, to own its property and conduct its business as such
properties are presently owned and such business is presently conducted.
(b) Due Qualification. The Transferor is duly qualified to do
-----------------
business and is in good standing as a foreign corporation (or is exempt from
such requirements), and has obtained all necessary licenses and approvals
with respect to the Transferor, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals could reasonably be expected
to render any Credit Card Agreement relating to an Account or any Receivable
unenforceable by the Transferor or the Trust or could reasonably be expected
to have a material adverse effect on the Certificateholders; provided that
--------
no representation or warranty is made with respect to any qualifications,
licenses or approvals which the Trustee would have to obtain to do business
in any state in which the Trustee seeks to enforce any Account or any
Receivable.
(c) Due Authorization. The execution and delivery of the Purchase
-----------------
and Sale Agreement, the Participation Agreement and this Agreement and the
execution and delivery to the Trustee of the Certificates by the Transferor
and the consummation of the transactions provided for in this Agreement have
been duly authorized by the Transferor by all necessary corporate action on
the part of the Transferor.
(d) Binding Obligation. The Purchase and Sale Agreement, the
------------------
Participation Agreement and this Agreement each constitutes a legal, valid
and binding obligation of the Transferor, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in equity).
(e) No Violation. The execution and delivery of the Purchase and
------------
Sale Agreement, the Participation Agreement and this Agreement and the
Certificates, the performance of the transactions contemplated by the
Purchase and Sale Agreement, the Participation Agreement and this Agreement
and the fulfillment of the terms hereof will not conflict with, violate,
result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material
default under, any Requirement of Law applicable to the Transferor or any
indenture, contract, agreement, mortgage, deed of trust, or other instrument
to which the Transferor is a party or by which it or its properties is bound.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the best knowledge of the Transferor, threatened against the
Transferor, before any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality (i) asserting the invalidity
of the Purchase and Sale Agreement, this Agreement, the Participation
Agreement or the Certificates, (ii) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated by
the Purchase and Sale Agreement, this Agreement, the Participation Agreement
or the Certificates, (iii) seeking any determination or ruling that, in the
reasonable judgment of the Transferor, could materially and adversely affect
the performance by the Transferor of its obligations under the Purchase and
Sale Agreement, the Participation Agreement or this Agreement (other than a
ruling or determination with respect to which there is no reasonable
likelihood of such an effect), (iv) seeking any determination or ruling that
could materially and adversely affect the validity or enforceability of this
Agreement, the Participation Agreement or the Certificates (other than a
ruling or determination with respect to which there is no reasonable
likelihood of such an effect), or (v) seeking to affect adversely the income
tax attributes of the Trust.
(g) All Consents Required. All approvals, authorizations,
---------------------
consents, orders or other actions of any Person or of any governmental body
or official required in connection with the execution and delivery by the
Transferor of the Purchase and Sale Agreement, the Participation Agreement,
this Agreement and the Certificates, the performance by the Transferor of the
transactions contemplated by the Purchase and Sale Agreement, this Agreement
and the fulfillment by the Transferor of the terms hereof have been obtained.
The representations and warranties set forth in this Section 2.03 shall
survive the transfer and assignment of the Trust Assets to the Trust, and the
termination of the rights and obligations of the Servicer pursuant to Section
10.01. Upon discovery by the Transferor, the Servicer or the Trustee of a
breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the other
parties.
Section 2.04 Representations and Warranties Relating to the Agreement
--------------------------------------------------------
and the Receivables.
- - -------------------
(a) Representations and Warranties. The Transferor and
------------------------------
Bridgestone/Firestone hereby, jointly and severally represent and warrant to
the Trustee, on behalf of the Trust, with respect to any Series, as of the
date of its related Supplement and Closing Date, unless otherwise stated in
such Supplement, and, with respect to any Series and matters involving
Additional Accounts, as of the related Addition Date that:
(i) the Purchase and Sale Agreement, the Participation
Agreement, this Agreement and, in the case of Additional Accounts, the
related Assignment, each constitutes legal, valid and binding obligations of
the Transferor enforceable against the Transferor in accordance with their
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);
(ii) as of the Initial Closing Date, Schedule 1 to this
----------
Agreement is and, as of the applicable Addition Date with respect to
Additional Accounts added pursuant to Sections 2.05(a) and 2.05(b), will be,
an accurate and complete listing of all the Accounts in all material respects
as of the Cut-Off Date or the applicable Addition Notice Date, as the case
may be, and the information contained therein with respect to the identity
of such Accounts and the Receivables existing thereunder is and will be true
and correct in all material respects as of such applicable Cut-Off Date or
Addition Notice Date; as of the ______________, the amount of Aggregate
Receivables was $____________; no selection procedures believed by the
Transferor or Bridgestone/Firestone to be adverse to the interests of
Certificateholders has or shall have been used in selecting the Accounts;
(iii) each Receivable existing on the Initial Closing Date
or thereafter arising or, in the case of Additional Accounts, on the Addition
Date and thereafter arising, has been conveyed to the Trust free and clear
of any Lien other than Liens permitted by Section 2.08(b);
(iv) with respect to each Receivable existing on the Initial
Closing Date or, in the case of Additional Accounts, on the Addition Date,
all consents, licenses, approvals or authorizations of or registrations or
declarations with any Governmental Authority required to be obtained,
effected or given by the Transferor in connection with the conveyance of such
Receivable to the Trust have been duly obtained, effected or given and are
in full force and effect;
(v) this Agreement and, in the case of Additional Accounts,
the related Assignment, either constitutes a valid transfer and assignment
to the Trust of all right, title and interest of the Transferor in the
Receivables and the proceeds thereof, or, if this Agreement and, in the case
of Additional Accounts, the related Assignment, does not constitute a valid
transfer and assignment of such property of the Transferor, it constitutes
a grant of a "security interest" (as defined in the UCC as in effect in the
State of New York and the Commonwealth of Massachusetts) in such property of
the Transferor to the Trust, which, in the case of existing Receivables and
the proceeds thereof, is enforceable upon execution and delivery of this
Agreement, and which will be enforceable with respect to such Receivables
hereafter created and the proceeds thereof upon such creation and which will
be enforceable with respect to Additional Accounts upon execution and
delivery of the related Assignment. Upon the filing of any financing
statements described in Section 2.01 and, in the case of the Receivables
hereafter created or transferred to the Trust and the proceeds thereof, upon
the creation or transfer thereof, the Trust shall have a first priority
perfected security or ownership interest in such property of the Transferor
except for Liens permitted under Section 2.08(b); provided, however, that
-------- -------
such security interest in proceeds shall remain perfected after 10 days from
their receipt by the Transferor only to the extent that such proceeds are
identifiable cash proceeds or come into the Trust's possession within the
applicable 10-day period; and provided, further, that the Transferor makes no
-------- -------
representation or warranty with respect to the effect of Section 9-306(4) of
the UCC on the rights of the Trust to proceeds held by the Transferor at the
time proceedings under any Debtor Relief Laws are instituted by or against the
Transferor. Except as otherwise provided in this Agreement, neither the
Transferor nor any Person claiming through or under the Transferor has any
claim to or interest in the Collection Account; and
(vi) as of the (Initial Closing Date), each Receivable
existing on such date is (or if such Receivable comes into existence in the
future, will be) an Eligible Receivable in all material respects and, in the
case of Additional Accounts, as of the Addition Date, each Receivable
transferred to the Trust with respect to such Additional Account is (or if
such Receivable comes into existence in the future, will be) an Eligible
Receivable.
(b) Notice of Breach. The representations and warranties set
----------------
forth in this Section 2.04 shall survive the transfer and assignment of the
Trust Assets to the Trust. Upon discovery by the Transferor,
Bridgestone/Firestone, the Servicer or the Trustee of a breach of any of the
representations and warranties set forth in this Section 2.04, the party
discovering such breach shall give prompt written notice to the others.
Section 2.05 Addition of Accounts.
--------------------
(a) The Transferor may, but shall not be obligated to, designate
from time to time additional credit card accounts with respect to receivables
arising from Alternative Programs ("Additional Accounts") to be included as
Accounts and convey the Additional Receivables arising from such Additional
Accounts to the Trust.
(b) The Transferor shall be permitted to designate and assign
Receivables from Additional Accounts only upon satisfaction of the following
conditions:
(i) The Transferor shall designate only Eligible Additional
Accounts;
(ii) On or prior to each Addition Date in respect of
Additional Accounts, the Transferor shall have executed and delivered to the
Trustee a written assignment (including an acceptance by the Trustee for the
benefit of the Certificateholders) in substantially the form of Exhibit B
---------
(the "Assignment") and a true and complete list identifying all such
----------
Additional Accounts specifying for each such Account, as of the Addition
Notice Date, its account number. Such list shall be as of the Addition Date
with respect to such Assignment and shall be incorporated into and made part
of such Assignment and this Agreement; in the event that the Servicer is then
required to make daily deposits into the Collection Account pursuant to
Section 4.01(h), the Transferor on or prior to each Addition Date will
deposit into the Collection Account an amount equal to the Collections which
have been processed on the Additional Accounts from their applicable Addition
Notice Date through the Business Day preceding such Addition Date;
(iii) The Transferor represents and warrants (x) as of
each Addition Date with respect to Additional Accounts added pursuant to
Sections 2.05(a) and 2.05(b) that (a) the list of Additional Accounts, as of
the Addition Notice Date, complies in all material respects with the
requirements of paragraph (ii) above and (b) no selection procedure was
utilized by the Transferor in selecting the Eligible Additional Accounts
which is adverse to the interests of the Investor Certificateholders; and (y)
as of the Addition Notice Date and as of the Addition Date, the Transferor
is not insolvent; and
(iv) On or before each Addition Date, the Transferor shall
deliver a certificate of a Vice President or more senior officer confirming
the items set forth in paragraphs (ii) and (iii) above. The Trustee may
conclusively rely on such certificate, shall have no duty to make inquiries
with regard to matters set forth therein and shall incur no liability in so
relying.
Upon satisfaction of the above conditions, the Transferor shall execute
and deliver the Assignment to the Trustee, and the Additional Receivables
from the Additional Accounts shall be conveyed to the Trust as provided in
the Assignment.
(c) In lieu of satisfying the conditions set forth in Section
2.05(b) above, the Transferor may assign all accounts relating to an
Alternative Program and all Additional Receivables relating to such accounts
upon receipt by the Trustee of written confirmation from each Moody's & S&P
that such rating agency will not reduce or withdraw its rating on any
outstanding Series as a result of including all Accounts relating to such
designated Alternative Program and all Receivables relating to such
Alternative Program in the Trust.
Upon receipt of such notice, all existing and future accounts
relating to such Alternative Program are deemed to be Eligible Accounts and
all existing and future receivables arising under such newly designated
Eligible Accounts may be sold into the Trust as Eligible Receivables and will
no longer be subject to the Ten Percent Maximum.
Section 2.06 Transfer of Ineligible Receivables.
----------------------------------
(a) In the event of a breach with respect to a Receivable of any
representations and warranties set forth in Section 2.04(a)(iii) or in the
event that a Receivable is not an Eligible Receivable as a result of the
failure to satisfy the conditions set forth in clause (d) of the definition
of Eligible Receivable:
(i) if the Lien of the subject Receivable is not of the type
otherwise described in clause (ii) below, and as a result of such breach or
event such Receivable becomes a Defaulted Receivable or the Trust's rights
in, to or under such Receivable or its proceeds are impaired or the proceeds
of such Receivable are not available for any reason to the Trust free and
clear of any Lien, then each such Receivable shall be automatically removed
from the Trust on the terms and conditions set forth below; or
(ii) if such Lien meets any of the following conditions: (1)
such Lien arises in favor of the United States of America or any state or any
agency or instrumentality thereof and involves taxes or liens arising under
Title IV of ERISA or (2) such Lien has been consented to by the Transferor,
then in the case of clause (1) upon the earlier to occur of the discovery of
such breach or event by the Transferor or the Servicer or receipt by the
Transferor and the Servicer of written notice of such breach or event given
by the Trustee or in the case of clause (2), immediately upon the occurrence
of such breach, each such Receivable shall be automatically removed from the
Trust on the terms and conditions set forth below.
(b) In the event of a breach of any representations and warranties
set forth in Section 2.04(a)(iv) or 2.04(a)(vi) or in the event any
Receivable is not at any time an Eligible Receivable for any reason other
than the failure to satisfy the conditions set forth in clause (d) of the
definition of Eligible Receivable then, upon the expiration of 60 days from
the earlier to occur of the discovery of any such event by the Transferor or
Bridgestone/Firestone, or receipt by the Transferor or Bridgestone/Firestone
of written notice of any such event given by the Trustee, the Servicer or the
Originator each such Receivable shall be removed from the Trust on the terms
and conditions set forth below; provided, however, that no such removal shall
-------- -------
be required to be made with respect to a Receivable which is not an Eligible
Receivable to be removed pursuant to this sentence if the event giving rise
to the obligation to remove such Receivable from the Trust and any material
adverse effect on the interests of Investor Certificateholders in such
Receivable shall be cured by the Servicer.
(c) When required with respect to a Receivable (an "Ineligible
----------
Receivable") by the provisions of Section 2.06(a) or 2.06(b), such Receivable
- - ----------
shall be automatically removed from the Trust by deducting the amount of each
such Ineligible Receivable from the amount of Receivables in the Trust, and
the Transferor shall immediately make a deposit in the Collection Account in
immediately available funds in an amount equal to the Transfer Deposit
Amount. Such deposit shall be considered a payment in full of the Ineligible
Receivable and shall be applied as a Finance Charge Collection or Principal
Collection, as applicable, in accordance with Article IV. On and after the
date of such removal, each Ineligible Receivable so removed shall not be
included in the calculation of any Invested Percentage, the Transferor
Percentage or the Transferor Amount. In the event that the exclusion of an
Ineligible Receivable from the calculation of the Transferor Amount would
cause the Transferor Amount to be a negative number or would otherwise not
be permitted by law, such Ineligible Receivable shall not be included in the
calculation of the B/F Amount. In the event that such exclusion would cause
the B/F Amount to be a negative number, such Ineligible Receivable shall not
be removed from the Trust. Upon each removal of an Ineligible Receivable
from the Trust, the Trust shall automatically and without further action be
deemed to transfer, assign, set-over and otherwise convey to the Transferor,
without recourse, representation or warranty, all the right, title and
interest of the Trust in and to such Ineligible Receivable, all monies due
or to become due with respect thereto and all proceeds thereof, provided that
any Periodic Finance Charges relating to such Ineligible Receivable accrued
through the date of removal of such Ineligible Receivable and not otherwise
included in the Transfer Deposit Amount shall continue to be property of the
Trust. The Trustee shall execute such documents and instruments of transfer
or assignment and take such other actions as shall reasonably be requested
by the Transferor to effect the conveyance of such Ineligible Receivable
pursuant to this Section. In the event that on any day within 60 days of the
date on which the removal of an Ineligible Receivable from the Trust pursuant
to this Section is effected, the applicable representations and warranties
shall be true and correct in all material respects on such date, the
Transferor may, but shall not be required to, direct the Servicer to include
such Receivable in the Trust by adding such Receivable to the Receivables in
the Trust. Upon addition of a Receivable to the Trust pursuant to this
Section, the Transferor and Bridgestone/Firestone shall have been deemed to
have made the applicable representations and warranties in Section 2.04(a)
as of the date of such addition, as if the Receivable had been created on
such date, and shall execute all such necessary documents and instruments of
transfer or assignment and take such other actions as shall be necessary to
effect and perfect the reconveyance of such Receivable to the Trust. The
obligation of the Transferor set forth in this Section, or the automatic
removal of such Receivable from the Trust, as the case may be, shall
constitute the sole remedy respecting any breach of the representations and
warranties set forth in the above-referenced Sections with respect to such
Receivable available to Certificateholders or the Trustee on behalf of
Certificateholders.
Section 2.07 Purchase of Certificates. In the event of any breach of
------------------------
any of the representations and warranties set forth in Sections 2.03(d) and
(g) or 2.04(a)(i) through 2.04(a)(v) and such event could have a material
adverse effect on Investor Certificateholders, either the Trustee, or the
Holders of Investor Certificates evidencing Undivided Interests aggregating
more than 50% of the Invested Amount of all Series, by notice then given in
writing to the Transferor (and to the Trustee and the Servicer if given by
the Investor Certificateholders), may direct the Transferor to purchase all
Certificates of all Series outstanding within 60 days of such notice, or
within such longer period as may be specified in such notice and the
Transferor shall be obligated to make such purchase on a Distribution Date
occurring within such period on the terms and conditions set forth below;
provided, however, that no such purchase shall be required to be made if,
- - -------- -------
during such applicable period, the breached representations and warranties
contained shall be satisfied in all material respects and any material
adverse effect on the Investor Certificateholders caused thereby shall have
been cured. The Transferor shall deposit in the Collection Account on a
Transfer Date occurring within the applicable period an amount equal to the
purchase price (as described in the next succeeding sentence) for the
Investor Certificates. The purchase price for any such purchase will be
equal to the sum of (a) the Invested Amount of such Series at the end of the
day on the Record Date preceding the date such deposit is made, plus (b) an
----
amount equal to all monthly interest accrued but unpaid on the Investor
Certificates of such Series for the related Interest Accrual Period for the
Distribution Date on which the distribution of such deposit is scheduled to
be made pursuant to Section 12.03 and all prior Distribution Dates.
Notwithstanding anything to the contrary in this Agreement, the entire amount
of the purchase price deposited in the Collection Account shall be
distributed to the Investor Certificateholders of such Series on such
Distribution Date pursuant to Section 12.03. Payment of such purchase price
into the Collection Account in immediately available funds shall otherwise
be considered a prepayment of Receivables. If the Trustee or the Investor
Certificateholders give notice directing the Transferor to purchase the
Investor Certificates of any Series as provided above, the obligation of the
Transferor to purchase the Investor Certificates of such Series pursuant to
this Section 2.07 shall constitute the sole remedy respecting an event of the
type specified in the first sentence of this Section 2.07 available to such
Investor Certificateholders (or the Trustee on behalf of such Investor
Certificateholders).
Section 2.08 Covenants of the Transferor. The Transferor hereby
---------------------------
covenants that:
(a) Receivables Not to be Evidenced by Promissory Notes or Chattel
--------------------------------------------------------------
Paper. The Transferor will take no action to cause any Receivable to be
- - -----
evidenced by any instrument (as defined in the UCC as in effect in the States
of New York and Ohio or the Commonwealth of Massachusetts). Each Receivable
shall be payable pursuant to a contract which does not create a Lien on any
goods purchased thereunder.
(b) Security Interests. Except for the conveyances hereunder, the
------------------
Transferor will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on any Receivable,
whether now existing or hereafter created, or any interest therein, and the
Transferor shall defend the right, title and interest of the Trust in, to and
under the Receivables, whether now existing or hereafter created, against all
claims of third parties claiming through or under the Transferor; provided,
--------
however, that nothing in this Section 2.08(b) shall prevent or be deemed to
- - -------
prohibit the Transferor from suffering to exist upon any of the Receivables
any Liens for municipal or other local taxes if such taxes shall not at the
time be due and payable or if the Transferor shall currently be contesting
the validity thereof in good faith by appropriate proceedings and shall have
set aside on its books adequate reserves with respect thereto.
(c) Periodic Finance Charges. The Transferor hereby agrees that,
------------------------
except as otherwise required by any Requirement of Law applicable to the
Transferor or as is deemed by the Originator to be necessary in order for the
Originator to maintain its business on a competitive basis based on a good
faith assessment by the Originator of the nature of its competition in its
business, it shall not at any time reduce the APR of the Periodic Finance
Charges assessed on the Receivables and/or any fees charged on any of the
Accounts, if as a result of any such reduction, the Transferor's reasonable
expectation of the Portfolio Yield as of such date would be less than the
Base Rate of any Series.
(d) Credit Card Agreements and Guidelines. The Transferor shall
-------------------------------------
ensure compliance with the obligations under the Credit Card Agreements
relating to the Accounts and the Credit Card Guidelines except insofar as any
failure so to comply or perform would not materially and adversely affect the
rights of the Trust or the Certificateholders hereunder or under the
Certificates. Subject to compliance with all Requirements of Law the failure
to comply with which would have a material adverse effect on the Investor
Certificateholders, the Transferor shall not agree to any change in the terms
and provisions of the Credit Card Agreement or the Credit Card Guidelines in
any respect (including, without limitation, the calculation of the amount, or
the timing, of charge-offs and the periodic finance charge to be assessed
thereon) unless in the reasonable judgment of the Transferor (a) if it owns
a comparable segment of credit card accounts, then such change is made
applicable to such comparable segment which has characteristics the same as,
or substantially similar to, the Accounts which are the subject of such
change and which were existing on the Cut-Off Date and (b) if it does not own
such a comparable segment, it will not make any such change with the intent
to materially benefit the Transferor over the Investor Certificateholders.
(e) Account Allocations. In the event that the Transferor is
-------------------
unable for any reason to transfer Receivables to the Trust in accordance with
the provisions of this Agreement (including, without limitation, by reason
of the application of the provisions of Section 9.02, any Governmental
Authority having authority over the Transferor or any court of competent
jurisdiction ordering that the Transferor not transfer any additional
Receivables to the Trust) then, in any such event, (A) the Transferor agrees
(except as prohibited by any such order) to allocate and pay to the Trust,
after the date of such inability, all Principal Collections, and all amounts
which would have constituted Collections, including Finance Charge
Collections, with respect to such Receivables which would have been
Receivables allocable to Principal Collections but for the Transferor's
inability to transfer such Receivables (up to an aggregate amount equal to
the amount of Receivables in the Trust on such date), (B) the Transferor
agrees to have such amounts applied as Collections in accordance with Article
IV and (C) for only so long as the allocation and application of all
Collections and all amounts which would have constituted Collections are made
in accordance with clauses (A) and (B) above, Receivables allocable to
Principal Collections (and all amounts which would have constituted
Receivables allocable to Principal Collections but for the Transferor's
inability to transfer Receivables to the Trust) which are written off as
uncollectible in accordance with this Agreement shall be allocated in
accordance with the related Supplement and all amounts which would have
constituted Receivables allocable to Principal Collections but for the
Transferor's inability to transfer Receivables to the Trust shall be deemed
to be Receivables allocable to Principal Collections for purposes of
calculating the Invested Percentage thereunder. If the Transferor is unable
pursuant to any Requirement of Law to allocate Collections as described
above, the Transferor agrees that it shall, in any such event, allocate,
after the date that the Transferor becomes unable to do so, payments on each
Account with respect to the principal balance of such Account first to the
oldest principal balance of such Account and to have such payments applied as
Collections in accordance with Article IV. The parties hereto agree that
Receivables allocable to Finance Charge Collections, whenever created,
accrued in respect of Receivables which have been conveyed to the Trust
shall continue to be a part of the Trust notwithstanding any cessation
of the transfer of additional Receivables to the Trust and Collections with
respect thereto shall continue to be allocated and paid in accordance with
Article IV.
(f) Delivery of Collections. In the event that the Transferor
-----------------------
receives Collections, the Transferor agrees to pay the Servicer or any
Successor Servicer all payments received by the Transferor in respect of the
Receivables as soon as practicable after receipt thereof by the Transferor,
but in no event later than two Business Days after the receipt by the
Transferor thereof.
(g) Notice of Liens. The Transferor shall notify the Trustee
---------------
promptly after becoming aware of any Lien on any Receivable other than the
conveyances hereunder.
(h) Status of Accounts and Receivables. The Transferor hereby
----------------------------------
agrees to comply with all Requirements of Law applicable to the Transferor
the failure to comply with which would have a material adverse effect on the
Investor Certificateholders.
(i) Other Debt; Receivables. The Transferor will not create,
-----------------------
incur, assume or suffer to exist any indebtedness, whether current or funded,
or any other liability except (i) indebtedness of the Transferor representing
fees, expenses and indemnities payable pursuant to this Agreement, (ii)
indebtedness of the Transferor representing fees, indemnities or expenses
payable to J.H. Holdings, Inc., (iii) indebtedness of the Transferor
representing fees, indemnities or expenses payable to any remarketing agent,
the placement agent or the underwriter of any certificates issued by the
Trust from time to time, (iv) indebtedness of the Transferor representing
fees, indemnities or expenses payable pursuant to the REMARC Purchase
Agreement, (v) indebtedness of the Transferor representing fees, expenses or
other amounts payable to the Originator under the Purchase and Sale
Agreement, (vi) indebtedness of the Transferor representing amounts payable
in respect of SWAPs, (vii) fees of the Rating Agencies in connection with
rating any Series of certificates issued by the Trust and (viii) indebtedness
or other liability on account of incidentals or services supplied or
furnished to the Transferor (including reasonable accountants' and attorneys'
fees); provided that the aggregate amount of the indebtedness or liabilities
--------
described in this subpart (viii) shall not exceed $4,750 at any one time
outstanding.
Section 2.09 Authentication of Certificates. Pursuant to the request
------------------------------
of the Transferor, the Trustee shall cause Certificates in authorized
denominations evidencing the entire ownership of the Trust to be duly
authenticated and delivered to or upon the order of the Transferor pursuant
to Section 6.02.
Section 2.10 Removal of Accounts.
-------------------
(a) On each Determination Date that the Transferor Amount (plus
the B/F Amount and any amount available under the Transferor Letter of
Credit) for the related Collection Period exceeds 7% of the Aggregate
Invested Amount with respect to such Determination Date, the Trustee shall
be deemed to have offered to the Transferor automatically and without any
notice to or action by or on behalf of the Trustee, as of such Determination
Date, the right to remove from the Trust all of the Trust's right, title and
interest in, to and under the Receivables now existing and hereafter created,
all monies due or to become due and all amounts received with respect thereto
and all proceeds thereof in or with respect to those Accounts designated by
the Transferor (the "Removed Accounts") in an aggregate amount not greater
----------------
than the excess of the Transferor Amount (plus amounts available to be drawn
under the Transferor Letter of Credit or the Transferor Escrow Account solely
to cover obligations of the Transferor under Section 3.09(a) plus the B/F
Amount) over the Minimum Transferor Interest Percentage of the Aggregate
Invested Amount. To accept such offer, the Transferor is required to
furnish to the Trustee and each Rating Agency written notice by the fifth
Business Day after the Determination Date specifying the approximate
aggregate amount of Receivables covered by the offer that the Transferor
intends to accept.
(b) In addition to the foregoing provisions, the Transferor shall
be permitted to accept reassignment to it of the Receivables from Removed
Accounts only upon satisfaction of the following conditions:
(i) On each date specified by the Transferor for removal of
the Removed Accounts (a "Removal Date"), the Trustee shall deliver to
------------
the Transferor a written reassignment in substantially the form of Exhibit C
---------
(the "Reassignment") and the Transferor shall deliver to the Trustee a
------------
true and complete list identifying all Accounts the Receivables of which
remain in the Trust, specifying for each such Account, as of the Removal
Notice Date, its account number. Such list shall be incorporated into and
made a part of this Agreement as of the date of such Reassignment;
(ii) The Transferor represents and warrants as of each Removal
Date that (a) the list of the Accounts not removed from the Trust, as of the
Removal Notice Date, complies in all material respects with the requirements
of paragraph (i) above; and (b) no selection procedure used by the Transferor
which is adverse to the interests of the Investor Certificateholders was
utilized in selecting the Removed Accounts;
(iii) The removal of any Receivables in any Removed
Accounts on any Removal Date shall not, in the reasonable belief of the
Transferor, cause an Amortization Event to occur;
(iv) The Transferor shall have delivered 20 days' prior
written notice (which may be given prior to the Determination Date in
expectation that the Trustee will make the offer described in Section
2.10(a)) of such removal to each Rating Agency which has rated any
outstanding Series and the Trustee shall have received written confirmation
from each Rating Agency that such Rating Agency will not reduce or withdraw
its rating on any outstanding Series as a result of such removal; and
(v) The Transferor shall have delivered to the Trustee a
certificate of a Vice President or more senior officer confirming the items
set forth in paragraphs (i) through (iv) above. The Trustee may conclusively
rely on such certificate, shall have no duty to make inquiries with regard
to the matters set forth therein and shall incur no liability in so relying.
Upon satisfaction of the above conditions, the Trustee shall
execute and deliver the Reassignment to the Transferor, and the Receivables
from the Removed Accounts shall no longer constitute a part of the Trust.
Section 2.11 Discount Option.
---------------
(a) The Transferor shall have the option to designate a
percentage, which may be a fixed percentage or a variable percentage based
on a formula (the "Discount Percentage"), of Aggregate Receivables, without
giving effect to any discounting pursuant to this Section 2.11, arising on
or after the date of such designation, to be treated as Receivables which
give rise to Finance Charge Collections. The Transferor shall provide to the
Servicer, the Trustee, any Enhancement Provider and any Rating Agency 15
days' prior written notice of such designation, and such designation shall
become effective on the date designated therein (i) unless such designation
in the reasonable belief of the Transferor would cause an Amortization Event
to occur, or an event which, with notice or the lapse of time or both, would
constitute an Amortization Event and (ii) only if each Rating Agency shall
have delivered a letter to the Transferor and the Trustee confirming that its
then current rating of the Investor Certificates of any Series then
outstanding will not be reduced or withdrawn as a result of such designation.
(b) After the date on which the Transferor's exercise of its
discount option takes effect, and with respect to Receivables generated on
and after such date, the Transferor shall deposit into the Collection Account
in immediately available funds an amount equal to the amount of the Discount
Option Receivable Collections processed on such day. The deposit made by the
Transferor into the Collection Account under the preceding sentence shall be
considered a payment of such Discount Option Receivables and shall be applied
as Finance Charge Collections in accordance with Article IV.
(END OF ARTICLE II)
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.01 Acceptance of Appointment and Other Matters Relating to
-------------------------------------------------------
the Servicer.
- - ------------
(a) Bridgestone/Firestone agrees to act as the Servicer under this
Agreement and any Investor Certificateholders and the Transferor by its
acceptance of the Certificates consents to Bridgestone/Firestone acting as
Servicer.
(b) The Servicer shall service and administer the Receivables and
shall collect payments due under the Receivables in accordance with its
customary and usual servicing procedures for servicing the Receivables and
in accordance with the Credit Card Guidelines and shall have full power and
authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting
the generality of the foregoing and subject to Section 10.01, the Servicer
is hereby authorized and empowered, unless such power and authority is
revoked by the Trustee (i) to make withdrawals and payments and to instruct
the Trustee to make withdrawals and payments from the Collection Account or
any other account or accounts maintained for the benefit of Certificate-
holders as set forth in this Agreement, (ii) to instruct the Trustee to take
any action permitted or required under any Enhancement at such time as set
forth in this Agreement, (iii) to execute and deliver, on behalf of the Trust
for the benefit of the Certificateholders, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Receivables and, after
the delinquency of any Receivable and to the extent permitted under and in
compliance with applicable law and regulations, to commence enforcement
proceedings with respect to such Receivables and (iv) to make any filings,
reports, notices, applications, registrations with, and to seek any consent
or authorizations from the Securities and Exchange Commission and any state
securities authority on behalf of the Trust as may be necessary or advisable
to comply with any Federal or state securities or reporting requirements or
laws.
(c) In the event that the Transferor is unable for any reason to
transfer Receivables to the Trust in accordance with the provisions
(including, without limitation, by reason of the application of the
provisions of Section 9.02 or any Governmental Authority having regulatory
authority over the Transferor or any court of competent jurisdiction ordering
that the Transferor not transfer any additional Receivables to the Trust)
then, in any such event (except as prohibited by such order), (A) the
Transferor agrees that the Servicer shall allocate, after such date, all
Principal Collections and all amounts which would have constituted
Collections (including Finance Charge Collections) with respect to such
Receivables which would have been Receivables allocable to Principal
Collections but for the Transferor's inability to transfer such Receivables
(up to an aggregate amount equal to the amount of Receivables in the Trust
as of such date) in accordance with Section 2.08(e), (B) the Transferor
agrees to have such amounts applied as Collections in accordance with Article
IV and (C) for only so long as all Collections and all amounts which would
have constituted Collections are allocated and applied in accordance with
clauses (A) and (B) above, Receivables allocable to Principal Collections and
all amounts which would have constituted Receivables allocable to Principal
Collections but for the Transferor's inability to transfer Receivables to the
Trust which are written off as uncollectible in accordance with this
Agreement shall continue to be allocated in accordance with the related
Supplement and all amounts which would have constituted Receivables allocable
to Principal Collections but for the Transferor's inability to transfer
Receivables to the Trust shall be deemed to be Receivables allocable to
Principal Collections for purposes of calculating the Invested Percentage
thereunder. If the Servicer is unable pursuant to any Requirement of Law to
allocate Collections, as described above, the Transferor agrees that the
Servicer shall, in any such event, allocate, after the date that the Servicer
becomes unable to do so, payments on each Account with respect to the
principal balance of such Account first to the oldest principal balance of
such Account and to have such payments applied as Collections in accordance
with Article IV. The parties hereto agree that Receivables allocable to
Finance Charge Collections, whenever created, accrued in respect of
Receivables allocable to Principal Collections which have been conveyed to
the Trust shall continue to be a part of the Trust notwithstanding any
cessation of the transfer of additional Receivables allocable to Principal
Collections to the Trust and Collections with respect thereto shall continue
to be allocated and paid in accordance with Article IV.
(d) If Transferor accepts reassignment of an Ineligible Receivable
pursuant to subsection 2.06(c) then, in any such event, Servicer agrees to
account for payments received with respect to such Ineligible Receivable
separately from its accounting for Collections on Principal Receivables
retained by the Trust. If payments received from or on behalf of an Obligor
are not specifically applicable either to an Ineligible Receivable of such
Obligor reassigned to Transferor or to receivables of such
Obligor retained in the Trust, then Servicer agrees to allocate payments
proportionately based on the total amount of Principal Receivables of such
Obligor retained in the Trust and the total amount owing by such Obligor or
any Ineligible receivables purchased by Transferor, and the portion
allocable to any Principal Receivables retained in the Trust shall be treated
as Collection and deposited in accordance with the provisions of Article IV.
(e) The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by the Servicer in
connection with servicing other credit card receivables.
(f) The Servicer shall maintain fidelity bond coverage insuring
against losses through wrongdoing of its officers and employees who are
involved in the servicing of credit card receivables covering such actions
and in such amounts as the Servicer believes to be reasonable from time to
time.
(g) The Servicer shall comply with and perform its servicing
obligations with respect to the Accounts and Receivables in accordance with
the Credit Card Agreements relating to the Accounts and the Credit Card
Guidelines.
Section 3.02 Servicing Compensation. As compensation for its servicing
----------------------
activities hereunder and reimbursement for its expenses as set forth in the
immediately following paragraph, the Servicer shall be entitled to receive
a monthly servicing fee in respect of any Collection Period (or portion
thereof) prior to the termination of the Trust pursuant to Section 12.01 (the
"Servicing Fee"), payable in arrears on each Distribution Date, equal to the
-------------
sum of, with respect to each Series, one-twelfth of the product of (a) the
applicable Servicing Fee Percentage with respect to each Series, and (b) the
sum of (x) an allocable portion (based on the relative percentages of the
Invested Amounts) of the Transferor Amount and the B/F Amount and (y) the
aggregate invested Amount with respect to each Series on the last day of the
second preceding Collection Period after giving effect to any payment of
principal on the related Distribution Date for such Collection Period (or,
in the case of the first Distribution Date, the Initial Invested Amount).
The share of the Servicing Fee allocable to each Series with respect to any
Distribution Date shall be equal to one-twelfth of the product of (A) the
related Servicing Fee Percentage and (B) the Invested Amount of such Series
on the last day of the second preceding Collection Period after giving effect
to any payment of principal on the related Distribution Date for such
Collection Period (or, in the case of the first Distribution Date, the
Initial Invested Amount) (with respect to any such Series, the "Monthly
-------
Servicing Fee"). The remainder of the Servicing Fee shall be paid by the
- - -------------
Holder of the Exchangeable Transferor Certificate and by Bridgestone/
Firestone as holder of the Bridgestone/Firestone Certificate. Any such
amount not paid by the Holders of the Exchangeable Transferor Certificate and
the Bridgestone/ Firestone Certificate may be withheld by the Servicer from
other amounts payable to the Holders of the Exchangeable Transferor
Certificate and the Bridgestone/Firestone Certificate under this Agreement.
In no event shall the Trustee or the Investor Certificateholders be liable
for the share of the Servicing Fee to be paid by the Holders of the
Exchangeable Transferor Certificate and the Bridgestone/Firestone
Certificate. Any Monthly Servicing Fees shall be payable to the Servicer
solely pursuant to the terms of, and to the extent amounts are available for
payment under, Article IV.
The Servicer's expenses include the amounts due to the Trustee pursuant
to Section 11.05 and the reasonable fees and disbursements of independent
accountants and all other expenses incurred by the Servicer in connection
with its activities hereunder, and including all other fees and expenses of
the Trust not expressly stated herein to be for the account of the
Certificateholders; provided that in no event shall the Servicer be liable
--------
for any Federal, state or local income or franchise tax, or any interest or
penalties with respect thereto, assessed on the Trust, the Trustee or the
Certificateholders except as expressly provided herein. So long as
Bridgestone/Firestone is acting as Servicer hereunder, in the event that the
Servicer fails to pay the amounts due to the Trustee pursuant to Section
11.05, the Trustee shall be entitled to receive such amounts from the
Servicing Fee, prior to the payment thereof to the Servicer. The Servicer
shall be required to pay expenses for its own account and shall not be
entitled to any payment therefor other than the Servicing Fee.
Section 3.03 Representations Warranties and Covenants of the Servicer.
--------------------------------------------------------
Bridgestone/Firestone, as initial Servicer, hereby makes, and any Successor
Servicer by its appointment hereunder shall make, the following
representations, warranties and covenants with respect to any Series as of
the date of the related Supplement and its Closing Date or, in the case of
any Successor Servicer, the date of its appointment, unless otherwise stated
in such Supplement, on which the Trustee shall be deemed to have relied in
accepting the Receivables in trust and in authenticating the Certificates;
(a) Organization and Good Standing. The Servicer is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has the corporate power and authority
to execute, deliver and perform its obligations under this Agreement and, in
all material respects, to own its property and conduct its business as such
properties are presently owned and as such business is presently conducted.
(b) Due Qualification. The Servicer is duly qualified to do
-----------------
business and is in good standing as a foreign corporation (or is exempt from
such requirements) and has obtained all necessary licenses and approvals in
each jurisdiction in which the failure to so qualify or to obtain such
license or approval would have a material adverse effect upon the
Certificateholders.
(c) Due Authorization. The execution, delivery, and performance
-----------------
of this Agreement, and the consummation of the transactions provided in this
Agreement, have been duly authorized by the Servicer by all necessary
corporate action on the part of the Servicer.
(d) Binding Obligations. This Agreement constitutes the legal,
-------------------
valid, and binding obligations of the Servicer, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws nov
or hereinafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity).
(e) No Violation. The execution and delivery of this Agreement
------------
by the Servicer, and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof applicable to the Servicer,
will not conflict with, violate, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of
time or both) a material default under, any Requirement of Law applicable to
the Servicer or any indenture, contract, agreement, mortgage, deed of trust,
or other instrument to which the Servicer is a party or by which it is bound.
(f) No Proceedings. There are no proceedings or investigations,
--------------
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality (i) seeking to prevent the issuance
of the Certificates or the consummation of any of the transactions
contemplated by this Agreement, (ii) seeking any determination or ruling
that, in the reasonable judgment of the Servicer, would materially and
adversely affect the performance by the Servicer of its obligations under
this Agreement, or (iii) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement.
(g) Compliance with Requirements of Law. The Servicer shall duly
-----------------------------------
satisfy all obligations on its part to be fulfilled under or in connection
with the Receivables or Accounts, will maintain in effect all qualifications
required under Requirements of Law in order to properly service the
Receivables and the Accounts and will comply in all material respects with
all Requirements of Law in connection with servicing the Receivables
and the Accounts the failure to comply with which would have a material
adverse effect on Certificateholders.
(h) No Rescission or Cancellation. Subject to the provision set
-----------------------------
forth in Section 3.03(i), the Servicer shall not permit any rescission or
cancellation of Receivable except as ordered by a court of competent
jurisdiction or other Governmental Authority.
(i) Protection of Certificateholders' Rights. The Servicer shall
----------------------------------------
not take any action which could reasonably be expected to impair or omit to
take any action necessary to avoid impairment of the rights of
Certificateholders in the Receivables, nor shall it reschedule, revise or
defer Collections due on the Receivables, nor take any action to cause
Receivables to be evidenced by a promissory note: provided, however, the
-------- -------
Servicer may, in accordance with the Credit Card Guidelines and with prudent
servicing practices, make customer service adjustments and adjustments in
payment schedules in the ordinary course of business.
(j) All Consents Required. All approvals, authorizations,
---------------------
consents, orders or other actions of any Person or of any governmental body
or official required in connection with the execution and delivery by the
Servicer of this Agreement, the performance by the Servicer of the
transactions contemplated by this Agreement and the fulfillment by the
Servicer of the terms hereof, have been obtained.
In the event (x) there is any breach of any of the representations,
warranties or covenants of the Servicer contained in Section 3.03(g), (h) or
(j) with respect to any Receivable or (y) the Servicer has failed to comply
in all material respects with all Requirements of Law applicable to any
Receivable or the Account relating to any Receivable, and as a result of such
breach or failure such Receivable becomes a Defaulted Receivable or the
rights of the Trust in, to or under such Receivable or its proceeds are
impaired or the proceeds of such Receivable are not available to the Trust,
then if in either case such noncompliance has not been cured within 60 days
(or with the prior consent of a Responsible Officer of the Trustee, such
longer period specified in such consent but not to exceed an additional 60
days) of the earlier to occur of the discovery of such event by the Servicer,
or receipt by the Servicer of written notice of such event given by the
Trustee, an Enhancement Provider or the Transferor, the Servicer shall accept
the transfer of all the Receivables in each Account as to which such event
relates on the terms and conditions set forth below; provided, however, that
-------- -------
no such transfer shall be required to be made with respect to such Receivable
if, within such 60-day period, the event giving rise to the obligation to
accept the transfer of such Receivable and any material adverse effect on
the interests of Certificateholders in such Receivable shall be cured by the
Servicer. The Servicer shall accept the transfer of a Receivable by making
a deposit into the Collection Account in immediately available funds by the
Transfer Date following the expiration of the 60-day period set forth in this
Section in an amount equal to the Transfer Deposit Amount for such
Receivable. Upon each such transfer to the Servicer, the Trustee shall
automatically and without further action be deemed to transfer, assign, and
set over, and otherwise convey to the Servicer, without recourse,
representation or warranty, all right, title and interest of the Trust in and
to such Receivable, all monies due or to become due with respect thereto and
all proceeds thereof; and such Receivable shall be treated by the Trustee as
collected in full as of the Collection Period to which such Transfer Deposit
Amount relates. The Trustee shall execute such documents and instruments of
transfer or assignment prepared by the Servicer in form reasonably
satisfactory to the Trustee and take such other actions as shall be
reasonably requested by the Servicer to effect the conveyance of any
Receivable pursuant to this Section. The obligation of the Servicer to
accept the transfer of any such Receivables shall constitute the sole remedy
respecting any breach of the representations, warranties and covenants set
forth in Section 3.03(g), (h) or (j) with respect to such Receivables
available to Certificateholders or the Trustee on behalf of
Certificateholders.
Section 3.04 Reports and Records for the Trustee: Bank Account
-------------------------------------------------
Statements.
- - ----------
(a) Daily Records. Upon two Business Days prior notice by the
-------------
Trustee, the Servicer shall make available at an office of the Servicer
selected by the Servicer for inspection by the Trustee on a business day
during the Servicer's normal business hours a record setting forth (i) the
Collections processed by the Servicer on the preceding Business Day on each
Account and (ii) the amount of Receivables as of the close of business on the
second preceding Business Day in all Accounts. The Servicer shall, at all
times, maintain its computer files with respect to the Accounts in such a
manner so that the Accounts may be specifically identified and, upon prior
request of the Trustee, shall make available to the Trustee at an office of
the Servicer selected by the Servicer on any Business Day during the
Servicer's normal business hours any computer programs necessary to make such
identification.
(b) Monthly Servicer's Certificate. Unless otherwise stated in
------------------------------
the relating Supplement with respect to any Series, no later than the
Determination Date prior to each Distribution Date, the Servicer shall
forward by facsimile (to be followed by original confirmation in writing) or
overnight delivery service to the Trustee, the Paying Agent, any Enhancement
Provider and each Rating Agency a certificate of a Servicing Officer
substantially in the form attached as an exhibit to the applicable
Supplement. Such certificate shall include a certification that to the best
of such officer's knowledge, the Servicer has fully performed all of its
obligations under the Agreement throughout such preceding month, or, if there
has been a default in the performance of any such obligation, specifying each
such default known to such officer and the nature and status thereof.
(c) Rating Agency Requests for Information. The Servicer shall
--------------------------------------
provide each Rating Agency such information with respect to the Trust as such
Rating Agency shall reasonably request.
Section 3.05 Annual Servicer's Certificate. The Servicer will deliver
-----------------------------
to the Trustee, any Enhancement Provider and each Rating Agency on or before
March 31 of each calendar year, beginning with March 31, 1993, an Officers'
Certificate substantially in the form of Exhibit E stating that (a) a review
---------
of the activities of the Servicer during the preceding calendar year (or
portion thereof, as applicable) and of its performance under this Agreement
was made under the supervision of the officers signing such certificate and
(b) to the be t of such officers' knowledge, based on such review, the
Servicer has fully performed all of its obligations under this Agreement
throughout such period, or, if there has been a default in the performance
of any such obligation, specifying each such default known to each such
officer and the nature and status thereof. A copy of such certificate may
be obtained by any Certificateholder by a request in writing to the Trustee
addressed to the Corporate Trust Office.
Section 3.06 Annual Independent Public Accountants' Servicing Report.
-------------------------------------------------------
(a) On or before March 31 of each calendar year, beginning with
March 31, 1994, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report (which report shall cover the
period from January 1 to and including December 31 of the prior calendar year
or for the report due March 31, 1994 from the Initial Closing Date to
December 31, 1993) to the Trustee, each Rating Agency and any Enhancement
Provider to the effect that they have applied certain procedures agreed upon
with the Servicer and examined certain documents and records relating to the
servicing of Accounts under this Agreement, and that, based upon such agreed-
upon procedures, nothing has come to the attention of such accountants that
caused them to believe the servicing (including, without limitation, the
allocation of Collections) has not been conducted in compliance with the
terms and conditions set forth in Sections 3.01, 3.04, 3.05, 3.09 and 12.01
and Article IV and any Supplement, except for such exceptions as they believe
to be immaterial and such other exceptions as shall be set forth in such
statement. In addition, each report shall set forth the agreed upon
procedures performed. A copy of such report may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
(b) On or before March 31 of each calendar year, beginning with
March 31, 1994, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report to the Trustee, each Rating
Agency and any Enhancement Provider to the effect that they have compared the
mathematical calculations of each amount set forth in the monthly
certificates forwarded by the Servicer pursuant to Section 3.04(b) during the
period covered by such report (which shall be the period from January 1 to
and including December 31 of the prior calendar year or for the calendar year
ending December 31, 1993 from the Initial Closing Date to December 31, 1993)
with the Servicer's computer reports which were the source of such amounts
and that on the basis of such comparison, such accountants are of the opinion
that such amounts are in agreement, except for such exceptions as they
believe to be immaterial and such other exceptions as shall be set forth in
such statement. A copy of such report may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
Section 3.07 Tax Treatment. The Transferor has entered into this
-------------
Agreement and the Investor Certificates (other than those held by the
Transferor) have been (or will be) issued with the intention that such
Investor Certificates will qualify under applicable tax law as indebtedness.
The Transferor, the Trustee, each such Investor Certificateholder by
acceptance of its Certificate and each Certificate Owner by acquiring an
interest in such an Investor Certificate agree to treat the Investor
Certificates as debt of Bridgestone/Firestone for purposes of Federal, state
and local income or franchise taxes and other tax imposed on or measured by
income. Furthermore, the Trustee shall treat the Trust as a security device
only, and shall not file tax returns or obtain an employer identification
number on behalf of the Trust.
Section 3.08 Notices to Bridgestone/Firestone. In the event that
--------------------------------
Bridgestone/Firestone is no longer acting as Servicer, any Successor Servicer
appointed pursuant to Section 10.02 shall deliver or make available to
Bridgestone/Firestone each certificate and report required to be prepared,
forwarded or delivered thereafter pursuant to Sections 3.04, 3.05 and 3.06.
Section 3.09 Adjustments.
-----------
(a) If the Servicer adjusts downward the amount of any Receivable
because of a rebate, refund, unauthorized charge or billing error to an
Obligor, or because such Receivable was created in respect of merchandise
which was refused or returned by an Obligor, or if the Servicer otherwise
adjusts downward the amount of any Receivable without either receiving
Collections therefor or charging off such amount as uncollectible or any
Receivable is discovered as having been created through a fraudulent or
counterfeit charge, then, in any such case, the Transferor shall make a
deposit into the Collection Account in immediately available funds in an
amount equal to the amount of any such adjustment or the amount of any such
fraudulent or counterfeit charge on the Transfer Date following the
Collection Period in which such adjustment obligation arises. In the event
that the Transferor shall fail to deposit any amount required to be deposited
in the Collection Account pursuant to the preceding sentence, the Trustee
shall make a proper demand under the Transferor Letter of Credit pursuant to
Section 4.01B hereof, up to the amount available thereunder, in the amount
required to be so deposited by the Transferor which the Transferor failed to
so deposit. Any deposit into the Collection Account in connection with the
adjustment of a Receivable (including the proceeds of any drawing under the
Transferor Letter of Credit) shall be considered an "Adjustment Payment,"
------------------
shall be treated as Finance Charge Collections or Principal Collections, as
applicable, and shall be applied in accordance with Article IV. If proceeds
from the Transferor Letter of Credit are not available to pay such adjustment
obligation in full, then the amount of Receivables used to calculate the
Transferor Amount, any Invested Percentage, the B/F Amount and the Transferor
Percentage will be reduced by the amount of the adjustment. Any adjustment
required pursuant to the preceding sentence in the amount of Receivables used
in the calculation of the Transferor Amount, any Invested Percentage, the B/F
Amount and the Transferor Percentage shall be made on or prior to the end of
the Collection Period in which such adjustment obligation arises. In the
event that the exclusion of such Receivables from the calculation of the
Transferor Amount would cause the Transferor Amount to be a negative number,
the B/F Amount shall be reduced by the amount by which the Transferor Amount
would be reduced below zero.
(b) If (i) the Servicer makes a deposit into the Collection
Account in respect of a Collection of a Receivable and such Collection was
received by the Servicer in the form of a check which is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less or more than the actual amount
of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Receivable in respect of which a dishonored check is
received shall be deemed not to have been paid. Nothing in this
Section 3.09(b) shall be interpreted to require or permit the Servicer to
recover any such adjustment from Certificateholders.
(END OF ARTICLE III)
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS, ALLOCATION
AND APPLICATION OF COLLECTIONS AND SERVICER
AND TRANSFEROR LETTERS OF CREDIT
Section 4.01 Establishment of Collection Account and Allocations with
--------------------------------------------------------
Respect to the Exchangeable Transferor Certificate.
- - --------------------------------------------------
(a) The Collection Account. The Trustee, for the benefit of the
----------------------
Certificateholders, shall establish and maintain or cause to be established
and maintained in the name of the Trustee, on behalf of the Trust, with an
Eligible Institution a segregated account (the "Collection Account"), bearing
------------------
a designation clearly indicating that the funds deposited therein are held
in trust for the benefit of the Certificateholders. The Trustee shall
possess all right, title and interest in all funds on deposit from time to
time in the Collection Account and in all proceeds thereof. The Collection
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Certificateholders. If, at any time, the institution holding
the Collection Account ceases to be an Eligible Institution, the Trustee (or
the Servicer on its behalf) shall within 10 Business Days establish a new
Collection Account meeting the conditions specified above with an Eligible
Institution, transfer any cash and/or any investments to such new Collection
Account and from the date such new Collection Account is established, it
shall be the Collection Account for all purposes hereof. Pursuant to the
authority granted to the Servicer in Section 3.01(b), the Servicer shall have
the power, revocable by the Trustee, to make withdrawals and payments from
the Collection Account and to instruct the Trustee to make withdrawals and
payments from the Collection Account for the purposes of carrying out the
Servicer's or Trustee's duties hereunder.
Each Series shall represent interests in the Trust including the
benefits of any Enhancement to be provided by an Enhancement Provider issued
with respect to such Series as indicated in the Supplement relating to such
Series and the right to receive Collections and other amounts at the times
and in the amounts specified in this Article IV to be deposited in the
Collection Account and any other accounts maintained for the benefit of the
Certificateholders or paid to the Investor Certificate Holders. The
Exchangeable Transferor Certificate shall represent the interests in the
Trust not represented by any Series then outstanding or the Bridgestone/
Firestone Certificate, including the right to receive Collections and other
amounts at the times and in the amounts specified in this Article IV to be
paid to the Transferor (the "Transferor Interest"), provided, however, that
------------------- -------- -------
such certificate shall not represent any interest in the Collection Account
and any other accounts maintained for the benefit of the Certificateholders
or the benefits of any Enhancement to be provided by an Enhancement Provider
issued with respect to any Series, except as specifically provided in this
Article IV.
(b) Administration of the Collection Account. At the direction
----------------------------------------
of the Servicer, funds on deposit in the Collection Account to be so invested
shall be invested by the Trustee in Permitted Investments. All such
Permitted Investments shall be held by the Trustee for the benefit of the
Certificateholders. Investments of funds representing Collections collected
during any Collection Period shall be invested in Permitted Investments that
will mature so that such funds will be available at the close of business on
the Transfer Date following such Collection Period. Any funds on deposit in
the Collection Account to be so invested shall be invested solely in
Permitted Investments. All such Permitted Investments shall be held to
maturity. Funds deposited in the Collection Account on a Transfer Date with
respect to the next following Distribution Date are not required to be
invested overnight. The Eligible Institution maintaining the Collection
Account shall maintain possession of the negotiable instruments or
securities, if any, evidencing the Permitted Investments described in clause
(a) of the definition thereof from the time of purchase thereof until the
time of maturity. On each Distribution Date, all interest and other
investment earnings (net of losses and investment expenses) on funds on
deposit in the Collection Account shall be paid to Transferor.
(c) Identification of Account. Schedule 2, which is hereby
------------------------- ----------
incorporated into and made a part of this Agreement, identifies the
Collection Account by setting forth the account number of such account, the
account designation of such account and the name of the institution with
which such account has been established.
(d) Allocations For the Exchangeable Transferor Certificate and
-----------------------------------------------------------
the Bridgestone/Firestone Certificate. Throughout the existence of the
- - -------------------------------------
Trust, the Servicer shall allocate on a daily basis to (x) the Holder of the
Exchangeable Transferor Certificate an amount equal to the product (A) of the
Transferor Percentage and (B) the aggregate amount of Principal Collections
in respect of such Collection Period and (y) to Bridgestone/Firestone as
Holder of the Bridgestone/Firestone Certificate an amount equal to the
product of (A) the B/F Percentage and (B) the aggregate amount of Finance
Charge Collections and Principal Collections in respect of such Collection
Period. Unless specified in any Supplement, the Servicer need not deposit
into the Collection Account any such amounts allocated to the Transferor or
Bridgestone/Firestone and any other amounts allocated to the Exchangeable
Transferor Certificate pursuant to any Supplement and shall pay such amounts
allocated to Bridgestone/Firestone as collected and shall pay such amounts
allocated to the Transferor as collected to the Transferor as long as the
Transferor Amount is greater than or equal to zero.
(e) Allocations of Collections. At all times prior to the
--------------------------
delivery of an Officers Certificate to the Trustee certifying that the
Servicer can allocate Finance Charge Collections and Principal Collections
on an actual basis for all of the Receivables for all purposes of this
Agreement the Servicer shall allocate Collections processed with respect to
the Receivables for any day during a Collection Period to Finance Charge
Collections to the extent of the amount of Periodic Finance Charges billed
on the Accounts during the prior Collection Period minus the amount of any
-----
finance charges being credited as a rebate during such prior Collection
Period for which an allocation is being made divided by the number of days
in such Collection Period. The balance of the Collections processed for any
day during a Collection Period shall be allocated to Principal Collections.
After delivery to the Trustee of the Officers' Certificate referred to above
Finance Charge Collections and Principal Collections shall be allocated on
an actual basis. The allocations provided for in this Section shall not
apply to Recoveries and Merchant Fees, which shall be treated as Finance
Charge Collections for all purposes of this Agreement.
(f) Shared Principal Collections. On each Business Day, Shared
----------------------------
Principal Collections shall be allocated to each outstanding Series pro rata
based on the Principal Shortfall, if any, for each such Series. The Servicer
shall pay any remaining Shared Principal Collections on such Business Day to
the Transferor; provided, that if an Amortization Period has commenced and
--------
is continuing with respect to more than one outstanding Series, such
remaining Shared Principal Collections shall be allocated to such Series pro
rata based on the Invested Percentage for Aggregate Receivables applicable
for such Series.
(g) Collections. Bridgestone/Firestone, as Servicer, will apply
-----------
all Collections with respect to the Receivables for each Collection Period
as described in this Article IV. The Servicer shall pay Collections to the
Holder of the Exchangeable Transferor Certificate and Bridgestone/Firestone
as Holder of the Bridgestone/Firestone Certificate to the extent such
Collections are allocated to the Exchangeable Transferor Certificate and the
Bridgestone/Firestone Certificate, respectively, pursuant to Section 4.01(d)
and as otherwise provided in Article IV. Subject to Section 4.01(h), the
Servicer may deposit into the Collection Account on any Business Day, and
shall deposit into the Collection Account on or prior to the Transfer Date
Collections with respect to the prior Collection Period to the extent such
Collections are allocated to any Series in accordance with Article IV, except
that the Servicer may distribute any amount determined to be payable to the
Holder of any subordinated Certificate (e.g. the Series 1992-A Class B
Certificate and the Series 1992-B Class B Certificates) pursuant to any
Supplement in respect of a Collection Period at any time after the related
Determination Date.
(h) Daily Collections. While Bridgestone/Firestone is the
-----------------
Servicer, and subject to the availability of a Servicer Letter of Credit, it
may hold for its own benefit all Collections, subject further, however, to
this subsection 4.01(h). The Servicer shall deposit all Collections
(including Collections then held by it) directly into the Collection Account
as soon as possible after the Date of Processing thereof, but in no event
later than two Business Days following such Date of Processing thereof,
commencing in the event of any of the following:
(i) the termination of Bridgestone/Firestone as Servicer;
(ii) 35 days shall have passed from the date the Servicer
received notice pursuant to Section 4.01A(b) of the downgrading of the short-
term unsecured debt ratings of the Letter of Credit Bank below A-1+ or F-1+
by the applicable Rating Agency and either (A) there shall not have been
delivered to the Trustee a substitute Servicer Letter of Credit in accordance
with Section 4.01A(c) or (B) the Trustee shall not have made a demand for a
Special Drawing under the Servicer Letter of Credit pursuant to Section
4.01A(e);
(iii) the Servicer shall have received notice pursuant to
Section 4.01A(b) of the downgrading of the short-term unsecured debt ratings
of the Letter of Credit Bank to or below A-2 or F-2 by the applicable Rating
Agency and either (A) there shall not have been delivered to the Trustee a
substitute Servicer Letter of Credit in accordance with Section 4.01(c) or
(B) the Servicer shall not have instructed the Trustee to make a demand for
a Special Drawing under the Servicer Letter of Credit pursuant to Section
4.01A(e); or
(iv) five Business Days remain to the expiry or termination
of the Servicer Letter of Credit and there shall not have been delivered to
the Trustee a substitute Servicer Letter of Credit in accordance with Section
4.01A(c).
Should the Servicer be required to make daily deposits of
Collections into the Collection Account pursuant to this Section, the
Servicer may make an estimated allocation of Finance Charge Collections and
Principal Collections for the purposes of determining the amount of
Collections to be so deposited as long as the Trustee received confirmation
from each Rating Agency that such method does not cause a downgrading or
withdrawal of the then current rating of any Series; provided, however,
-------- -------
that as soon as practical thereafter, the Servicer shall reconcile the
estimated allocation of Collections with the actual allocation required
under this Agreement.
If at any time Bridgestone/Firestone is the Servicer, Collections
held by Bridgestone/Firestone allocable to all Series and not previously used
to purchase receivables exceed the Available Letter of Credit Amount under
the Servicer Letter of Credit (for the avoidance of doubt, it is agreed that
the Available Letter of Credit Amount shall be zero after the return of the
funds on deposit in the Escrow Account pursuant to Section 4.01A(e) unless
a substitute Servicer Letter of Credit is provided to the Trustee pursuant
to Section 4.01A(c)) then the Servicer shall deposit all Collections directly
into the Collection Account; provided, however, that Bridgestone/Firestone
shall be required to deposit Collections directly into the Collection Account
pursuant to this paragraph only for so long as Collections held by
Bridgestone/Firestone exceed the Available Letter of Credit Amount.
Section 4.01A Servicer Letter of Credit. In accordance with Section
-------------------------
4.01(h), the following provisions shall apply so long as Bridgestone/
Firestone is the Servicer hereunder:
(a) Servicer Letter of Credit. If with respect to any Collection
-------------------------
Period the Servicer shall have failed to make in full the remittance of
Collections or any other payment required to be made pursuant to Section
4.01(9), the Trustee shall draw on the Servicer Letter of Credit, in
accordance with the terms thereof, in the amount of the shortfall between the
amount of funds that are required to be remitted by the Servicer to the
Collection Account as set forth in the Monthly Servicer's Certificate and the
amount of funds actually so remitted. Any such draw on the Servicer Letter
of Credit shall be made after receipt of the related Monthly Servicer's
Certificate but on or before 1:00 P.M. (New York City time) on the Transfer
Date for such Collection Period, provided the Trustee has received such
Monthly Servicer's Certificate prior to such time. Upon receipt of the
proceeds of any drawing under the Servicer Letter of Credit, the Trustee
shall deposit such proceeds into the Collection Account. Amounts so
deposited by the Trustee pursuant to this Section 4.01A(a) shall not be
deemed to constitute amounts deposited pursuant to Section 2.06(c), 2.07 or
12.01(b). The Servicer shall include in each Monthly Servicer's Certificate,
or in an Officer's Certificate provided to the Trustee with each Monthly
Servicer's Certificate, the Stated Amount (as defined in the Servicer Letter
of Credit) of the Servicer Letter of Credit as of the related Determination
Date.
(b) Downgrade of Letter of Credit Bank or Expiration of Term of
-----------------------------------------------------------
Servicer Letter of Credit.
- - -------------------------
(i) On the fifth Business Day prior to the expiry date of
the Servicer Letter of Credit (as such letter of credit may have been renewed
or extended), the Trustee shall give written notice thereof to the Servicer.
(ii) In the event that a Responsible Officer of the Trustee
obtains actual knowledge that the short-term unsecured debt rating of the
Letter of Credit Bank has been withdrawn or reduced below A-1+ or F-1+ by the
applicable Rating Agency, the Trustee shall promptly give written notice
thereof to the Servicer. Within 35 (thirty-five) days (or immediately if the
short-term debt rating of the Letter of Credit Bank has been reduced to or
below A-2 or F-2 by the applicable Rating Agency) of receipt of such notice,
the Servicer shall either (x) deliver to the Trustee a substitute Servicer
Letter of Credit in accordance with Section 4.01A(c), (y) instruct the
Trustee in writing to make a demand for a Special Drawing under the Servicer
Letter of Credit pursuant to Section 4.01A(e) or (z) commence depositing
Collections directly into the Collection Account pursuant to Section 4.01(h).
(c) Substitute Servicer Letter of Credit. The Trustee shall
------------------------------------
accept delivery of a letter of credit in substitution for the Servicer Letter
of Credit and shall deliver the Servicer Letter of Credit to the Letter of
Credit Bank for cancellation upon the satisfaction of the following
conditions:
(i) The substitute letter of credit shall be irrevocable
and shall be issued by a bank or other financial institution whose short term
unsecured debt is rated A-1+ and F-1+ by the applicable Rating Agency, and
the substitute letter of credit shall provide that drawings thereunder may
be made on substantially the same terms and conditions as the initial
Servicer Letter of Credit, and the substitute letter of credit shall have
been delivered to the Trustee.
(ii) The Trustee shall have received written confirmation
from each Rating Agency with an outstanding rating on any Series to the
effect that the delivery of the substitute letter of credit to the Trustee
and the termination of the initial Servicer Letter of Credit will not result
in the downgrade or withdrawal of any outstanding rating on any then
outstanding Series.
(iii) The amount available to be drawn under, and the Stated
Amount of, the substitute letter of credit shall be at least equal to the
amount which was available to be drawn under, and the Stated Amount of, the
Servicer Letter of Credit being replaced.
(iv) The Trustee shall have received written opinions of
counsel (acceptable to the Trustee) (including domestic and foreign counsel,
if applicable) to the issuer of the substitute letter of credit, which
opinions shall be reasonably satisfactory to the Trustee and the Transferor
and their respective counsel, substantially to the same effect as the
opinions delivered to the Trustee on the date of issuance of the Servicer
Letter of Credit with respect to the Servicer Letter of Credit.
(v) The Servicer shall have delivered to the Trustee an
Officer's Certificate confirming the items set forth in (i) through (iii)
above. The Trustee may conclusively rely on such certificate, shall have no
duty to make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.
Upon the delivery to the Trustee of a substitute letter of credit
in accordance with this Section 4.01A(e), such substitute letter of credit
shall be the Servicer Letter of Credit and the issuer thereof shall be a
Letter of Credit Bank for all purposes hereof.
(d) Daily Remittances. If the Servicer elects to begin daily
-----------------
remittances of Collections to the Collection Account pursuant to Section
4.01A(b) above, the Servicer shall instruct the Trustee in writing to submit
the Servicer Letter of Credit to the Letter of Credit Bank for cancellation
and the Servicer shall begin such daily remittances in accordance with
Section 4.01(h) hereof.
(e) Special Drawing. If the Servicer elects to instruct the
---------------
Trustee to make a Special Drawing pursuant to Section 4.01A(b) above, the
Servicer shall provide two Business Days' notice to the Letter of Credit Bank
and shall instruct the Trustee in writing to promptly draw upon the Servicer
Letter of Credit to the full extent of the Available Letter of Credit Amount
thereunder and deposit such amount into the Escrow Account (as defined
below). On the Closing Date, the Trustee for the benefit of the Holders of
the Investor Certificates shall establish or cause to be established with the
Trustee in the name of the Trustee, on behalf of the Servicer, a segregated
trust account (the "Escrow Account"), bearing a designation clearly
--------------
indicating that the funds deposited therein are held for the benefit of such
Certificateholders. Such account shall be maintained in the corporate trust
department of the Trustee if the short-term unsecured debt rating of the
Trustee is below A-1+ from Standard & Poor's. All funds on deposit in the
Escrow Account shall, at the direction of the Servicer, be invested by
the Trustee in Permitted Investments which will be held to maturity and which
will mature so that all funds on deposit therein will be available prior to
the Distribution Date next following such investment. The Trustee shall
maintain possession of the negotiable instruments or securities, if any,
evidencing the Permitted Investments described in clause (a) of the
definition thereof from the time of purchase thereof until maturity. Until
the earlier of (a) the date on which all Series are paid in full and (b) the
termination of the Trust (the "Payoff Date"), if a drawing under the Servicer
-----------
Letter of Credit is called for under Section 4.01 (a), a withdrawal in the
same amount from the Escrow Account shall instead be made and the related
funds applied as provided therein. Any reimbursement with respect to any
drawing which would otherwise have been applied to reinstate the Servicer
Letter of Credit shall be deposited in the Escrow Account. If, as evidenced
by an Officers' Certificate of the Servicer, on any Distribution Date the
amount on deposit in the Escrow Account (excluding any investment earnings
on deposit therein) exceeds the unpaid balance of all Series plus interest
accrued and unpaid thereon through the then current applicable interest
accrual period, the Trustee shall withdraw such excess amount on such
Distribution Date and pay such excess to the Letter of Credit Bank for
application in accordance with the agreement pursuant to which the Letter of
Credit was issued. From and after the date of such Special Drawing the term
"Available Letter of Credit Amount" with respect to the Servicer Letter of
---------------------------------
Credit shall be deemed to refer to the amount on deposit in the Escrow
Account (excluding any investment earnings thereon). On the first Business
Day after the earlier of the Payoff Date and the scheduled expiration date
of the Servicer Letter of Credit, all funds in the Escrow Account shall be
paid to the Letter of Credit Bank for application in accordance with the
agreement pursuant to which the Servicer Letter of Credit was issued. Any
investment earnings on the Escrow Account shall be remitted monthly on each
Distribution Date to the Letter of Credit Bank for application by the Letter
of Credit Bank in accordance with the agreement pursuant to which the
Servicer Letter of Credit was issued. All funds on deposit in the Escrow
Account shall be the sole and exclusive property of the Trustee for the
benefit of the Holders of all Series, subject to the rights of the Letter of
Credit Bank as provided herein. Neither the Transferor nor the Servicer
shall at any time have any ownership or other interest in such funds or any
right to withdraw or to receive such funds. In the event that,
notwithstanding the intention of the parties hereto, such funds are deemed
to be the property of the Servicer, the Servicer hereby grants to the
Trustee, for the benefit of the Holders of the Investor Certificates, a first
priority security interest in and to all of the Servicer's right, title and
interest in such funds for the purpose of securing the rights of the Trustee
for the benefit of the Holders of the Investor Certificates hereunder subject
to the rights of the Letter of Credit Bank and the Trustee's obligations to
remit funds on deposit in the Escrow Account to the Letter of Credit Bank as
described herein.
In the event that the Servicer delivers to the Trustee a substitute
letter of credit meeting the requirements of Section 4.01A(c), the Trustee
shall release to the initial Letter of Credit Bank any funds on deposit in
the Escrow Account for application pursuant to the agreement pursuant to
which the initial Servicer Letter of Credit was issued.
Section 4.01B Transferor Letter of Credit.
---------------------------
(a) Transferor Letter of Credit. If with respect to any
---------------------------
Collection Period the Servicer adjusts downward the amount of any Receivable
pursuant to Section 3.09(a) and the Transferor fails to make any deposit to
the Collection Account in respect thereof as required pursuant to Section
3.09(a), the Trustee shall draw on the Transferor Letter of Credit, in
accordance with the terms thereof, in the amount of the adjustment. Any such
draw on the Transferor Letter of Credit shall be made after receipt of the
related Monthly Servicer's Certificate but on or before 1:00 P.M. (New York
City time) on the Transfer Date for such Collection Period provided such
Monthly Servicer's Certificate is received by the Trustee prior to such time.
Upon receipt of the proceeds of any drawing under the Transferor Letter of
Credit, the Trustee shall deposit such proceeds into the Collection Account.
The Servicer shall include in each Monthly Servicer's Certificate, or in an
Officer's Certificate provided to the Trustee with each Monthly Servicer's
Certificate, the Stated Amount (as defined in the Transferor Letter of
Credit) of the Transferor Letter of Credit as of the related Determination
Date.
(b) Downgrade Credit of Transferor Letter of Credit Bank or
-------------------------------------------------------
Expiration of Term of Transferor Letter of Credit.
- - -------------------------------------------------
(i) On the fifth Business Day prior to the expiry date of
the Transferor Letter of Credit (as such letter of credit may have been
renewed or extended), the Trustee shall give written notice thereof to the
Transferor.
(ii) In the event that a Responsible Officer of the Trustee
obtains actual knowledge that the short-term unsecured debt rating of the
Letter of Credit Bank has been withdrawn or reduced below A-1+ or F-1+ by the
applicable Rating Agency, the Trustee shall promptly give written notice
thereof to the Transferor. Within 35 (thirty-five) days (or immediately if
the short-term debt rating of the Letter of Credit Bank has been reduced to
or below A-2 or F-2 by the applicable Rating Agency) of receipt of such
notice, the Transferor shall either (x) deliver to the Trustee a substitute
Transferor Letter of Credit in accordance with Section 4.01B(c) or (y)
instruct the Trustee in writing to make a demand for a Special Drawing under
the Transferor Letter of Credit pursuant to Section 4.01B(d).
(c) Substitute Transferor Letter of Credit. The Trustee shall
--------------------------------------
accept delivery of a letter of credit in substitution for the Transferor
Letter of Credit and shall deliver the Transferor Letter of Credit to the
Letter of Credit Bank for cancellation upon the satisfaction of the following
conditions:
(i) The substitute letter of credit shall be irrevocable
and shall be issued by a bank or other financial institution whose short term
unsecured debt is rated A-1+ and F-1+ by the applicable Rating Agency, and
the substitute letter of credit shall provide that drawings thereunder may
be made on substantially the same terms and conditions as the initial
Transferor Letter of Credit, and the substitute letter of credit shall have
been delivered to the Trustee.
(ii) The Trustee shall have received written confirmation
from each Rating Agency with an outstanding rating on any Series to the
effect that the delivery of the substitute letter of credit to the Trustee
and the termination of the initial Transferor Letter of Credit will not
result in the downgrade or withdrawal of any outstanding rating on any then
outstanding Series.
(iii) The amount available to be drawn under, and the Stated
Amount of, the substitute letter of credit shall be at least equal to the
amount which was available to be drawn under, and the Stated Amount of, the
Transferor Letter of Credit being replaced.
(iv) The Transferor Amount (plus the B/F Amount and the
Available Letter of Credit Amount) expressed as a percentage of the aggregate
invested amount of all outstanding Series issued by the Trust with respect
to the Transferor Letter of Credit shall be at least equal to the Minimum
Transferor Interest Percentage.
(v) The Trustee shall have received written opinions of
counsel (acceptable to the Trustee) (including domestic and foreign counsel,
if applicable) to the issuer of the substitute letter of credit, which
opinions shall be reasonably satisfactory to the Trustee and the Transferor
and their respective counsel, substantially to the same effect as the
opinions delivered to the Trustee on the date of issuance of the Transferor
Letter of Credit with respect to the Transferor Letter of Credit.
(vi) The Transferor shall have delivered to the Trustee an
Officer's Certificate confirming the items set forth in (i) through (iv)
above. The Trustee may conclusively rely on such certificate, shall have no
duty to make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.
Upon the delivery to the Trustee of a substitute letter of credit
in accordance with this Section 4.01B(c), such substitute letter of credit
shall be the Transferor Letter of Credit and the issuer thereof shall be a
Letter of Credit Bank for all purposes hereof.
(d) Special Drawing. If the Transferor elects to instruct the
---------------
Trustee to make a Special Drawing pursuant to Section 4.01B(b) above, the
Transferor shall provide two Business Days notice to the Letter of Credit
Bank and shall instruct the Trustee in writing to promptly draw upon the
Transferor Letter of Credit to the full extent of the Available Letter of
Credit Amount thereunder and deposit such amount into the Transferor Escrow
Account (as defined below). On the Closing Date, the Trustee for the benefit
of the Holders of the Investor Certificates shall establish or cause to be
established with the Trustee in the name of the Trustee, on behalf of the
Transferor, a segregated trust account (the "Transferor Escrow Account"),
-------------------------
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of such Certificateholders. Such account shall be
maintained in the corporate trust department of the Trustee if the short-term
unsecured debt rating of the Trustee is below A-1+ from Standard & Poor's.
All funds on deposit in the Transferor Escrow Account shall, at the direction
of the Transferor, be invested by the Trustee in Permitted Investments which
will be held to maturity and which will mature so that all funds on deposit
therein will be available prior to the Distribution Date next following such
investment. The Trustee shall maintain possession of the negotiable
instruments or securities, if any, evidencing the Permitted Investments
described in clause (a) of the definition thereof from the time of purchase
thereof until maturity. Until the earlier of (a) the date on which all
Series are paid in full and (b) the Payoff Date, if a drawing under the
Transferor Letter of Credit is called for under Section 4.01B(a), a
withdrawal in the same amount from the Transferor Escrow Account shall
instead be made and the related funds applied as provided therein. Any
reimbursement with respect to any drawing which would otherwise have been
applied to reinstate the Transferor Letter of Credit shall be deposited in
the Transferor Escrow Account. If, as evidenced by an Officers' Certificate
of the Transferor, on any Distribution Date the amount on deposit in the
Transferor Escrow Account (excluding any investment earnings on deposit
therein) exceeds the unpaid balance of all Series plus interest accrued and
unpaid thereon through the then current applicable interest
accrual period, the Trustee shall withdraw such excess amount on such
Distribution Date and pay such excess to the Letter of Credit Bank for
application in accordance with the agreement pursuant to which the Transferor
Letter of Credit was issued. From and after the date of such Special
Drawing, the term "Available Letter of Credit Amount" with respect to the
---------------------------------
Transferor Letter of Credit shall be deemed to refer to the amount on deposit
in the Transferor Escrow Account (excluding any investment earnings thereon).
On the first Business Day after the earlier of the Payoff Date and the
scheduled expiration date of the Transferor Letter of Credit, all funds in
the Transferor Escrow Account shall be paid to the Letter of Credit Bank for
application in accordance with the agreement pursuant to which the Transferor
Letter of Credit was issued. Any investment earnings on the Transferor
Escrow Account shall be remitted monthly on each Distribution Date to the
Letter of Credit Bank for application by the Letter of Credit Bank in
accordance with the agreement pursuant to which the Transferor Letter of
Credit was issued. All funds on deposit in the Transferor Escrow Account
shall be the sole and exclusive property of the Trustee for the benefit of
the Holders of all Series, subject to the rights of the Letter of Credit Bank
as provided herein. Neither the Transferor nor the Servicer shall at any
time have any ownership or other interest in such funds or any right to
withdraw or to receive such funds. In the event that, notwithstanding the
intention of the parties hereto, such funds are deemed to be the property of
the Transferor, the Transferor hereby grants to the Trustee, for the benefit
of the Holders of the Investor Certificates, a first priority security
interest in and to all of the Transferor's right, title and interest in such
funds for the purpose of securing the rights of the Trustee for the benefit
of the Holders of the Investor Certificates hereunder subject to the rights
of the Letter of Credit Bank and the Trustee's obligations to remit funds on
deposit in the Transferor Escrow Account to the Letter of Credit Bank as
described herein.
In the event that the Transferor delivers to the Trustee a substitute
letter of credit meeting the requirements of Section 4.01B(c), the Trustee
shall release to the initial Letter of Credit Bank any funds on deposit in
the Transferor Escrow Account for application pursuant to the agreement
pursuant to which the initial Transferor Letter of Credit was issued.
(THE REMAINDER OF ARTICLE IV IS RESERVED
AND MAY BE SPECIFIED IN ANY SUPPLEMENT
WITH RESPECT TO ANY SERIES)
ARTICLE V
(ARTICLE V IS RESERVED AND MAY BE SPECIFIED IN
ANY SUPPLEMENT WITH RESPECT TO ANY SERIES)
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates. Subject to Section 6.11 of the
----------------
Agreement, the Investor Certificates of each Series shall be issued in fully
registered form (the "Registered Certificates"), and shall be substantially
-----------------------
in the form of the exhibits with respect thereto attached to the applicable
Supplement. The Exchangeable Transferor Certificate shall be substantially
in the form of Exhibit A-1. The Investor Certificates and the Exchangeable
-----------
Transferor Certificate shall, upon issuance pursuant hereto or to Section
6.09 or Section 6.11 of the Agreement, be executed and delivered by the
Transferor to the Trustee for authentication and redelivery as provided in
Sections 2.09 and 6.02 of the Agreement. Any Investor Certificates shall be
issued in minimum denominations of $1,000 and in integral multiples of $1,000
in excess thereof, unless otherwise specified in any Supplement. If
specified in the related Supplement for any Series, the Investor Certificates
shall be issued upon initial issuance as a single certificate in an original
principal amount equal to the Initial Invested Amount as described in Section
6.10 of the Agreement. The Exchangeable Transferor Certificate shall be
issued to the Transferor as a single certificate. The Bridgestone/Firestone
Certificate shall be issued to Bridgestone/Firestone as a single certificate
in substantially the form of Exhibit A-2. Each Certificate shall be executed
-----------
by manual or facsimile signature on behalf of the Transferor by its President
or any Vice President. Certificates bearing the manual or facsimile (in the
case of the Transferor) signature of the individual who has, at the time when
such signature was affixed, authorized to sign on behalf of the Transferor
or the Trustee shall not be rendered invalid, notwithstanding that such
individual has ceased to be so authorized prior to the authentication and
delivery of such Certificates or does not hold such office at the date of
such Certificates. No Certificate shall be entitled to any benefit under
this Agreement or any applicable Supplement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by or on behalf of the
Trustee by the manual signature of a duly authorized signatory, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Section 6.02 Authentication of Certificates. Contemporaneously with
------------------------------
the assignment and transfer of the Receivables, whether now existing or
hereafter created, and the other Trust Assets to the Trust, the Trustee shall
authenticate and deliver the initial Series of Investor Certificates upon the
order of the Transferor. The Trustee shall authenticate and deliver the
Bridgestone/Firestone Certificates upon the order of the Transferor. The
Trustee shall authenticate and deliver the Exchangeable Transferor
Certificate, upon the order of the Transferor, to the Transferor
simultaneously with the delivery of the initial Series of Investor
Certificates. Upon an Exchange as provided in Section 6.09 of the Agreement
and the satisfaction of certain other conditions specified therein, the
Trustee shall authenticate and deliver the Investor Certificates of
additional Series (with the designation provided in the applicable
Supplement), upon the order of the Transferor, to the persons designated in
such Supplement. Upon the order of the Transferor, the Certificates of any
Series shall be duly authenticated by or on behalf of the Trustee, in
authorized denominations equal to (in the aggregate) the Initial Invested
Amount of such Series of Investor Certificates. If specified in the related
Supplement for any Series, the Trustee shall authenticate Book-Entry
Certificates or Certificates in physical form that are issued upon original
issuance thereof, upon the written order of the Transferor, to a Clearing
Agency or its nominee as provided in Section 6.11 of the Agreement against
payment of the purchase price thereof.
Section 6.03 Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Trustee shall cause to be kept at the office or agency to
be maintained by a transfer agent and registrar (which may be the Trustee)
(the "Transfer Agent and Registrar") in accordance with the provisions of
----------------------------
Section 6.03(c) of the Agreement a register (the "Certificate Register") in
--------------------
which, subject to such reasonable regulations as it may prescribe, the
Transfer Agent and Registrar shall provide for the registration of the
Registered Certificates and of transfers and exchanges of the Registered
Certificates as herein provided. The Trustee is hereby initially appointed
Transfer Agent and Registrar for the purpose of registering the Registered
Certificates and transfers and exchanges of the Registered Certificates as
herein provided. The Trustee shall be permitted to resign as Transfer Agent
and Registrar upon 30 days' written notice to the Transferor and the
Servicer; provided, however, that such resignation shall not be effective and
-------- -------
the Trustee shall continue to perform its duties as Transfer Agent and
Registrar until the Transferor has appointed a successor Transfer Agent and
Registrar acceptable to the Transferor and the Trustee. If specified in the
related Supplement for any Series of Certificates, the Transferor shall
appoint any co-transfer agent and co-registrar chosen by the Transferor, and
acceptable to the Trustee. If specified in such related Supplement, so long
as the Registered Certificates relating to such Supplement are outstanding,
the Transferor shall maintain a co-transfer agent and co-registrar in New
York City or any other city designated in such Supplement and any reference
in this Agreement to the Transfer Agent and Registrar shall include
any co-transfer agent and co-registrar unless the context requires otherwise.
Upon surrender for registration of transfer of any Registered
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose and compliance with applicable requirements of
the Transfer Agent and Registrar, the Transferor shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Registered Certificates in
authorized denominations of the same Series representing like aggregate
Undivided Interests in the Trust.
At the option of any Registered Certificateholder, Registered
Certificates may be exchanged for other Registered Certificates of the same
Series in authorized denominations of like aggregate Undivided Interests in
the Trust, upon surrender of the Registered Certificates to be exchanged at
any office or agency of the Transfer Agent and Registrar maintained for such
purpose.
The preceding provisions of this Section 6.03 notwithstanding, the
Trustee or the Transfer Agent and Registrar, as the case may be, shall not
be required to register the transfer of or exchange any Certificate of any
Series for a period of 15 days preceding the due date for any payment with
respect to the Certificates of such Series.
Whenever any Investor Certificates of any Series are so surrendered
for exchange the Transferor shall execute and the Trustee shall authenticate
and (unless the Transfer Agent and Registrar is different from the Trustee
in which case the Transfer Agent and Registrar shall) deliver the Investor
Certificates of such Series which the Certificateholder making the exchange
is entitled to receive. Every Investor Certificate presented or surrendered
for registration of transfer or exchange shall be accompanied by a written
instrument of transfer in a form satisfactory to the Trustee and the Transfer
Agent and Registrar duly executed by the Certificateholder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Investor Certificates but the Transfer Agent and Registrar and
the Trustee or any co-transfer agent and co-registrar or co-trustee may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Investor
Certificates.
All Investor Certificates surrendered for registration of transfer
or exchange shall be cancelled by the Transfer Agent and Registrar and
destroyed by the Trustee.
The Transferor shall execute and deliver to the Trustee or the
Transfer Agent and Registrar, as applicable, and Registered Certificates in
such amounts and at such times as are necessary to enable the Trustee to
fulfill its responsibilities under this Agreement and the Certificates.
Any Series Supplement may set forth additional restrictions on the
transfer of Certificates.
(b) Except as provided in any Supplement or in Sections 6.09 and
7.02 of the Agreement, the Transferor's interest in the Exchangeable
Transferor Certificate shall not be sold, transferred, assigned, exchanged,
pledged, participated or otherwise conveyed except that the Transferor
Interest may be participated to Bridgestone/Firestone pursuant to the
Participation Agreement. The Bridgestone/Firestone Certificate may not be
sold, assigned, pledged or otherwise conveyed.
(c) The Transfer Agent and Registrar will maintain at its expense
in the Borough of Manhattan, the City of New York (or subject to Section
6.03(a) of the Agreement any other city designated in such Supplement), an
office or offices or agency or agencies where Investor Certificates may be
surrendered for registration of transfer or exchange.
(d) Any Supplement may provide for restrictions applicable to the
transfer of a particular Series of Certificates.
Section 6.04 Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If (a) any mutilated Certificate is surrendered to the Transfer Agent and
Registrar, or the Transfer Agent and Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate and
(b) there is delivered to the Transfer Agent and Registrar, the Trustee and
the Transferor such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Transferor
shall execute and the Trustee shall authenticate and (unless the Transfer
Agent and Registrar is different from the Trustee, in which case the Transfer
Agent and Registrar shall) deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and aggregate Undivided Interest, if applicable. In connection with
the issuance of any new Certificate under this Section 6.04, the Trustee or
the Transfer Agent and Registrar may require the payment by the
Certificateholder of a sum sufficient to cover any tax or other governmental
expenses (including the fees and expenses of the Trustee and Transfer Agent
and Registrar) connected therewith. Any Certificate issued pursuant to this
Section 6.04 shall constitute complete and indefeasible evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
Section 6.05 Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Trustee, the Paying Agent, the
Transfer Agent and Registrar and any agent of any of them may treat the
person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Article
IV hereof and for all other purposes whatsoever, and neither the Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by any notice to the contrary. Notwithstanding the
foregoing provisions of this Section 6.05, in determining whether the holders
of the requisite Undivided Interests have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Certificates
owned by the Transferor, the Servicer or any affiliate thereof (as defined
in Rule 405 under the Securities Act of 1933, as amended), shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
Certificates so owned which have been pledged in good faith shall not be
disregarded and may be regarded as outstanding if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect
to such Certificates and that the pledgee is not the United States, the
Servicer or an affiliate thereof (as defined above).
Section 6.06 Appointment of Paying Agent. The Paying Agent shall make
---------------------------
distributions to Investor Certificateholders from the Collection Account (or
any other account or accounts maintained for the benefit of
Certificateholders as specified in the related Supplement for any Series)
pursuant to Articles IV and V hereof. Any Paying Agent shall have the
revocable power to withdraw funds from the Collection Account (or any other
account or accounts maintained for the benefit of Certificateholders as
specified in the related Supplement for any Series for the purpose of making
distributions referred to above. The Trustee may revoke such power and
remove the Paying Agent if the Trustee determines in its sole discretion that
the Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Paying Agent shall initially be the
Trustee and any co-paying agent chosen by the Transferor and acceptable to
the Trustee. The Trustee shall be permitted to resign as Paying Agent upon
30 days' written notice to the Trustee and the Transferor. In the event that
the Trustee shall no longer be the Paying Agent, the Transferor shall appoint
a successor to act as Paying Agent and such successor shall be
acceptable to the Trustee. The Trustee shall cause the initial Paying Agent
and each successor Paying Agent or any additional Paying Agent appointed by
the Transferor to execute and deliver to the Trustee an instrument in which
such initial or successor Paying Agent or additional Paying Agent shall agree
with the Trustee that, as Paying Agent, such initial or successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Investor Certificateholders in trust for the benefit of the
Investor Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders. The Paying Agent shall return all unclaimed
funds to the Trustee and upon removal of a Paying Agent shall also return all
funds in its possession to the Trustee. The provisions of Sections 11.01,
11.02 and 11.03 shall apply to the Trustee also in its role as Paying Agent,
for so long as the Trustee shall act as Paying Agent. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
Section 6.07 Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses. The Transfer Agent and Registrar shall furnish to the Servicer
- - ---------
(or the Paying Agent or any agent thereof), within five Business Days after
receipt by the Trustee of a request therefor from the Servicer or the Paying
Agent, respectively, in writing, a list in such form as the Servicer or the
Paying Agent may reasonably require, of the names and addresses of the
Investor Certificateholders. If three or more Holders of Investor
Certificates of any Class of any Series or holders representing Undivided
Interests in the Trust aggregating not less than 5% of the Invested Amount
of the Investor Certificates of any Class of any Series (the "Applicants")
----------
apply in writing to the Trustee, and such application states that the
Applicants desire to communicate with other Investor Certificateholders of
any Series with respect to their rights under this Agreement or under the
Investor Certificates and is accompanied by a copy of the communication which
such Applicants propose to transmit, then the Trustee, after having been
adequately indemnified by such Applicants for its costs and expenses shall
afford or shall cause the Transfer Agent and Registrar to afford such
Applicants access during normal business hours to the most recent list of
Certificateholders held by the Trustee, within five Business Days after the
receipt of such application. Such list shall be as of a date no more than
30 days prior to the date of receipt of such Applicants' request.
Every Certificateholder agrees with the Trustee that neither the
Trustee, the Transfer Agent and Registrar, nor any of their respective agents
shall be held accountable by reason of the disclosure of any such information
as to the names and addresses of the Certificateholders hereunder, regardless
of the sources from which such information was derived.
Section 6.08 Authenticating Agent.
--------------------
(a) The Trustee may appoint one or more authenticating agents with
respect to the Certificates which shall be authorized to act on behalf of the
Trustee in authenticating the Certificates in connection with the issuance,
delivery, registration of transfer, exchange or repayment of the
Certificates. Whenever reference is made in this Agreement to the
authentication of Certificates by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication
on behalf of the Trustee by an authenticating agent and a certificate of
authentication executed on behalf of the Trustee by an authenticating agent.
Each authenticating agent must be reasonably acceptable to the Transferor.
(b) Any institution succeeding to the corporate agency business
of an authenticating agent shall continue to be an authenticating agent
without the execution or filing of any paper or any further act on the part
of the Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving
written notice of resignation to the Trustee and to the Transferor. The
Trustee may at any time terminate the agency of an authenticating agent by
giving notice of termination to such authenticating agent and to the
Transferor. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time an authenticating agent shall cease to
be acceptable to the Trustee or the Transferor, the Trustee promptly may
appoint a successor authenticating agent. Any successor authenticating agent
upon acceptance of its appointment hereunder shall become agent ted with all
the rights, powers and duties of its predecessor hereunder, with like effect
as if originally named as an authenticating agent. No successor
authenticating agent shall be appointed unless acceptable to the Trustee and
the Transferor.
(d) The Servicer agrees to pay, on behalf of the Trust, to each
authenticating agent from time to time reasonable compensation for its
services under this Section 6.08.
(e) The provisions of Sections 11.01, 11.02 and 11.03 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section 6.08, the
Certificate, may have endorsed thereon, in lieu of the Trustee's certificate
of authentication, an alternate certificate of authentication in
substantially the following form:
This is one of the Certificates described in the within mentioned
Pooling and Servicing Agreement.
_________________________
_________________________
as Authenticating Agent for
the Trustee,
By: _____________________
Authorized Officer
Section 6.09 Tender of Exchangeable Transferor Certificate.
---------------------------------------------
(a) Upon any Exchange, the Trustee shall issue to the Transferor
under Section 6.01 for execution and redelivery to the Trustee for
authentication under Section 6.02 one or more new Series of Investor
Certificates. Any such Series of Investor Certificates shall be
substantially in the form specified in the applicable Supplement and shall
bear, upon its face, the designation for such Series to which it belongs so
selected by the Transferor. Except as specified in any Supplement for a
related Series, all Investor Certificates of any Series shall be equally and
ratably entitled as provided herein to the benefits hereof without
preference, priority or distinction on account of the actual time or times
of authentication and delivery, all in accordance with the terms and
provisions of this Agreement and the applicable Supplement.
(b) The Transferor may tender the Exchangeable Transferor
Certificate to the Trustee in exchange for (i) one or more newly issued
Series of Investor Certificates and (ii) a reissued Exchangeable Transferor
Certificate (any such tender a "Transferor Exchange"). In addition, to the
-------------------
extent permitted for any Series of Investor Certificates as specified in the
related Supplement, the Transferor may tender the Investor Certificates of
any Series and the Exchangeable Transferor Certificate to the Trustee
pursuant to the terms and conditions set forth in such Supplement in exchange
for, respectively (i) one or more newly issued Series of Investor
Certificates and (ii) a reissued Exchangeable Transferor Certificate (an
"Investor Exchange"). The Transferor Exchange and Investor Exchange are
-----------------
referred to collectively herein as an "Exchange." The Transferor may perform
--------
an Exchange by notifying the Trustee, in writing, at least five days in
advance (an "Exchange Notice") of the date upon which the Exchange is to
---------------
occur (an "Exchange Date"). Any Exchange Notice shall state the designation
-------------
of any Series to be newly issued on the Exchange Date and, with respect to
each such Series: (a) its Initial Invested Amount (or the method for
calculating such Initial Invested Amount), if any, which, in the aggregate,
at any time, may not be greater than the current principal amount of the
Exchangeable Transferor Certificate less the current required Transferor
Amount, if any, at such time (or in the case of an Investor Exchange, the sum
of the Invested Amount of the Series of Investor Certificates to be exchanged
plus the current principal amount of the Exchangeable Transferor
Certificate), and (b) its Certificate Rate (or the method for allocating
interest payments or other cash flow to such newly issued Series), if any.
On the Exchange Date, the Trustee shall only authenticate and deliver the
Certificates of any such Series upon delivery to it of the following: (a) a
Supplement in form satisfactory to the Trustee executed by the Transferor and
specifying the Principal Terms of such Series, (b) the applicable
Enhancement, if any, (c) an Opinion of Counsel to the effect that the newly
issued Series of Investor Certificates will be characterized as either
indebtedness or an interest in a partnership under existing law for Federal
income tax purposes and that the issuance of the newly issued Series of
Investor Certificates will not have any material adverse impact on the
Federal income tax characterization of any outstanding Series of Investor
Certificates that have been the subject of a previous opinion of tax counsel,
(d) an agreement, if any, pursuant to which the Enhancement Provider agrees
to provide Enhancement, (e) written confirmation from each Rating Agency that
the Exchange will not result in the Rating Agency's reducing or withdrawing
its rating or otherwise adversely affect any rating on any then outstanding
Series rated by it and (f) the existing Exchangeable Transferor Certificate
or applicable Investor Certificates, as the case may be. Upon satisfaction
of such conditions, the Trustee shall cancel the existing Exchangeable
Transferor Certificate or applicable Investor Certificates, as the case may
be and issue, as provided above, such Series of Investor Certificates and a
new Exchangeable Transferor Certificate, dated the Exchange Date.
(c) In conjunction with an Exchange, the parties hereto shall
execute a Supplement, which shall specify the relevant terms with respect to
any Series of Investor Certificates, which may include, without limitation:
(i) its name or designation, (ii) an Initial Invested Amount or the method
of calculating the Initial Invested Amount, (iii) a Certificate Rate (or
formula for the determination thereof), (iv) the rights of the Transferor as
Holder of the Exchangeable Transferor Certificate that have been transferred
to the Holders of such Series pursuant to such Exchange (including any rights
to allocations of Collections), (v) the interest payment date or dates and
the date or dates from which interest shall accrue, (vi) the method of
allocating Principal Collections for such Series and, if applicable, with
respect to other Series and the method by which the principal amount of
Investor Certificates of such Series shall amortize or accrete and the method
for allocating Finance Charge Collections and Defaulted Receivables,
(vii) the names of any accounts to be used by such Series and the
terms governing the operation of any such accounts, (viii) the Servicing Fee
Percentage, (ix) the Minimum Transferor Interest Percentage, (x) Minimum
Aggregate Receivables, (xi) the Series Termination Date, (xii) the terms of
any Enhancement, (xiii) the Enhancement Provider, (xiv) the Base Rate,
(xv) the Repurchase Terms or the terms on which the Certificates of such
Series may be remarketed to other investors, (xvi) any deposit into any
account provided for such Series, (xvii) the number of Classes of such
Series, and if more than one Class, the rights and priorities of each such
Class, (xviii) whether the Certificates may be issued in bearer form and any
limitations imposed thereon, (xix) the priority of any Series with respect
to any other Series, and (xx) any other relevant terms of such Series (all
such terms, the "Principal Terms" of such Series). If on the date of the
---------------
issuance of such Series there is issued and outstanding no Series of Investor
Certificates which is currently rated by a Rating Agency, then as a condition
to such Exchange a nationally recognized investment banking firm or
commercial bank shall also deliver to the Trustee an officer's certificate
stating, in substance, that the Exchange will not have an adverse effect on
the timing or distribution of payments to such other Series of Investor
Certificates then issued and outstanding.
Section 6.10 (Reserved)
--------
Section 6.11 Book-Entry Certificates. Unless otherwise provided in
-----------------------
any related Supplement, the Investor Certificates, upon original issuance,
will be issued in the form of the requisite number of typewritten
Certificates representing the Book-Entry Certificates, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of,
the Transferor. The Investor Certificates shall initially be registered on
the Certificate Register in the name of CEDE & Co., the nominee of the
Depository Trust Company, and no Certificate Owner will receive a definitive
certificate representing such Certificate Owner's interest in the Investor
Certificates, except as provided in Section 6.13 of the Agreement. Unless
and until definitive, fully registered Investor Certificates (the "Definitive
----------
Certificates") have been issued to Certificate Owners pursuant to Section
- - ------------
6.13 of the Agreement:
(i) the provision of this Section 6.11 shall be in full
force and effect;
(ii) all payments and notices to the Certificate Owners
shall be made to the Clearing Agency;
(iii) to the extent that the provisions of this Section 6.11
conflict with any other provisions of this Agreement, the provisions of this
Section 6.11 shall control but shall be subject to the provisions of Section
6.05;
(iv) the rights of Certificate Owners shall be exercised
only through the Clearing Agency and the Clearing Agency Participants and
shall be limited to those established by law and agreements between such
Certificate Owners and the Clearing Agency and for the Clearing Agency
Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 6.13 of the Agreement,
the initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit distributions of principal and
interest on the Investor Certificates to such Clearing Agency Participants;
and
(v) whenever this Agreement requires or permits actions to
be taken based upon instructions or directions of a specified percentage of
the Invested Amount of any or all Series of Certificates outstanding, the
Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from Certificate
Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in Investor
Certificates.
Section 6.12 Notice to Clearing Agency. Whenever notice or other
-------------------------
communication to the Investor Certificateholders is required under this
Agreement, unless and until Definitive Certificates shall have been issued
to Certificate Owners pursuant to Section 6.13 of the Agreement, the Trustee,
the Servicer and the Paying Agent shall give all such notices and
communications specified herein to be given to Holders of the Investor
Certificates to the Clearing Agency or Agencies.
Section 6.13 Definitive Certificates. If Book-Entry Certificates have
-----------------------
been issued pursuant to Section 6.11 and if (i)(A) the Transferor advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities under the Depository Agreement, and
(B) the Trustee or the Transferor is unable to locate a qualified successor,
(ii) the Transferor at its option, advises the Trustee in writing that it
elects to terminate the book-entry system through the Clearing Agency or
(iii) after the occurrence of a Servicer Default, Certificate Owners
representing beneficial interests aggregating not less than 50% of the
Invested Amount of any Series advise the Trustee and the Clearing Agency
through the Clearing Agency Participants in writing that the continuation of
a book-entry system through the Clearing Agency is no longer in the best
interests of the Certificate Owners, the Trustee shall notify all Certificate
Owners, through each applicable Clearing Agency, of the occurrence of any
such event and of the availability of Definitive Certificates to Certificate
Owners requesting the same. Upon surrender to the Trustee of the
Investor Certificates by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Trustee shall
issue the Definitive Certificates. Neither the Transferor, the Transfer
Agent and Registrar nor the Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions.
(END OF ARTICLE VI)
ARTICLE VII
OTHER MATTERS RELATING
TO THE TRANSFEROR
Section 7.01 Liability of the Transferor. The Transferor shall be
---------------------------
liable for each obligation, covenant, representation and warranty of the
Transferor, arising under or related to this Agreement or any Supplement.
Except as provided in the preceding sentence, the Transferor shall be liable
only to the extent of the obligations specifically undertaken by the
Transferor in its capacity as Transferor hereunder.
Section 7.02 Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, the Transferor.
- - ------------------------------
(a) The Transferor shall not consolidate with or merge into any
other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person unless:
(i) the corporation formed by such consolidation or into
which the Transferor is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Transferor substantially as an
entirety shall be, if the Transferor is not the surviving entity, organized
and existing under the laws of the United States of America or any state or
the District of Columbia, and shall be a corporation, a savings and loan
association, national association, a bank or other entity and, if the
Transferor is not the surviving entity, shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the performance of every covenant and obligation
of the Transferor hereunder; and
(ii) the Transferor has delivered to the Trustee an
officers' certificate signed by a Vice President (or any more senior officer)
of the Transferor and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such supplemental agreement
comply with this Section 7.02 and that all conditions precedent herein
provided for relating to such transaction have been complied with; and
(iii) the Transferor has delivered notice to each Rating
Agency of such consolidation, merger, conveyance or transfer and shall have
received written confirmation from each Rating Agency that such
consolidation, merger, conveyance or transfer would not cause a reduction or
withdrawal of the rating of any Series of Certificates then outstanding.
(b) The obligations of the Transferor hereunder shall not be
assignable nor shall any Person succeed to the obligations of the Transferor
hereunder except in each case in accordance with the provisions of the
foregoing paragraph.
Section 7.03 Limitation on Liability of the Transferor. Subject to
-----------------------------------------
Sections 7.01 and 7.04 of the Agreement, neither the Transferor nor any of
its directors or officers or employees or agents in its capacity as
Transferor shall be under any liability to the Trust, the Trustee, the
Certificateholders or any other Person for any action taken or for refraining
from the taking of any action in the capacity as Transferor pursuant to this
Agreement whether arising from express or implied duties under this Agreement
or any Supplement; provided, however, that this provision shall not protect
-------- -------
the Transferor against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. The Transferor and any director or officer or employee or
agent of the Transferor may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any
- - ----- -----
matters arising hereunder.
Section 7.04 Liabilities. Notwithstanding Sections 7.01 and 7.03 of
-----------
the Agreement, by entering into this Agreement, the Transferor and
Bridgestone/Firestone agree to indemnify the Trust for the entire amount of
any losses, claims, damages or liabilities (other than investment losses
incurred by a Certificateholder in the capacity of an investor in the
Investor Certificates of any Series) asserted against the Trust by parties
other than the Transferor, the Servicer, the Trustee or Certificateholders,
and arising out of or based on the arrangement created by this Agreement or
any Supplement and the actions of the Servicer taken pursuant hereto as
though the Agreement and any Supplement created a partnership under the
Uniform Partnership Act. The Transferor and Bridgestone/FireStone agree to
pay, indemnify and hold harmless each Investor Certificateholder of any
Series against and from any and all such losses, claims, damages and
liabilities except to the extent that they arise from any action by such
Investor Certificateholder causing such losses, claims, damages or
liabilities. The Servicer will indemnify and hold harmless the Transferor
and Bridgestone/Firestone for any losses, claims, damages and liabilities of
the Transferor or Bridgestone/Firestone arising under this Section 7.04 from
the actions or omissions of the Servicer. The amount of the Transferor's
liability under this Section 7.04 shall be subordinate to the security
interest of the Trust in the Receivables and shall be payable from the assets
of the Transferor at the time such liability is asserted and at any time
thereafter.
(END OF ARTICLE VII)
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
Section 8.01 Liability of the Servicer. The Servicer shall be liable
-------------------------
under this Agreement only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
Section 8.02 Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, the Servicer. The Servicer shall not consolidate with or
- - ----------------------------
merge into any other corporation or convey or transfer its properties and
assets substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into
which the Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Servicer substantially as an
entirety shall be a corporation organized and existing under the laws of the
United States of America or any State or the District of Columbia, and shall
be a corporation, a savings and loan association, a national association, a
bank or other entity and, if the Servicer is not the surviving entity, such
corporation shall expressly assume, by an agreement supplemental hereto
executed and delivered to the Trustee in a form satisfactory to the Trustee,
the performance of every covenant and obligation of the Servicer hereunder
(provided that this Section 8.02(i) shall not be construed to extend to
mergers of subsidiaries of the Servicer into the Servicer as long as the
Servicer is the surviving entity); and
(ii) the Servicer has delivered to the Trustee an officer's
certificate signed by a Vice President (or more senior officer) of the
Servicer stating that such consolidation, merger, conveyance or transfer
comply with this Section 8.02 and that all conditions precedent herein
provided for relating to such transaction have been complied with and if an
agreement supplemental hereto has been executed as contemplated by clause (i)
above, an Opinion of Counsel stating that such supplemental agreement is a
legal, valid and standing obligation of the Servicer enforceable against the
Servicer in accordance with its terms; and
(iii) the Servicer has delivered notice to each Rating Agency
of such consolidation, merger, conveyance or transfer and shall have received
written confirmation from each Rating Agency that such consolidation, merger,
conveyance or transfer would not cause a reduction or withdrawal of the
rating of any Series of Certificates then outstanding.
Section 8.03 Limitation on Liability of the Servicer and Others.
--------------------------------------------------
Except as provided in Section 8.04 of the Agreement with respect to the Trust
and the Trustee, neither the Servicer nor any of the directors or officers
or employees or agents of the Servicer shall be under any liability to the
Trust, the Trustee, the Certificateholders or any other person for any action
taken or for refraining from the taking of any action in its capacity as
Servicer pursuant to this Agreement or any Supplement; provided, however,
-------- -------
that this provision shall not protect the Servicer against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith
or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Servicer and any director
or officer or employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any
----- -----
Person respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its duties to service the Receivables in accordance with
this Agreement or any Supplement which in its reasonable opinion may involve
it in any expense or liability.
Section 8.04 Servicer Indemnification of the Trust and the Trustee.
-----------------------------------------------------
The Servicer shall indemnify and hold harmless the Trust, for the benefit of
the CertificatehoLders, and the Trustee, including its officers, directors
and employees from and against any loss (excluding any investment loss),
liability, expense, damage or injury suffered or sustained in connection with
the acceptance of performance of the trusts and duties herein contained in
any Supplement, including those arising from acts or omissions of the
Servicer pursuant to this Agreement or any Supplement, including but not
limited to any judgment, award, settlement, reasonable attorneys' fees and
expenses and other costs or expenses incurred in connection with the defense
of any actual or threatened action, proceeding or claim, provided that except
in the case of any proceeding, action or claim which may involve a conflict
between the interests on the Servicer and those of the Trustee, Trustee or
Certificateholders, such attorneys to be reasonably acceptable to the
Servicer provided, however, that the Servicer shall not indemnify the Trust
-------- -------
or the Trustee or its officers, directors or employees for such loss,
liability, expense, damage or injury to the extent such loss, liability,
expense, damage or injury shall be due to the fraud, negligence or willful
misconduct by the Trustee or its officers, directors or employees; provided,
--------
further, that the Servicer shall not indemnify the Trust, the Trustee or its
- - -------
officers, directors or employees or the Investor Certificateholders for any
liability, cost or expense of the Trust or the Trustee or its officers,
directors or employees with respect to any action taken by the Trustee at the
request of the Investor Certificateholders nor with respect to any Federal,
state or local income or franchise taxes (or any interest or penalties with
respect thereto) required to be paid by the Trust or the Investor
Certificateholders in connection herewith to any taxing authority. Subject
to Sections 7.01 and 7.04 and Section 10.02(b) of the Agreement, any
indemnification pursuant to this Section shall be only from the assets of the
Servicer. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof and shall
survive the termination of the Agreement and payment in full of the
Certificates.
Section 8.05 The Servicer Not to Resign. The Servicer shall not
--------------------------
resign from the obligations and duties hereby imposed on it except (a) upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law or (b) upon the satisfaction of the
following conditions, (i) upon the assumption, by an agreement supplemental
hereto, executed by and delivered to the Trustee in form satisfactory to the
Trustee, of the obligations and duties of the Servicer hereunder by the
proposed Successor Servicer, (ii) the written confirmation by Rating Agencies
that the then rating of the Certificates will not, solely as a result of such
transfer, be reduced or withdrawn, (iii) the delivery to the Trustee of an
Opinion of Counsel to the effect that such transfer will not have any
material adverse impact on the Federal income tax characterization of any
outstanding Series of Investor Certificates that have been the subject of a
previous opinion of tax counsel and (iv) the proposed Successor Servicer has
a net worth of not less than $100,000,000 and its regular business includes
the servicing of credit card receivables. If the Trustee is unable within
120 days of the date of such determination to appoint a Successor Servicer
pursuant to Section 10.02, the Trustee shall serve as Successor Servicer
hereunder but shall have continued authority to appoint another Person as
Successor Servicer. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (a) above by an Opinion of Counsel
to such effect delivered to the Trustee. No such resignation shall become
effective until the Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section
10.02 of the Agreement as if a Termination Notice had been given.
Section 8.06 Access to Certain Documentation and Information Regarding
---------------------------------------------------------
the Receivables. The Servicer shall provide to the Trustee reasonable access
- - ---------------
to the documentation regarding the Accounts and the Receivables in such cases
where the Trustee is required in connection with the performance of its
obligation under this Agreement or any Supplement, the enforcement of the
rights of the Investor Certificateholders, or by applicable statutes or
regulations to review such documentation, such access being
afforded without charge but only (i) upon reasonable request,
(ii) during normal business hours, (iii) subject to the Servicer's normal
security and confidentiality procedures and (iv) at offices designated by the
Servicer. Nothing in this Section 8.06 shall derogate from the obligation
of the Transferor, the Trustee or the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors and the failure
of the Servicer to provide access as provided in this Section 8.06 as a
result of such obligation shall not constitute a breach of this Section 8.06.
Section 8.07 Delegation of Duties. In the ordinary course of
--------------------
business, the Servicer may at any time delegate any duties hereunder to any
Person who agrees to conduct such duties in accordance with the Credit Card
Guidelines and this Agreement; however, if such delegation is not in the
ordinary course of the Servicer's business, written notice shall be given to
the Trustee and each Rating Agency of such delegation. Any delegation shall
not relieve the Servicer of its liability and responsibility with respect to
such duties, and shall not constitute a resignation within the meaning of
Section 8.05 of the Agreement.
Section 8.08 Examination of Records. Each of the Transferor and the
----------------------
Servicer shall indicate clearly and unambiguously in its computer files or
other records that the Receivables arising in the Accounts have been
transferred to the Trust pursuant to this Agreement for the benefit of the
Investor Certificateholders. Each of the Transferor and the Servicer shall,
prior to the sale or transfer to a third party of any receivable held in its
custody, examine its computer and other records to determine that such
receivable is not a Receivable.
(END OF ARTICLE VIII)
ARTICLE IX
AMORTIZATION EVENTS
Section 9.01 Amortization Events. Unless modified with respect to any
-------------------
Series of Investor Certificates by any related Supplement, if any one of the
following events shall occur:
(a) the Originator, Bridgestone/Firestone or the Transferor
voluntarily seeks, consents to or acquiesces in the benefit or benefits of
any Debtor Relief Law or becomes a party to (or is made the subject of) any
proceeding provided for by any Debtor Relief Law, other than as creditor or
claimant, and in the event such proceeding is involuntary, the petition
instituting same is not dismissed within 90 days of its filing or the
Originator or the Transferor shall become unable for any reason to transfer
Receivables to the Trust in accordance with the provisions of this Agreement;
or
(b) the Trust shall become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
then an "Amortization Event" with respect to all Series of Certificates shall
occur without any notice or other action on the part of the Trustee or
Investor Certificateholders.
Upon the occurrence and during the continuance of any involuntary
proceeding under any Debtor Relief Law with respect to the Transferor or the
Originator, the Transferor shall not transfer any Receivables hereunder to
the Trust.
Section 9.02 Additional Rights Upon the Occurrence of Certain Events.
-------------------------------------------------------
(a) If either the Transferor or Bridgestone/Firestone (i) seeks,
consents to or acquiesces in the benefit or benefits of any Debtor Relief Law
or becomes a party to (or is made the subject of) any proceeding provided for
by any Debtor Relief Law, other than as creditor or claimant, and in the
event such proceeding is involuntary, the petition instituting the same is
not dismissed within (90) days of its filing or (ii) goes into liquidation
or any other Person shall be appointed as a bankruptcy trustee or receiver
or conservator of the Transferor or Bridgestone/Firestone, the Transferor
shall on the day of such appointment (the "Appointment Date") immediately
----------------
cease to transfer Receivables to the Trust and the Transferor or Bridgestone/
Firestone as applicable, shall promptly give notice to the Trustee of such
appointment. Notwithstanding any cessation of the transfer to the Trust of
additional Receivables, Receivables transferred to the Trust prior to the
occurrence of any such voluntary or involuntary event and all Collections
thereof, including Finance Charge Collections (other than Discount Option
Receivable Collections), whenever created or accrued in respect of such
Receivables shall continue to be a part of the Trust. Within 15 days of the
Appointment Date, the Trustee shall (i) publish a notice in an Authorized
Newspaper that a bankruptcy trustee or receiver, as the case may be, of the
Transferor has been appointed and that the Trustee intends to sell, dispose
of or otherwise liquidate the Receivables or interest therein (as described
below) on commercially reasonable terms and in a commercially reasonable
manner and (ii) send written notice to the Investor Certificateholders
describing the provisions of this Section 9.02 and requesting instructions
from such Holders. Unless otherwise prohibited by law or unless within 60
days from the day notice pursuant to clause (i) above is first published, the
Trustee shall have received written instructions of Holders of Investor
Certificates representing Undivided Interests aggregating more than 50% of
the Invested Amount of each Series (or, with respect to Series having more
than one class, each class of such Series) to the effect that such
Certificateholders disapprove of the liquidation of the Receivables or
interest therein (as described below) and wish to continue receiving
Receivables under the Trust as before such appointment, the Trustee shall
proceed to sell, dispose of, or otherwise liquidate the Receivables, in a
commercially reasonable manner and on commercially reasonable terms, which
shall include the solicitation of competitive bids. The Trustee may obtain
a prior determination from such bankruptcy trustee or receiver that the terms
and manner of any proposed sale, disposition or liquidation are commercially
reasonable. The provisions of Section 9.01 and this Section 9.02 are not
mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Receivables or interest therein pursuant to Section (a) above shall be
treated as Collections on the Receivables and shall be allocated in
accordance with the provisions of Article IV with respect to any Series as
to which such sale, disposition or liquidation relates; provided that the
--------
Trustee shall determine conclusively the amount of such proceeds which are
allocable to Finance Charge Collections and the amount of such proceeds which
are allocable to Principal Collections; provided, however, that any amounts
-------- -------
payable to the Holder of the Exchangeable Transferor Certificate shall be
payable to the Trustee to the extent of the reasonable costs, fees and
expenses incurred by the Trustee in connection with such sale, liquidation
or other disposition. On the day following the Distribution Date on which
such proceeds are distributed to the Investor Certificateholders, the Trust
shall terminate.
(END OF ARTICLE IX)
ARTICLE X
SERVICER DEFAULTS
Section 10.01 Servicer Defaults. If any one of the following events
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(a "Servicer Default") shall occur and be continuing:
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(a) failure by the Servicer to make any payment, transfer or
deposit or to give instructions or to give notice to the Trustee to make such
payment, transfer or deposit or any withdrawal or to give notice to the
Trustee as to any required drawing or payment under any Enhancement on or
before the date occurring five Business Days after the date such payment,
transfer or deposit or such instruction or notice is required to be made or
given, as the case may be, under the terms of this Agreement or any
Supplement;
(b) failure on the part of the Servicer duly to observe or perform
any other covenants or agreements of the Servicer set forth in this Agreement
or any Supplement which could reasonably have a material adverse effect on
the Certificateholders (other than a failure with respect to which there is
no reasonable likelihood of such an effect), which continues unremedied for
a period of 60 days after the earlier of discovery by the Servicer or the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the Holders of Investor Certificates evidencing
Undivided Interests in the Trust aggregating not less than 50% of the
Invested Amount of any Series adversely affected thereby; or the Servicer
shall assign its duties under this Agreement, except as permitted by Section
8.07;
(c) any representation, warranty or certification made by the
Servicer in this Agreement, any Supplement or in any certificate delivered
pursuant to this Agreement or any Supplement shall prove to have been
incorrect when made, which could reasonably have a material adverse effect
on the rights of the Certificateholders and which material adverse effect
continues for Certificateholders for a period of 60 days after the date on
which written notice thereof, requiring the same to be remedied, shall have
been given to the Servicer by the Trustee, or to the Servicer and the Trustee
by the Holders of Investor Certificates evidencing Undivided Interests in the
Trust aggregating not less than 50% of the Invested Amount of any Series
adversely affected thereby; or
(d) the Servicer voluntarily seeks, consents to or acquiesces in
the benefit or benefits of any Debtor Relief Law or becomes a party to (or
is made the subject of) any proceeding provided for by any Debtor Relief Law,
other than as creditor or claimant, and in the event such proceeding is
involuntary, the petition instituting the same is not dismissed within 90
days of its filing;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either the Trustee, or the Holders of Investor
Certificates evidencing Undivided Interests aggregating more than 50% of the
Aggregate Invested Amount, by notice then given in writing to the Servicer
(and to the Trustee if given by the Investor Certificateholders) (a
"Termination Notice"), may terminate all but not less than all of the rights
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and obligations of the Servicer as Servicer under this Agreement and in and
to the Receivables and the proceeds thereof. After receipt by the Servicer
of a Termination Notice, and on the date that a Successor Servicer shall have
been appointed by the Trustee pursuant to Section 10.02 of the Agreement, all
authority and power of the Servicer under this Agreement shall pass to and
be vested in a Successor Servicer (a "Service Transfer"); and, without
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limitation, the Trustee is hereby authorized and empowered (upon the failure
of the Servicer to cooperate) to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, all documents and other
instruments upon the failure of the Servicer to execute or deliver such
documents or instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purposes of such Service Transfer.
The Trustee shall, as soon as practicable, notify the Servicer Letter of
Credit Bank of such Service Transfer and surrender the Servicer Letter of
Credit to the Servicer Letter of Credit Bank for cancellation. The Servicer
agrees to cooperate with the Trustee and such Successor Servicer in effecting
the termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder, including, without limitation, the transfer to such
Successor Servicer of all authority of the Servicer to service the
Receivables provided for under this Agreement, including, without limitation,
all authority over all Collections which shall on the date of transfer be
held by the Servicer for deposit, or which have been deposited by the
Servicer, in the Collection Account, or which shall thereafter be received
with respect to the Receivables, and in assisting the Successor Servicer.
The Servicer shall promptly transfer its electronic records relating to the
Receivables to the Successor Servicer in such electronic form as the
Successor Servicer may reasonably request and shall promptly transfer to the
Successor Servicer all other records, correspondence and documents necessary
for the continued servicing of the Receivables in the manner and at such
times as the Successor Servicer shall reasonably request. To the extent that
compliance with this Section 10.01 shall require the Servicer to disclose to
the Successor Servicer information of any kind which the Servicer reasonably
deems to be confidential, the Successor Servicer shall be required to enter
into such customary licensing and confidentiality and nondisclosure agreements
as the Servicer shall deem reasonably necessary to protect its interest.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 10.01(a) of the Agreement for a period of 10 Business Days or
under Section 10.01(b) or (c) of the Agreement for a period of 60 Business
Days, shall not constitute a Servicer Default, if such delay or failure could
not be prevented by the exercise of reasonable diligence by the Servicer and
such delay or failure was caused by an Act of God or the public enemy, acts
of declared or undeclared war, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods or
similar causes. The preceding sentence shall not relieve the Servicer from
using its best efforts to perform its respective obligations in a timely
manner in accordance with the terms of this Agreement and the Servicer shall
provide the Trustee, any Enhancement Provider, the Transferor and the
Investor Certificateholders with an Officers' Certificate giving prompt
notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations. The Servicer shall immediately notify
the Trustee in writing of any Servicer Default.
Section 10.02 Trustee to Act; Appointment of Successor.
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(a) On and after the receipt by the Servicer of a Termination
Notice pursuant to Section 10.01, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or otherwise specified by the Trustee in writing or, if
no such date is specified in such Termination Notice, or otherwise specified
by the Trustee, until a date mutually agreed upon by the Servicer and
Trustee. The Trustee shall as promptly as possible after the giving of a
Termination Notice, and with the consent of any Enhancement Provider (unless
the applicable Supplement specifies otherwise) and the Originator, which
consent shall not be unreasonably withheld, appoint an Eligible Servicer a
successor servicer (the "Successor Servicer"), and such Successor Servicer
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shall accept its appointment by a written assumption in a form acceptable to
the Trustee. In the event that a Successor Servicer has not been appointed
or has not accepted its appointment at the time when the Servicer ceases to
act as Servicer, the Trustee without further action shall automatically be
appointed the Successor Servicer. The Trustee may delegate any of its
servicing obligations to an affiliate or agent in accordance with Section
3.01(b) of the Agreement. Notwithstanding the above, the Trustee shall, if
it is unable so to act, petition a court of competent jurisdiction to appoint
any established institution having a net worth of not less than $100,000,000
and whose regular business includes the servicing of credit card receivables
as the Successor Servicer hereunder. The Servicer shall immediately give
notice to each Rating Agency upon the appointment of a Successor Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall
be deemed to refer to the Successor Servicer except for the references in
Sections 8.04 and 11.05 of the Agreement which shall continue to refer to
Bridgestone/Firestone; provided, however, that (i) Bridgestone/Firestone
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shall not indemnify the Trust or the Trustee if the acts, omissions or
alleged acts or omissions upon which a claim for indemnification arises
pursuant to Section 8.04 of the Agreement constitute fraud, gross negligence,
breach of fiduciary duty or willful misconduct by a Successor Servicer (which
obligation shall be assumed by the Successor Servicer) and (ii)
Bridgestone/Firestone shall not pay or reimburse the Trustee pursuant to
Section 11.05 of the Agreement for any expense, disbursement or advance of
the Trustee related to or arising as a result of the gross negligence or bad
faith of the Successor Servicer (which obligation shall be assumed by the
Successor Servicer). The Successor Servicer shall expressly be authorized,
subject to Section 8.07 of the Agreement, to delegate any of its duties
hereunder to Bridgestone/Firestone for a reasonable period on and after the
date of any Servicer Transfer pursuant to this Article X. Any Successor
Servicer, by its acceptance of its appointment, will automatically agree to
be bound by the terms and provisions of any agreement under which an
Enhancement Provider agrees to provide Enhancement for a Series.
(c) In connection with any Termination Notice, the Trustee will
review any bids which it obtains from Eligible Servicers and shall be
permitted to appoint any Eligible Servicer submitting such a bid as a
Successor Servicer for servicing compensation not in excess of the Servicing
Fee; provided, however, that no such monthly compensation paid out of
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Collections shall be in excess of the Monthly Servicing Fee permitted to the
Servicer pursuant to Section 3.02.
(d) All authority and power granted to the Successor Servicer
under this Agreement shall automatically cease and terminate upon termination
of the Trust pursuant to Section 12.01, and shall pass to and be vested in
the Transferor and, without limitation, the Transferor is hereby authorized
and empowered to execute and deliver, on behalf of the Successor Servicer,
as attorney-in-fact or otherwise, all documents and other instruments, and
to do and accomplish all other acts or things necessary or appropriate to
effect the purposes of such transfer of servicing rights. The Successor
Servicer agrees to cooperate with the Transferor in effecting the termination
of the responsibilities and rights of the Successor Servicer to conduct
servicing on the Receivables. The Successor Servicer shall transfer its
electronic records relating to the Receivables to the Transferor in such
electronic form as the Transferor may reasonably request and shall transfer
all other records, correspondence and documents to the Transferor in the
manner and at such times as the Transferor shall reasonably request. To the
extent that compliance with this Section 10.02 shall require the Successor
Servicer to disclose to the Transferor information of any kind which the
Successor Servicer deems to be confidential, the Transferor shall be required
to enter into such customary licensing and confidentiality agreements as the
Successor Servicer shall deem necessary to protect its interests.
Section 10.03 Notification to Certificateholders. Upon the occurrence
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of any Servicer Default, the Servicer shall give prompt written notice
thereof to the Trustee, any Enhancement Provider and each Rating Agency and
the Trustee shall give notice to the Investor Certificateholders at their
respective addresses appearing in the Certificate Register. Upon any
termination or appointment of a Successor Servicer pursuant to this Article
X, the Trustee shall give prompt written notice thereof to each Rating
Agency, any Enhancement Provider and to Investor Certificateholders at their
respective addresses appearing in the Certificate Register.
Section 10.04 Waiver of Past Defaults. The Holders of Investor
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Certificates evidencing Undivided Interests aggregating more than 66-2/3% of
the Invested Amount of each Series affected by any default by the Servicer
may, on behalf of all Certificateholders, waive any default by the Servicer
in the performance of its obligations hereunder and its consequences, except
a default in the failure to make any required deposits or payments of
interest or principal with respect to any Series of Certificates. Upon any
such waiver of a past default, such default shall cease to exist, and any
default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
(END OF ARTICLE X)
ARTICLE XI
THE TRUSTEE
Section 11.01 Duties of Trustee.
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(a) The Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement. If a Servicer
Default to the actual knowledge of a Responsible Officer of the Trustee has
occurred (which has not been cured or waived), the Trustee shall exercise
such of the rights and powers vested in it by this Agreement or any
Supplement, as the case may be, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement or any Supplement, shall examine
them to determine whether they substantially conform to the requirements of
this Agreement or any Supplement.
(c) Subject to Section 11.01(a), no provision of this Agreement
or any Supplement shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct; provided, however, that:
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(i) The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(ii) The Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Investor Certificates
evidencing Undivided Interests in the Trust aggregating more than 50% or such
other amount as may be set forth in any Supplement for a Series of the
Invested Amount of any Series pursuant to Section 11.14; and
(iii) The Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with any of its obligations, including the
obligations of the Servicer referred to in clauses (a), (b) and (c) of
Section 10.01, unless a Responsible Officer of the Trustee obtains actual
knowledge of such failure.
(d) The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if there
is reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it, and none of the provisions contained in this Agreement or any
Supplement shall in any event require the Trustee to perform, or be
responsible for the manner of performance of, any obligations of the Servicer
under this Agreement or any Supplement except during such time, if any, as
the Trustee shall be the successor to, and be vested with the rights, duties,
powers and privileges of, the Servicer in accordance with the terms of this
Agreement or any Supplement.
(e) Except for actions expressly authorized by this Agreement or
any Supplement, the Trustee shall take no action reasonably likely to impair
the interests of the Trust in any Receivable now existing or hereafter
created or to impair the value of any Receivable now existing or hereafter
created.
(f) Except as specifically provided in this Agreement, the Trustee
shall have no power to vary the corpus of the Trust.
(g) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the
manner or on the day required to be performed by the Paying Agent or the
Transfer Agent and Registrar, as the case may be, under this Agreement, the
Trustee shall be obligated as soon as possible upon actual knowledge of a
Responsible Officer thereof and receipt of appropriate records, if any, to
perform such obligation, duty or agreement in the manner so required.
(h) Any action, suit or proceeding brought in respect of one or
more particular Series shall have no effect on the Trustee's rights, duties
and obligations hereunder with respect to any one or more Series not the
subject of such action, suit or proceeding.
Section 11.02 Rights of the Trustee. Except as otherwise provided in
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Section 11.01:
(a) The Trustee may rely on and shall be protected in acting on,
or in refraining from acting in accord with, any resolution, Officers'
Certificate, Opinion of Counsel, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by it to
be genuine and to have been signed or presented to it pursuant to this
Agreement or any Supplement by the proper party or parties;
(b) The Trustee may reasonably consult with counsel and any
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it hereunder in good
faith and in accordance with such Opinion of Counsel;
(c) Subject to Section 11.01(a), the Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Agreement or any Supplement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or
direction of any of the Certificateholders, pursuant to the provisions of
this Agreement or any Supplement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
(d) The Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Agreement or any
Supplement;
(e) The Trustee shall not be bound to make any investigation into
the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond
or other paper or document, unless requested in writing so to do by Holders
of Investor Certificates evidencing Undivided Interests aggregating more than
50% of the Invested Amount of any Series which could be adversely affected
if the Trustee does not perform such acts;
(f) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or custodians, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed with due care by it hereunder;
(g) Except as may be required by Section 11.01(a) of the
Agreement, the Trustee shall not be required to make any initial or periodic
examination of any documents or records related to the Receivables or the
Accounts for the purpose of establishing the presence or absence of defects,
the compliance by the Transferor and Servicer with their representations and
warranties or for any other purpose; and
(h) Whether or not therein expressly so provided, every provision
of this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section 11.02.
Section 11.03 Trustee Not Liable for Recitals in Certificates. The
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Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.15
of the Agreement, the Trustee makes no representations as to the validity or
sufficiency of this Agreement or any Supplement or of the Certificates (other
than the certificate of authentication on the Certificates) or of any
Receivable or related document. The Trustee shall not be accountable for the
use or application by the Transferor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds
paid to the Transferor in respect of the Receivables or deposited in the
Collection Account or other Accounts now or hereafter established to
effectuate the transactions contemplated herein and in accordance with the
terms hereof.
Section 11.04 Trustee May Own Certificates. The Trustee in its
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individual or any other capacity may become the owner or pledgee of Investor
Certificates with the same rights as it would have if it were not the
Trustee.
Section 11.05 The Servicer to Pay Trustee's Fees and Expenses. The
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Servicer covenants and agrees to pay to the Trustee from time to time, and
the Trustee shall be entitled to receive, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust) for all services rendered by it in the
execution of the trust hereby created and in the exercise and performance of
any of the powers and duties hereunder of the Trustee, and, subject to
Section 8.04, the Servicer will pay or reimburse the Trustee upon its request
for all reasonable expenses, disbursements and advances incurred or made by
the Trustee in accordance with any of the provisions of this Agreement or any
Supplement (including the reasonable fees and expenses of its agents and
counsel) except any such expense, disbursement or advance as may arise from
its negligence or bad faith and except as provided in the following sentence.
If the Trustee is appointed Successor Servicer pursuant to Section 10.02, the
provision of this Section 11.05 shall not apply to expenses, disbursements
and advances made or incurred by the Trustee in its capacity as Successor
Servicer, which shall be covered out of the Servicing Fee.
Section 11.06 Eligibility Requirements for Trustee. The Trustee
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hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or any state thereof
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or state authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 11.06, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions
of this Section 11.06, the Trustee shall resign immediately in the manner and
with the effect specified in Section 11.07.
Section 11.07 Resignation or Removal of Trustee.
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(a) The Trustee may at any time resign and be discharged from the
trust hereby created by giving written notice thereof to the Transferor and
the Servicer. Upon receiving such notice of resignation, the Transferor
shall promptly appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 of the Agreement and shall
fail to resign after written request therefor by the Servicer, or if at any
time the Trustee shall be legally unable to act, or shall be adjudged a
bankrupt or insolvent, or if a receiver of the Trustee or of its property
shall be appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Servicer may remove the Trustee and
promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of
a successor trustee pursuant to any of the provisions of this Section 11.07
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 11.08.
Section 11.08 Successor Trustee.
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(a) Any successor trustee appointed as provided in Section 11.07
of the Agreement shall execute, acknowledge and deliver to the Transferor and
to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor
Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder and under
any Supplement with like effect as if originally named as Trustee herein. The
predecessor Trustee shall deliver to the successor trustee at the expense of
the Servicer, all documents or copies thereof, and statements held by it
hereunder; and the Transferor and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor
trustee all such rights, power, duties and obligations. The Servicer shall
immediately give notice to each Rating Agency upon the appointment of a
successor trustee.
(b) No successor trustee shall accept appointment as provided in
this Section 11.08 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 11.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 11.08, such successor trustee shall mail notice of
such succession hereunder to all Certificateholders at their addresses as
shown in the Certificate Register.
Section 11.09 Merger or Consolidation of Trustee. Any Person into
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which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding
to the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding. The Trustee shall deliver notice to the
Servicer, and each Rating Agency of any such merger, conversion,
consolidation or succession.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
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(a) Notwithstanding any other provisions of this Agreement or any
Supplement, at any time, for the purpose of meeting any legal requirements
of any jurisdiction in which any part of the Trust may at the time be
located, the Trustee shall have the power and may execute and deliver all
instruments to appoint one or more persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of
the Trust, and to vest in such Person or Persons, in such capacity and for
the benefit of the Certificateholders, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section 11.10, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under
Section 11.06 and no notice to Certificateholders of the appointment of any
co-trustee or separate trustee shall be required under Section 11.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized
to act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to
the Servicer hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Assets or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction
of the Trustee;
(ii) No trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) The Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article XI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement or any Supplement, specifically including every
provision of this Agreement or any Supplement relating to the conduct of,
affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to
the Servicer.
(d) Any separate trustee or co-trustee may at any time constitute
the Trustee, its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by lay, to do any lawful act under or in respect
to this Agreement or any Supplement on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts
shall vest in and be exercised by the Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
Section 11.11 Tax Returns. In accordance with Section 3.07 hereof, the
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Trustee shall not file any Federal income tax return for the Trust. In the
event of any Special Drawing pursuant to Section 4.01A(e) or 4.01B(d), the
Servicer shall report the investment earnings thereon as its income for
federal income tax purposes. In the event the Trust shall be required to
file state tax returns or pursuant to an audit or administrative proceeding
or change in applicable regulations to file Federal tax returns, the Servicer
shall prepare or shall cause to be prepared any tax returns required to be
filed by the Trust and shall remit such returns to the Trustee for signature
at least five days before such returns are due to be filed; the Trustee shall
promptly sign such returns and deliver such returns after signature to the
Servicer and such returns shall be filed by the Servicer. The Servicer in
accordance with the provisions of any supplement of the Agreement shall also
prepare or shall cause to be prepared all tax information required by law to
be distributed to Investor Certificateholders. The Trustee, upon request,
will furnish the Servicer with all such information known to the Trustee as
may be reasonably required in connection with the preparation of all tax
returns of the Trust, and shall, upon request, execute such returns. In no
event shall the Trustee, the Servicer or the Transferor be liable for any
liabilities, costs or expenses of the Trust, the Investor Certificateholders
or the Certificate Owners arising under any tax law, including without
limitation Federal, state or local income or excise taxes or any other tax
imposed on or measured by income (or any interest or penalty with respect
thereto or arising from a failure to comply therewith).
Section 11.12 Trustee May Enforce Claims Without Possession of
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Certificates. All rights of act (i) on and claims under this Agreement or
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any Supplement or the Certificates may be prosecuted and enforced by the
Trustee without the possession of any of the Certificates or the production
thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Certificateholders in respect
of which such judgment has been obtained.
Section 11.13 Suits for Enforcement. If a Servicer Default shall occur
---------------------
and be continuing, the Trustee, in its discretion may, subject to the
provisions of Section 10.01 of the Agreement, proceed to protect and enforce
its rights and the rights of the Certificateholders under this Agreement or
any Supplement by suit, action or proceeding in equity or at law or
otherwise, whether for the specific performance of any covenant or agreement
contained in this Agreement or any Supplement or in aid of the execution of
any power granted in this Agreement or any Supplement or for the enforcement
of any other legal, equitable or other remedy as the Trustee, being advised
by counsel, shall deem most effectual to protect and enforce any of the
rights of the Trustee or the Certificateholders. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Certificateholder any plan of reorganization,
arrangement, adjustment or composition affecting the Certificates or the
rights of any Holder thereof, or authorize the Trustee to vote in respect of
the claim of any Certificateholder in any such proceeding.
Section 11.14 Rights of Certificateholders to Direct Trustee. Except
----------------------------------------------
for those actions taken pursuant to Section 9.02, holders of Investor
Certificates evidencing Undivided Interests in the Trust aggregating more
than 50% of the Invested Amount of any Series or such other amount as may be
set forth in any Supplement for a Series affected by the conduct of any
proceeding or the exercise of any right conferred on the Trustee shall have
the right to direct the time, method, and place of conducting such proceeding
for any remedy available to the Trustee, or exercising any such trust or
power; provided, however, that, subject to Section 11.01, the Trustee shall
-------- -------
have the right to decline to follow any such direction if the Trustee being
advised by counsel determines that the action so directed may not lawfully
be taken, or if the Trustee in good faith shall, by a Responsible Officer or
Responsible Officers of the Trustee, determine that the proceedings so
directed would be illegal or involve it in personal liability or be unduly
prejudicial to the rights of Certificateholders not parties to such
direction; and provided further that nothing in this Agreement or any
--------
Supplement shall impair the right of the Trustee to take any action deemed
proper by the Trustee and which is not inconsistent with such direction of
the Certificateholders.
Section 11.15 Representations and Warranties of Trustee. The Trustee
-----------------------------------------
represents and warrants that:
(i) The Trustee is a banking corporation organized and
existing under the laws. of the State of New York and authorized to conduct
and engage in a banking and trust business under such laws;
(ii) The Trustee has full power, authority and right to
execute, deliver and perform this Agreement, and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Agreement; and
(iii) This Agreement has been duly executed and delivered by
the Trustee.
Section 11.16 Maintenance of Office or Agency. The Trustee will
-------------------------------
maintain at its expense in the Borough of Manhattan, The City of New York,
an office or offices or agency or agencies where notices and demands to or
upon the Trustee in respect of the Certificates and this Agreement may be
served. The Trustee initially appoints the Corporate Trust Office as its
office for such purposes in New York. The Trustee will give prompt written
notice to the Servicer and to Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
(END OF ARTICLE XI)
ARTICLE XII
TERMINATION
Section 12.01 Termination of Trust.
--------------------
(a) The respective obligations and responsibilities of the
Transferor, the Servicer and the Trustee created hereby (other than the
obligation of the Trustee to make payments to Certificateholders as hereafter
set forth) shall terminate, except with respect to the duties described in
Section 12.03(b), upon the earlier of (i) the day after the day on which
funds shall have been deposited in the Collection Account sufficient to pay
the Aggregate Invested Amount plus interest accrued at the applicable
Certificate Rates through the end of the applicable Interest Accrual Period
in full on all Series of Investor Certificates and paid to the Holders of
such Certificates and (ii) a day which is September 15, 2092 (the "Final
-----
Trust Termination Date"); provided, however, that in no event shall the trust
- - ---------------------- -------- -------
created by the Agreement continue beyond the expiration of 21 years from the
death of the last survivor of the descendants, living on the date of this
Agreement, of Joseph P. Kennedy, of the Commonwealth of Massachusetts,
formerly United States representative at the Court of St. James. The
Servicer shall promptly notify the Trustee of any respective termination
pursuant to this Section 12.01.
(b) If on the Transfer Date in the month immediately preceding the
month in which the Final Trust Termination Date occurs in the case of
Subsection (a)(ii) above, (after giving effect to all transfers, withdrawals,
deposits and drawings to occur on such date and the payment of principal on
any Series of Certificates to be made on the related Distribution Date
pursuant to Article IV) the Invested Amount of any Series would be greater
than zero, the Servicer shall sell within 30 days of such Transfer Date all
of the Receivables. The proceeds of such sale shall be treated as
Collections on the Receivables and shall be allocated in accordance with
Article IV; provided, however, that the Trustee in its sole discretion shall
-------- -------
determine conclusively the amount of such proceeds which are allocable to
Finance Charge Collections and the amount of such proceeds which are
allocable to Principal Collections. During such 30-day period, the Servicer
shall continue to collect Collections on the Receivables and allocate such
payments in accordance with the provisions of Article IV.
Section 12.02 Optional Purchase and Final Termination Date of Investor
--------------------------------------------------------
Certificates of any Series.
- - --------------------------
(a) If provided in any Supplement on a Distribution Date the
Transferor may, but shall not be obligated to, purchase any such Series of
Investor Certificates by depositing into the Collection Account, on the
preceding Transfer Date, an amount equal to the Invested Amount thereof plus
interest accrued and unpaid thereon at the applicable Certificate Rate
through the Interest Accrual Period related to such Distribution Date on
which the purchase will be made; provided, however, that no such purchase
-------- -------
of any Series of Investor Certificates shall occur unless the Transferor
shall deliver an Opinion of Counsel reasonably acceptable to the Trustee,
that such purchase of any Series of Investor Certificates would not
constitute a fraudulent conveyance of the Transferor.
(b) The amount deposited pursuant to Section 12.02(a) shall be
paid to the Investor Certificateholders of the related Series pursuant to
Article IV on the Distribution Date following the date of such deposit. All
Certificates of a Series which are purchased by the Transferor pursuant to
Section 12.02(a) shall be delivered by the Transferor upon such purchase to,
and be cancelled by, the Transfer Agent and Registrar and be disposed of in
a manner satisfactory to the Trustee and the Transferor.
(c) All principal or interest with respect to any Series of
Investor Certificates shall be due and payable no later than the Series
Termination Date with respect to such Series. Unless otherwise provided in
a Supplement, in the event that the Invested Amount of any Series of
Certificates is greater than zero on its Series Termination Date (after
giving effect to all transfers, withdrawals, deposits and drawings to occur
on such date and the payment of principal to be made on such Series on such
date), the Trustee will sell or cause to be sold, and pay the proceeds to all
Certificateholders of such Series pro rata in final payment of all principal
of and accrued interest on such Series of Certificates, an amount of
Receivables or interests in Receivables up to 110% of the Invested Amount of
such Series at the close of business on such date (but not more than an
amount of Receivables equal to the sum of (1) the product of (A) the current
Transferor Percentage, (B) Aggregate Receivables and (C) a fraction the
numerator of which is the related Invested Percentage with respect to Finance
Charge Collections and the denominator of which is the sum of all Invested
Percentages with respect to Finance Charge Collections of all Series
outstanding and (2) the Invested Amount of such Series). Any proceeds of
such sale in excess of such principal and interest paid shall be paid to the
Holder of the Exchangeable Transferor Certificate. Upon such Series
Termination Date with respect to the applicable Series of Certificates, final
payment of all amounts allocable to any Investor Certificates of such Series
shall be made in the manner provided in Section 12.03.
Section 12.03 Final Payment with Respect to any Series.
----------------------------------------
(a) Written notice of any termination, specifying the Distribution
Date upon which the Investor Certificateholders of any Series may surrender
their Certificates for payment of the final distribution with respect to such
Series and cancellation, shall be given (subject to at least two days'
prior notice from the Servicer to the Trustee) by the Trustee to
Investor Certificateholders of such Series mailed not later than such
final distribution specifying (a) the Distribution Date (which
shall be the Distribution Date in the month in which the deposit is made
pursuant to Section 2.07 or Section 12.02(a)) upon which final payment of
such Investor Certificates will be made upon presentation and surrender of
such Investor Certificates at the office or offices therein designated, (b)
the amount of any such final payment and (c) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made
only upon presentation and surrender of the Investor Certificates at the
office or offices therein specified. The Servicer's notice to the Trustee
in accordance with the preceding sentence shall be accompanied by an
Officers' Certificate setting forth the information specified in the
applicable Supplement covering the period during the then current calendar
year through the date of such notice and setting forth the date of such final
distribution. The Trustee shall give such notice to the Transfer Agent and
Registrar and the Paying Agent at the time such notice is given to such
Investor Certificateholders.
(b) Notwithstanding the termination of the Trust pursuant to
Section 12.01(a) or the occurrence of the Series Termination Date with
respect to any Series pursuant to Section 12.02 of the Agreement, all funds
then on deposit in the Collection Account shall continue to be held in trust
for the benefit of the Certificateholders and the Paying Agent or the Trustee
shall pay such funds to the Certificateholders upon surrender of their
Certificates. In the event that all of the Investor Certificateholders of
such Series shall not surrender their Certificates for cancellation within
six months after the date specified in the above-mentioned notice, the
Trustee shall give a second written notice to the remaining Investor
Certificateholders of such Series upon receipt of the appropriate records
from the Transfer Agent and Registrar to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If
within one and one-half years after the second notice all the Investor
Certificates of such Series shall not have been surrendered for cancellation,
the Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Investor Certificateholders of
such Series concerning surrender of their Certificates, and the cost thereof
shall be paid out of the funds in the Collection Account held for the benefit
of such Investor Certificateholders.
(c) All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
cancelled by the Transfer Agent and Registrar and be disposed of in a manner
satisfactory to the Trustee and the Transferor.
Section 12.04 Transferor's Termination Rights. Upon the termination
-------------------------------
of the Trust pursuant to Section 12.01 and the surrender of the Exchangeable
Transferor Certificate, the Trustee shall return to the Transferor (without
recourse, representation or warranty) all right, title and interest of the
Trust in the Receivables, then existing or thereafter created, all moneys due
or to become due with respect thereto (including all accrued interest
theretofore posted as Periodic Finance Charges), and all proceeds thereof,
including all Recoveries relating thereto and all proceeds thereof and all
right, title and interest of the Transferor in, to and under the Purchase and
Sale Agreement, except for amounts held by the Trustee pursuant to Subsection
12.03(b). The Trustee shall execute and deliver such instruments of transfer
and assignment, in each case without recourse, as shall be reasonably
requested by the Transferor to vest in the Transferor all right, title and
interest which the Trust had in the Receivables.
(END OF ARTICLE XII)
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Amendment.
---------
(a) This Agreement and any Supplement may be amended from time to
time by the Servicer, the Transferor and the Trustee, without the consent of
any of the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions herein which may be inconsistent with any other
provisions herein or to add any other provisions with respect to matters or
questions raised under this Agreement which shall not be inconsistent with
the provisions of this Agreement, provided, however, that such action shall
-------- -------
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any of the Investor Certificateholders. The Trustee
may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's rights, duties or immunities under this Agreement or
otherwise.
This Agreement and any Supplement may also be amended from time to time
by the Servicer, the Transferor and the Trustee, without the consent of any
of the Certificateholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this
Agreement, or of modifying, in any manner the rights of the Holders of
Certificates; provided that (i) the Servicer shall have provided an Officer's
--------
Certificate to the Trustee and any Enhancement Provider to the effect that
such amendment will not materially and adversely affect the interests of the
Certificateholders, (ii) such amendment shall not, as evidenced by an Opinion
of Counsel, cause the Trust to be characterized for Federal income tax
purposes as an association taxable as a corporation or otherwise have any
material adverse impact on the Federal income taxation of any outstanding
Series of Investor Certificates or any Certificate Owner and (iii) the Rating
Agencies shall confirm that such amendment shall not cause a reduction or
withdrawal of the rating of any outstanding Series of Certificates; provided,
--------
further, that such amendment shall not reduce in any manner the amount of,
- - -------
or delay the timing of, distributions which are required to be made on any
Investor Certificate of such Series without the consent of the related
Investor Certificateholder, change the definition of or the manner of
calculating the interest of any Investor Certificateholder of such Series
without the consent of the related Investor Certificateholder or reduce the
percentage pursuant to clause (b) required to consent to any such amendment,
in each case without the consent of all such Investor Certificateholders;
provided, further, that (w) the transfer of the Accounts and/or the servicing
- - -------- -------
functions with respect thereto to a national banking association established
and owned by Bridgestone/Firestone to own the Originator's credit
card accounts and receivables and to act as Servicer shall require the prior
written consent of the Rating Agencies, (x) the transfer of the Accounts to
any national bank to own the Originator's credit card accounts and
receivables shall require written consent of the applicable Rating Agencies
and an opinion of counsel stating that the transfer will not result in the
transfer of the Receivables for federal tax purposes, (y) any transaction
effected in accordance with Section 8.02 hereof and (z) any other
transactions related, supplemental or incidental thereto (including any
transaction effected pursuant to clause (x) above) shall be deemed not to
materially and adversely affect the interests of the Certificateholders and
shall not require the delivery of an Officer's Certificate of the Servicer
pursuant to clause (i) above.
(b) This Agreement and any Supplement may also be amended from
time to time by the Servicer, the Transferor and the Trustee with the consent
of the Holders of Investor Certificates evidencing Undivided Interests
aggregating not less than 66-2/3% of the Invested Amount of each and every
Series affected, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Investor Certificateholders of any
Series then issued and outstanding; provided, however, that no such amendment
-------- -------
under this Subsection (b) shall (i) reduce in any manner the amount of, or
delay the timing of, distributions which are required to be made on any
Investor Certificate of such Series without the consent of the related
Investor Certificateholders; (ii) change the definition of or the manner of
calculating the interest of any Investor Certificateholder of such Series
without the consent of the related Investor Certificateholder or (iii) reduce
the aforesaid percentage required to consent to any such amendment, in each
case without the consent of all such Investor Certificateholders.
(c) Promptly after the execution of any amendment described in
this Section the Trustee shall furnish written notification of the substance
of such amendment to each Investor Certificateholder, and the Servicer shall
furnish written notification of the substance of such amendment to any
related Enhancement Provider and each Rating Agency.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section 13.01 to approve the particular form
of any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
(e) Any Assignment or Reassignments regarding the addition to or
removal of Receivables from the Trust respectively, as provided in Sections
2.05 and 2.10, respectively, of the Agreement executed in accordance with the
provisions hereof shall not be considered amendments to this Agreement,
including, without limitation, for the purpose of Sections 13.01(a) and (b).
Section 13.02 Protection of Right, Title and Interest to Trust.
------------------------------------------------
(a) The Servicer shall cause this Agreement, any Supplement, all
amendments hereto and/or all financing statements and continuation statements
and any other necessary documents covering the Certificateholders and the
Trustee's right, title and interest to the Trust Assets, and the Transferor's
rights in and to the Receivables to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in
such manner and in such places as may be required by law fully to preserve
and protect the right, title and interest of the Trustee hereunder to all
property comprising the Trust Assets and to preserve and protect the right,
title and interest of the Transferor to the Receivables. The Servicer shall
deliver to the Trustee file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing. The Transferor
shall Cooperate fully with the Servicer in connection with the obligations
set forth above and will execute any and all documents reasonably required
to fulfill the intent of this Section 13.02(a).
(b) Within 30 days after the Transferor makes any change in its
name identity or corporate structure which would make any financing statement
or continuation statement filed in accordance with paragraph (a) above
seriously misleading within the meaning of Section 9-402(7) of the UCC as in
effect in the Commonwealth of Massachusetts the Transferor shall give the
Trustee and the Servicer notice of any such change and shall file such
financing statements or amendments as may be necessary to continue the
perfection of the Trust's security interest in the Receivables and the
proceeds thereof.
(c) The Transferor and the Servicer will give the Trustee prompt
written notice of any relocation of any office from which the Servicer
services Receivables or in which the Transferor and the Servicer keep
records concerning the Receivables or of the relocation of the Transferor's
and the Servicer's principal executive offices and whether, as a result of
such relocation, the applicable provisions of the UCC would require the
filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall file such financing
statements or amendments as may be necessary to perfect or to continue the
perfection of the Trust's security interest in the Receivables and the
proceeds thereof. The Servicer will at all times maintain each office from
which it services Receivables, and the Transferor and the Servicer will at
all times maintain their principal executive offices within the United States
of America.
(d) The Servicer will deliver to the Trustee: (i) upon the
execution and delivery of each amendment of the Agreement or any Supplement
(provided, however, that the adoption of a Supplement pursuant to Section
-------- -------
6.09 which supplements or modifies Article IV for a particular new Series
shall not be considered an amendment) other than amendments pursuant to
Section 13.01(a) and upon each date that any Additional Accounts are to be
included in the Accounts pursuant to Section 2.05 hereof, an Opinion of
Counsel substantially in the form of Exhibit F; and (ii) on or before March
---------
31 of each year, beginning with March 31, 1994, an Opinion of Counsel, dated
on or after January 1 of such year, stating to the effect that no filing or
other action, except such action as shall be described therein, is necessary
from the date thereof through March 31 of the following year to continue the
perfected status of the interest of the Trust in the collateral described in
the financing statements referred to in such opinion.
(e) If at any time the Servicer is no longer
Bridgestone/Firestone, the Transferor shall deliver to the Successor Servicer
powers-of-attorney such that such Successor Servicer may perform the
obligations set forth in Sections 13.02(a), 13.02(b) and 13.02(c).
Section 13.03 Limitation on Rights of Certificateholders.
------------------------------------------
(a) The death or incapacity of any Investor Certificateholder
shall not operate to terminate this Agreement or the Trust, nor shall such
death or incapacity entitle such Investor Certificateholders' legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) No Investor Certificateholder shall have any right to vote
(except as specifically provided in this Agreement) or in any manner
otherwise control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall any Investor Certificateholder
be under any liability to any third person by reason of any action taken by
the parties to this Agreement pursuant to any provision hereof (other than
the Holder of the Exchangeable Transferor Certificate, to the extent
provided herein).
(c) No Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Certificateholder previously shall have given to the Trustee, and unless the
Holders of Investor Certificates evidencing Undivided Interests in the Trust
aggregating more than 50% of the Invested Amount of any Series which may be
adversely affected but for the institution of such suit, action or proceeding
shall have made, written request upon the Trustee to institute such action,
suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and
the Trustee, for 60 days after its receipt of such notice, request and offer
of indemnity, shall have neglected or refused to institute any such action,
suit or proceeding; it being understood and intended, and being expressly
covenanted by each Certificateholder with every other Certificateholder and
the Trustee, that no one or more Certificateholders shall have any right in
any manner whatsoever by virtue or by availing itself or themselves of any
provisions of this Agreement to affect, disturb or prejudice the rights of
the Investor Certificateholders of any other of the Investor Certificates,
or to obtain or seek to obtain priority over or preference to any other such
Certificateholder, or to enforce any right under this Agreement, except in
the manner herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the provisions
of this Section 13.03, each and every Certificateholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
Section 13.04 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS.
Section 13.05 Notices. All demands, notices and communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at, or sent by overnight courier or facsimile to, or
mailed by registered mail, return receipt requested, to (a) in the case of
Firestone Retail Credit Corporation to c/o JH Management Company, One
International Place, Boston, Massachusetts 02110, Attention: ______________;
(b) in the case of Bridgestone/Firestone, Inc., 50 Century Boulevard,
Nashville, Tennessee 37214, Attention: Treasurer and (c) in the case of the
Trustee, to the Corporate Trust Office; or, as to each party, at such other
address as shall be designated by such party in a written notice to each
other party. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Copies of all notices, reports, certificates and amendments delivered
hereunder shall be mailed to the Rating Agency as follows: (a) Standard &
Poor's Corporation, 25 Broadway, New York, NY 10004, Attention: Structured
Finance, (b) Moody's Investor Services, 99 Church Street, New York, N.Y.
10007, Attention: Structured Finance and (c) Fitch Investors Service, Inc.,
One State Street Plaza, New York, NY 10004, Attention: Structured
Surveillance Department.
Section 13.06 Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or
of the Certificates or rights of the Certificateholders thereof.
Section 13.07 Assignment. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Section 8.02, this Agreement,
including any Supplement, may not be assigned by the Servicer without the
prior consent of Holders of Investor Certificates evidencing Undivided
Interests aggregating not less than 66-2/3% of the Invested amount of the
Investor Certificates of each Series on a Series by Series basis.
Section 13.08 Certificates Nonassessable and Fully Paid. It is the
-----------------------------------------
intention of the parties to this Agreement that the Investor
Certificateholders shall not be personally liable for obligations of the
Trust, that the interests in the Trust represented by the Investor
Certificates shall be nonassessable for any losses or expenses of the Trust
or for any reason whatsoever, and that Certificates upon authentication
thereof by the Trustee pursuant to Sections 2.09 and 6.02 are and shall be
deemed fully paid.
Section 13.09 Further Assurances. The Transferor and the Servicer
------------------
agree to do and perform, from time to time, any and all acts and to execute
any and all further instruments required or reasonably requested by the
Trustee more fully to effect the purposes of this Agreement, including,
without limitation, the execution of any financing statements or continuation
statements relating to the Receivables for filing under the provisions of the
UCC of any applicable jurisdiction.
Section 13.10 No Waiver; Cumulative Remedies. No failure to exercise
------------------------------
and no delay in exercising, on the part of the Trustee or the Investor
Certificateholders, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise
of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exhaustive of any rights, remedies, powers
and privileges provided by law.
Section 13.11 Counterparts. This Agreement and any Supplement may be
------------
executed in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which together
shall constitute one and the same instrument.
Section 13.12 Third Party Beneficiaries. This Agreement and any
-------------------------
Supplement will inure to the benefit of and be binding upon the parties
hereto, and, in addition, shall inure to the benefit of the
Certificateholders and their respective successors and permitted assigns.
Except as otherwise provided in this Article XIII or Section 7.04, no other
person will have any right or obligation hereunder; provided, however, that
-------- -------
if so specified in the applicable Supplement, an Enhancement Provider may be
deemed to be a third party beneficiary of this Agreement.
Section 13.13 Actions by Certificateholders.
-----------------------------
(a) Wherever in this Agreement or any Supplement, a provision is
made that an action may be taken or a notice, demand or instruction given by
Investor Certificateholders, such action, notice or instruction may be taken
or given by any Investor Certificateholder of any Series, unless such
provision requires a specific percentage of Investor Certificateholders of
a certain Series or all Series.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall bind such
Certificateholder and every subsequent holder of such Certificate issued upon
the registratiOn of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done or omitted to be done by the Trustee or
the Servicer in reliance thereon, whether or not notation of such action is
made upon such Certificate.
Section 13.14 Merger and Integration. Except as specifically stated
----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not
be modified, amended, waived or supplemented except as provided herein.
Section 13.15 Headings. The headings herein are for purposes of
--------
reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
Section 13.16 Voting, Waiver and Consents. Notwithstanding anything
---------------------------
herein to the contrary, any certificate held by, or on behalf of, the
Transferor or any of its Affiliates shall not be entitled to vote for, or
give its consent to, or grant a waiver with respect to, any matter required,
permitted or authorized hereby to be voted upon, consented to or waived. For
the purposes of calculating the percentage of any Certificates so voting,
consenting or granting such waiver, such Certificate held by, or on behalf
of, the Transferor or any of it. Affiliates shall be deemed not to be
outstanding and it interest shall not be reflected in either the numerator
or denominator of the fraction by which such percentage is derived.
(END OF ARTICLE XIII)
IN WITNESS WHEREOF, the Transferor, Bridgestone/Firestone, the Servicer
and the Trustee have caused this Agreement to be duly executed by their
respective officers as of the day and year first above written.
FIRESTONE RETAIL CREDIT CORPORATION,
as Transferor
By
-----------------------------------------------
Name:
Title:
BRIDGESTONE/FIRESTONE, INC.
as Servicer and individually
By
-----------------------------------------------
Name:
Title:
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By
-----------------------------------------------
Name:
Title:
IN WITNESS WHEREOF, the Transferor, Bridgestone/Firestone, the Servicer
and the Trustee have caused this Agreement to be duly executed by their
respective officers as of the day and year first above written.
FIRESTONE RETAIL CREDIT CORPORATION,
as Transferor
By
-----------------------------------------------
Name:
Title:
BRIDGESTONE/FIRESTONE, INC.
as Servicer and individually
By
-----------------------------------------------
Name:
Title:
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By
-----------------------------------------------
Name:
Title:
Exhibit A-1
-----------
FORM OF EXCHANGEABLE TRANSFEROR CERTIFICATE
One Unit
BRIDGESTONE/FIRESTONE MASTER TRUST
EXCHANGEABLE TRANSFEROR CERTIFICATE
THIS CERTIFICATE REPRESENTS THE TRANSFEROR INTEREST
IN THE BRIDGESTONE/FIRESTONE MASTER TRUST
Evidencing an undivided interest in a trust, the corpus of which
consists of receivables generated or to be generated under a private label
credit card program (the "Credit Card Program") established by Credit First
National Association ("Credit First") and all monies due or to become due in
respect thereof.
(Not an interest in or obligation of
Credit First, Bridgestone/Firestone, Inc. or
Firestone Retail Credit Corporation or
any affiliate thereof)
This certifies that FIRESTONE RETAIL CREDIT CORPORATION is the
registered owner of an undivided interest (the "Transferor Interest") in the
Bridgestone/Firestone Master Trust (the "Trust") not represented by the
Investor Certificates and the Bridgestone/Firestone Certificate issued
pursuant to the Amended and Restated Pooling and Servicing Agreement, dated
as of ________________ (the "Agreement"; such term to include any Supplement
thereto) by and among Firestone Retail Credit Corporation, as transferor (the
"Transferor"), Bridgestone/Firestone, Inc., as servicer (the "Servicer") and
The Fuji Bank and Trust Company, as trustee (the "Trustee"). The corpus of
the Trust consists of all of the Transferor's right, title and interest in
a portfolio of receivables (the "Receivables") existing in consumer revolving
credit card accounts identified in the Agreement from time to time (the
"Accounts") as of the Cut-Off Date, all Receivables generated under the
Accounts from time to time thereafter, all monies due or to become due and
all amounts received with respect to the Receivables in existence in the
Accounts on the Cut-Off Date or generated thereafter including all Recoveries
relating thereto (net of related expenses) insurance proceeds (net of related
expenses), all right, title and interest of the Transferor in, to and under
the Participation Agreement, Purchase and Sale Agreement and any Insurance
Premiums paid under any Insurance Agreement, all monies on deposit in the
Collection Account (excluding any investment earnings on such deposited
amounts), any other account or accounts maintained for the benefit of
Certificateholders and available under any Enhancement to be provided by an
Enhancement Provider for any Series for payment to Certificateholders, the
Servicer Letter of Credit and all other assets and interests constituting the
Trust and all proceeds of the foregoing.
Although a summary of certain provisions of the Agreement is set forth
below, this Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the Trustee. A copy of the
Agreement may be requested from the Trustee by writing to the Trustee at The
Fuji Bank and Trust Company, Two World Trade Center, 81st Floor, New York,
New York 10048, Attention: Trust Administration Department. To the extent
not defined herein, the capitalized terms used herein have the meanings
ascribed to them in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement, as amended from time to time, the Transferor by virtue of the
acceptance hereof assents and by which the Transferor is bound.
This Certificate is not permitted to be transferred, assigned, exchanged
or otherwise pledged or conveyed except in compliance with the terms of the
Agreement .
The Receivables consist of amounts transferred to the Transferor,
payable by Obligors on any Account, from time to time as shown on the
Servicer's records, including, without limitation, amounts payable for the
purchases of goods or services and amounts payable for Periodic Finance
Charges, Late Fees, Returned Check Fees, returned convenience check fees,
cash advance fees and credit related insurance, as more fully specified in
the Agreement.
This Certificate is the Exchangeable Transferor Certificate (the
"Certificate"), which represents an undivided interest in the Trust,
-----------
including the right to receive the Collections and other amounts at the times
and in the amounts specified in the Agreement to be paid to the holder of the
Exchangeable Transferor Certificate. The aggregate interest represented by
this Certificate at any time in the Receivables in the Trust shall not exceed
the Transferor Interest at such time. In addition to this Certificate,
Investor Certificates will be issued to investors pursuant to the Agreement,
which will represent the interests of Investor Certificateholders in the
Trust and the Bridgestone/Firestone Certificate will be issued to
Bridgestone/Firestone, pursuant to the Agreement, which will represent the
interest of Bridgestone/Firestone in the Trust. This Certificate shall not
represent any interest in the Collection Account or other account or any
Enhancement except as provided in the Agreement.
Subject to certain conditions in the Agreement, the obligations created
by the Agreement and the Trust created thereby shall terminate upon the
earlier of (i) September 15, 2092 and (ii) the day after the date on which
funds shall have been deposited in the Collection Account sufficient to pay
the Aggregate Invested Amount plus interest accrued at the applicable
Certificate Rates through the end of the applicable Interest Accrual Period
in full on all Series of Investor Certificates; provided, however, that in
-------- -------
no event shall the trust created by the Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the
descendants, living on the date of the Agreement, of Joseph P. Kennedy, of
the Commonwealth of Massachusetts, formerly United States representative at
the Court of St. James.
Upon termination of the Trust pursuant to Article XII of the Agreement,
subject to the provisions of the Agreement and the surrender of this
Certificate, the Trustee shall assign and convey to the Transferor (without
recourse, representation or warranty) all right, title and interest of the
Trust in the Receivables, whether then existing or thereafter created, and
all proceeds thereof, except for amounts held by the Trustee pursuant to
Subsection 12.03(b). The Trustee shall execute and deliver such instruments
of transfer and assignment, in each case without recourse, as shall be
reasonably requested by the Transferor to vest in the Transfer or all right,
title and interest which the Trust has in the Receivables.
Unless the certificate of authentication herein has been executed by or
on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be
duly executed.
FIRESTONE RETAIL CREDIT CORPORATION
By:
----------------------------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Exchangeable Transferor Certificate referred to in the
within mentioned Pooling and Servicing Agreement.
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By:
----------------------------------------------
Authorized Signatory
Exhibit A- 2
------------
FORM OF BRIDGESTONE/FIRESTONE CERTIFICATE
One Unit
BRIDGESTONE/FIRESTONE MASTER TRUST
BRIDGESTONE/FIRESTONE CERTIFICATE
THIS CERTIFICATE REPRESENTS THE B/F ALLOCATION PERCENTAGE
IN THE BRIDGESTONE/FIRESTONE MASTER TRUST
Evidencing an undivided interest in a trust, the corpus of which
consists of receivables generated or to be generated under a private label
credit card program established by Credit First National Association ("Credit
First") and all monies due or to become due in respect thereof.
(Not an interest in or obligation of
Credit First, Bridgestone/Firestone, Inc. or
Firestone Retail Credit Corporation or
any affiliate thereof)
This certifies that BRIDGESTONE/FIRESTONE, INC. is the registered owner
of an undivided one percent interest (the "B/F Allocation Percentage") in the
Bridgestone/Firestone Master Trust (the "Trust"). This Certificate, the
Investor Certificates and the Exchangeable Transferor Certificate were issued
pursuant to the Amended and Restated Pooling and Servicing Agreement, dated
as of ________________ (the "Agreement"; such term to include any Supplement
thereto) by and among Firestone Retail Credit Corporation, as transferor (the
"Transferor"), Bridgestone/Firestone, Inc., as servicer (the "Servicer") and
The Fuji Bank and Trust Company, as trustee (the "Trustee"). The corpus of
the Trust consists of all of the Transferor's right, title and interest in
a portfolio of receivables (the "Receivables") existing in consumer revolving
credit card accounts identified in the Agreement from time to time (the
"Accounts") as of the Cut-Off Date, all Receivables generated under the
Accounts from time to time thereafter, all monies due or to become due and
all amounts received with respect to the Receivables in existence in the
Accounts on the Cut-Off Date or generated thereafter including all Recoveries
relating thereto (net of related expenses) insurance proceeds (net of related
expenses), all right, title and interest of the Transferor in, to and under
the Participation Agreement, the Purchase and Sale Agreement and any
Insurance Premiums paid under any Insurance Agreement, all monies on deposit
in the Collection Account (excluding any investment earnings on such
deposited amounts), any other account or accounts maintained for the benefit
of Certificateholders and available under any Enhancement to be provided by an
Enhancement Provider for any Series for payment to Certificateholders,
Servicer Letter of Credit and all other assets and interests constituting the
Trust and all proceeds of the foregoing.
Although a summary of certain provisions of the Agreement is set forth
below, this Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds, and duties evidenced
hereby and the rights, duties and obligations of the Trustee. A copy of the
Agreement may be requested from the Trustee by writing to the Trustee at The
Fuji Bank and Trust Company, Two World Trade Center, 81st Floor, New York,
New York 10048, Attention: Trust Administration Department. To the extent
not defined herein, the capitalized terms used herein have the meanings
ascribed to them in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement, as amended from time to time, the Transferor by virtue of the
acceptance hereof assents and by which the Transferor is bound.
This Certificate is not permitted to be transferred, assigned, exchanged
or otherwise pledged or conveyed except in compliance with the terms of the
Agreement.
The Receivables consist of amounts transferred to the Transferor,
payable by Obligors on any Account, from time to time as shown on the
Servicer's records, including, without limitation, amounts payable for
purchases of goods or services and amounts Payable for Periodic Finance
Charges, Late Fees, Returned Check Fees, returned convenience check fees,
cash advance fees and credit related insurance, as more fully specified in
the Agreement.
This Certificate is the Bridgestone/Firestone Certificate (the
"Certificate"), which represents an undivided one percent interest in the
-----------
Trust, including the right to receive the Collections and other amounts at
the times and in the amounts specified in the Agreement to be paid to the
holder of the Bridgestone/Firestone Certificate. The aggregate interest
represented by this Certificate at any time in the Receivables in the Trust
shall not exceed the B/F Allocation Percentage. In addition to this
Certificate, Investor Certificates will be issued to investors pursuant to
the Agreement, which will represent the interests of Investor
Certificateholders in the Trust and the Exchangeable Transferor Certificate
will be issued to the Transferor, pursuant to the Agreement, which will
represent the interest of the Transferor in the Trust. This Certificate
shall not represent any interest in the Collection Account or other account
or any Enhancement except as provided in the Agreement.
Subject to certain conditions in the Agreement, the obligations created
by the Agreement and the Trust created thereby shall terminate upon the
earlier of (i) September 15, 2092 and (ii) the day after the date on which
funds shall have been deposited in the Collection Account sufficient to pay
the Aggregate Invested amount plus interest accrued at the applicable
Certificate Rates through the end of the applicable Interest Accrual Period
in full on all Series of Investor Certificates; provided, however, that in
-------- -------
no event shall the trust created by the Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the
descendants, living on the date of the Agreement, of Joseph P. Kennedy, of
the Commonwealth of Massachusetts, formerly United States representative at
the Court of St. James.
Unless the certificate of authentication herein has been executed by or
on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Certificate to be
duly executed.
FIRESTONE RETAIL CREDIT CORPORATION
By:
----------------------------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the BRIDGESTONE/FIRESTONE Certificate referred to in the within
mentioned Pooling and Servicing Agreement.
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By:
----------------------------------------------
Authorized Signatory
EXHIBIT B
---------
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Subsection 2.05(b)(ii) of
the Pooling and Servicing Agreement)
ASSIGNMENT No. _____ OF RECEIVABLES IN ADDITIONAL ACCOUNTS, dated as of
_________________, by and between FIRESTONE RETAIL CREDIT CORPORATION (the
"Transferor"), a Massachusetts corporation, as Transferor, and THE FUJI BANK
AND TRUST COMPANY, a banking corporation organized and existing under the
laws of the State of New York, as Trustee (the "Trustee") pursuant to the
Pooling and Servicing Agreement referred to below.
W I T N E S E T H:
- - - - - - - - -
WHEREAS, the Transferor, Bridgestone/Firestone, Inc.
("Bridgestone/Firestone"), as Servicer, and the Trustee are parties to the
Amended and Restated Pooling and Servicing Agreement, dated as of November
1, 1992 (hereinafter as such agreement may have been or may from time to time
be, amended, supplemented or otherwise modified, the "Pooling and Servicing
Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the Transferor
pursuant to Section 2.05(a) of the Pooling and Servicing Agreement, may
designate Additional Accounts of the Transferor to be included as Accounts
and to convey the Receivables of such Additional Accounts, whether now
existing or hereafter created, to the Trust as part of the corpus of the
Trust (as each such term is defined in the Pooling and Servicing Agreement);
and
WHEREAS, the Trustee is willing to accept such designation and
conveyance of the Receivables in the Additional Accounts subject to the terms
and conditions hereof;
NOW, THEREFORE, the Transferor and the Trustee hereby agree as follows:
1. Defined Terms. All capitalized terms used herein shall have the
-------------
meanings ascribed to them in the Pooling and Servicing Agreement unless
otherwise defined herein.
"Addition Date" shall mean, with respect to the Additional Accounts
-------------
designated hereby, (___________________, 199__).
"Addition Notice Date" shall mean, with respect to the Additional
--------------------
Accounts, the last day in the month preceding the month in which the Addition
Date occurs.
2. Designation of Additional Accounts. The Transferor does hereby
----------------------------------
deliver herewith a list or computer file containing a true and complete
schedule identifying all such Additional Accounts specifying for each such
Account, as of the Addition Notice Date, its account number. Such list or
computer file shall be as of the date of this Assignment incorporated into
and made part of this Assignment and is marked as Schedule 1 to this
----------
Assignment.
3. Conveyance of Receivables.
-------------------------
(a) The Transferor does hereby transfer, assign, set over and otherwise
convey to the Trust for the benefit of Certificateholders, without recourse
all of its right, title and interest in, to and under the Receivables now
existing and hereafter created designated on Schedule 1 hereof, all monies
----------
due or to become due and all amounts received with respect thereto, including
all Recoveries related thereto (net of related expenses), insurance proceeds
(net of related expenses), and any Insurance Premiums paid under any
Insurance Agreement and all proceeds thereof. The foregoing transfer,
assignment, set-over and conveyance does not constitute and is not intended
to result in a creation or an assumption by the Trust, the Trustee or any
Investor Certificateholder of any obligation of the Servicer, the Transferor
or any other Person in connection with the Accounts, the Receivables or under
any agreement or instrument relating thereto, including, without limitation,
any obligation to any Obligors, merchants, Society National Bank or Credit
First National Association and any affiliate thereof, or insurers.
(b) In connection with such transfer, the Transferor agrees to record
and file, at its own expense, a financing statement (and continuation
statements with respect to such financing statements when applicable) with
respect to the Receivables now existing and hereafter created for the
transfer of accounts meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect the transfer and
assignment of the Receivables to the Trust, and to deliver a file-stamped
copy of such financing statement or other evidence of such filing to the
Trustee on or prior to the date of issuance of the Certificates. The Trustee
shall be under no obligation whatsoever to file such financing statement, or
a continuation statement to such financing statement, or make any other
filing under the UCC in connection with such transfer.
(c) In connection with such transfer, the Transferor further agrees,
at its own expense, on or prior to the date of this Assignment to indicate
in its books and records that all Receivables created in connection with the
Additional Accounts designated hereby have been conveyed to the Trust
pursuant to this Assignment for the benefit of the Certificateholders.
4. Acceptance by Trustee. Subject to the satisfaction of the
---------------------
conditions set forth in Section 6, the Trustee hereby acknowledges its
acceptance on behalf of the Trust for the benefit of all Certificateholders
of all right, title and interest to the property, now existing and hereafter
created, conveyed to the Trust pursuant to Section 3(a) of this Assignment,
and declares that it shall maintain such right, title and interest, upon the
trust set forth in the Pooling and Servicing Agreement. The Trustee further
acknowledges that, prior to or simultaneously with the execution and delivery
of this Assignment, the Transferor delivered to the Trustee the written list
described in Section 2 of this Assignment.
5. Representations and Warranties of the Transferor. The Transferor
------------------------------------------------
hereby represents and warrants to the Trustee, on behalf of the Trust, as of
the date of this Assignment and as of the Addition Date that:
(a) Legal, Valid and Binding Obligation. This Assignment constitutes
-----------------------------------
a legal, valid and binding obligation of the Transferor enforceable against
the Transferor in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now and hereafter in effect affecting the
enforcement of creditors' rights in general and except as such enforceability
may be limited by general principles of equity (whether considered in a suit
at law or in equity);
(b) Eligibility of Accounts: As of the Addition Notice Date, to the
-----------------------
best knowledge of the Transferor, each Additional Account designated hereby
is an Eligible Additional Account in all material respects;
(c) Selection Procedures. No selection procedure adverse to the
--------------------
interests of the Investor Certificateholders was utilized in selecting the
Additional Accounts designated hereby from the available Eligible Additional
Accounts;
(d) Insolvency. The Transferor is not insolvent and, after giving
----------
effect to the conveyance set forth in Section 3 of the Assignment, will not
be insolvent; and
(e) Security Interest. This Assignment constitutes a valid transfer
-----------------
and assignment to the Trust of all right, title and interest of the
Transferor in the Receivables including all Recoveries relating thereto and
the proceeds thereof (including insurance proceeds to the extent that the
Seller is entitled thereto) relating thereto or, if this Assignment does not
constitute a valid transfer and assignment of such property, it constitutes
a grant of a "security interest" (as defined in the UCC as in effect in the
State of New York) in such property to the Trust, which, in the case of
existing Receivables and the proceeds thereof, is enforceable upon execution
and delivery of this Assignment, and which will be enforceable with respect
to such Receivables hereafter created and the proceeds thereof upon such
creation. Upon the filing of the financing statement described in Section
3 of the Assignment and, in the case of the Receivables hereafter created and
the proceeds thereof, upon the creation thereof, the Trust shall have a first
priority perfected security or ownership interest in such property except for
Liens permitted under subsection 2.08(b) of the Pooling and Servicing
Agreement; provided, however, that such security interest in proceeds shall
-------- -------
remain perfected after 10 days from their receipt by the Servicer (so long
as Bridgestone/Firestone is the Servicer) or the Transferor only to the
extent that such proceeds are identifiable cash proceeds or that come into
the Trust's possession within the applicable 10-day period; and provided,
--------
further, that the Transferor makes no representation or warranty with respect
- - -------
to the effect of Section 9-306(4) of the UCC on the rights of the Trust to
proceeds held by the Transferor at the time insolvency proceedings are
instituted by or against the Transferor.
6. Conditions Precedent. The acceptance of the Trustee set forth in
--------------------
Section 4 hereof and the amendment of the Pooling and Servicing Agreement as
set forth in Section 7 hereof are subject to the satisfaction, on or prior
to the Addition Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Transferor in Section 5 shall be true and correct as
of the Addition Notice Date or as of the Addition Date as applicable.
(b) Officer's Certificate. The Transferor shall have delivered to the
---------------------
Trustee a certificate of a Vice President or more senior officer confirming
the items set forth in Section 2.05(b)(v) of the Pooling and Servicing
Agreement.
(c) Opinion of Counsel. The Transferor shall have delivered to the
------------------
Trustee an Opinion of Counsel with respect to the Additional Accounts
designated hereby substantially in the form of Exhibit F to the Pooling and
---------
Servicing Agreement.
(d) Additional Information. The Transferor shall have delivered to the
----------------------
Trustee such information, if any, as was reasonably requested by the Trustee
to satisfy itself as to the accuracy of the representation and warranty set
forth in Section 5(b) of this Agreement.
7. Amendment of the Pooling and Servicing Agreement. The Pooling and
------------------------------------------------
Servicing Agreement is hereby amended by providing that all references to the
"Pooling and Servicing Agreement," to "this Agreement" and "herein" shall
be deemed from and after the Addition Date to be a dual reference to the
Pooling and Servicing Agreement as supplemented by this Assignment. Except
as expressly amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Pooling and Servicing Agreement shall remain
unamended and shall continue to be, and shall remain, in full force and
effect in accordance with its terms and except as expressly provided herein
shall not constitute or be deemed to constitute a waiver of compliance with
or consent to noncompliance with any term or provision of the Pooling and
Servicing Agreement.
8. Counterparts. This Assignment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument.
9. Governing Law. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS.
IN WITNESS WHEREOF, the undersigned have caused this Assignment of
Receivables in Additional Accounts to be duly executed and delivered by their
respective duly authorized officers on the day and the year first above
written.
FIRESTONE RETAIL CREDIT CORPORATION,
as Transferor
By
-----------------------------------------------
Title:
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By
-----------------------------------------------
Title:
EXHIBIT C
---------
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(As required by Subsection 2.10(b)(i) of
the Pooling and Servicing Agreement)
REASSIGNMENT No. ___ OF RECEIVABLES, dated as of ___________, __, by and
between FIRESTONE RETAIL CREDIT CORPORATION, as Transferor (the
"Transferor"), a Massachusetts corporation, and THE FUJI BANK AND TRUST
COMPANY, a banking corporation organized and existing under the laws of the
State of New York, as Trustee (the "Trustee") pursuant to the Pooling and
Servicing Agreement referred to below.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Transferor, Bridgestone/Firestone, Inc.
("Bridgestone/Firestone"), as servicer and the Trustee are parties to the
Amended and Restated Pooling and Servicing Agreement, dated as of
______________ (hereinafter as such agreement may have been, or may from time
to time be, amended, supplemented or otherwise modified, the "Pooling and
Servicing Agreement");
WHEREAS, pursuant to the Pooling and Servicing Agreement, the Transferor
wishes to remove all Receivables from certain designated Accounts of the
Transferor (the "Removed Accounts.) and to cause the Trustee to reconvey the
Receivables of such Removed Accounts, whether now existing or hereafter
created, from the Trust to the Transferor; and
WHEREAS, the Trustee is willing to accept such designation and to
reconvey the Receivables in the Removed Accounts subject to the terms and
conditions hereof;
NOW, THEREFORE, the Transferor and the Trustee hereby agree as follows:
1. Defined Terms. All terms defined in the Pooling and Servicing
-------------
Agreement and used herein shall have such defined meanings when used herein,
unless otherwise defined herein.
"Removal Date" shall mean, with respect to the Removed Accounts
------------
designated hereby, ___________, 19__.
"Removal Notice Date" shall mean, with respect to the Removed Account,
-------------------
the billing date for such Removed Account in the month preceding the month
in which the Removal Date for such Removed Account occurs, (which shall be
a date on or prior to the fifth Business Day prior to the Removal Date).
2. Designation of Removed Accounts. The Transferor shall deliver to
-------------------------------
the Trustee herewith a list or computer file containing a true and complete
schedule identifying all Accounts the Receivables of which have not been
removed from the Trust specifying for each such Account, as of the Removal
Notice Date, its account number. Such schedule shall be marked as Schedule 1
----------
to this Reassignment and shall be incorporated into and made a part of this
Reassignment as of the Removal Date.
3. Conveyance of Receivables.
-------------------------
(a) The Trustee does hereby transfer, assign, set-over and otherwise
convey to the Transferor, without recourse on and after the Removal Date, all
right, title and interest of the Trust in, to and under the Receivables now
existing and hereafter created in the Removed Accounts designated hereby, all
amounts due or to become due and all amounts received with respect thereto,
including all Recoveries relating thereto (net of related expenses),
insurance proceeds (net of related expenses), all of its right, title and
interest in, to and under the Participation Agreements, Purchase and Sale
Agreement and any Insurance Premiums paid under any Insurance Agreement and
all proceeds of any Insurance Agreement.
(b) In connection with such transfer, the Trustee agrees to execute and
deliver to the Transferor, on or prior to the date of this Reassignment, a
termination statement prepared by the Transferor in form satisfactory to the
Trustee with respect to the Receivables now existing and hereafter created
in the Removed Accounts reassigned hereby (which may be a single termination
statement with respect to all such Receivables) evidencing the release by the
Trust of its lien on the Receivables in the Removed Accounts, and meeting the
requirements of applicable state law, in such manner and such jurisdictions
as are necessary to remove such lien.
4. Acceptance by Trustee. The Trustee hereby acknowledges that, prior
---------------------
to or simultaneously with the execution and delivery of this Reassignment,
the Transferor delivered to the Trustee the computer file or microfiche list
described in Section 2 of this Reassignment.
5. Representations and Warranties of the Transferor. The Transferor
------------------------------------------------
hereby represents and warrants to the Trustee, on behalf of the Trust, as of
the date of this Agreement and as of the Removal Date:
(a) Legal, Valid and Binding Obligation. This Reassignment constitutes
-----------------------------------
a legal, valid and binding obligation of the Transferor enforceable against
the Transferor, in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights in general and except as such enforceability
may be limited by general principles of equity (whether considered in a suit
at law or in equity); and
(b) Selection Procedures. No selection procedures believed by the
--------------------
Transferor to be materially adverse to the interests of the Investor
Certificateholders of any Series were utilized in selecting the Removed
Accounts designated hereby.
6. Conditions Precedent. The amendment of the Pooling and Servicing
Agreement set forth in Section 7 hereof is subject to the satisfaction, on
or prior to the Removal Date, of the following condition precedent:
(a) Officers' Certificate. The Transferor shall have delivered to the
---------------------
Trustee an Officers' Certificate certifying that (i) as of the Removal Date,
all requirements set forth in Section 2.10 of the Pooling and Servicing
Agreement for designating Removed Accounts and reconveying the Receivables
of such Removed Accounts, whether now existing or hereafter created, have
been satisfied, and (ii) each of the representations and warranties made by
the Transferor in Section 5 hereof is true and correct as of the Removal
Date. The Trustee may conclusively rely on such Officers' Certificate, shall
have no duty to make inquiries with regard to the matters set forth therein
and shall incur no liability in so relying.
7. Amendment of the Pooling and Servicing Agreement. The Pooling and
------------------------------------------------
Servicing Agreement is hereby amended to provide that all references therein
to the "Pooling and Servicing Agreement," to "this Agreement" and "herein"
shall be deemed from and after the Removal Date to be a dual reference to the
Pooling and Servicing Agreement as supplemented by this Reassignment. Except
as expressly amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Pooling and Servicing Agreement shall remain
unamended and shall continue to be, and shall remain, in full force and
effect in accordance with its terms and except as expressly provided herein
shall not constitute or be deemed to constitute a waiver of compliance with
or a consent to non-compliance with any term or provision of the Pooling and
Servicing Agreement.
8. Counterparts. This Reassignment may be executed in two or more
------------
counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one
and the same instrument.
9. Governing Law. THIS REASSIGNMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS.
IN WITNESS WHEREOF, the undersigned have caused this Reassignment of
Receivables to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.
FIRESTONE RETAIL CREDIT CORPORATION,
as Transferor
By
-----------------------------------------------
Title:
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By
-----------------------------------------------
Title:
EXHIBIT D
---------
Date: ______________, 1992
IRREVOCABLE SERVICER LETTER OF CREDIT NO. _________
The Fuji Bank and Trust Company
Two World Trade Center
81st Floor
New York, New York 10048
Attention: Trust Administration Department
Gentlemen:
At the request and for the account of our customer,
Bridgestone/Firestone, an Ohio corporation (the "Corporation"), we (the
"Bank") hereby establish in your favor this Irrevocable Letter of Credit No.
________________________ wherein you, as trustee (the "Trustee") under the
Amended and Restated Pooling and Servicing Agreement, as supplemented
(collectively, the "Pooling and Servicing Agreement") among the Corporation,
as servicer, Firestone Retail Credit Corporation, as transferor and you,
pursuant to which the Bridgestone/Firestone Master Trust, Series 1992-A and
Series 1992-B Certificates (the "Certificates") have been issued, are hereby
irrevocably authorized, to draw (i) as required under Section 4.01A(a) of the
Pooling and Servicing Agreement or (ii) Section 4.01A(e) of the Pooling and
Servicing Agreement (a "Special Drawing"), upon the terms and conditions
hereinafter set forth, in an aggregate amount not exceeding $45,000,000
(hereinafter, as reduced from time to time in accordance with the provisions
hereof, the "Stated Amount").
Funds under this Letter of Credit are available to you only against your
written certificate signed by a person purporting to be your authorized
officer, appropriately completed, in the form of Annex 1 or Annex 2 hereto
for payment of certain amounts due from, but unpaid by, the Corporation under
the Pooling and Servicing Agreement.
We hereby agree that each demand made under and in compliance with the
terms of this Letter of Credit will be duly honored by us upon due delivery
of the certificate(s), as specified above, appropriately completed (together
with the enclosures, if any, required thereby), if presented as specified
on or before the expiration date hereof. If a presentation in respect of
payment is made by you hereunder at or prior to 12:00 P.M., New York City
time, on a Business Day, and provided that the documents so presented conform
to the terms and conditions hereof, payment shall be made to you of the
amount specified, in immediately available funds, not later than 3:00 P.M.,
New York City time, on the same Business Day. If a presentation in respect
of payment is made by you hereunder after 3:00 P.M., New York City time, on
a Business Day, such presentation shall be deemed to have been made prior to
3:00 P.M., New York City time, on the next succeeding Business Day. You
agree to use your best efforts to provide us telephonic notice at the time
any presentation in respect of payment is made hereunder; provided, however,
-------- -------
that failure to provide such telephonic notice shall not affect our
obligation to make payment in respect of any such presentation in respect of
payment. If requested by you, payment under this Letter of Credit will be
wire transferred to an account in New York, New York specified in the related
certificate. As used herein, "Business Day" shall mean any day other than
a Saturday, a Sunday, or a day on which banking institutions in New York, New
York shall be authorized or obligated by law, executive order or governmental
decree to be closed.
If a drawing made by you hereunder does not, in any instance, conform
to the terms and conditions of this Letter of Credit, we shall give you
prompt notice that the purported drawing was not effected in accordance with
the terms and conditions of this Letter of Credit, stating the reasons
therefor and that we are holding any documents presented in connection
therewith at your disposal or are returning the same to you, as we may elect.
Except as otherwise specified in Annex 2, each drawing under this Letter
of Credit shall be verified to Account No. ________ maintained by the Trustee
(the "Collection Account").
Only you, as Trustee, may make a drawing under this Letter of Credit.
Upon the payment of the amount specified in the related certificate(s)
presented hereunder, we shall be fully discharged of our obligation under
this Letter of Credit with respect to such certificate(s) and we shall not
thereafter be obligated to make any further payments under this Letter of
Credit in respect of such certificate(s) to you or any other person. By
paying to you an amount demanded in accordance herewith, we make no
representation as to the correctness of the amount demanded.
This Letter of Credit shall expire at our close of business in New York,
New York on the first to occur of the following dates (the "Termination
Date"): (x) ______________ ___, 199_ or, if said date shall not be a Business
Day, on the Business Day next succeeding said date, or (y) the date the
Corporation ceases to be the Servicer under the Pooling and Servicing
Agreement, as provided in a written notice to us from the Trustee, or (z) the
date of receipt by us of your written certificate signed by a person
purporting to be your authorized officer, appropriately completed, in the
form of Annex 3 hereto. This Letter of Credit shall be promptly surrendered
to us upon expiration.
Drawings in respect of payments hereunder honored by us shall not, in
the aggregate, exceed the Stated Amount in effect immediately prior to such
drawing. Each drawing honored by us hereunder shall pro tanto reduce the
--- -----
Stated Amount in effect immediately prior to such drawing.
This Letter of Credit is subject to, and shall be governed by, the
Uniform Customs and Practice for Documentary Credits (1983 Revision),
International Chamber of Commerce, Publication No. 400 (the "Uniform
Customs"). This Letter of Credit shall be deemed to be made under the laws
of the State of New York, including Article 5 of the Uniform Commercial Code
of such State, and shall, as to matters not governed by the Uniform Customs,
be governed by and construed in accordance with the laws of the State of New
York.
Notwithstanding anything in Article 54(e) of the Uniform Customs to the
contrary, this Letter of Credit is transferable in its entirety (but not in
part) only to a successor Trustee under the Pooling and Servicing Agreement
upon presentation to us of this Letter of Credit accompanied by the transfer
form attached hereto as Annex 4, to the transferee specified therein.
All documents presented to us in connection with any demand for payment
hereunder, as well as all notices and other communications to us in respect
of this Letter of Credit, shall be in writing and addressed and presented to
us at our office at One World Trade Center, New York, New York 10048
Attention: Loan Administration and shall make specific reference to this
Letter of Credit by number. Such documents, notices and other communication
shall be personally delivered to us, or may be sent to us by tested telex or
over a telecopier (promptly confirmed by delivery of the written document,
notice or other communication, as the case may be, provided that such
confirmation shall not be a condition to the effectiveness of such demand for
payment, notice or other communication) to the following numbers, as
applicable:
Telex No.: 420575 (Answerback: SMTBK)
Telecopier No.: (212) 524-0612
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited
by reference to any document, instrument or agreement referred to herein
(including, without limitation, the certificates), except only Annex
1 through 4 hereto; and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or agreement except
as set forth above.
Very truly yours,
The Sumitomo Bank, Limited
By:
----------------------------------------------
Name:
Title:
ANNEX 1 T0
LETTER OF CREDIT NO.
------------------------------------
CERTIFICATE FOR "ANNEX 1 DRAWING"
---------------------------------
The undersigned, as Trustee (the "Trustee"), acting through the
undersigned duly authorized officer of the Trustee, hereby certifies to The
Sumitomo Bank, Limited (the "Bank"), with reference to the Bank's Irrevocable
Letter of Credit No. ______________ (the "Letter of Credit"; any capitalized
term used herein and not defined shall have its respective meaning as set
forth in the Letter of Credit) issued in favor of the Trustee, that:
(1) The Trustee is the Trustee under the Pooling and Servicing
Agreement.
(2) The Corporation, as servicer (the "Servicer") under the
Pooling and Servicing Agreement, has notified us, as Trustee under the
Pooling and Servicing Agreement, pursuant to a Monthly Servicer's Certificate
(as defined in the Pooling and Servicing Agreement) (a copy of which is
attached hereto) furnished pursuant to Section 3.04(b) of the Pooling and
Servicing Agreement, that the following amount was required to be remitted
by the Corporation to the Collection Account pursuant to Section 4.01(g) of
the Pooling end Servicing Agreement with respect to the Distribution Date (as
defined in the Pooling and Servicing Agreement) occurring on (insert
------
applicable Distribution Date): $(insert amount required to be remitted
- - ----------------------------- -------------------------------------
pursuant to Section 4.01(g)).
- - ---------------------------
(3) The Corporation has failed to deposit the following portion
of amounts owed by it with respect to such Distribution Date as set forth in
paragraph (2) above: $(insert amount of deficiency).
---------------------------
(4) The Trustee is making a drawing under the Letter of Credit in
the amount of $_________ which amount equals the lesser of (a) the amount set
forth in paragraph (3) and (b) the amount identified by the Servicer in the
Monthly Servicer's Certificate referred to in paragraph (2) above as being
available on the date hereof (and after giving effect to any contemporaneous
demand for payment under the Letter of Credit being made by the Trustee) to
be drawn under the Letter of Credit.
(5) The Trustee has not received notice from the Corporation or any
other person or entity contesting the accuracy of such Monthly Servicer's
Certificate.
(6) The account to which payment under the Letter of Credit is to
be wire transferred is Account No. 30492-01/0.1, maintained at The Fuji Bank
and Trust Company.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
certificate as of the _____ day of _____________.
THE FUJI BANK, AND
TRUST COMPANY, as Trustee
By
-----------------------------------------------
Name:
Title:
ANNEX 2 TO
LETTER OF CREDIT NO.
-------------------------------------
CERTIFICATE FOR "SPECIAL DRAWING"
---------------------------------
___________, 19__
The Sumitomo Bank, Limited
One World Trade Center, 95th Floor
New York, New York 10048
Attention:
Re: Irrevocable Letter of Credit No. ________________
Gentlemen:
The undersigned, a duly authorized officer of The Fuji Bank and Trust
Company (the "Trustee"), hereby certifies to The Sumitomo Bank, Limited with
reference to irrevocable Letter of Credit No. ________________ (the "Letter
of Credit") (any capitalized term used herein and not defined shall have the
meaning set forth in the Letter of Credit) issued by The Sumitomo Bank,
Limited (the "Bank"), in favor of the Trustee, that:
(1) The Trustee is the Trustee under the Pooling and Servicing
Agreement.
(2) The Trustee has been instructed by the Servicer to make a Special
Drawing.
(3) A Responsible Officer of the Trustee has obtained knowledge that the
short-term debt rating of the Bank has been reduced, suspended or withdrawn.
(4) The Trustee hereby demands payment under the Letter of Credit in the
amount of $_____, which amount equals the Available Letter of Credit Amount
on the Business Day preceding the date hereof, as specified in the Monthly
Servicer's Certificate delivered by the Servicer pursuant to Section 3.04(b)
of the Pooling and Servicing Agreement (and after giving effect to any
contemporaneous demand for payment under the Letter of Credit being made with
respect to such date).
(5) All amounts received by the Trustee from the Bank in respect of this
certificate shall be applied in accordance with Section 4.01A(e) of the
Pooling and Servicing Agreement.
(6) The Trustee directs that such amounts be deposited in Account No.
____________ at The Fuji Bank and Trust Company.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
certificate as of this _____ day of ____________, 19__.
THE FUJI BANK AND
TRUST COMPANY, as Trustee
By:
----------------------------------------------
Authorized Signatory
ANNEX 3 TO
LETTER OF CREDIT NO.
-------------------------------------
CERTIFICATE FOR THE TERMINATION
OF LETTER OF CREDIT NO. ______________
The Sumitomo Bank, Limited
One World Trade Center
New York, New York 10048
Attention:
The undersigned, a duly authorized officer of The Fuji Bank and Trust
Company (the "Trustee"), hereby certifies to The Sumitomo Bank, Limited, with
reference to Irrevocable Letter of Credit No. ________________ (the "Letter
of Credit"; any capitalized terms used herein and not defined shall have the
meaning set forth in the Letter of Credit) issued by The Sumitomo Bank,
Limited in favor of the Trustee, that the Letter of Credit shall terminate
on _________________. Accordingly, we herewith return to you for
cancellation the Letter of Credit, which is terminated, as of the date
hereof, pursuant to its terms.
Date: _______________ THE FUJI BANK AND TRUST COMPANY,
as Trustee
By _________________________________________
Authorized Officer
ANNEX 4 TO
LETTER OF CREDIT NO.
-------------------------------------
___________, 19__
The Sumitomo Bank, Limited
One World Trade Center
New York, New York 10048
Attention: Loan Administration
Re: Irrevocable Letter of Credit No.
_______________
of The Sumitomo Bank, Limited
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
_________________________________________
(Name of Transferee)
_________________________________________
(Address)
all rights of the undersigned beneficiary to draw under the above-captioned
Letter of Credit (the "Letter of Credit"). The transferee has succeeded the
undersigned as Trustee under the Pooling and Servicing Agreement (as defined
in the Letter of Credit).
By this transfer, all rights of the undersigned beneficiary in the
Letter of Credit are transferred to the transferee and the transferee shall
hereafter have the sole rights as beneficiary thereof; provided, however,
-------- -------
that no rights shall be deemed to have been transferred to the transferee
until such transfer complies with the requirements of the Letter of Credit
pertaining to transfers.
The Letter of Credit is returned herewith and in accordance therewith
we ask that this transfer be effective and that you cause the transfer of the
Letter of Credit to our transferee or that, if so requested by the
transferee, you cause the issuance of a new irrevocable Letter of Credit in
favor of the transferee with provisions consistent with the Letter of Credit.
Very truly yours,
________________________________________
as predecessor Trustee
By ________________________________________
(Name and Title)
EXHIBIT E
---------
FORM OF ANNUAL SERVICER'S CERTIFICATE
(As required to be delivered on or before
March 31 of each calendar year, beginning
with March 31, 1993, pursuant to Section
3.05 of the Pooling and Servicing Agreement)
BRIDGESTONE/FIRESTONE, INC.
_____________________________________________________________________________
BRIDGESTONE/FIRESTONE MASTER TRUST
_____________________________________________________________________________
The undersigned, duly authorized representatives of
Bridgestone/Firestone, Inc. ("Bridgestone/Firestone"), as Servicer pursuant
to the Amended and Restated Pooling and Servicing Agreement dated as of
_______________ by and between Firestone Retail Credit Corporation, as
Transferor, Bridgestone/Firestone, as Servicer, and The Fuji Bank and Trust
Company, as Trustee, do hereby certify that:
1. Bridgestone/Firestone is, as of the date hereof, the Servicer under
the Pooling and Servicing Agreement.
2. The undersigned are duly authorized pursuant to the Pooling and
Servicing Agreement to execute and deliver this Certificate to the Trustee.
3. A review of the activities of the Servicer during the calendar year
ended December 31, 19_ and of its performance under the Pooling and Servicing
Agreement was conducted under our supervision.
4. Based on such review, the Servicer has, to the best of our
knowledge, fully performed all its obligations under the Pooling and
Servicing Agreement and no default in the performance of such obligations has
occurred or is continuing except as set forth in paragraph 5 below.
5. The following is a description of each default in the performance
of the Servicer's obligations under the provisions of the Pooling and
Servicing Agreement known to us to have been made by the Servicer noted
during the year ended December 31, 19__, which sets forth in detail the (i)
nature of each such default, (ii) the action taken by the Servicer, if any,
to remedy each such default and (iii) the current status of each default:
(If applicable, insert "None.")
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this __ day of ________, 19__.
BRIDGESTONE/FIRESTONE, INC.,
as Servicer
By _____________________________________________
Name:
Title:
By _____________________________________________
Name:
Title:
EXHIBIT F
---------
(FORM OF OPINION OF COUNSEL
PROVISIONS TO BE INCLUDED IN
OPINION OF COUNSEL TO BE
DELIVERED PURSUANT TO
SUBSECTION 2.05(b)(vi)
----------------------------
The opinion set forth below may be subject to certain qualifications,
assumptions, limitations and exemptions (including, without limitation, with
respect to the consideration given for the Additional Accounts and the
insolvency of the Transferor at the time of the conveyance of such Accounts)
taken or made in the opinion of ____________________________ with respect to
similar matters delivered on the Closing Date.
Pursuant to the Assignment No. __ of Receivables in Additional Accounts
(the "Assignment"), the Transferor will transfer, assign, set-over and
----------
otherwise convey to the Trust all of its right, title and interest in, to and
under the Receivables now existing and hereafter created in the Additional
Accounts ("Receivables in Additional Accounts"). If the assignment, transfer
and conveyance of the Receivables in Additional Accounts is determined to be
a sale of the Receivables in Additional Accounts and such sale is a sale of
accounts (as defined in the Code), the Assignment together with the filing
of a UCC-1 financing statement with the Secretary of State of the
Commonwealth of Massachusetts, is effective to transfer the Transferor's
interest therein on the terms and conditions set forth in the Assignment,
prior to all liens. If the assignment, transfer and conveyance of the
Receivables in Additional Account is determined to be a sale of general
intangibles, then, assuming the applicability of Massachusetts law the
Assignment is effective to transfer the Transferor's interest in the
Receivables in Additional Accounts. If the assignment, transfer and
conveyance of the Receivables in Additional Accounts is determined to be the
granting of a security interest in the Receivables in Additional Accounts,
the Assignment, together with the filing (which has been completed) of a
UCC-1 financing statement with the Secretary of State of the Commonwealth of
Massachusetts is effective to grant to and create in favor of the Trust a
first priority perfected security interest in the Receivables in Additional
Accounts.)
EXHIBIT G
---------
Date: ___________, 1992
IRREVOCABLE TRANSFEROR LETTER OF CREDIT NO. _____
The Fuji Bank and Trust Company
Two World Trade Center
81st Floor
New York, New York 10048
Attention: Trust Administration Department
Gentlemen:
At the request and for the account of our customer,
Bridgestone/Firestone, an Ohio corporation (the "Corporation"), we (the
"Bank") hereby establish in your favor this Irrevocable Letter of Credit No.
______ wherein you, as trustee (the "Trustee") under the Pooling and
Servicing Agreement, as supplemented by the Series 1992-A and Series 1992-B
Supplements, each dated as of November 1, 1992 (collectively, the "Pooling
and Servicing Agreement") among the Corporation, as servicer, Firestone
Retail Credit Corporation, as transferor and you, pursuant to which the
Bridgestone/Firestone Master Trust, Series 1992-A and Series 1992-B
Certificates (the "Certificates") have been issued, are hereby irrevocably
authorized, to draw (i) as required under Section 4.01B(a) of the Pooling and
Servicing Agreement or (ii) Section 4.01B(d) of the Pooling and Servicing
Agreement (a "Special Drawing"), upon the terms and conditions hereinafter
set forth, in an aggregate amount not exceeding $15,000,000 (hereinafter, as
reduced from time to time in accordance with the provisions hereof, the
"Stated Amount").
Funds under this Letter of Credit are available to you only against your
written certificate signed by a person purporting to be your authorized
officer, appropriately completed, in the form of Annex 1 or Annex 2 hereto
for payment of certain amounts due from, but unpaid by, the Corporation under
the Pooling and Servicing Agreement.
We hereby agree that each demand made under and in compliance with the
terms of this Letter of Credit will be duly honored by us upon due delivery
of the certificate(s), as specified above, appropriately completed (together
with the enclosures, if any, required thereby), if presented as specified on
or before the expiration date hereof. If a presentation in respect of
payment is made by you hereunder at or prior to 12:00 P.M., New York City
time, on a Business Day, and provided that the documents so presented conform
to the terms and conditions hereof, payment shall be made to you of the amount
specified, in immediately available funds, not later than 3:00 P.M., New York
City time, on the same Business Day. If a presentation in respect of payment
is made by you hereunder after 3:00 P.M., New York City time, on a Business
Day, such presentation shall be deemed to have been made prior to 3:00 P.M.,
New York City time, on the next succeeding Business Day. You agree to use
your best efforts to provide us telephonic notice at the time any
presentation in respect of payment is made hereunder; provided, however, that
-------- -------
failure to provide such telephonic notice shall not affect our obligation to
make payment in respect of any such presentation in respect of payment. If
requested by you, payment under this Letter of Credit will be wire
transferred to an account in New York, New York specified in the related
certificate. As used herein, "Business Day" shall mean any day other than
a Saturday, a Sunday, or a day on which banking institutions in New York, New
York shall be authorized or obligated by law, executive order or governmental
decree to be closed.
If a drawing made by you hereunder does not, in any instance, conform
to the terms and conditions of this Letter of Credit, we shall give you
prompt notice that the purported drawing was not effected in accordance with
the terms and conditions of this Letter of Credit, stating the reasons
therefor and that we are holding any documents presented in connection
therewith at your disposal or are returning the same to you, as we may elect.
Except as otherwise specified in Annex 2, each drawing under this Letter
of Credit shall be verified to Account No. _____ maintained by the Trustee
(the "Collection Account").
Only you, as Trustee, may make a drawing under this Letter of Credit.
Upon the payment of the amount specified in the related certificate(s)
presented hereunder, we shall be fully discharged of our obligation under
this Letter of Credit with respect to such certificate(s) and we shall not
thereafter be obligated to make any further payments under this Letter of
Credit in respect of such certificate(s) to you or any other person. By
paying to you an amount demanded in accordance herewith, we make no
representation as to the correctness of the amount demanded.
This Letter of Credit shall expire at our close of business in New York,
New York on the first to occur of the following dates (the "Termination
Date"): (x) ________, 199__ or, if said date shall not be a Business Day, on
the Business Day next succeeding said date, or (y) the date the Corporation
ceases to be the Servicer under the Pooling and Servicing Agreement, as
provided in a written notice to us from the Trustee, or (z) the date of
receipt by us of your written certificate signed by a person purporting to be
your authorized officer, appropriately completed, in the form of Annex 3
hereto. This Letter of Credit shall be promptly surrendered to us upon
expiration.
Drawings in respect of payments hereunder honored by us shall not, in
the aggregate, exceed the Stated Amount in effect immediately prior to such
drawing. Each drawing honored by us hereunder shall pro tanto reduce the
--- -----
Stated Amount in effect immediately prior to such drawing.
This Letter of Credit is subject to, and shall be governed by, the
Uniform Customs and Practice for Documentary Credits (1983 Revision),
International Chamber of Commerce, Publication No. 400 (the "Uniform
Customs"). This Letter of Credit shall be deemed to be made under the laws
of the State of New York, including Article 5 of the Uniform Commercial Code
of such State, and shall, as to matters not governed by the Uniform Customs,
be governed by and construed in accordance with the laws of the State of New
York.
Notwithstanding anything in Article 54(e) of the Uniform Customs to the
contrary, this Letter of Credit is transferable in its entirety (but not in
part) only to a successor Trustee under the Pooling and Servicing Agreement
upon presentation to us of this Letter of Credit accompanied by the transfer
form attached hereto as Annex 4, to the transferee specified therein.
All documents presented to us in connection with any demand for payment
hereunder, as well as all notices and other communications to us in respect
of this Letter of Credit, shall be in writing and addressed and presented to
us at our office at One World Trade Center, New York, New York 10048
Attention: Loan Administration and shall make specific reference to this
Letter of Credit by number. Such documents, notices and other communication
shall be personally delivered to us, or may be sent to us by tested telex or
over a telecopier (promptly confirmed by delivery of the written document,
notice or other communication, as the case may be, provided that such
confirmation shall not be a condition to the effectiveness of such demand for
payment, notice or other communication) to the following numbers, as
applicable:
Telex No.: 420575 (Answerback: SMTBK)
Telecopier No.: (212) 524-0612
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited
by reference to any document, instrument or agreement referred to herein
(including, without limitation, the Certificates), except only Annex 1
through 4 hereto; and any such reference shall not be deemed to incorporate
herein by reference any document, instrument or agreement except as set forth
above.
Very truly yours,
The Sumitomo Bank, Limited
By: _____________________________________________
Name:
Title:
ANNEX 1 TO
LETTER OF CREDIT NO.
---------------------------------
CERTIFICATE FOR "ANNEX 1 DRAWING"
---------------------------------
The undersigned, as Trustee (the "Trustee"), acting through the
undersigned duly authorized officer of the Trustee, hereby certifies to The
Sumitomo Bank, Limited (the "Bank"), with reference to the Bank's Irrevocable
Letter of Credit No. ____________ (the "Letter of Credit"; any capitalized
term used herein and not defined shall have its respective meaning as set
forth in the Letter of Credit) issued in favor of the Trustee, that:
(1) The Trustee is the Trustee under the Pooling and Servicing
Agreement.
(2) The Corporation, a servicer (the "Servicer") under the Pooling
and Servicing Agreement, has notified us, as Trustee under the Pooling and
Servicing Agreement, pursuant to a Monthly Servicer's Certificate (as
defined in the Pooling and Servicing Agreement) (a copy of which is attached
hereto) furnished pursuant to Section 3.04(b) of the Pooling and Servicing
Agreement, that the following amount was required to be remitted by the
Corporation to the Collection Account pursuant to Section 3.09(a) of the
Pooling and Servicing Agreement with respect to the Distribution Date (as
defined in the Pooling and Servicing Agreement) occurring on (insert
applicable Distribution Date): $(insert amount required to be remitted
-------------------------------------
pursuant to Section 3.09(a)).
- - ---------------------------
(3) The Corporation has failed to deposit the following portion
of amounts owed by it with respect to such Distribution Date as set forth in
paragraph (2) above: $(insert amount of deficiency).
---------------------------
(4) The Trustee is making a drawing under the Letter of Credit in
the amount of $_________ which amount equals the lesser of (a) the amount set
forth in paragraph (3) and (b) the amount identified by the Servicer in the
Monthly Servicer's Certificate referred to in paragraph (2) above as being
available on the date hereof (and after giving effect to any contemporaneous
demand for payment under the Letter of Credit being made by the Trustee) to
be drawn under the Letter of Credit.
(5) The Trustee has not received notice from the Corporation or
any other person or entity contesting the accuracy of such Monthly Servicer's
Certificate.
(6) The account to which payment under the Letter o(Pound
Sterling) Credit is to be wire transferred is Account No. 30492-01/0.1,
maintained at The Fuji Bank and Trust Company.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
certificate as of the _____ day of _____________.
THE FUJI BANK, AND TRUST COMPANY,
as Trustee
By _____________________________________________
Name:
Title:
ANNEX 2 TO
LETTER OF CREDIT NO.
---------------------------------
CERTIFICATE FOR "SPECIAL DRAWING"
---------------------------------
___________, 19__
The Sumitomo Bank, Limited
One World Trade Center
New York, New York 10048
Attention:
Re: Irrevocable Letter of Credit No.____________
Gentlemen:
The undersigned, a duly authorized officer of The Fuji Bank and Trust
Company (the "Trustee"), hereby certifies to The Sumitomo Bank, Limited with
reference to irrevocable Letter of Credit No. ______________ (the "Letter of
Credit") (any capitalized term used herein and not defined shall have the
meaning set forth in the Letter of Credit) issued by The Sumitomo Bank,
Limited (the "Bank"), in favor of the Trustee, that:
(1) The Trustee is the Trustee under the Pooling and Servicing
Agreement.
(2) The Trustee has been instructed by the Servicer to make a Special
Drawing.
(3) A Responsible Officer of the Trustee has obtained knowledge that the
short-term debt rating of the Bank has been reduced, suspended or withdrawn.
(4) The Trustee hereby demands payment under the Letter of Credit in the
amount of $_____, which amount equals the Available Letter of Credit Amount
on the Business Day preceding the date hereof, as specified in the Monthly
Servicer's Certificate delivered by the Servicer pursuant to Section 3.04(b)
of the Pooling and Servicing Agreement (and after giving effect to any
contemporaneous demand for payment under the Letter of Credit being made with
respect to such date).
(5) All amounts received by the Trustee from the Bank in respect of this
certificate shall be applied in accordance with Section 4.01A(e) of the
Pooling and Servicing Agreement.
(6) The Trustee directs that such amounts be deposited in Account No.
______________ at The Fuji Bank and Trust Company.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
certificate as of this _____ day of ________, 19__.
THE FUJI BANK AND TRUST COMPANY,
as Trustee
By: _____________________________________________
Authorized Signatory
ANNEX 3 TO
LETTER OF CREDIT NO.
---------------------------------
CERTIFICATE FOR THE TERMINATION
OF LETTER OF CREDIT NO. _________________
The Sumitomo Bank, Limited
One World Trade Center
New York, New York 10048
Attention: Loan Administration
The undersigned, a duly authorized officer of The Fuji Bank and Trust
Company (the "Trustee"), hereby certifies to The Sumitomo Bank, Limited, with
reference to Irrevocable Letter of Credit No. _______________ (the "Letter
of Credit"; any capitalized terms used herein and not defined shall have the
meaning set forth in the Letter of Credit) issued by The Sumitomo Bank,
Limited in favor of the Trustee, that the Letter of Credit shall terminate
on _________________. Accordingly, we herewith return to you for
cancellation the Letter of Credit, which is terminated, as of the date
hereof, pursuant to its terms.
Date: ____________ THE FUJI BANK AND
TRUST COMPANY, as Trustee
By _____________________________________________
Authorized Officer
ANNEX 4 TO
LETTER OF CREDIT NO.
-------------------------------------
___________, 19__
The Sumitomo Bank, Limited
One World Trade Center
New York, New York 10048
Attention: Loan Administration
Re: Irrevocable Letter of Credit No._________
of The Sumitomo Bank, Limited
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
______________________________
(Name of Transferee)
______________________________
(Address)
all rights of the undersigned beneficiary to draw under the above-captioned
Letter of Credit (the "Letter of Credit"). The transferee has succeeded the
undersigned as Trustee under the Pooling and Servicing Agreement (as defined
in the Letter of Credit).
By this transfer, all rights of the undersigned beneficiary in the
Letter of Credit are transferred to the transferee and the transferee shall
hereafter have the sole rights as beneficiary thereof; provided, however,
-------- -------
that no rights shall be deemed to have been transferred to the transferee
until such transfer complies with the requirements of the Letter of Credit
pertaining to transfers.
The Letter of Credit is returned herewith and in accordance therewith
we ask that this transfer be effective and that you cause the transfer of the
Letter of Credit to our transferee or that, if so requested by the
transferee, you cause the issuance of a new irrevocable Letter of Credit in
favor of the transferee with provisions consistent with the Letter of Credit.
Very truly yours,
_____________________________________________
as predecessor Trustee
By _____________________________________________
(Name and Title)
=============================================================================
Telegraphic Address One World Trade
"SUMITBANK, New York" THE SUMITOMO BANK, LIMITED Center
Telephone No. Suite 9651,
(212)553-0100 New York Branch New York,
New York 10048
=============================================================================
Date: December 2, 1992
IRREVOCABLE TRANSFEROR LETTER OF
CREDIT NO. LG/MIS/NY-430647
The Fuji Bank and Trust Company
Two World Trade Center
81st Floor
New York, New York 10048
Attention: Trust Administration Department
Gentlemen:
At the request and for the account of our customer,
Bridgestone/Firestone, an Ohio corporation (the "Corporation"), we (the
"Bank") hereby establish in your favor this irrevocable Letter of Credit No.
LG/MIS/NY-430647 wherein you, as trustee (the "Trustee') under the Pooling
and Servicing Agreement, as supplemented by the Series 1992-A and Series
1992-B Supplements, each dated as of November 1, 1992 (collectively, the
"Pooling and Servicing Agreement") among the Corporation, as servicer,
Firestone Retail Credit Corporation, as transferor and you, pursuant to which
the Bridgestone/Firestone Master Trust, Series 1992-A and Series 1992-B
Certificates (the "Certificates") have been issued, are hereby irrevocably
authorized, to draw (i) as required under Section 4.01B(a) of the Pooling and
Servicing Agreement or (ii) Section 4.01B(d) of the Pooling and Servicing
Agreement (a "Special Drawing"), upon the terms and conditions hereinafter
set forth, in an aggregate amount not exceeding $15,000,000 (hereinafter, as
reduced from time to time in accordance with the provisions hereof, the
"Stated Amount").
Funds under this Letter of Credit are available to you only against your
written certificate signed by a person purporting to be your authorized
officer, appropriately completed, in the form of Annex 1 or Annex 2 hereto
for payment of certain amounts due from, but unpaid by, the Corporation under
the Pooling and Servicing Agreement.
We hereby agree that each demand made under and in compliance with the
terms of this Letter of Credit will be duly honored by us upon due delivery
of the certificate(s), as specified above, appropriately completed (together
with the enclosures, if any, required thereby), if presented as specified on
or before the expiration date hereof. If a presentation in respect of
payment is made by you hereunder at or prior to 1:00 P.M., New York City
time,on a Business Day, and provided that the documents so presented conform
to the terms and conditions hereof, payment shall be made to you of the
amount specified, in immediately available funds, not later than 4:00 P.M.,
New York City time, on the same Business Day. If a presentation in respect
of payment is made by you hereunder after 1:00 P.M., New York City time, on
a Business Day, such presentation shall be deemed to have been made prior to
1:00 P.M., New York City time, on the next succeeding Business Day. You
agree to use your best efforts to provide us telephonic notice at the time
any presentation in respect of payment is made hereunder; provided, however,
that failure to provide such telephonic notice shall not affect our
obligation to make payment in respect of any such presentation in respect of
payment. If requested by you, payment under this Letter of Credit will be
wire transferred to an account in New York, New York specified in the related
certificate. As used herein, "Business Day" shall mean any day other than
a Saturday, a Sunday, or a day on which banking institutions in New York, New
York shall be authorized or obligated by law, executive order or governmental
decree to be closed.
If a drawing made by you hereunder does not, in any instance, conform
to the terms and conditions of this Letter of Credit, we shall give you
prompt notice that the purported drawing was not effected in accordance with
the terms and conditions of this Letter of Credit, stating the reasons
therefor and that we are holding any documents presented in connection
therewith at your disposal or are returning the same to you, as we may elect.
Except as otherwise specified in Annex 2, each drawing under this Letter
of Credit shall be verified to Account No. 30492-01/0.1 maintained by the
Trustee (the "Collection Account").
=============================================================================
Telegraphic Address One World Trade
"SUMITBANK, New York" THE SUMITOMO BANK, LIMITED Center
Telephone No. Suite 9651,
(212)553-0100 New York Branch New York,
New York 10048
=============================================================================
Only you, as Trustee, may make a drawing under this Letter of Credit.
Upon the payment of the amount specified in the related certificate(s)
presented hereunder, we shall be fully discharged of our obligation under
this Letter of Credit with respect to such certificate(s) and we shall not
thereafter be obligated to make any further payments under this Letter of
Credit in respect of such certificate(s) to you or any other person. By
paying to you an amount demanded in accordance herewith, we make no
representation as to the correctness of the amount demanded.
This Letter of Credit shall expire at our close of business in New York,
New York on the first to occur of the following dates (the "Termination
Date"): (x) November 30, 1993 or, if said date shall not be a Business Day,
on the Business Day next succeeding said date, or (y) the date of receipt by
us of your written certificate signed by a person purporting to be your
authorized officer, appropriately completed, in the form of Annex 3 hereto.
This Letter of Credit shall be promptly surrendered to us upon expiration.
Drawings in respect of payments hereunder honored by us shall not in the
aggregate, exceed the Stated Amount in effect immediately prior to such
drawing. Each drawing honored by us hereunder shall pro tanto reduce the
--- -----
Stated Amount in effect immediately prior to such drawing.
This Letter of Credit is subject to, and shall be governed by, the
Uniform Customs and Practice for Documentary Credits (1983 Revision),
International Chamber of Commerce, Publication No. 400 (the "Uniform
Customs"). This Letter of Credit shall be deemed to be made under the laws
of the State of New York, including Article 5 of the Uniform Commercial Code
of such State, and shall, as to matters not governed by the Uniform Customs,
be governed by and construed in accordance with the laws of the State of New
York.
Notwithstanding anything in Article 54(e) of the Uniform Customs to the
contrary, this Letter of Credit is transferable in its entirety (but not in
part) only to a successor Trustee under the Pooling and Servicing Agreement
upon presentation to us of this Letter of Credit accompanied by the transfer
form attached hereto as Annex 4, to the transferee specified therein.
All documents presented to us in connection with any demand for payment
hereunder, as well as all notices and other communications to us in respect
of this Letter of Credit, shall be in writing and addressed and presented to
us at our office at One World Trade Center, New York, New York 10048
Attention: Loan Administration and shall make specific reference to this
Letter of Credit by number. Such documents, notices and other communication
shall be personally delivered to us, or may be sent to us by tested telex or
over a telecopier (promptly confirmed by delivery of the written document,
notice or other communication, as the case may be, provided that such
confirmation shall not be a condition to the effectiveness of such demand for
payment, notice or other communication) to the following numbers, as
applicable:
Telex No.: 420615 (Answerback: SMTBK)
Telecopier No.: (212) 524-0612
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or
__________________ by reference to any document, instrument or agreement
referred to herein (including, without limitation, the Certificates), except
only Annex 1 through 4 hereto; and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or agreement except
as set forth above.
Very Truly yours,
The Sumitomo Bank, Limited
By:_____________________________________
Name:
Title:
EXHIBIT 4.2
Brown & Wood
Draft 8/30/96
FIRESTONE RETAIL CREDIT CORPORATION,
Transferor,
BRIDGESTONE/FIRESTONE, INC.
and
THE FUJI BANK AND TRUST COMPANY,
Trustee
on behalf of the Series 1996-1
Certificateholders
______________________________
SERIES 1996-1 SUPPLEMENT
Dated as of ________ 1, 1996
to
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1992
______________________________
BRIDGESTONE/FIRESTONE MASTER TRUST
SERIES 1996-1
TABLE OF CONTENTS
SECTION 1. Designation . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3. Aggregate Receivables . . . . . . . . . . . . . . . . . . . .
SECTION 4. Reassignment and Transfer Terms . . . . . . . . . . . . . . .
SECTION 5. Delivery and Payment for the Series 1996-1 Certificates . . .
SECTION 6. Form of Delivery of the Series 1996-1 Certificates . . . . . .
SECTION 7. Subordination of Transferor Interest.
SECTION 8. Article IV of the Agreement . . . . . . . . . . . . . . . . .
Section 4.02. Rights of Certificateholders . . . . . . . . . . . . . .
Section 4.03. Collections and Allocation . . . . . . . . . . . . . . .
Section 4.04. Determination of Monthly Interest for the Series 1996-1
Certificates . . . . . . . . . . . . . . . . . . . .
Section 4.05. Determination of Monthly Principal . . . . . . . . . . .
Section 4.06. Coverage of Required Amount for the Series 1996-1
Certificates . . . . . . . . . . . . . . . . . . . .
Section 4.07. Application of Funds on Deposit in the Collection
Account for the Series 1996-1 Certificates . . . . .
Section 4.08. Investor Charge-Offs . . . . . . . . . . . . . . . . .
Section 4.09. Excess Finance Charge Collections for the Series 1996-1
Certificates . . . . . . . . . . . . . . . . . . .
Section 4.10. Reallocated Principal Collections for the Series 1996-1
Certificates . . . . . . . . . . . . . . . . . . . .
SECTION 9. Article V of the Agreement . . . . . . . . . . . . . . . . . .
Section 5.01. Distributions . . . . . . . . . . . . . . . . . . . . . .
Section 5.02. Statements to Series 1996-1
Certificateholders . . . . . . . . . . . . . . . . . . .
SECTION 10. Article VI of the Agreement . . . . . . . . . . . . . . . . .
Section 6.14 Transfers of the Class C and the Subordinated Transferor
Certificates . . . . . . . . . . . . . . . . . . . .
SECTION 11. Consents of the Series 1996-1
Certificateholders . . . . . . . . . . . . . . . . . . . . . .
SECTION 12. Amortization Events . . . . . . . . . . . . . . . . . . . . .
SECTION 13. Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 14. Ratification of Pooling and Servicing Agreement . . . . . . .
SECTION 15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 16. Governing Law . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 17. Certain Amendments . . . . . . . . . . . . . . . . . . . . . .
SERIES 1996-1 SUPPLEMENT, dated as of ________ 1, 1996 (this "Series
------
Supplement") among FIRESTONE RETAIL CREDIT CORPORATION, a corporation
- - ----------
organized and existing under the laws of the Commonwealth of Massachusetts,
as Transferor, BRIDGESTONE/FIRESTONE, INC., a corporation organized and
existing under the laws of the State of Ohio, individually and as Servicer
and THE FUJI BANK AND TRUST COMPANY, a banking corporation organized and
existing under the laws of the State of New York (together with its
successors in trust thereunder as provided in the Agreement referred to
below, the "Trustee"), as trustee under the Pooling and Servicing Agreement
-------
dated as of November 1, 1992, as amended, modified or supplemented from time
to time (the "Agreement").
----------
PRELIMINARY STATEMENT
Section 6.09 of the Agreement provides, among other things, that the
Transferor and the Trustee may at any time and from time to time enter into
a Supplement to the Agreement for the purpose of authorizing the issuance by
the Trustee to the Transferor for execution and redelivery to the Trustee for
authentication of one or more Series of Certificates. The Transferor has
tendered the Exchange Notice required by Section 6.09(b) of the Agreement and
hereby enters into this Supplement with the Trustee as required by Section
6.09(c) of the Agreement to provide for the issuance, authentication and
delivery of the Series 1996-1 Asset Backed Certificates (the "Investor
--------
Certificates"). In the event that any term or provision contained herein
- - ------------
shall conflict with or be inconsistent with any term or provision contained
in the Agreement, the terms and provisions of this Series Supplement shall
govern.
All capitalized terms not otherwise defined herein are defined in the
Agreement. All Article or Section references herein shall mean Article or
Section of the Agreement, except as otherwise provided herein. Unless
otherwise stated herein, as the context otherwise requires or if such term
is otherwise defined in the Agreement, each capitalized term used or defined
herein shall relate only to the Series 1996-1 Certificates and no other
Series of Investor Certificates issued by the Trust.
SECTION 1. Designation. There is hereby created a Series of Investor
-----------
Certificates to be issued pursuant to the Agreement and this Series
Supplement to be known as the Series 1996-1 Asset Backed Certificates (the
"Series 1996-1 Certificates"), consisting of $(200,000,000) principal amount
--------------------------
of Class A Certificates (the "Class A Certificates"), $(50,000,000) principal
--------------------
amount of Class B Certificates (the "Class B Certificates"), $( )
--------------------
principal amount of Class C Certificates (the "Class C Certificates"), and
--------------------
$( )
principal amount of a Subordinated Transferor Certificate (the "Subordinated
------------
Transferor Certificate").
- - ----------------------
SECTION 2. Definitions. The following words and phrases shall have the
-----------
meanings set forth below with respect to the Series 1996-1 Certificates and
the definitions of such terms are applicable to the singular as well as the
plural form of such terms and to the masculine as well as the feminine and
neuter genders of such terms:
"Amortization Event" shall have the meaning specified in Section
------------------
12.
"Amortization Period" shall mean, with respect to the Investor
-------------------
Certificates, the period following the Revolving Period which shall be either
the Controlled Amortization Period or the Rapid Amortization Period.
"Base Rate" shall mean the Class A Certificate Rate plus 2.00% per
---------
annum.
"Class A Additional Interest" shall have the meaning specified in
---------------------------
Section 4.04 of the Agreement.
"Class A Certificate Rate" shall mean, with respect to any Interest
------------------------
Accrual Period, a per annum rate equal to LIBOR for such Interest Accrual
Period plus % provided, however, with respect to the first Interest
-------
Accrual Period, the Class A Certificate Rate will be equal to %.
----
"Class A Certificateholder" shall mean the Person in whose name a
-------------------------
Class A Certificate is registered in the Certificate Register.
"Class A Certificateholders' Interest" shall mean the portion of
------------------------------------
the Series 1996-1 Certificateholders' Interest evidenced by the Class A
Certificates.
"Class A Certificates" shall mean any one of the certificates
--------------------
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of exhibit A-1 hereto.
("Class A Controlled Amortization Amount" shall mean $__________.)
--------------------------------------
"Class A Floating Allocation Percentage" shall mean, with respect
--------------------------------------
to any Collection Period, the percentage equivalent of a fraction, the
numerator of which is the Class A Invested Amount and the denominator of
which is the Aggregate Receivables
in the Trust each on the last day of the immediately preceding Collection
Period; provided, however, that when used in respect of the allocation of
Finance Charge Collections, such percentage shall be the percentage
equivalent of a fraction the numerator of which is the Class A Invested
Amount on the last day of the immediately preceding Collection Period and the
denominator of which is the sum of the numerators used to calculate the
Invested Percentage for the allocation of Finance Charge Collections for all
Series of Certificates outstanding during such Collection Period (including
all classes of such Series) and the B/F Amount.
"Class A Initial Invested Amount" shall mean the aggregate initial
-------------------------------
principal amount of the Class A Certificates, which is $(200,000,000).
"Class A Interest Shortfall" shall have the meaning specified in
--------------------------
Section 4.04(a).
"Class A Invested Amount" shall mean, when used with respect to any
-----------------------
date, an amount equal to (a) the Class A Initial Invested Amount, minus (b)
the aggregate amount of principal payments made to Class A Certificateholders
prior to such date and minus (c) the excess, if any, of the aggregate amount
of Class A Investor Charge-Offs for all Distribution Dates preceding such
date over Class A Investor Charge-Offs reimbursed pursuant to Section 4.08(a)
prior to such date.
"Class A Invested Percentage" shall mean for any Collection Period,
---------------------------
(a) with respect to Finance Charge Collections and Defaulted Receivables at
any time or Principal Collections during the Revolving Period, the Class A
Floating Allocation Percentage and (b) with respect to Principal Collections
during any Amortization Period, the Fixed Allocation Percentage.
"Class A Investor Charge-Offs" shall have the meaning specified in
----------------------------
Section 4.08(a).
"Class A Investor Default Amount" shall mean, with respect to each
-------------------------------
Distribution Date, an amount equal to the product of the Class A Floating
Allocation Percentage applicable during the immediately preceding Collection
Period and the amount of Defaulted Receivables for such Collection Period.
"Class A Monthly Interest" shall mean the monthly interest
------------------------
distributable in respect of the Class A Certificates as calculated in
accordance with Section 4.04(a).
"Class A Monthly Principal" shall mean the monthly principal
-------------------------
distributable in respect of the Class A Certificates as calculated in
accordance with Section 4.05(a).
"Class A Monthly Servicing Fee" shall mean, with respect to any
-----------------------------
Distribution Date, one twelfth of the product of 2.00% and the Class A
Invested Amount on the last day of the second preceding Collection Period (or
in the case of the first Distribution Date, the initial principal amount of
the Class A Certificates).
"Class A Pool Factor" shall mean, with respect to any Record Date,
-------------------
a number carried out to eight decimal places representing the ratio of the
Class A Invested Amount as of such Record Date (determined after taking into
account any decreases in the Class A Invested Amount which will occur on the
following Distribution Date) to the Class A Initial Invested Amount.
"Class A Required Amount" shall mean, with respect to any
-----------------------
Distribution Date, the amount by which (a) the sum of (i) Class A Monthly
Interest for such Distribution Date, (ii) any Class A Monthly Interest
previously due but not paid to the Class A Certificateholders on a prior
Distribution Date, (iii) Class A Additional Interest, if any, for such
Distribution Date and any Class A Additional Interest previously due but not
paid to the Class A Certificateholders on a prior Distribution Date, (iv) the
Class A Monthly Servicing Fee for such Distribution Date and (v) the Class
A Investor Default Amount, if any, for such Distribution Date exceeds (b) the
Class A Floating Allocation Percentage of Finance Charge Collections
deposited in the Collection Account for the immediately preceding Collection
Period.
"Class B Additional Interest" shall have the meaning specified in
---------------------------
Section 4.04 of the Agreement.
"Class B Certificate Rate" shall mean, with respect to any Interest
------------------------
Accrual Period, a per annum rate equal to LIBOR for such Interest Accrual
Period plus % provided, however, with respect to the first Interest
------
Accrual Period, the Class B Certificate Rate will be equal to %.
---
"Class B Certificateholder" shall mean the Person in whose name a
-------------------------
related Class B Certificate is registered in the Certificate Register.
"Class B Certificateholders' Interest" shall mean the portion of
------------------------------------
the Series 1996-1 Certificateholders' Interest evidenced by the Class B
Certificates.
"Class B Certificates" shall mean any one of the certificates
--------------------
executed by the Transferor and authenticated by or
on behalf of the Trustee, substantially in the form of Exhibit A-2.
"Class B Floating Allocation Percentage" shall mean, with respect
--------------------------------------
to any Collection Period, the percentage equivalent of a fraction, the
numerator of which is the Class B Invested Amount and the denominator of
which is the Aggregate Receivables in the Trust each on the last day of the
immediately preceding Collection Period; provided, however, that when used
in respect of the allocation of Finance Charge Collections, such percentage
shall be the percentage equivalent of a fraction the numerator of which is
the Class B Invested Amount on the last day of the immediately preceding
Collection Period and the denominator of which is the sum of the numerators
used to calculate the Invested Percentage for the allocation of Finance
Charge Collections for all Series of Certificates outstanding during such
Collection Period (including all classes of such Series) and the B/F Amount.
"Class B Initial Invested Amount" shall mean the aggregate initial
-------------------------------
principal amount of the Class B Certificates, which is $(50,000,000).
"Class B Interest Shortfall" shall have the meaning specified in
--------------------------
Section 4.04(b).
"Class B Invested Amount" shall mean, when used with respect to any
-----------------------
date, an amount equal to (a) the Class B Initial Invested Amount, minus (b)
the amount of principal payments made to Class B Certificateholders prior to
such date, minus (c) the aggregate amount of Class B Investor Charge-Offs for
all prior Distribution Dates, minus (d) the aggregate amount of Class B
Reallocated Principal Collections for all prior Distribution Dates which have
been used to fund the Required Amount with respect to such Distribution Dates
pursuant to Sections 4.06 and 4.10 for which neither the Subordinated
Transferor Invested Amount nor the Class C Invested Amount has been reduced
for all prior Business Days (provided that the Class B Invested Amount shall
in no event be reduced to an amount less than zero), minus (e) an amount
equal to the aggregate amount by which the Class B Invested Amount has been
reduced to fund the Class A Investor Default Amount on all prior Distribution
Dates pursuant to Section 4.08(a) and plus (f) the amount of Excess Finance
Charge Collections allocated and available on all prior Distribution Dates
pursuant to Section 4.09(d), for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c), (d) and (e).
"Class B Investor Charge-Offs" shall have the meaning specified in
----------------------------
Section 4.08(b).
"Class B Investor Default Amount" shall mean, with respect to each
-------------------------------
Distribution Date, an amount equal to the product of the Class B Floating
Allocation Percentage applicable during the immediately preceding Collection
Period and the amount of Defaulted Receivables for such Collection Period.
"Class B Monthly Interest" shall mean the monthly interest
------------------------
distributable in respect of the Class B Certificates as calculated in
accordance with Section 4.04(b).
"Class B Monthly Principal" shall mean the monthly principal
-------------------------
distributable in respect of the Class B Certificates as calculated in
accordance with Section 4.05(b).
"Class B Monthly Servicing Fee" shall mean, with respect to any
-----------------------------
Distribution Date, one twelfth of the product of 2.00% and the Class B
Invested Amount on the last day of the second preceding Collection Period (or
in the case of the first Distribution Date, the initial principal amount of
the Class B Certificates).
"Class B Pool Factor" shall mean, with respect to any Record Date,
-------------------
a number carried out to eight decimal places representing the ratio of the
Class B Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class B Invested Amount which will
occur on the following Distribution Date) to the Class B Initial Invested
Amount.
"Class B Reallocated Principal Collections" shall mean, with
-----------------------------------------
respect to each Distribution Date, the Principal Collections allocable to the
Class B Certificates with respect to such Distribution Date (equal to the
Class B Floating Allocation Percentage of Principal Collections for the
related Collection Period for any such Distribution Date during the Revolving
Period and equal to the product of the Fixed Allocation Percentage of
Principal Collections and a fraction, the numerator of which is the Class B
Invested Amount and the denominator of which is the Invested Amount of the
Series 1996-1 Certificates as of the last day of the prior Collection Period
for any such Distribution Date during any Amortization Period), in an amount
equal to the Class A Required Amount, if any, with respect to such
Distribution Date after giving effect to any payment of the Class A Required
Amount from Excess Finance Charge Collections, Class C Reallocated Principal
Collections and Subordinated Transferor Reallocated Principal Collections.
"Class B Required Amount" shall mean, with respect to any
-----------------------
Distribution Date, the amount by which (a) the sum of (i) Class B Monthly
Interest for such Distribution Date, (ii) any
Class B Monthly Interest previously due but not paid to the Class B
Certificateholders on a prior Distribution Date, (iii) Class B Additional
Interest, if any, for such Distribution Date and any Class B Additional
Interest previously due but not paid to the Class B Certificateholders on a
prior Distribution Date, (iv) the Class B Monthly Servicing Fee for such
Distribution Date and (v) the Class B Investor Default Amount, if any, for
such Distribution Date exceeds (b) the Class B Floating Allocation Percentage
of Finance Charge Collections deposited in the Collection Account for the
immediately preceding Collection Period.
"Class C Additional Interest" shall have the meaning specified in
---------------------------
Section 4.04(c) of the Agreement.
"Class C Certificate Rate" shall mean, with respect to any Interest
------------------------
Accrual Period, a per annum rate equal to LIBOR for such Interest Accrual
Period plus % provided, however, with respect to the first Interest
------
Accrual Period, the Class C Certificate Rate will be equal to %.
---
"Class C Certificateholder" shall mean the Person in whose name a
-------------------------
related Class C Certificate is registered in the Certificate Register.
"Class C Certificateholders' Interest" shall mean the portion of
------------------------------------
the Series 1996-1 Certificateholders' Interest evidenced by the Class C
Certificates.
"Class C Certificates" shall mean any one of the certificates
--------------------
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-3.
"Class C Floating Allocation Percentage" shall mean, with respect
--------------------------------------
to any Collection Period, the percentage equivalent of a fraction, the
numerator of which is the Class C Invested Amount and the denominator of
which is the Aggregate Receivables in the Trust each on the last day of the
immediately preceding Collection Period; provided, however, that when used
in respect of the allocation of Finance Charge Collections, such percentage
shall be the percentage equivalent of a fraction the numerator of which is
the Class C Invested Amount on the last day of the immediately preceding
Collection Period and the denominator of which is the sum of the numerators
used to calculate the Invested Percentage for the allocation of Finance
Charge Collections for all Series of Certificates outstanding during such
Collection Period (including all classes of such Series) and the B/F Amount.
"Class C Initial Invested Amount" shall mean the aggregate initial
-------------------------------
principal amount of the Class C Certificates, which is $__________.
"Class C Interest Shortfall" shall have the meaning specified in
--------------------------
Section 4.04(c).
"Class C Invested Amount" shall mean, when used with respect to any
-----------------------
date, an amount equal to (a) the Class C Initial Invested Amount, minus (b)
the amount of principal payments made to Class C Certificateholders prior to
such date, minus (c) the aggregate amount of Class C Investor Charge-Offs for
all prior Distribution Dates, minus (d) the aggregate amount of Class C
Reallocated Principal Collections for all prior Distribution Dates which have
been used to fund the Required Amount with respect to such Distribution Dates
pursuant to Sections 4.06 and 4.10 for which the Subordinated Transferor
Invested Amount has not been reduced for all prior Business Days (provided
that the Class C Invested Amount shall in no event be reduced to an amount
less than zero), minus (e) an amount equal to the aggregate amount by which
the Class C Invested Amount has been reduced to fund the Class A Investor
Default Amount on all prior Distribution Dates pursuant to Section 4.08 and
plus (f) the amount of Excess Finance Charge Collections allocated and
available on all prior Distribution Dates pursuant to Section 4.09(f), for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e).
"Class C Investor Charge-Offs" shall have the meaning specified in
----------------------------
Section 4.08(c).
"Class C Investor Default Amount" shall mean, with respect to each
-------------------------------
Distribution Date, an amount equal to the product of the Class C Floating
Allocation Percentage applicable during the immediately preceding Collection
Period and the amount of Defaulted Receivables for such Collection Period.
"Class C Monthly Interest" shall mean the monthly interest
------------------------
distributable in respect of the Class C Certificates as calculated in
accordance with Section 4.04(c).
"Class C Monthly Principal" shall mean the monthly principal
-------------------------
distributable in respect of the Class C Certificates as calculated in
accordance with Section 4.05(c).
"Class C Monthly Servicing Fee" shall mean, with respect to any
-----------------------------
Distribution Date, one twelfth of the product of 2.00% and the Class C
Invested Amount on the last day of the second preceding Collection Period (or
in the case of the first
Distribution Date, the initial principal amount of the Class C Certificates).
"Class C Pool Factor" shall mean, with respect to any Record Date,
-------------------
a number carried out to eight decimal places representing the ratio of the
Class C Invested Amount as of such Record Date (determined after taking into
account any increases or decreases in the Class C Invested Amount which will
occur on the following Distribution Date) to the Class C Initial Invested
Amount.
"Class C Reallocated Principal Collections" shall mean, with
-----------------------------------------
respect to each Distribution Date, the Principal Collections allocable to the
Class C Certificates with respect to such Distribution Date (equal to the
Class C Floating Allocation Percentage of Principal Collections for the
related Collection Period for any such Distribution Date during the Revolving
Period and equal to the product of the Fixed Allocation Percentage of
Principal Collections and a fraction, the numerator of which is the Class C
Invested Amount and the denominator of which is the Invested Amount of the
Series 1996-1 Certificates as of the last day of the prior Collection Period
for any such Distribution Date during any Amortization Period) in an amount
equal to the Class A and Class B Required Amount, if any, with respect to
such Distribution Date after giving effect to any payment of the Class A and
Class B Required Amount from Excess Finance Charge Collections and
Subordinated Transferor Reallocated Principal Collections.
"Class C Required Amount" shall mean, with respect to any
-----------------------
Distribution Date, the amount by which (a) the sum of (i) Class C Monthly
Interest for such Distribution Date, (ii) any Class C Monthly Interest
previously due but not paid to the Class C Certificateholders on a prior
Distribution Date, (iii) Class C Additional Interest, if any, for such
Distribution Date and any Class C Additional Interest previously due but not
paid to the Class C Certificateholders on a prior Distribution Date, (iv) the
Class C Monthly Servicing Fee for such Distribution Date and (v) the Class
C Investor Default Amount, if any, for such Distribution Date exceeds (b) the
Class C Floating Allocation Percentage of Finance Charge Collections
deposited in the Collection Account for the immediately preceding Collection
Period.
"Closing Date" shall mean, with respect to the Series 1996-1
------------
Certificates, ___________, 1996.
"Controlled Amortization Period" shall mean an amortization period
------------------------------
commencing on ________, 1998 and continuing to, but not including, the date
on which the Class A Invested Amount has been paid in full or to, and
including, (i) the date
of termination of the Trust pursuant to Section 12.01 or (ii) the Final
Series 1996-1 Termination Date or (iii) the day on which an Amortization
Event occurs or is deemed to have occurred.
"Controlled Distribution Amount" shall mean, for any Distribution
------------------------------
Date with respect to the Controlled Amortization Period, an amount equal to
the sum of the Controlled Amortization Amount and any existing Deficit
Controlled Amortization Amount.
"Deficit Controlled Amortization Amounts" shall mean, on the first
---------------------------------------
Distribution Date with respect to the Controlled Amortization Period, the
excess, if any, of the Controlled Amortization Amount over the amount
distributed as Class A Monthly Principal for such Distribution Date and, on
each subsequent Distribution Date with respect to the Controlled Amortization
Period, the excess, if any, of the Controlled Amortization Amount and any
then existing Deficit Controlled Amortization Amount over the aggregate Class
A Monthly Principal distributed on such Distribution Date.
"Designated Maturity" shall mean, for any LIBOR Determination Date,
-------------------
(a) with respect to the Class A Certificates, prior to the occurrence of an
Amortization Event, (three months), and after the occurrence of an
Amortization Event, (one month) and (b) with respect to the Class B
Certificates, (one month).
"Distribution Date" shall mean the first day of each month, unless
-----------------
such first day is not a Business Day, in which case the next Business Day,
commencing on __________, 1996.
"Excess Finance Charge Collections" shall mean, with respect to any
---------------------------------
Distribution Date, the sum of the amounts, if any, specified pursuant to
Sections 4.07 (a)(iv), (b)(iv), (c)(iv) and (d)(ii) with respect to such
Distribution Date.
"Final Series 1996-1 Termination Date" shall mean ________________.
------------------------------------
"Fixed Allocation Percentage" shall mean, for any Collection Period
---------------------------
with respect to an Amortization Period when used with respect to the
allocation of Principal Collections, the percentage equivalent of the ratio
which the sum of the Class A Invested Amount, the Class B Invested Amount,
the Class C Invested Amount and the Subordinated Transferor Invested Amount,
each as of the last day of the Revolving Period, bears to the greater of (a)
the Aggregate Receivables on the last day of the prior Collection Period and
(b) the sum of the numerators used to calculate the Invested Percentage with
respect to Principal Collections for all Series of Certificates outstanding
for such Collection Period.
"Floating Allocation Percentage" shall mean for any Collection
------------------------------
Period, the sum of the applicable Class A Floating Allocation Percentage, the
Class B Floating Allocation Percentage for such Collection Period, the Class
C Floating Percentage and the Subordinated Transferor Floating Allocation
Percentage.
"Floating Rate Interest Factor" shall mean with respect to any
-----------------------------
Interest Accrual Period, the number of days from and including the first day
in the Interest Accrual Period to but excluding the last day in the Interest
Accrual Period, divided by 360.
"Initial Invested Amount" shall mean the aggregate initial
-----------------------
principal amount of the Investor Certificates of Series 1996-1, which is
$___________.
"Interest Accrual Period" shall mean, with respect to any
-----------------------
Distribution Date, the period from and including the first day of the
preceding calendar month to and including the last day of such preceding
calendar month, except the initial Interest Accrual Period shall be deemed
to be the period from the Closing Date through the last day of the calendar
month preceding the initial Distribution Date.
"Invested Amount" shall mean, when used with respect to any date,
---------------
an amount equal to the sum of the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount and Subordinated Transferor
Invested Amount, each as of such date.
"Invested Percentage" shall mean for any Collection Period, (a)
-------------------
with respect to Finance Charge Collections and Defaulted Receivables at any
time or Principal Collections during the Revolving Period, the Floating
Allocation Percentage and (b) with respect to Principal Collections during
the Amortization Period, the Fixed Allocation Percentage.
"Investor Certificateholder" shall mean the Holder of record of an
--------------------------
Investor Certificate of Series 1996-1.
"Investor Certificates" shall mean the Class A Certificates, the
---------------------
Class B Certificates, the Class C Certificates and the Subordinated
Transferor Certificate.
"Investor Default Amount" shall mean, with respect to each
-----------------------
Distribution Date, an amount equal to the sum of the Class A Investor Default
Amount, the Class B Investor Default Amount, the Class C Investor Default
Amount and the Subordinated Transferor Investor Default Amount, each for such
Distribution Date.
"LIBOR" shall mean, as of any LIBOR Determination Date, the rate
-----
for deposits in United States dollars for a period of the Designated Maturity
commencing on the first day of the relevant Interest Accrual Period which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on the day that
is the LIBOR Determination Date. If such rate does not appear on Telerate
Page 3750, the rate for that day will be determined on the basis of the rates
at which deposits in United States dollars are offered by the Reference Banks
at approximately 11:00 a.m., London time, on that day to major banks in the
London interbank market for a period of the Designated Maturity commencing
on the first day of the relevant Interest Accrual Period. The Servicer will
request the principal London office of each of the Reference Banks to provide
a quotation of its rate. If at least two such quotations are provided, the
rate for that day will be the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the rate for that day will be
the arithmetic mean of the rates quoted by major banks in New York City,
selected by the Servicer, at approximately 11:00 a.m., New York City time,
on that day for loans in United States dollars to leading European banks for
the Designated Maturity commencing on the first day of the relevant Interest
Accrual Period.
"LIBOR Determination Date" shall mean, with respect to any Interest
------------------------
Accrual Period, the second London Business Day prior to the commencement of
such Interest Accrual Period.
"London Business Day" shall mean, a business day on which dealings
-------------------
in deposits in United States dollars are transacted in the London interbank
market.
"Payment Date Statement" shall have the meaning specified in
----------------------
Section 5.02(a).
"Principal Shortfalls" shall mean on any Business Day (x) for
--------------------
Series 1996-1, (i) during the Controlled Amortization Period, the excess of
the Class A Controlled Distribution Amount over the aggregate amount applied
with respect thereto for such Business Day and for each prior Business Day
in such Collection Period, and (ii) at all other times, the Invested Amount
of the class then receiving principal payments after the application of
Principal Collections on such Business Day or (y) for any other Series the
amounts specified as such in the Supplement for such other Series.
"Rapid Amortization Period" shall mean an Amortization Period
-------------------------
commencing on the earlier of the day on which (i) the Class A Invested Amount
has been reduced to zero or (ii) an Amortization Event occurs or is deemed
to have occurred and
ending on the earlier to occur of (x) the date on which the Invested Amount
has been paid in full or (x) the Final Series 1996-1 Termination Date.
"Rating Agency" shall mean Standard & Poor's, Moody's and Fitch,
-------------
to the extent such entities were selected by the Transferor to rate the
Series 1996-1 Investor Certificates.
"Reallocated Principal Collections" shall mean, with respect to
---------------------------------
each Distribution Date, the sum of the Class B Reallocated Principal
Collections, Class C Reallocated Principal Collections and the Subordinated
Transferor Reallocated Principal Collections.
"Record Date" shall mean, with respect to any Distribution Date,
-----------
the 15th day of the calendar month immediately preceding such Distribution
Date.
"Reference Banks" shall mean four major banks in the London
---------------
interbank market selected by the Servicer.
"Required Amount" shall mean the sum of the Class A Required
---------------
Amount, the Class B Required Amount and the Class C Required Amount.
"Revolving Period" shall mean, with respect to the Series 1996-1
----------------
Certificates, the period from and including the Closing Date, up to and
including the day prior to the day on which an Amortization Period commences.
"Series 1996-1 Certificateholders' Interest" shall have the meaning
------------------------------------------
specified in Section 4.02.
"Servicing Fee Percentage" shall mean 2.00% per annum.
------------------------
"Shared Principal Collections" shall mean, as the context requires,
----------------------------
either (a) the amount allocated to the Series 1996-1 Certificates which may
be applied in accordance with Article IV of the Agreement or (b) the amounts
allocated to the investor certificates (other than Transferor Retained
Certificates) of other Series which the applicable Series Supplements for
such Series specify are to be treated as "Shared Principal Collections" and
which may be applied to cover Principal Shortfalls with respect to the Series
1996-1 Certificates.
"Subordinated Transferor Certificate" shall mean the certificate
-----------------------------------
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-4.
"Subordinated Transferor Certificateholder" shall mean the Person
-----------------------------------------
in whose name the Subordinated Transferor Certificate is registered in the
Certificate Register.
"Subordinated Transferor Certificateholders' Interest" shall mean
----------------------------------------------------
the Series 1996-1 Certificateholders' Interest evidenced by the Subordinated
Transferor Certificate.
"Subordinated Transferor Investor Default Amount" shall mean, with
-----------------------------------------------
respect to each Distribution Date, an amount equal to the product of the
Subordinated Transferor Floating Allocation Percentage applicable during the
immediately preceding Collection Period and the amount of Defaulted
Receivables for such Collection Period.
"Subordinated Transferor Floating Allocation Percentage" shall
------------------------------------------------------
mean, with respect to any Collection Period, the percentage equivalent of a
fraction, the numerator of which is the Subordinated Transferor Invested
Amount and the denominator of which is the Aggregate Receivables in the Trust
each on the last day of the immediately preceding Collection Period;
provided, however, that when used in respect of the allocation of Finance
Charge Collections, such percentage shall be the percentage equivalent of a
fraction the numerator of which is the Subordinated Transferor Invested
Amount on the last day of the immediately preceding Collection Period and the
denominator of which is the sum of the numerators used to calculate the
Invested Percentage for the allocation of Finance Charge Collections for all
Series of Certificates outstanding during such Collection Period (including
all classes of such Series) and the B/F Amount.
"Subordinated Transferor Initial Invested Amount" shall mean the
-----------------------------------------------
aggregate initial principal amount of the Subordinated Transferor
Certificate, which is $__________.
"Subordinated Transferor Invested Amount" shall mean, when used
---------------------------------------
with respect to any date, an amount equal to (a) the Subordinated Transferor
Initial Invested Amount, minus (b) the amount of principal payments made to
the Subordinated Transferor Certificateholder prior to such date, minus (c)
the aggregate amount of Subordinated Transferor Investor Charge-Offs for all
prior Distribution Dates, minus (d) the aggregate amount of Reallocated
Principal Collections for all prior Distribution Dates which have been used
to fund the Required Amount with respect to such Distribution Dates pursuant
to Sections 4.06 and 4.10 (provided that the Subordinated Transferor Invested
Amount shall in no event be reduced to an amount less than zero), minus (e)
an amount equal to the aggregate amount by which the Subordinate Transferor
Invested Amount has been reduced to fund
the Class A Investor Default Amount on all prior Distribution Dates pursuant
to Section 4.08 and plus (f) the amount of Excess Finance Charge Collections
allocated and available on all prior Distribution Dates pursuant to Section
4.09(h), for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c), (d) and (e).
"Subordinated Transferor Investor Charge-Offs" shall have the
--------------------------------------------
meaning specified in Section 4.08(d).
("Subordinated Transferor Monthly Principal" shall mean the monthly
-----------------------------------------
principal distributable in respect of the Subordinated Transferor Certificate
as calculated in accordance with Section 4.05(d).)
"Subordinated Transferor Monthly Servicing Fee" shall mean, with
---------------------------------------------
respect to any Distribution Date, one twelfth of the product of 2.00% and the
Subordinated Transferor Invested Amount on the last day of the second
preceding Collection Period (or in the case of the first Distribution Date,
the initial principal amount of the Subordinated Transferor Certificate).
"Subordinated Transferor Pool Factor" shall mean, with respect to
-----------------------------------
any Record Date, a number carried out to eight decimal places representing
the ratio of the Subordinated Transferor Invested Amount as of such Record
Date (determined after taking into account any increases or decreases in the
Subordinated Transferor Invested Amount which will occur on the following
Distribution Date) to the Subordinated Transferor Initial Invested Amount.
"Subordinated Transferor Reallocated Principal Collections" shall
---------------------------------------------------------
mean, with respect to each Distribution Date, the Principal Collections
allocable to the Subordinated Transferor Certificate with respect to such
Distribution Date (equal to the Subordinated Transferor Floating Allocation
Percentage of Principal Collections for the related Collection Period for any
such Distribution Date during the Revolving Period and equal to the product
of the Fixed Allocation Percentage of Principal Collections and a fraction,
the numerator of which is the Subordinated Transferor Invested Amount and the
denominator of which is the Invested Amount of the Series 1996-1 Certificates
as of the last day of the prior Collection Period for any such Distribution
Date during any Amortization Period) in an amount equal to the Class A, Class
B and Class C Required Amount, if any, with respect to such Distribution Date
(after giving effect to any payment of the Class A, Class B and Class C
Required Amount from Excess Finance Charge Collections).
"Telerate Page 3750" means the display page currently so designated
------------------
on the Dow Jones Telerate Service (or such other page as may replace that
page on that service for the purpose of displaying comparable rates or
prices).
"Termination Payment Date" shall mean the earlier of the first
------------------------
Distribution Date following the liquidation or sale of the Receivables as a
result of an Amortization Event and the occurrence of the Final Series 1996-1
Termination Date.
SECTION 3. Aggregate Receivables. The Transferor shall maintain
---------------------
the Aggregate Receivables at a level such that the Transferor Amount (plus
any amounts available under the Transferor Letter of Credit or the Transferor
Escrow Account and the B/F Amount) is equal to or greater than _% (the
"Minimum Transferor Interest Percentage") of the Aggregate Invested Amount
--------------------------------------
of all Series of Certificates issued by the Trust.
SECTION 4. Reassignment and Transfer Terms. The Series 1996-1
-------------------------------
Certificates may be reassigned and transferred to the Transferor on any
Distribution Date on or after which the Invested Amount is reduced to an
amount less than or equal to $__________ or 5% of the Initial Invested
Amount, subject to the provisions of Section 12.02.
SECTION 5. Delivery and Payment for the Series 1996-1
------------------------------------------
Certificates. The Trustee shall deliver the Series 1996-1 Certificates when
- - ------------
authenticated in accordance with Section 6.02 of the Agreement.
SECTION 6. Form of Delivery of the Series 1996-1 Certificates.
--------------------------------------------------
The Class A Certificates and the Class B Certificates shall be delivered as
Book-Entry Certificates as provided in Section 6.11 of the Agreement. The
Class C Certificates and the Subordinated Transferor Certificate shall be
delivered in physical form.
(SECTION 7. Subordination of Transferor Interest. For the benefit
------------------------------------
of the Investor Certificateholders of the Series established hereby, the
Transferor hereby subordinates, if required pursuant to Section 4.09A hereof,
and to the extent and in the manner set forth in Section 4.08(a) hereof all
of the Transferor's right, title and interest in and to future distributions
due on the Exchangeable Transferor Certificate to the extent, and only to the
extent, of the Available Subordinated Amount.)
SECTION 8. Article IV of the Agreement. Any provisions of Article
---------------------------
IV of the Agreement which distribute Collections to the Transferor on the
basis of the Transferor
Percentage shall continue to apply irrespective of the issuance of the Series
1996-1 Certificates. Section 4.01, Section 4.01A and Section 4.01B of the
Agreement shall read in their entirety as provided in the Agreement.
Article IV of the Agreement (except for Sections 4.01, 4.01A and
4.01B) shall read in its entirety as follows and shall be applicable to the
Series 1996-1 Certificates:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.02. Rights of Certificateholders. The Series 1996-1
----------------------------
Certificates shall represent undivided interests in the Trust, consisting of
the right to receive, to the extent necessary to make the required payments
with respect to such Investor Certificates at the times and in the amounts
specified in this Agreement, (a) the Floating Allocation Percentage and Fixed
Allocation Percentage (as applicable from time to time pursuant to Sections
4.04 and 4.05 of the Agreement) of Collections received with respect to the
Receivables and (b) funds on deposit in the Collection Account (for such
Series, the "Series 1996-1 Certificateholders' Interest"). The Subordinated
------------------------------------------
Transferor Certificate shall be subordinate to the Class C Certificates, the
Class C Certificates shall be subordinate to the Class B Certificates and the
Class B Certificates shall be subordinate to the Class A Certificates. The
Exchangeable Transferor Certificate shall not represent any interest in the
Collection Account, except as specifically provided in this Article IV.
Section 4.03. Collections and Allocation.
--------------------------
(a) Collections. The Servicer will apply or will instruct the
-----------
Trustee to apply all funds on deposit in the Collection Account as described
in this Article IV.
(b) Allocations. On each Determination Date, the Servicer shall
-----------
determine whether an Amortization Event is deemed to have occurred in the
related Collection Period with respect to the Series 1996-1 Certificates, and
the Servicer shall allocate Collections with respect to the related
Collection Period as follows:
(i) During the Revolving Period. On each Determination Date,
---------------------------
or more frequently at the option of the Servicer, allocate to the Series
1996-1 Certificateholders' Interest (x) an amount equal to the Floating
Allocation Percentage of the Principal
Collections for the prior Collection Period and remit such amounts
to the Holder of the Exchangeable Transferor Certificate (except that such
remittance shall not include Reallocated Principal Collections used to cover
the Required Amount (except to the extent of the Class A Investor Default
Amount) and shall not exceed the Transferor Interest on such Determination
Date, after giving effect to any new Receivables purchased by the Holder of
the Exchangeable Transferor Certificate and transferred to the Trust on such
day) and (y) an amount equal to the Floating Allocation Percentage of the
Finance Charge Collections for the prior Collection Period and deposit such
amount into the Collection Account as and when required pursuant to Section
4.01;
(ii) During any Amortization Period. On each Determination
------------------------------
Date, or more frequently at the option of the Servicer, allocate to the
Series 1996-1 Certificateholders' Interest (x) an amount equal to the Fixed
Allocation Percentage of the Principal Collections for the prior Collection
Period and deposit such amount into the Collection Account and (y) an amount
equal to the Floating Allocation Percentage of the Finance Charge Collections
for the prior Collection Period and deposit such amount into the Collection
Account as and when required pursuant to Section 4.01; and
(iii) Allocations and Payments to the Holder of the
---------------------------------------------
Exchangeable Transferor Certificate and the Bridgestone/Firestone
- - -----------------------------------------------------------------
Certificate. Amounts to be allocated to the Holder of the Exchangeable
- - -----------
Transferor Certificate and the Bridgestone/Firestone Certificate and payments
with respect thereto shall be determined and made only as provided in
Sections 4.03(b)(i), 4.01(d) and 4.01(g).
The allocations to be made pursuant to this Section 4.03(b) also apply to
deposits into the Collection Account that are treated as Collections,
including Transfer Deposit Amounts, Adjustment Payments, proceeds from the
sale, disposition or liquidation of the Receivables pursuant to Section 9.02
or 12.01. Such deposits to be treated as Collections will be allocated as
Finance Charge Collections or Principal Collections as provided in the
Agreement.
Section 4.04. Determination of Monthly Interest for the Series
------------------------------------------------
1996-1 Certificates. (a) The amount of monthly interest (the "Class A
- - -------------------
Monthly Interest") distributable from the
Collection Account with respect to the Class A Certificates of the Series
1996-1 Certificates on any Distribution Date shall be an amount equal to the
product of (i) the Floating Rate Interest Factor, (ii) the Class A
Certificate Rate and (iii) the outstanding principal balance of the Class A
Certificates as of the preceding Distribution Date (after subtracting
therefrom the aggregate amount of all distributions of Class A Monthly
Principal made through such Distribution Date to the Class A
Certificateholders); provided, however, that with respect to the first
-------- -------
Distribution Date for the Series 1996-1 Certificates, Class A Monthly
Interest shall be equal to $____________.
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class A Interest Shortfall") equal
--------------------------
to the excess, if any, of (x) the aggregate Class A Monthly Interest for the
Interest Accrual Period applicable to the preceding Distribution Date over
----
(y) the amount which was paid to the Class A Certificateholders in respect
of interest on such preceding Distribution Date. If there is a Class A
Interest Shortfall with respect to any Distribution Date, an additional
amount ("Class A Additional Interest") shall be payable as provided herein
---------------------------
with respect to the Class A Certificates on each Distribution Date following
such Distribution Date to and including the Distribution Date on which such
Class A Interest Shortfall is paid to Class A Certificateholders equal to the
product of (i) the Floating Rate Interest Factor, (ii) the Class A
Certificate Rate and (iii) such Class A Interest Shortfall. Notwithstanding
anything to the contrary herein, Class A Additional Interest shall be payable
or distributed to Class A Certificateholders only to the extent permitted by
applicable law.
(b) The amount of monthly interest (the "Class B Monthly Interest")
------------------------
distributable from the Collection Account with respect to the Class B
Certificates of the Series 1996-1 Certificates on any Distribution Date shall
be an amount equal to one-twelfth of the product of (i) the Floating Rate
Interest Factor, (ii) the Class B Certificate Rate and (iii) the outstanding
principal balance of the Class B Certificates as of the preceding
Distribution Date (after subtracting therefrom the aggregate amount of all
distributions of Class B Monthly Principal made through such Distribution
Date to the Class B Certificate-holders); provided, however, that with
-------- -------
respect to the first Distribution Date for the Series 1996-1 Certificates,
Class B Monthly Interest shall be equal to $ .
--------------
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class B Interest Shortfall") equal
--------------------------
to the excess, if any, of (x) the aggregate Class-B Monthly Interest for the
Interest Accrual
Period applicable to the preceding Distribution Date over (y) the amount
----
which was paid to the Class B Certificateholders in respect of interest on
such preceding Distribution Date. If there is a Class B Interest Shortfall
with respect to any Distribution Date, an additional amount ("Class B
-------
Additional Interest") shall be payable as provided herein with respect to the
- - -------------------
Class B Certificates on each Distribution Date following such Distribution
Date to and including the Distribution Date on which such Class B Interest
Shortfall is paid to Class B Certificateholders equal the product of (i) the
Floating Rate Interest Factor, (ii) the Class B Certificate Rate and (iii)
such Class B Interest Shortfall. Notwithstanding anything to the contrary
herein, Class B Additional Interest shall be payable or distributed to Class
B Certificateholders only to the extent permitted by applicable law.
(c) The amount of monthly interest (the "Class C Monthly Interest")
------------------------
distributable from the Collection Account with respect to the Class C
Certificates of the Series 1996-1 Certificates on any Distribution Date shall
be an amount equal the product of (i) the Floating Rate Interest Factor, (ii)
the Class C Certificate Rate and (iii) the outstanding principal balance of
the Class C Certificates as of the preceding Distribution Date (after
subtracting therefrom the aggregate amount of all distributions of Class C
Monthly Principal made through such Distribution Date to the Class C
Certificate-holders); provided, however, that with respect to the first
-------- -------
Distribution Date for the Series 1996-1 Certificates, Class C Monthly
Interest shall be equal to $ .
--------------
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class C Interest Shortfall") equal
--------------------------
to the excess, if any, of (x) the aggregate Class-C Monthly Interest for the
Interest Accrual Period applicable to the preceding Distribution Date over
----
(y) the amount which was paid to the Class C Certificateholders in respect
of interest on such preceding Distribution Date. If there is a Class C
Interest Shortfall with respect to any Distribution Date, an additional
amount ("Class C Additional Interest") shall be payable as provided herein
---------------------------
with respect to the Class C Certificates on each Distribution Date following
such Distribution Date to and including the Distribution Date on which such
Class C Interest Shortfall is paid to Class C Certificateholders equal to the
product of (i) the Floating Rate Interest Factor, (ii) the Class C
Certificate Rate and (iii) such Class C Interest Shortfall. Notwithstanding
anything to the contrary herein, Class C Additional Interest shall be payable
or distributed to Class C Certificateholders only to the extent permitted by
applicable law.
Section 4.05. Determination of Monthly Principal. (a) The amount
----------------------------------
of monthly principal (the "Class A Monthly Principal") distributable from the
-------------------------
Collection Account with respect to the Class A Certificates on each
Distribution Date beginning with the Distribution Date related to the
Collection Period in which the Controlled Amortization Period or any Rapid
Amortization Period begins shall be equal to an amount calculated as follows:
the sum of (i) an amount equal to the Fixed Allocation Percentage of all
Principal Collections received during the Collection Period immediately
preceding such Distribution Date (or portion thereof, in the case of an
Amortization Event which occurs during such Collection Period) (other than
Reallocated Principal Collections used to pay the Required Amount due on the
Class A Certificates), (ii) the amount of Shared Principal Collections
allocated to the Class A Certificates with respect to the preceding
Collection Period pursuant to Section 4.05(e), (iii) the amount, if any, of
Transfer Deposit Amounts and Adjustment Payments with respect to such
Distribution Date and (iv) the amount, if any, of Finance Charge Collections
and Excess Finance Charge Collections allocated and available on such
Distribution Date to (A) fund the Class A Investor Default Amount and the
Class B Investor Default Amount with respect to such Distribution Date and
(B) reimburse Class A Investor Charge-Offs and previous reductions in the
Class B Invested Amount; provided, however, that for each Distribution Date
-------- -------
with respect to the Controlled Amortization Period (unless and until an
Amortization Event shall have occurred), Class A Monthly Principal shall not
exceed the Controlled Distribution Amount for such Distribution Date;
provided, however, that with respect to the Final Series 1996-1 Termination
- - -------- -------
Date, Class A Monthly Principal shall be an amount equal to the Class A
Invested Amount.
(b) The amount of (monthly) principal (the "Class B Monthly
---------------
Principal") distributable from the Collection Account with respect to the
- - ---------
Class B Certificates on each Distribution Date, beginning with the
Distribution Date on which the Class A Invested Amount is paid in full, shall
be an amount equal to and calculated as follows: the sum of (a)(i) an amount
equal to the Fixed Allocation Percentage of Principal Collections received
during the Collection Period immediately preceding such Distribution Date (or
portion thereof, in the case of an Amortization Event which occurs during
such Collection Period), (ii) the amount of Shared Principal Collections
allocated to the Class B Certificates with respect to the preceding
Collection Period pursuant to Section 4.05(e), and (iii) the amount, if any,
of Excess Finance Charge Collections to be distributed pursuant to Section
4.09(c) and (d) with respect to such Distribution Date, minus (b) the Class
A Monthly Principal, if any, with respect to such Distribution Date.
(c) The amount of (monthly) principal (the "Class C Monthly
---------------
Principal") distributable from the Collection Account with respect to the
- - ---------
Class C Certificates on each Distribution Date, beginning with the
Distribution Date on which the Class B Invested Amount is paid in full, shall
be an amount equal to and calculated as follows: the sum of (a)(i) an amount
equal to the Fixed Allocation Percentage of Principal Collections received
during the Collection Period immediately preceding such Distribution Date (or
portion thereof, in the case of an Amortization Event which occurs during
such Collection Period), (ii) the amount of Shared Principal Collections
allocated to the Class C Certificates with respect to the preceding
Collection Period pursuant to Section 4.05(e), and (iii) the amount, if any,
of Excess Finance Charge Collections to be distributed pursuant to Section
4.09(e) and (f) with respect to such Distribution Date, minus (b) the Class
B Monthly Principal, if any, with respect to such Distribution Date.
(d) The amount of (monthly) principal (the "Subordinated
------------
Transferor Monthly Principal") distributable from the Collection Account with
- - ----------------------------
respect to the Subordinated Transferor Certificates on each Distribution
Date, beginning with the Distribution Date on which the Class C Invested
Amount is paid in full, shall be an amount equal to and calculated as
follows: the sum of (a)(i) an amount equal to the Fixed Allocation Percentage
of Principal Collections received during the Collection Period immediately
preceding such Distribution Date (or portion thereof, in the case of an
Amortization Event which occurs during such Collection Period), (ii) the
amount of Shared Principal Collections allocated to the Subordinated
Transferor Certificate with respect to the preceding Collection Period
pursuant to Section 4.05(e), and (iii) the amount, if any, of Excess Finance
Charge Collections to be distributed pursuant to Section 4.09(g) and (h) with
respect to such Distribution Date, minus (b) the Class C Monthly Principal,
if any, with respect to such Distribution Date.
(e) Shared Principal Collections allocated to the Series 1996-1
Certificates for any Business Day with respect to the Amortization Period
shall mean an amount equal to the product of (x) Shared Principal Collections
for all Series for such Business Day and (y) a fraction, the numerator of
which is the Principal Shortfall for the Series 1996-1 Certificates for such
Business Day and the denominator of which is the aggregate amount of
Principal Shortfalls for all Series for such Business Day. For any Business
Day with respect to the Revolving Period, Shared Principal Collections
allocated to the Series 1996-1 Certificates shall be zero.
Section 4.06. Coverage of Required Amount for the Series 1996-1
-------------------------------------------------
Certificates. On each Determination Date, the Servicer shall determine the
- - ------------
Required Amount, if any. In the event that the Required Amount for such
Distribution Date is greater than zero, the Servicer shall give written
notice to the Trustee of such positive Required Amount on the Determination
Date prior to such Distribution Date and all or a portion of the Excess
Finance Charge Collections with respect to such Distribution Date in an
amount equal to the Required Amount for such Distribution Date shall be
distributed from the Collection Account on such Distribution Date pursuant
to Section 4.09(a). In the event that the Required Amount for such
Distribution Date exceeds the amount of Excess Finance Charge Collections
with respect to such Distribution Date, first, all or a portion of the
-----
Subordinated Transferor Reallocated Principal Collections, second, the Class
------
C Reallocated Principal Collections, and third, the Class B Reallocated
-----
Principal Collections, in an amount equal to such excess shall be distributed
from the Collection Account on such Distribution Date to or for the benefit
of first, the Class A Certificateholders, second, the Class B
----- ------
Certificateholders and third, the Class C Certificateholders pursuant to
-----
Section 4.10.
In the event that the Required Amount exceeds the amount of such
Excess Finance Charge Collections and Reallocated Principal Collections, the
Subordinated Transferor Invested Amount shall be reduced by the amount of
such remaining deficiency, but not to exceed the amount of the Class A, Class
B and Class C Investor Default Amount for the related Collection Period. In
the event that any such reduction would cause the Subordinated Transferor
Invested Amount to be a negative number, the Class C Invested Amount shall
be reduced as provided in Section 4.08. In the event that any such reduction
would cause the Class C Invested Amount to be a negative number, the Class
B Invested Amount shall be reduced as provided in Section 4.08. In the event
that any such reduction would cause the Class B Invested Amount to be a
negative number, the Class A Invested Amount shall be reduced as provided in
Section 4.08.
Section 4.07. Application of Funds on Deposit in the Collection
-------------------------------------------------
Account for the Series 1996-1 Certificates. The Servicer shall apply or
- - ------------------------------------------
cause the Trustee to apply, on each Distribution Date funds on deposit in the
Collection Account with respect to such Distribution Date, to make the
following distributions:
(a) On each Distribution Date, an amount equal to the Class A
Floating Allocation Percentage of Finance Charge Collections deposited in the
Collection Account for the
Collection Period immediately preceding such Distribution Date shall be
distributed in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
----
previously due but not paid to Class A Certificateholders on a prior
Distribution Date, plus the amount of any Class A Additional Interest for
----
such Distribution Date, plus the amount of any Class A Additional Interest
----
previously due but not paid to the Class A Certificateholders on a prior
Distribution Date, shall be paid to the Class A Certificateholders;
(ii) an amount equal to the aggregate Class A Investor Default
Amount for such Distribution Date shall be distributed to the Transferor on
Distribution Dates with respect to the Revolving Period (unless such amount
has been previously netted against deposits to the Collection Account) (but
not exceeding the Transferor Interest after giving effect to any new
Receivables transferred to the Trust on such date) and thereafter shall be
included in the funds on deposit in the Collection Account to be paid
pursuant to Section 4.07(e) to the Series 1996-1 Certificateholders on
Distribution Dates with respect to any Amortization Period;
(iii) an amount equal to the Class A Monthly Servicing Fee for such
Distribution Date shall be distributed to the Servicer (unless such amount
has been previously netted against deposits to the Collection Account):
(iv) the balance, if any, shall constitute Excess Finance Charge
Collections and shall be allocated and distributed as set forth in Section
4.09: and
(v) if Bridgestone/Firestone is not the Servicer the priority of
items (ii) and (iii) above shall be reversed.
(b) On each Distribution Date, an amount equal to the Class B
Floating Allocation Percentage of Finance Charge Collections deposited in the
Collection Account for the Collection Period immediately preceding such
Distribution Date shall be distributed in the following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
----
previously due but not paid to Class B Certificateholders on a prior
Distribution Date, plus the amount of any Class B Additional Interest for
----
such Distribution Date, plus the amount of any Class B Additional
----
Interest previously due but not paid to the Class B Certificateholders
on a prior Distribution Date, shall be paid to the Class B
Certificateholders;
(ii) an amount equal to the aggregate Class B Investor Default
Amount for such Distribution Date shall be distributed to the Transferor on
Distribution Dates with respect to the Revolving Period (unless such amount
has been previously netted against deposits to the Collection Account) (but
not exceeding the Transferor Interest after giving effect to any new
Receivables transferred to the Trust on such date) and thereafter shall be
included in the funds on deposit in the Collection Account to be paid
pursuant to Section 4.07(e) to the Series 1996-1 Certificateholders on
Distribution Dates with respect to any Amortization Period;
(iii) an amount equal to the Class B Monthly Servicing Fee for such
Distribution Date shall be distributed to the Servicer (unless such amount
has been previously netted against deposits to the Collection Account):
(iv) the balance, if any, shall constitute Excess Finance Charge
Collections and shall be allocated and distributed as set forth in Section
4.09: and
(v) if Bridgestone/Firestone is not the Servicer the priority of
items (ii) and (iii) above shall be reversed.
(c) On each Distribution Date, an amount equal to the Class C
Floating Allocation Percentage of Finance Charge Collections deposited in the
Collection Account for the Collection Period immediately preceding such
Distribution Date shall be distributed in the following priority:
(i) an amount equal to Class C Monthly Interest for such
Distribution Date, plus the amount of any Class C Monthly Interest
----
previously due but not paid to Class C Certificateholders on a prior
Distribution Date, plus the amount of any Class C Additional Interest for
----
such Distribution Date, plus the amount of any Class C Additional Interest
----
previously due but not paid to the Class C Certificateholders on a prior
Distribution Date, shall be paid to the Class C Certificateholders;
(ii) an amount equal to the aggregate Class C Investor Default
Amount for such Distribution Date shall be distributed to the Transferor on
Distribution Dates with respect to the Revolving Period (unless such amount
has been previously netted against deposits to the Collection
Account) (but not exceeding the Transferor Interest after giving effect
to any new Receivables transferred to the Trust on such date) and thereafter
shall be included in the funds on deposit in the Collection Account to be
paid pursuant to Section 4.07(e) to the Series 1996-1 Certificateholders on
Distribution Dates with respect to any Amortization Period;
(iii) an amount equal to the Class C Monthly Servicing Fee for such
Distribution Date shall be distributed to the Servicer (unless such amount
has been previously netted against deposits to the Collection Account);
(iv) the balance, if any, shall constitute Excess Finance Charge
Collections and shall be allocated and distributed as set forth in Section
4.09; and
(v) if Bridgestone/Firestone is not the Servicer the priority of
items (ii) and (iii) above shall be reversed.
(d) On each Distribution Date, an amount equal to the Subordinated
Transferor Floating Allocation Percentage of Finance Charge Collections
deposited in the Collection Account for the Collection Period immediately
preceding such Distribution Date shall be distributed in the following
priority;
(i) an amount equal to the Subordinated Transferor Monthly
Servicing Fee for such Distribution Date shall be distributed to the Servicer
(unless such amount has been previously netted against deposits to the
Collection Account); and
(ii) the balance, if any, shall constitute Excess Finance Charge
Collections and shall be allocated and distributed as set forth in Section
4.09.
(e) On each Distribution Date with respect to the Controlled
Amortization Period or any Rapid Amortization Period, the remaining funds on
deposit in the Collection Account (other than Excess Finance Charge
Collections and any Reallocated Principal Collections which pursuant to
Section 4.09 or 4.10 are not to be included in the funds to be distributed
pursuant to this Section 4.07(e)) will be distributed in the following
priority:
(i) an amount equal to the Class A Monthly Principal for such
Distribution Date to the extent of the Class A Invested Amount, shall be paid
to the Class A Certificateholders;
(ii) for each Distribution Date, beginning with the Distribution
Date on which the Class A Invested Amount is paid in full, after giving
effect to the transactions referred to in clause (i) above, the amount of any
such remaining funds then on deposit in the Collection Account, up to the
amount of Class B Monthly Principal, shall be paid to the Class B
Certificateholders; and
(iii) for each Distribution Date, beginning with the Distribution
Date on which the Class B Invested Amount is paid in full, after giving
effect to the transactions referred to in clause (ii) above, the amount of
any such remaining funds then on deposit in the Collection Account, up to the
amount of Class C Monthly Principal, shall be paid to the Class C
Certificateholders; and
(iv) for each Distribution Date, beginning with the Distribution
Date on which the Class C Invested Amount is paid in full, after giving
effect to the transactions referred to in clause (iii) above, the amount of
any such remaining funds then on deposit in the Collection Account, up to the
amount of Subordinated Transferor Monthly Principal, shall be paid to the
Subordinated Transferor Certificateholder; and
(v) for each Distribution Date, after giving effect to the
transactions referred to in clauses (iv) above, an amount equal to the
balance, if any, of such remaining funds then on deposit in the Collection
Account and allocable to the Series 1996-1 Certificates shall be treated as
Shared Principal Collections and applied in accordance with Article IV of the
Agreement and thereafter be paid by the Servicer or the Trustee to the
Transferor but not exceeding the Transferor Interest (after giving effect to
any new Receivables transferred to the Trust).
Section 4.08. Investor Charge-Offs. (a) On each Determination
--------------------
Date, the Servicer shall calculate the Class A Investor Default Amount, if
any, for the related Distribution Date. If on any Distribution Date, the
Required Amount for such Distribution Date exceeds the sum of (i) Excess
Finance Charge Collections with respect to the Collection Period immediately
preceding such Distribution Date, ((ii) the amount of the Transferor Interest
available to be written down, if any, to cover Investor Charge-Offs) and
(iii) the amount of Reallocated Principal Collections with respect to such
Collection Period, the Subordinated Transferor Invested Amount shall be
reduced by the amount of such excess, but not more than the Class A, Class
B and Class C Investor Default Amount for such Distribution Date second, the
------
Class C Invested Amount shall be reduced by the
amount of such excess, but not more than the Class A and Class B Investor
Default Amount for such Distribution Date, and third, the Class B Invested
-----
Amount shall be reduced by the amount of such excess, but not more than the
Class A Investor Default Amount for such Distribution Date. In the event
that such reduction would cause the Class B Invested Amount to be a negative
number, the Class B Invested Amount shall be reduced to zero, the Class A
Invested Amount shall be reduced by the amount by which the Class B Invested
Amount would have been reduced below zero, but not more than the Class A
Investor Default Amount for such Distribution Date (a "Class A Investor
----------------
Charge-Off").
- - ----------
Class A Investor Charge-Offs shall thereafter be reimbursed (but not by
an amount in excess of the aggregate Class A Investor Charge-Offs) (and the
Class B, Class C and Subordinated Transferor Invested Amount increased) by
the amount of Excess Finance Charge Collections allocated and available for
that purpose pursuant to Section 4.09(b).
(b) On each Determination Date, the Servicer shall calculate the
Class B Investor Default Amount, if any, for the related Distribution Date.
If on any Distribution Date, the Class B Investor Default Amount, if any, for
such Distribution Date exceeds the sum of Excess Finance Charge Collections
with respect to the Collection Period immediately preceding the Distribution
Date which are allocated and available to pay such amount pursuant to Section
4.09(c) and the amount of Class C and Subordinated Transferor Reallocated
Principal Collections, then the Class B Invested Amount shall be reduced by
the aggregate amount of such excess, but not more than the Class B Investor
Default Amount for such Distribution Date (a "Class B Investor Charge-Off").
---------------------------
Class B Investor Charge-Offs shall thereafter be reimbursed (and the Class
B Invested Amount increased) on any Distribution Date by the amount of Excess
Finance Charge Collections allocated and available for that purpose pursuant
to Section 4.09(d) (but only, in any case, to the extent such amount is not
required to reimburse Class A Investor Charge-Offs pursuant to Section
4.08(a) and not, in any case, in excess of the unpaid principal balance of
the Class B Certificates).
(c) On each Determination Date, the Servicer shall calculate the
Class C Investor Default Amount, if any, for the related Distribution Date.
If on any Distribution Date, the Class C Investor Default Amount, if any, for
such Distribution Date exceeds the sum of Excess Finance Charge Collections
with respect to the Collection Period immediately preceding the Distribution
Date which are allocated and available to pay such amount pursuant to Section
4.09(e) and the amount of Subordinated Transferor Reallocated Principal
Collections, then the Class C Invested Amount shall be reduced by the
aggregate amount of such
excess, but not more than the Class C Investor Default Amount for such
Distribution Date (a "Class C Investor Charge-Off"). Class C Investor
---------------------------
Charge-Offs shall thereafter be reimbursed (and the Class C Invested Amount
increased) on any Distribution Date by the amount of Excess Finance Charge
Collections allocated and available for that purpose pursuant to Section
4.09(f) (but only, in any case, to the extent such amount is not required to
reimburse Class A and Class B Investor Charge-Offs pursuant to Section
4.08(a) and (b) and not, in any case, in excess of the unpaid principal
balance of the Class C Certificates).
(d) On each Determination Date, the Servicer shall calculate the
Subordinated Transferor Investor Default Amount, if any, for the related
Distribution Date. If on any Distribution Date, the Subordinated Transferor
Investor Default Amount, if any, for such Distribution Date exceeds the
amount of Excess Finance Charge Collections with respect to the Collection
Period immediately preceding the Distribution Date which are allocated and
available to pay such amount pursuant to Section 4.09(g), then the
Subordinated Transferor Invested Amount shall be reduced by the aggregate
amount of such excess, but not more than the Subordinated Transferor Investor
Default Amount for such Distribution Date (a "Subordinated Transferor
-----------------------
Investor Charge-Off"). Subordinated Transferor Investor Charge-Offs shall
- - -------------------
thereafter be reimbursed (and the Subordinated Transferor Invested Amount
increased) on any Distribution Date by the amount of Excess Finance Charge
Collections allocated and available for that purpose pursuant to Section
4.09(h) (but only, in any case, to the extent such amount is not required to
reimburse Class A, Class B and Class C Investor Charge-Offs pursuant to
Section 4.08(a), (b) and (c) and not, in any case, in excess of the unpaid
principal balance of the Subordinated Transferor Certificate).
Section 4.09. Excess Finance Charge Collections for the Series 1996-1
-------------------------------------------------------
Certificates. The Servicer shall apply or shall cause the Trustee to apply,
- - ------------
on each Distribution Date, Excess Finance Charge Collections for the Series
1996-1 Certificates with respect to the Collection Period immediately
preceding such Distribution Date, to make the following distributions in the
following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Distribution Date shall be distributed by the Servicer or the
Trustee to fund any deficiency pursuant to Sections 4.07(a)(i), 4.07(a)(ii)
or 4.07(a)(iii); provided that in the event the Class A Required Amount for
such Distribution Date exceeds the amount of Excess Finance Charge
Collections, such Excess Finance Charge Collections shall be applied first,
-----
to pay amounts due pursuant to Section 4.07(a)(i), second, to pay
------
the Class A Investor Default Amount, if any, pursuant to Section 4.07(a)(ii),
and third, to pay the Class A Monthly Servicing Fee to the Servicer pursuant
-----
to Section 4.07(a)(iii) (in the event that Bridgestone/Firestone is not the
Servicer, the Class A Monthly Servicing Fee shall be paid prior to the Class
A Investor Default Amount);
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed pursuant to this
Section 4.09(b) shall be distributed by the Servicer or the Trustee to the
Holder of the Exchangeable Transferor Certificate on Distribution Dates with
respect to the Revolving Period, but not exceeding the Transferor Interest
on such day (after giving effect to any new Receivables transferred to the
Trust on such date) and thereafter shall be included in the funds on deposit
in the Collection Account to be distributed pursuant to Section 4.07(c) on
Distribution Dates with respect to the Amortization Period;
(c) an amount equal to the Class B Required Amount, if any, with
respect to such Distribution Date shall be distributed by the Servicer or the
Trustee to fund any deficiency pursuant to Sections 4.07(b)(i), 4.07(b)(ii)
or 4.07(b)(iii); provided that in the event the Class B Required Amount for
such Distribution Date exceeds the amount of available Excess Finance Charge
Collections, such Excess Finance Charge Collections shall be applied first
to pay amounts due pursuant to Section 4.07(b)(i), second to pay the Class
B Investor Default Amount, if any, pursuant to Section 4.07(b)(ii), and third
to pay the Class B Monthly Servicing Fee to the Servicer pursuant to Section
4.07(b)(iii) (in the event that Bridgestone/Firestone is not the Servicer,
the Class B Monthly Servicing Fee shall be paid prior to the Class B Investor
Default Amount);
(d) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced below the Class B Initial Invested Amount
(other than by payments to the Class B Certificateholders) (but not in excess
of the aggregate amount of such reductions which have not been previously
reimbursed) shall be distributed by the Servicer or the Trustee to the Holder
of the Exchangeable Transferor Certificate on Distribution Dates with respect
to the Revolving Period, but not exceeding the Transferor Interest on such
day (after giving effect to any new Receivables transferred to the Trust on
such date) and thereafter shall be included in the funds on deposit in the
Collection Account to be distributed pursuant to Section 4.07(e) on
Distribution Dates with respect to any Amortization Period;
(e) an amount equal to the Class C Required Amount, if any, with
respect to such Distribution Date shall be distributed
by the Servicer or the Trustee to fund any deficiency pursuant to Sections
4.07(c)(i), 4.07(c)(ii) or 4.07(c)(iii); provided that in the event the Class
B Required Amount for such Distribution Date exceeds the amount of available
Excess Finance Charge Collections, such Excess Finance Charge Collections
shall be applied first to pay amounts due pursuant to Section 4.07(c)(i),
second to pay the Class C Investor Default Amount, if any, pursuant to
Section 4.07(c)(ii), and third to pay the Class C Monthly Servicing Fee to
the Servicer pursuant to Section 4.07(c)(iii) (in the event that
Bridgestone/Firestone is not the Servicer, the Class C Monthly Servicing Fee
shall be paid prior to the Class C Investor Default Amount);
(f) an amount equal to the aggregate amount by which the Class C
Invested Amount has been reduced below the Class C Initial Invested Amount
(other than by payments to the Class C Certificateholders) (but not in excess
of the aggregate amount of such reductions which have not been previously
reimbursed) shall be distributed by the Servicer or the Trustee to the Holder
of the Exchangeable Transferor Certificate on Distribution Dates with respect
to the Revolving Period, but not exceeding the Transferor Interest on such
day (after giving effect to any new Receivables transferred to the Trust on
such date) and thereafter shall be included in the funds on deposit in the
Collection Account to be distributed pursuant to Section 4.07(e) on
Distribution Dates with respect to any Amortization Period;
(g) an amount equal to the aggregate Subordinated Transferor
Investor Default Amount, if any, for such Distribution Date shall be
distributed by the Servicer or the Trustee to the Holder of the Exchangeable
Transferor Certificate on Distribution Dates with respect to the Revolving
Period, but not exceeding the Transferor Interest on such day (after giving
effect to any new Receivables transferred to the Trust on such date) and
thereafter shall be included in the funds on deposit in the Collection
Account to be distributed pursuant to Section 4.07(e) on Distribution Dates
with respect to any Amortization Period;
(h) an amount equal to the aggregate amount by which the
Subordinated Transferor Invested Amount has been reduced below the
Subordinated Transferor Initial Invested Amount (other than by payments to
the Holder of the Subordinated Transferor Certificate) (but not in excess of
the aggregate amount of such reductions which have not been previously
reimbursed) shall be distributed by the Servicer or the Trustee to the Holder
of the Exchangeable Transferor Certificate on Distribution Dates with respect
to the Revolving Period, but not exceeding the Transferor Interest on such
day (after giving effect to any new Receivables transferred to the Trust on
such date) and thereafter shall be included in the funds on deposit in the
Collection Account to be
distributed pursuant to Section 4.07(e) on Distribution Dates with respect
to any Amortization Period;
(i) the balance, if any, shall be treated as (Shared) Excess
Finance Charge Collections, and the Servicer shall direct the Trustee in
writing on each Business Day to withdraw such amounts from the Collection
Account and to make such amounts available to pay to Certificateholders of
other Series to the extent of shortfalls, if any, in amounts payable to such
Certificateholders from Finance Charge Collections allocated to such other
Series;
(j) the balance, if any, shall be treated as Shared Principal
Collections; and
(k) the balance, if any, shall be distributed by the Servicer or
the Trustee to Bridgestone/Firestone.
For each Business Day with respect to the Revolving Period, the
funds on deposit in the Collection Account to the extent of the product of
(i) the sum of the Class A Floating Allocation Percentage, the Class B
Floating Allocation Percentage and the Class C Floating Allocation Percentage
and (ii) Principal Collections with respect to such Business Day (less the
amount of Class C Reallocated Principal Collections and Class B Reallocated
Principal Collections on such Business Day) will be treated as Shared
Principal Collections and applied, pursuant to the written direction of the
Servicer in the Payment Date Statement for such Business Day.
Section 4.10. Reallocated Principal Collections for the Series
------------------------------------------------
1996-1 Certificates. (a) The Servicer shall apply or cause the Trustee to
- - -------------------
apply, on each Distribution Date, Subordinated Transferor Reallocated
Principal Collections with respect to the Collection Period immediately
preceding such Distribution Date, first to the components of the Class A
Required Amount, if any, then to the components of the Class B Required
Amount, if any, and then to the components of the Class C Required Amount,
if any, in the same priority as such amounts are applied to such components
from Excess Finance Charge Collections pursuant to Section 4.09 herein.
(b) The Servicer shall apply or cause the Trustee to apply, on
each Distribution Date, Class C Reallocated Principal Collections with
respect to the Collection Period immediately preceding such Distribution
Date, first to the components of the Class A Required Amount, if any, and
then to the components of the Class B Required Amount, if any, in the same
priority as such amounts are applied to such components from Excess Finance
Charge Collections pursuant to Section 4.09 herein.
(c) The Servicer shall apply or cause the Trustee to apply, on
each Distribution Date, Class B Reallocated Principal Collections with
respect to the Collection Period immediately preceding such Distribution Date
to the components of the Class A Required Amount, if any, in the same
priority as such amounts are applied to such components from Excess Finance
Charge Collections pursuant to Section 4.09 herein.
SECTION 9. Article V of the Agreement. Article V of the Agreement
--------------------------
shall read in its entirety as follows:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Section 5.01. Distributions. (a) On each Distribution Date, the
-------------
Paying Agent shall distribute (in accordance with the Monthly Servicer's
Certificate) to each Class A, Class B, Class C and Subordinated Transferor
Certificateholder on the preceding Record Date (other than as provided in
Section 12.02 of the Agreement respecting a final distribution) such
Certificateholder's pro rata share (based on the aggregate Undivided
Interests represented by the Certificates held by such Certificateholder) of
the amounts on deposit in the Collection Account pursuant to Section 4.07.
(b) Except as provided in Section 12.02 with respect to a final
distribution, distributions to Investor Certificateholders hereunder shall
be made by check mailed to each such Certificateholder at such
Certificateholder's address appearing in the Certificate Register without
presentation or surrender of any such Investor Certificate or the making of
any notation thereon; provided, however, that with respect to such Investor
Certificates registered in the name of a Clearing Agency, such distributions
shall be made to such Clearing Agency in immediately available funds.
Section 5.02. Statements to Series 1996-1 Certificateholders. (a) On
----------------------------------------------
each Distribution Date, the Paying Agent, on behalf of the Trustee, shall
forward to each Class A, Class B and Class C Certificateholder a statement
substantially in the form of (Item G to Exhibit B) (the "Payment Date
------------
Statement") prepared by the Servicer setting forth certain information
- - ---------
relating to the Trust and the Investor Certificates.
(b) Annual Certificateholders' Statement. On or before January
------------------------------------
31 of each calendar year, beginning with calendar year 1997, the Paying
Agent, on behalf of Bridgestone/Firestone, shall furnish or cause to be
furnished to each Person who at any
time during the preceding calendar year was an Investor Certificateholder,
a statement prepared by the Trustee on behalf of Bridgestone/Firestone
containing such information as is required to be provided to a holder of
indebtedness under the Internal Revenue Code and such other information as
may be reasonably requested by the Investor Certificateholders to prepare
their tax returns. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall
be provided by the Paying Agent pursuant to any requirements of the Internal
Revenue Code as from time to time in effect.
(c) No later than the second business day prior to each
Distribution Date, the Servicer shall forward by facsimile (to be followed
by original confirmation in writing) or overnight delivery service to the
Trustee, the Paying Agent and each Rating Agency a certificate of a Servicing
Officer substantially in the form attached as (Exhibit B) (the "Monthly
---------
Servicer's Certificate").
(END OF ARTICLE V)
SECTION 10. Article VI of the Agreement. Article VI shall, for
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purposes of Series 1996-1, contain the following Section 6.14:
Section 6.14 Transfers of the Class C and the Subordinated
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Transferor Certificate.
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(a) The Class C Certificates shall be issued in minimum
denominations of 1/80th of the Class C Initial Invested Amount. At any point
in time, the Class C Certificates shall not be held by more than eighty
different investors.
(b) No transfer of any Class C Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "1933 Act"), and effective
registration or qualification under applicable state securities laws, or is
made in a transaction which does not require such registration or
qualification. If such a transfer is to be made without registration or
qualification, then the Certificate Registrar shall require, in order to
assure compliance with such laws, receipt of: (i) if such transfer is of a
Class C Certificate and is purportedly being made in reliance upon Rule 144A
under the 1933 Act, a certificate from the Certificateholder desiring to
effect such transfer substantially in the form attached as Exhibit ___ hereto
and a certificate from such Certificateholder's prospective transferee
substantially in the form attached as Exhibit ___ hereto; and (ii) in all
other cases,
(A) except where the Transferor or an Affiliate thereof is the transferor or
transferee, an Opinion of Counsel satisfactory to the Trustee to the effect
that such transfer may be made without such registration or qualification
(which Opinion of Counsel shall not be an expense of the Trust Fund or the
Transferor or the Trustee in their respective capacities as such), (B) a
certificate from the Certificateholder desiring to effect such transfer
substantially in the form attached as Exhibit ___ hereto and (C) a
certificate from such Certificateholder's prospective transferee
substantially in the form attached as Exhibit ___ hereto. Neither the
Transferor nor the Trustee is obligated to register or qualify the Class C
Certificates under the 1933 Act or any other securities law or to take any
action not otherwise required under this Agreement to permit the transfer of
any Class C Certificate without registration or qualification. Any Class C
Certificateholder desiring to effect such a transfer shall, and does hereby
agree to, indemnify the Trustee and the Transferor against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.
(c) No transfer of any Class C Certificate shall be made unless
the prospective transferee represents (i) that it is acquiring the
Certificate for its own behalf and is not acting as agent or custodian for
any other person or entity in connection with such acquisition, and (ii) if
the prospective transferee is a partnership, grantor trust or S corporation
for federal income tax purposes (a "Flow-Through Entity"), any Class C
Certificates owned by such Flow-Through Entity will represent less than 50%
of the value of all the assets owned by such Flow-Through Entity and no
special allocation of income, gain, loss, deduction or credit from such
Certificates will be made among the beneficial owners of such Flow-Through
Entity. Such representation shall be made by the transferee in a letter
substantially in the form of Exhibit __ hereto.
(d) The Subordinated Transferor Certificate may not be sold,
assigned, transferred, participated, pledged, hypothecated, or otherwise
conveyed by the Transferor except that an interest in the Subordinated
Transferor Certificate may be participated to Bridgestone/Firestone.
SECTION 11. Consents of Series 1996-1 Certificateholders.
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Whenever the Agreement provides for the vote, consent or waiver of Series
1996-1 Certificateholders, such vote, consent or waiver shall be obtained on
the basis of the Investor Certificateholders on an aggregate basis, except
with respect to the votes, consents or waivers permitted or required by the
Sections indicated below, with respect to which such
votes, consents or waivers shall be obtained from either Class, or each and
every Class, as a separate Class, as specified below:
shall be required on
Section: the following basis:
- - ------- -------------------
6.13 Class A, B and C
9.02 Class A, B and C
10.01(b) and (c) Class A, B and C
10.04 Class A, B and C
13.01 Class A, B and C
13.07 Class A, B and C
SECTION 12. Amortization Events. If any one of the events
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specified in Section 9.01 of the Agreement (after any grace periods or
consents applicable thereto) or any one of the following events shall occur
during the Revolving Period or the Controlled Amortization Period with
respect to the Series 1996-1 Certificates (each, an "Amortization Event"):
------------------
(a) failure on the part of the Servicer, the Originator or the
Transferor, as applicable (i) to make any payment or deposit required by the
terms of the Agreement or Supplement on or before five Business Days after
the date such payment or deposit is required to be made herein, or (ii) duly
to observe or perform in any material respect the covenant of the Transferor
set forth in Section 2.08(b) of the Agreement, or (iii) duly to observe or
perform in any material respect any other covenants or agreements of the
Transferor set forth in this Agreement or Supplement, which, in the case of
clause (iii), continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer, the Originator or the Transferor, as
applicable by the Trustee, or to the Transferor and the Trustee by the
Holders of Investor Certificates evidencing Undivided Interests aggregating
not less than 10% of the Invested Amount of either Class of the Series 1996-1
Certificates provided, however, that an Amortization Event pursuant to this
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Section 12(a) shall not be deemed to have occurred hereunder with respect to
any such Series if the Transferor has accepted the transfer of the
Receivable, or all of such Receivables, if applicable, during such period (or
such
longer period as the Trustee may specify) in accordance with the provisions
hereof;
(b) any representation or warranty made by the Servicer, the
Originator or the Transferor, as applicable in the Purchase and Sale
Agreement or this Supplement or any information contained in a list required
to be delivered by the Transferor pursuant to Section 2.01 or 2.05 of the
Agreement shall prove to have been incorrect in any material respect when
made or when delivered, which continues to be incorrect in any material
respect for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Servicer, the Originator or the Transferor, as applicable by the Trustee, or
to the Transferor and the Trustee by the Holders of Investor Certificates
evidencing Undivided Interests aggregating not less than 10% of the Invested
Amount of any Class of the Series 1996-1 Certificates and as a result of
which the interests of such Series are materially and adversely affected
provided, however, that an Amortization Event pursuant to this Section 12(b)
shall not be deemed to have occurred hereunder with respect to any such
Series if the Transferor has accepted the transfer of the Receivable, or all
of such Receivables, if applicable, during such period (or such longer period
as the Trustee may specify) in accordance with the provisions hereof;
(c) the Portfolio Yield averaged over any three consecutive
Collection Periods in less than the Base Rate of such Series;
(d) any Servicer Default shall occur which would have a material
adverse effect on the Holders of the Investor Certificates;
(e) the Transferor Amount (plus any amounts available under the
Transferor Letter of Credit or the Transferor Escrow Account and the B/F
Amount) is less than __% of the Aggregate Invested Amount of all Series each
on the last day of any Collection Period; or
(f) the Transferor Amount plus the B/F Amount and the Subordinated
Transferor Invested Amount (plus the invested amount of the Series 1992-B
Class B Certificates and any other subordinated class of certificates of
additional Series which is retained by the Transferor and with respect to
which no legal opinion is delivered characterizing such certificates as
indebtedness for federal income tax purposes) is less than __% of Aggregate
Receivables on the last day of any Collection Period:
then, (x) in the case of any event described in subparagraphs (a),
(b) or (d) of this Section 12, after the applicable grace period, if any,
either the Trustee or the Investor Certificateholders evidencing interest
aggregating not less than 50% of the Invested Amount by written notice to the
Transferor (and to the Trustee if given by the Investor Certificateholders)
may declare that an Amortization Event has occurred with respect to the
Investor Certificates as of the date of such notice, or (y) in the case of
any event described in Section 9.01(a) or (b) of the Agreement an
Amortization Event with respect to all series of certificates, including the
Investor Certificates, or (z) in the case of subparagraphs (c), (e) or (f)
of this Section 12 an Amortization Event with respect to the Investor
Certificates, shall occur immediately upon the occurrence of such event,
without any notice or other action on the part of the Trustee or the
Certificateholders.
SECTION 13. Servicing Fee. Notwithstanding Section 3.02 of the
-------------
Agreement, the Monthly Servicing Fee shall equal the sum of the Class A
Monthly Servicing Fee, the Class B Monthly Servicing Fee, the Class C Monthly
Servicing Fee and the Subordinated Transferor Monthly Servicing Fee.
SECTION 14. Ratification of Pooling and Servicing Agreement. As
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supplemented or modified by this Supplement, the Agreement is in all respects
ratified and confirmed and the Agreement as so supplemented or modified by
this Supplement shall be read, taken, and construed as one and the same
instrument.
SECTION 15. Counterparts. This Supplement may be executed in any
------------
number of counterparts, each of which when so executed shall be deemed to be
an original, but all of which counterparts shall together constitute but one
and the same instrument.
SECTION 16. Governing Law. THIS SUPPLEMENT SHALL BE GOVERNED BY
-------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS.
SECTION 17. Certain Amendments. In the event that federal
------------------
legislation creates a new type of entity for federal income tax purposes, the
"financial asset securitization investment trust" (a "FASIT"), the Transferor
may amend this Series Supplement in order to effect a FASIT election for all
or a portion of the Trust or the Investor Certificates; provided, that the
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Transferor delivers an opinion to the Trustee to the effect that such
election will not adversely affect the Federal or applicable state income tax
characterization of any
outstanding Series of Investor Certificates or the taxability of the Trust
under Federal or applicable state income tax laws.
IN WITNESS WHEREOF, the Transferor, the Servicer and the Trustee
have caused this Supplement to be duly executed by their respective officers
duly authorized as of the day and year first above written.
FIRESTONE RETAIL CREDIT
CORPORATION, as Transferor
By
----------------------------
Name:
Title:
BRIDGESTONE/FIRESTONE, INC.
as Servicer and individually
By
----------------------------
Name:
Title:
THE FUJI BANK AND TRUST
COMPANY, as Trustee
By
----------------------------
Name:
Title:
