AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON September 14, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PRIME
CREDIT CARD MASTER TRUST
(Issuer of the Certificates)
(Exact name of Registrant as Specified in its Charter)
PRIME RECEIVABLES CORPORATION
(Originator of the Trust Described Herein)
(Exact name of Registrant as Specified in its Charter)
DELAWARE 31-1359594
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
PRIME RECEIVABLES CORPORATION
7 WEST SEVENTH STREET
CINCINNATI, OHIO 45202
(513) 579-7580
(Address, Including Zip Code, and Telephone Number, Including Area
Code, of the Registrant's Principal Executive Office)
----------------
DENNIS J. BRODERICK
FEDERATED DEPARTMENT STORES, INC.
7 WEST SEVENTH STREET
CINCINNATI, OHIO 45202
(513) 579-7000
(Name, Address Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
ROBERT J. GRAVES ANDREW M. FAULKNER
JONES, DAY, REAVIS & POGUE SKADDEN, ARPS, SLATE,
77 WEST WACKER MEAGHER & FLOM LLP
CHICAGO, ILLINOIS 60601 FOUR TIMES SQUARE
(312) 782-3939 NEW YORK, NEW YORK 10036-6522
(212) 735-2853
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective as
determined by market conditions.
If the only securities registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| ______________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
---------------------------- ---------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Asset Backed Certificates.............. $1,000,000,000 100% $1,000,000,000 $264,000.00
(1) Estimated solely for the purpose of calculating the Registration Fee.
</TABLE>
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
[FLAG]
The information in this prospectus supplement and prospectus is not
complete and may be changed. We cannot sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. Neither this prospectus supplement nor the prospectus is an
offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED__________, 2000
PROSPECTUS SUPPLEMENT TO PROSPECTUS, DATED ________, 2000
PRIME CREDIT CARD MASTER TRUST
Issuer
% CLASS A ASSET BACKED CERTIFICATES, SERIES 2000-__
% CLASS B ASSET BACKED CERTIFICATES, SERIES 2000-__
PRIME RECEIVABLES CORPORATION, Transferor
FDS BANK, Servicer
<TABLE>
<CAPTION>
Class A certificates Class B certificates
<S> <C> <C> <C>
Principal Amount $__________ Principal Amount $__________
Price $__________ ( %) Price $__________ ( %)
Underwriters' Commissions $__________ ( %) Underwriters' Commissions $__________ ( %)
Proceeds to the Transferor $__________ ( %) Proceeds to the Transferor $__________ ( %)
Certificate Rate _______ % p.a. Certificate Rate _______ % p.a.
Interest Payment Dates monthly on the 15th Interest Payment Dates monthly on the 15th
First Interest Payment Date ___________, 2000 First Interest Payment Date ___________, 2000
Expected Final Payment ___________, 20__ Expected Final Payment ___________, 20__
Date Date
</TABLE>
THE CERTIFICATES ARE INTERESTS IN PRIME CREDIT CARD MASTER TRUST
AND ARE BACKED ONLY BY THE ASSETS OF THE TRUST. NONE OF THE CERTIFICATES OR
THE ASSETS OF THE TRUST ARE OBLIGATIONS OF FDS BANK, FEDERATED DEPARTMENT
STORES, INC., PRIME RECEIVABLES CORPORATION, OR ANY OF THEIR AFFILIATES OR
ARE OBLIGATIONS INSURED BY THE FDIC.
THESE SECURITIES ARE HIGHLY STRUCTURED. BEFORE YOU PURCHASE THESE
SECURITIES, BE SURE YOU UNDERSTAND THE STRUCTURE AND THE RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE [S-12] OF THIS PROSPECTUS SUPPLEMENT.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED ON THE ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS
SUPPLEMENT AND THE ATTACHED PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The underwriters of each of the Class A certificates and the Class
B certificates have agreed to purchase the Class A certificates and the
Class B certificates, subject to the terms and conditions in the
underwriting agreement. The Class C certificates will be retained by Prime
Receivables Corporation.
The date of this Prospectus Supplement is __________, 2000.
TABLE OF CONTENTS
Page
WHERE TO FIND INFORMATION IN THESE
DOCUMENTS............................................................S-3
SUMMARY OF TERMS..........................................................S-5
STRUCTURAL SUMMARY........................................................S-6
RISK FACTORS.............................................................S-11
Potential Early Repayment or
Delayed Payment due to Reduced
Portfolio Yield................................................S-11
FDS May Change the Terms
and Conditions of the
Accounts.......................................................S-11
Accounts Added to the Trust
Portfolio May Have Different
Terms and Conditions...........................................S-11
PRC May Not be Able to
Add Accounts to the Trust......................................S-12
Changes to Consumer
Protection Laws May Impede
FDS's Collection Efforts.......................................S-12
Cardholders May Make
Principal Payments at
Any Time.......................................................S-13
Dependence on Federated
Department Stores..............................................S-13
Allocations of Charged-Off
Receivables Could Result in
a Loss to Your Certificates....................................S-14
Adjustments Due to Rebates,
Exchanges and Write-downs
Could Reduce Payments to You...................................S-14
You May Not Be Able to Resell
Your Certificates..............................................S-14
Insolvency or Bankruptcy of PRC
or FDS Could Result in
Accelerated, Delayed or Reduced
Payments to You................................................S-15
You Will Have Limited
Control of Trust Actions.......................................S-16
FEDERATED DEPARTMENT STORES, INC.........................................S-17
TRUST CREDIT CARD PORTFOLIO..............................................S-18
The Federated Portfolio.............................................S-18
Delinquency and Loss Experience.....................................S-18
Characteristics of the Trust Portfolio..............................S-19
MATURITY CONSIDERATIONS..................................................S-24
Accumulation Period.................................................S-24
Pay Out Event.......................................................S-25
Paired Series.......................................................S-25
Historical Payment Rates of the
Federated Portfolio............................................S-26
RECEIVABLE YIELD CONSIDERATIONS..........................................S-26
USE OF PROCEEDS..........................................................S-27
DESCRIPTION OF THE OFFERED CERTIFICATES..................................S-27
General.............................................................S-27
Interest Payments...................................................S-28
Principal Payments..................................................S-29
Postponement of Accumulation
Period.........................................................S-31
Subordination.......................................................S-32
Transfer of the Class C Certificates................................S-33
Allocation Percentages..............................................S-33
Application of Collections..........................................S-34
Reallocation of Cash Flows..........................................S-41
Sharing of Excess Finance Charge
Collections....................................................S-42
Shared Principal Collections........................................S-42
Defaulted Receivables; Investor
Charge-Offs....................................................S-43
Principal Funding Account...........................................S-44
Withdrawals from the Collection
Account........................................................S-44
Paired Series.......................................................S-46
Pay Out Events......................................................S-47
Servicing Fees and Expenses.........................................S-50
Optional Termination................................................S-50
Series Termination..................................................S-50
GENERAL INFORMATION......................................................S-51
UNDERWRITING.............................................................S-51
OTHER SERIES ISSUED AND OUTSTANDING......................................S-54
GLOSSARY OF TERMS FOR PROSPECTUS
SUPPLEMENT..........................................................S-56
WHERE TO FIND INFORMATION IN THESE DOCUMENTS
The attached prospectus provides general information about the
Prime Credit Card Master Trust, including terms and conditions that are
generally applicable to certificates issued by the trust. The specific
terms of the certificates are described in this prospectus supplement.
This prospectus supplement begins with several introductory
sections describing your series and the Prime Credit Card Master Trust in
abbreviated form:
o Summary of Terms provides important amounts, dates and other
terms of your series,
o Structural Summary gives a brief introduction to the key
structural features of your series and directions for
locating further information,
o Receivables Flow Chart illustrates the flow of receivables,
o Selected Trust Portfolio Summary Data gives certain financial
information about the assets of the trust, and
o Risk Factors describes some of the risks that apply to your
certificates.
As you read through these sections, cross-references will direct
you to more detailed descriptions in the attached prospectus and elsewhere
in this prospectus supplement. You can also directly reference key topics
by looking at the table of contents in this prospectus supplement and the
attached prospectus.
You should rely only on the information contained or incorporated
by reference in this prospectus supplement and the prospectus. We have not
authorized anyone to provide you with different information.
We are not offering these certificates in any state where the
offer is not permitted.
We do not make any representation as to the accuracy of the
information in this prospectus supplement as of any date other than the
date set forth on its cover.
TO UNDERSTAND THE STRUCTURE AND TERMS OF THESE SECURITIES, YOU MUST READ
CAREFULLY THE ATTACHED PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT IN THEIR
ENTIRETY.
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<TABLE>
<CAPTION>
SUMMARY OF TERMS
Trust: Prime Credit Card Master Trust
Transferor: Prime Receivables Corporation--"PRC"
Servicer: FDS Bank--"FDS"
Trustee: The Chase Manhattan Bank
Pricing Date: _________, ____
Closing Date: _________, ____
Clearance and Settlement: DTC/Clearstream/Euroclear
Trust Assets: receivables originated in consumer
open-end credit card accounts of FDS
and other credit card originators,
including recoveries on charged-off
receivables.
<S> <C> <C>
Series Structure: Amount % of Total Series
Class A $___________ __%
Class B $___________ __%
Class C $___________ __%
Annual Servicing Fee Rate: 2%
Class A Class B
Credit Enhancement: subordination of Class B and subordination of Class C
Class C
Certificate Rate: ___% p.a. ___% p.a.
Interest Accrual Method: 30/360 30/360
Interest Payment Dates: monthly on the 15th monthly on the 15th
First Interest Payment Date: ______, 2000 ______, 2000
Expected Final Principal Payment
Date: ______ distribution date ______ distribution date
Series 2000-__ Legal Final Maturity: ______ distribution date ______ distribution date
Commencement of Accumulation
Period (subject to adjustment): First day of ________ First day of ________
CUSIP Number:
Anticipated Ratings:
(Moody's/Standard & Poor's) [Aaa/AAA] [A2/A]
</TABLE>
STRUCTURAL SUMMARY
This summary briefly describes certain major structural components
of Series 2000-__. To fully understand the terms of Series 2000-__ you will
need to read both this prospectus supplement and the attached prospectus in
their entirety.
THE SERIES 2000-__ CERTIFICATES
Your certificates represent the right to receive a portion of collections
on the underlying trust assets. Your certificates bear interest at the rate
stated in the summary of terms. Your certificates will also be allocated a
portion of net losses on the receivables. Any collections allocated to your
series in excess of the amount owed to you or the servicer of the
receivables will be shared with other series of certificates issued by the
trust or returned to PRC. In no case will you receive more than the
principal and interest owed to you under the terms described in this
prospectus supplement.
The certificates are backed by interests in a pool of revolving credit card
receivables. The receivables currently arise primarily under credit card
accounts relating to the sale of merchandise and services by retail stores
owned and operated by Federated Department Stores, Inc. and its
subsidiaries. FDS services these credit card accounts.
For more information on the certificates, see "Description of the Offered
Certificates" in this prospectus supplement. For more information on the
allocation of collections to and payments to Series 2000-__, see
"Description of the Offered Certificates--Interest Payments," "--Principal
Payments" and "--Allocation Percentages" in this prospectus supplement.
PRIME CREDIT CARD MASTER TRUST
The trustee maintains the trust for several beneficiaries:
o the certificateholders of Series 2000-__ certificates,
o certificateholders of other series issued by the trust, and
o PRC, as the transferor of the receivables to the trust.
The certificates will be one of four outstanding series issued by the
trust. Each series has a claim to a specific dollar amount of the trust's
assets, regardless of the total amount of receivables in the trust at any
time. PRC, as holder of the exchangeable transferor certificate, holds the
remaining claims to the trust's assets. The size of these claims fluctuate
with the total amount of receivables in the trust. PRC, as the holder of
the exchangeable transferor certificate, will also have the right to
purchase your certificates on any distribution date when the outstanding
amount of the certificateholders' interest in the trust is less than or
equal to 11% of the original amount of that interest. PRC will also have
the right to purchase your certificates on or before the second
distribution date following the expected final payment date for the Class A
certificates. The price PRC will pay for the outstanding amount of that
interest will be equal to the entire unpaid balance of that amount plus
accrued and unpaid interest.
CREDIT ENHANCEMENT
Your Class A certificates feature credit enhancement by means of the
subordination of the Class B certificates and the Class C certificates.
Your Class B certificates feature credit enhancement by means of the
subordination of the Class C certificates. This credit enhancement is
intended to protect you from losses and shortfalls in cash flow. The effect
of subordination is that the more subordinated certificates will absorb any
losses allocated to Series 2000-__, and make up any shortfalls in cash
flow, before the Class A certificates are affected. If the cash flow and
the subordinated Class B certificates do not cover all losses allocated to
Series 2000-__, your payments of interest and principal will be reduced and
you may suffer a loss of principal.
For a more detailed description of the subordination provisions of Series
2000-__, see "Description of the Offered Certificates--Sub- ordination" in
this prospectus supplement.
EXPECTED FINAL PRINCIPAL PAYMENTS AND POTENTIAL EARLIER OR LATER PAYMENTS
The Class A certificates are expected to be paid in full on the ________,
20__ payment date.
The Class B certificates are expected to be paid in full on the ______,
20__ payment date.
The trust expects to pay the entire principal amount of the Class A
certificates in full on _________ and the entire principal amount of the
Class B certificates in full on _______, in each case if a pay out event
has not occurred. The trust will accumulate principal collections in a
principal funding account during an "accumulation period" to pay the Class
A certificates as expected. The length of the accumulation period will be
as many months as is expected to be necessary for the accumulation of the
Class A payment amount, but will not be less than one month. The
accumulation period will end on the expected final payment date for the
Class A certificates, when the funds on deposit in the principal funding
account are paid to the Class A certificates.
If the Class A certificates are not paid in full on their expected final
payment date, the Class A certificates will begin to receive monthly
payments of principal until they are paid in full.
After Class A is fully repaid, Class B will receive a principal payment on
its expected final payment date. If the Class B certificates are not paid
in full on their expected final payment date, the Class B certificates will
begin to receive monthly payments of principal until they are paid in full.
The certificates will mature, and any remaining principal and interest will
be payable on [ ], 20__. No further payments on the certificates will be
made after that date assuming certificates have been repaid in full.
For more information on the payment of principal on the certificates and
the accumulation period, see "Description of the Offered
Certificates--Principal Payments" and "Maturity
Considerations--Accumulation Period" in this prospectus supplement.
MINIMUM YIELD ON THE RECEIVABLES; POSSIBLE EARLY PRINCIPAL REPAYMENT OF
YOUR SERIES
The offered certificates may be repaid earlier than their expected final
payment date if collections on the underlying receivables, together with
other amounts available for payment to certificateholders, are too low. The
minimum amount that must be available for payment to your series in any
month, referred to as the base rate, is generally the weighted average of
the Class A, Class B and Class C certificate rates, plus the servicing fee
rate, in each case for the related interest period. If the average
portfolio yield, which reflects a reduction for receivable defaults for
your series, for any three consecutive months is less than the average base
rate for the same three consecutive months, a pay out event will occur and
the trust will commence early amortization and holders of your series will
receive principal payments earlier than the expected final principal
payment date.
Your series is also subject to several other pay out events, which could
cause your series to amortize. If your series begins to amortize, the Class
A certificates will receive monthly payments of principal until they are
fully repaid; the Class B certificates will then receive monthly payments
of principal until they are fully repaid. In that event, your certificates
may be repaid before the expected final payment date.
For more information on pay out events, the portfolio yield and base rate,
early principal payment and early amortization, see "Maturity
Considerations," "Description of the Offered Certificates--Principal
Payments," "--Pay Out Events" and "--Optional Termination" in this
prospectus supplement and "Description of the Certificates--Principal" and
"--Pay Out Events" and "The Pooling and Servicing Agreement--Termination of
the Trust" in the attached prospectus.
INCOME TAX STATUS OF CLASS A AND CLASS B CERTIFICATES AND THE PRIME CREDIT
CARD MASTER TRUST
Jones, Day, Reavis & Pogue, special federal income tax counsel to PRC, is
of the opinion that:
o under existing law the Class A and the Class B certificates will
be classified as debt for U.S. federal income tax purposes, and
o the trust will not be an association or publicly traded
partnership taxable as a corporation for U.S. federal income tax
purposes.
For further information regarding the application of U.S. federal income
tax laws, see "Tax Matters" in the attached prospectus.
ERISA CONSIDERATIONS
The underwriters anticipate that the Class A certificates will be held by
at least 100 persons who are independent of PRC and each other. PRC
anticipates that the Class A certificates will meet the other criteria for
treatment as "publicly- offered securities." If so, subject to important
considerations described under "Employee Benefit Plan Considerations" in
the attached prospectus, the Class A certificates will be eligible for
purchase by persons investing assets of employee benefit plans or
individual retirement accounts.
It is not anticipated that the Class B certificates will meet the criteria
for treatment as "publicly- offered securities." Employee benefit and other
plans subject to ERISA or Section 4975 of the U.S. Internal Revenue Code
cannot acquire Class B certificates. Prohibited investors include:
o "employee benefit plans" as defined in Section 3(3) of ERISA;
o any "plan" as defined in Section 4975 of the U.S. Internal Revenue
Code; and
o any entity whose underlying assets may be deemed to include "plan
assets" under ERISA by reason of that plan's investment in the
entity, including insurance company general accounts.
By purchasing any Class B certificates you certify that you are not within
any of those categories.
For further information regarding the application of ERISA, see "Employee
Benefit Plan Considerations" in the attached prospectus.
MAILING ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES
The mailing address of Prime Receivables Corporation is 7 W. Seventh
Street, Cincinnati, Ohio 45202 and the telephone number is (513) 579-7580.
Receivables Flow Chart
[GRAPHIC OMITTED]
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the Class A certificates or the Class B certificates described in
this prospectus supplement.
POTENTIAL EARLY REPAYMENT OR
DELAYED PAYMENT DUE TO REDUCED
PORTFOLIO YIELD If there is a decline in the
amount of the receivables
collected by the trust or
another pay out event, an early
amortization of the
certificates may occur and you
will receive principal payments
earlier than the expected final
payment date. If the average
portfolio yield, which reflects
a reduction for receivable
defaults for Series 2000-__,
for any three consecutive
months is less than the average
base rate for the same three
consecutive months, a "pay out
event" will occur for Series
2000-__. If this occurs, the
early amortization of Series
2000-__ will commence, and you
may receive principal payments
earlier than the expected final
principal payment date.
Moreover, if principal
collections on receivables
allocated to other series or
the transferor are available to
be applied to an early
amortization of any outstanding
certificates, the period during
which that early amortization
occurs may be substantially
shortened.
Conversely, any reduction in
collections may cause the
period necessary to repay your
certificates to go beyond the
expected final payment date of
your certificates.
The following factors could
result in reduced collections:
FDS MAY CHANGE THE TERMS
AND CONDITIONS OF THE ACCOUNTS FDS will sell receivables
arising under specified credit
card accounts to PRC which will
transfer those receivables to
the trust, but FDS will
continue to own those accounts.
As the owner of those accounts,
FDS retains the right to change
various terms and conditions of
those accounts, including
finance charges and other fees
it charges and the required
minimum monthly payment.
Certain changes in the terms of
the accounts may reduce the
amount of receivables arising
under the accounts, reduce the
portfolio yield, reduce the
amount of collections on those
receivables or otherwise alter
payment patterns.
ACCOUNTS ADDED TO THE TRUST
PORTFOLIO MAY HAVE DIFFERENT
TERMS AND CONDITIONS So long as certain conditions
are satisfied, PRC will
automatically designate
additional accounts for the
trust portfolio and transfer
the receivables in those
accounts to the trust. Any new
accounts and receivables may
have different terms and
conditions than the terms and
conditions for the accounts and
receivables already in the
trust. Credit card accounts
purchased by FDS or originated
by other credit card
originators may be included as
additional accounts, if certain
conditions are satisfied. The
new accounts and receivables
may perform differently over
time than the accounts and
receivables already in the
trust and could reduce the
amount of collections allocated
to your series.
PRC MAY NOT BE ABLE TO
ADD ACCOUNTS TO THE TRUST If PRC's percentage interest in
the accounts of the trust falls
to a minimum level, PRC will be
required to maintain that level
by designating additional
accounts for the trust
portfolio and transferring the
receivables in those accounts
to the trust. PRC may not be
able to designate additional
accounts to be added to the
trust portfolio when required.
If PRC fails to designate
additional accounts when
required, a pay out event will
occur and you could receive
payment of principal sooner
than expected.
CHANGES TO CONSUMER
PROTECTION LAWS MAY IMPEDE
FDS'S COLLECTION EFFORTS Federal and state consumer
protection laws regulate the
creation and enforcement of
consumer loans, including
credit card accounts and
receivables. Changes or
additions to those laws or
failure to comply with those
laws could make it more
difficult for FDS to collect
payments on the receivables or
could reduce the finance
charges and other fees that FDS
can charge on credit card
account balances, or could
render some receivables
uncollectible.
Receivables that do not comply
with consumer protection laws
may not be valid or enforceable
in accordance with their terms
against the obligor on those
receivables. FDS and PRC each
make representations and
warranties relating to the
validity and enforceability of
the receivables arising under
the accounts in the trust
portfolio. No other party will
examine the receivables or the
related records for the purpose
of determining the presence or
absence of defects, compliance
with representations and
warranties or for any other
purpose. The only remedy if any
representation or warranty is
violated, and the violation
continues beyond the period of
time PRC has to correct the
violation, is that PRC must
accept reassignment of the
receivables affected by the
violation, subject to certain
conditions. See "The Pooling
and Servicing
Agreement--Representations and
Warranties" and "Legal Aspects
of the Receivables--Consumer
Protection Laws" in the
attached prospectus.
CARDHOLDERS MAY MAKE
PRINCIPAL PAYMENTS AT
ANY TIME The receivables transferred to
the trust may be paid at any
time. We cannot assure the
creation of additional
receivables in those accounts
or that any particular pattern
of cardholder payments will
occur.
DEPENDENCE ON FEDERATED
DEPARTMENT STORES The Federated credit cards
currently can be used to
purchase merchandise and
services only from department
stores, and associated
direct-to-customer catalog and
electronic commerce businesses
operated by Federated's
subsidiaries "Bloomingdale's,"
"Bloomingdale's By Mail,"
"bloomingdales.com,"
"Burdines," "Goldsmith's,"
"Lazarus," "Macy's By Mail,"
"macys.com," "Rich's,"
"Stern's," and "The Bon
Marche." Accordingly, the trust
is completely dependent upon
Federated's department stores
and its direct-to-customer
catalog and electronic commerce
businesses for the generation
of receivables. The retailing
industry, in general, and the
department store business, in
particular, are and will
continue to be intensely
competitive. Federated's
department stores and its
direct-to-customer catalog and
electronic commerce businesses
will face increasing
competition not only with other
department stores in the
geographic areas in which they
operate but also with numerous
types of retail formats,
including specialty stores,
general merchandise stores,
off-price and discount stores,
new and established forms of
home shopping (including mail
order catalogs, television, and
the Internet), and
manufacturers outlets. The
Pooling and Servicing Agreement
does not prohibit Federated
from transferring all or any
portion of the business or
assets of its subsidiaries.
There can, therefore, be no
assurance that Federated's
subsidiaries will continue to
generate receivables at the
same rate as in prior years.
Prior to Federated's
acquisition of Macy's in
December, 1994, a third party
financial institution bought
the revolving credit card
accounts of customers of the
then-existing Macy's stores. A
significant portion of the
current customers accounts of
Macy's are still owned by this
third party and are not sold to
the Transferor or transferred
to the master trust. Similar
consequences of receivables not
being transferred to the master
trust could result from the
Federated stores or businesses
being sold to third parties.
The Transferor has been advised
by Federated that decisions
with respect to the above and
other aspects of Federated's
business operations will be
based upon the best interests
of Federated and its
stockholders from time to time,
which interests may vary from
those of the holders of the
certificates offered in this
document.
ALLOCATIONS OF CHARGED-OFF
RECEIVABLES COULD RESULT IN
A LOSS TO YOUR CERTIFICATES FDS will write off as
uncollectible some portion of
the receivables arising in
accounts in the trust
portfolio. Each class of
certificates will be allocated
a portion of those charged-off
receivables. If the amount of
charged-off receivables
allocated to any class of
certificates exceeds the amount
of other funds available for
reimbursement of those
charge-offs--which could occur
if the limited amount of Class
C certificates is reduced to
zero--the holders of the Class
A and Class B certificates may
not receive the full amount of
principal and interest due to
them. See "Trust Credit Card
Portfolio--Delinquency and Loss
Experience" and "Description of
the Offered Certificates--
Reallocation of Cash Flows,"
"--Application of Collections"
and "--Defaulted Receivables;
Investor Charge-Offs" in this
prospectus supplement.
ADJUSTMENTS DUE TO REBATES,
EXCHANGES AND WRITE-DOWNS
COULD REDUCE PAYMENTS TO YOU A portion of the receivables
will not be collected as a
result of rebates, exchanges,
write-downs and similar
occurrences. If the interest in
the trust retained by PRC is at
a minimum level, PRC will be
obligated to make payments to
compensate the holders of the
certificates for the amount of
receivables which become
uncollectible for these
reasons. If PRC fails to make
any of these payments, the
amount of the resulting
insufficiency will be allocated
to PRC's interest. If the
amount of PRC's interest does
not cover this insufficiency,
the available credit
enhancement may be reduced and
you may not receive the full
amount of principal and
interest due.
YOU MAY NOT BE ABLE TO
RESELL YOUR CERTIFICATES The underwriters may assist in
resales of your certificates
but they are not required to do
so. A secondary market for the
certificates may not develop.
If a secondary market does
develop, it might not continue
or it might not be sufficiently
liquid to allow you to resell
any of your certificates.
INSOLVENCY OR BANKRUPTCY OF
PRC OR FDS COULD RESULT IN
ACCELERATED, DELAYED
OR REDUCED PAYMENTS TO YOU The receivables in which you
have an interest are conveyed
to the trust by PRC. PRC
acquired the receivables from
FDS. In each instance, the
conveyances are intended to be
treated as sales. However, a
court could conclude that PRC
or FDS still owns the
receivables and that the trust
only holds a security interest
in the receivables. The
receivables may then be subject
to tax or other governmental
liens and to administrative
expenses of the bankruptcy or
bank receivership proceeding of
a predecessor in interest of
those receivables. Furthermore,
a bankruptcy trustee or a
creditor may attempt to cause a
predecessor in interest of the
receivables or PRC to be
substantively consolidated with
PRC or the trust.
Recharacterization as a pledge
or substantive consolidation
can delay or even reduce
payments on your certificates.
FDS is chartered as a federally
chartered savings bank and is
subject to regulation and
supervision by the Office of
Thrift Supervision. If FDS
becomes insolvent or is in an
unsound condition, the
Comptroller is authorized to
appoint the FDIC as receiver.
Under these circumstances, the
FDIC could:
o require the trustee of the
trust to go through an
administrative claims
procedure to establish its
right to payments
collected on the
receivables in the trust,
o request a stay of
proceedings relating to
the trust's claims against
FDS, or
o repudiate the pooling and
servicing agreement and
limit the trust's
resulting claim against
the receivables to "actual
direct compensatory
damages" measured as of
the date of receivership.
See "Legal Aspects of the
Receivables--Matters Relating
to Bankruptcy or Receivership"
in the attached prospectus.
If the FDIC were to take any of
those actions, payments on your
certificates could be delayed
and possibly reduced.
If specified events related to
the conservatorship or
receivership of FDS, or the
bankruptcy or insolvency of PRC
were to occur then a pay out
event would occur for all
outstanding series.
The conservator or receiver may
have the power:
o regardless of the terms of
the pooling and servicing
agreement:
- to prevent the
beginning of an
early amortization
period or rapid
accumulation period,
- to prevent the early
sale of the
receivables and
termination of the
trust,
- to require new
principal
receivables to
continue being
transferred to the
trust,
- to require the
trustee of the trust
to go through an
administrative
claims procedure to
establish its right
to payments
collected on the
receivables in the
trust, or
- to repudiate the
pooling and
servicing agreement
which establishes
the trust and limit
the trust's
resulting claim, or
o regardless of the
instructions of the
certificateholders:
- to require the early
sale of the trust's
receivables,
- to require
termination of the
trust and retirement
of the trust's
certificates
including your
series, or
- to prohibit the
continued transfer
of principal
receivables to the
trust.
YOU WILL HAVE LIMITED
CONTROL OF TRUST ACTIONS You will have limited voting
rights relating to actions of
the trust and the trustee. You
will not have the right to vote
to direct the trustee to take
any actions other than the
right to vote to declare a pay
out event or a servicer
default.
FEDERATED DEPARTMENT STORES, INC.
Federated is one of the leading operators of full-line department
stores in the United States, with more than 400 department stores in 33
states as of August 3, 2000. Federated also operates the Fingerhut,
Bloomingdale's By Mail, Macy's By Mail, macys.com and bloomingdales.com
direct to customer catalog and electronic commerce subsidiaries.
The following table provides information with respect to each of
Federated's retail operating divisions as of January 29, 2000. In this
table:
o "Gross Square Feet" reflects total square footage of store
locations, including office, storage, service and other
support space that is not dedicated to direct merchandise
sales, but excluding warehouses and distribution terminals
not located at store sites, and office buildings.
<TABLE>
<CAPTION>
FISCAL GROSS SQUARE
NUMBER OF 1999 SALES FEET
STORES (IN MILLIONS) (IN THOUSANDS)
--------------- ------------- --------------
<S> <C> <C> <C>
Bloomingdale's........................................ 24 $1,788 6,375
The Bon Marche........................................ 42 975 5,329
Burdines.............................................. 52 1,385 8,393
Macy's East........................................... 87 4,675 23,477
Macy's West........................................... 99 4,011 19,994
Rich's/Lazarus/Goldsmith's............................ 74 2,176 13,623
Stern's............................................... 25 840 4,796
-------- -------- --------
Total Department Stores...................... 403 $15,850 81,987
</TABLE>
TRUST CREDIT CARD PORTFOLIO
Defined terms are indicated by boldface type. Both the attached
prospectus and this prospectus supplement contain a glossary of important
terms where definitions can be found.
THE FEDERATED PORTFOLIO
The following information reflects the composition and historical
performance of the Federated portfolio of credit card accounts. See "FDS
Bank's Credit Card Business" in the attached prospectus for a description
of Federated's credit card business.
DELINQUENCY AND LOSS EXPERIENCE
All of the receivables in a particular account are considered to
become delinquent immediately upon the failure of any payment due thereon
to be made in full on or prior to the date due. Efforts to collect
delinquent credit card receivables are made by FACS personnel and
collection agencies and attorneys retained by FACS. Under current
procedures, FACS automatically prints a statement message on all customer
statements after a scheduled payment has been missed. If payment has not
been made 14 days after the billing date, a reminder letter is sent to the
cardholder. If payment still has not been received by the next billing
date, the account is eligible for assignment to a FACS collector, who may
send additional letters and initiate telephone contact with the cardholder
in an effort to make payment arrangements. The current policy of the
originators is generally to recognize losses no later than the eighth month
of delinquency or, in the case of certain major purchase plan accounts, no
later than the ninth month of delinquency, although charge-offs may be made
earlier in certain circumstances. The originators may change their
charge-off policies and collection practices at any time in accordance with
their business judgment and applicable law. Under the terms of the Pooling
and Servicing Agreement, any recoveries received in respect of receivables
in charged-off accounts, net of the estimated expenses of collection, will
be paid to the Trust.
The following table sets forth the loss experience with respect to
payments by cardholders for each of the periods shown for the Federated
portfolio. Because losses are affected by a number of factors, including
competitive and general economic conditions and consumer debt levels, there
can be no assurance that the loss experience for the Receivables in the
future will be similar to the historical experience set forth below.
"Average Receivables Outstanding" is the arithmetic average as of the
beginning of each fiscal month during the period indicated. "Net
Charge-Offs" shown include the sum of any merchandise finance charge and
late fee charge-offs, minus recoveries and do not include the amount of any
reductions in average receivables outstanding due to fraud or customer
disputes. "Recoveries" include finance charge receivables and late payment
fee recoveries and include sales tax recoveries and are net of collection
agency fees. The percentage reflected for the 6 months ended July 29, 2000
is an annualized figure.
<TABLE>
<CAPTION>
LOSS EXPERIENCE
FOR THE FEDERATED PORTFOLIO
(DOLLARS IN THOUSANDS)
6 MONTHS ENDED YEAR ENDED
---------------------------- ----------------------------------------
JULY 29, JULY 31, JANUARY 29, JANUARY 30, JANUARY 31,
2000 1999 2000 1999 1998
-------------- ------------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C>
Average Receivables Outstanding.............
Net Charge-Offs.............................
Net Charge-Offs as a Percentage of Average
Receivables Outstanding................
</TABLE>
The following table provides the delinquency experience for the
Federated portfolio as of the indicated dates. Because the composition of
the Federated portfolio may change in the future, this table is not
necessarily indicative of the composition of the Federated portfolio at any
later time. In the following table:
o the percentages result from dividing the "Amount" by the sum
of the receivables outstanding as of the billing date for
each billing cycle during the applicable period.
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE
FOR THE FEDERATED PORTFOLIO
(DOLLARS IN THOUSANDS)
AS OF AS OF
------------------------------------- ---------------------------------------------------------
JULY 29, 2000 JULY 31, 1999 JANUARY 29, 2000 JANUARY 30, 1999 JANUARY 31, 1998
----------------- ------------------ ---------------- ----------------- ----------------------
NUMBER OF DAYS
DELINQUENT AMOUNT % AMOUNT % AMOUNT % AMOUNT % AMOUNT %
------------------------ --------- ------ ---------- ------- --------- ------ --------- ------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Retail Age 2
(30-59 Days Past Due)
Retail Age 3
(60-89 Days Past Due)
Retail Age 4 and higher
(90 Days or More Past Due)
--------- ------ ---------- ------- --------- ------ --------- ------- --------- --------
TOTAL..............
========= ====== ========== ======= ========= ====== ========= ======= ========= ========
</TABLE>
As of ________________, 2000, accounts 30 or more days delinquent
were % of total receivables compared with % and % of total receivables as
of January 29, 2000 and January 30, 1999 and 1998, respectively.
Delinquencies are a leading indicator of future charge-offs.
CHARACTERISTICS OF THE TRUST PORTFOLIO
The assets of the trust include credit card receivables generated
through accounts that PRC has designated as trust accounts. The trust
accounts are:
o accounts existing at the close of business on the INITIAL
CUT-OFF DATE,
o Federated card accounts originated in accordance with the
originators credit and collection policy,
o AUTOMATIC ADDITIONAL ACCOUNTS automatically added to the
trust as they are created, and
o SUPPLEMENTAL ACCOUNTS that have been designated since the
trust was established.
The receivables arising from the accounts as of the cut-off date
totaled $[ ]. As of the cut-off date, the accounts had an average credit
guideline of $[ ], and the percentage of the aggregate total receivable
balance to the aggregate total credit guideline was approximately [ ]%. As
of the cut-off date, approximately [ ]% of the accounts had been opened
prior to _____________. Billing addresses for the Accounts include 50
states and the District of Columbia and some foreign addresses.
The following tables summarize characteristics of the Federated
portfolio as of the end of the day on _____ ___, 2000. Because the
composition of the Federated portfolio may change in the future, these
tables are not necessarily indicative of the character or performance of
the Federated portfolio at any later time. In the following tables:
o The figures for number of accounts and receivables
outstanding are compiled from data as of the last cycle
billing date of each Federated subsidiary preceding the
cut-off date.
o Credit balances are a result of cardholder payments and
credit adjustments applied in excess of an account's unpaid
balance. Accounts currently having a credit balance are
included, as receivables may be generated in the future.
o Accounts currently having no balance are included, as
receivables may be generated with respect thereto in the
future.
<TABLE>
<CAPTION>
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER RECEIVABLES RECEIVABLES
ACCOUNT BALANCE RANGE ACCOUNTS OF ACCOUNTS OUTSTANDING OUTSTANDING
-------------------------- ------------ ------------- ------------------ --------------
<S> <C> <C> <C> <C>
Credit Balance................................ % $ %
$0............................................
$0.01 to $500.00..............................
$500.01 to $1,000.00..........................
$1,000.01 to $2,000.00........................
$2,000.01 to $3,000.00........................
$3,000.01 to $4,000.00........................
Over $4,000.00................................
------------ ------------- ------------------ --------------
TOTAL................................ % $ %
============ ============= ================== ==============
COMPOSITION BY CREDIT GUIDELINE
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER RECEIVABLES RECEIVABLES
CREDIT LIMIT RANGE ACCOUNTS OF ACCOUNTS OUTSTANDING OUTSTANDING
--------------------- ------------ ------------- ------------------ --------------
$Under $500.................................. % $ %
$500 to $1,000...............................
$1,000 to $2,000.............................
$2,000 to $3,000.............................
$3,000 to $4,000.............................
$4,000 to $5,000.............................
$5,000 to $6,000.............................
Over $6,000..................................
------------ ------------- ------------------ --------------
TOTAL............................... % $ %
============ ============= ================== ==============
</TABLE>
In the following tables:
o The figures for number of accounts and receivables
outstanding are compiled from data as of each cycle billing
date during the month of and exclude accounts with zero or
-----
credit balances.
o Current and Retail Age 1 includes both current accounts and
accounts that are less than 30 days past due. Accounts that
were 1-29 days past due constituted ____% of the total
number of accounts and the receivables therein constituted
____% of the total receivables outstanding.
o The figures for number of accounts and receivables
outstanding are compiled from data as of the last cycle
billing date of each Federated subsidiary preceding the
cut-off date.
<TABLE>
<CAPTION>
COMPOSITION OF ACCOUNTS BY PAYMENT STATUS
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
<S> <C> <C> <C> <C>
Current and Retail
Age 1
Retail Age 2
(30-59 days past due)...............
Retail Age 3
(60-89 days past due)...............
Retail Age 4
(90-119 days past due)..............
Retail Age 5
(120-149 days past due).............
Retail Age 6
(150-179 days past due).............
Retail Age 7 and higher
(180 or more days
past due)...........................
Total........................
COMPOSITION OF ACCOUNTS BY AGE
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
Under 6 months........................
6 months to 1 year....................
1-2 years.............................
2-3 years.............................
3-4 years.............................
4 years and older.....................
Total........................
COMPOSITION OF ACCOUNTS BY GEOGRAPHIC DISTRIBUTION
PERCENTAGE PERCENTAGE
OF TOTAL CURRENT OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNTS ACCOUNTS OUTSTANDING(2) OUTSTANDING
California............................
Florida...............................
New York..............................
Washington............................
Georgia...............................
Ohio..................................
Massachusetts.........................
New Jersey............................
Tennessee.............................
Pennsylvania..........................
Indiana...............................
Kentucky..............................
Alabama...............................
Arizona...............................
Idaho.................................
South Carolina........................
Oregon................................
Rhode Island..........................
Connecticut...........................
New Mexico............................
Texas.................................
Subtotal..............................
Other.................................
Total............................
</TABLE>
MATURITY CONSIDERATIONS
The Class A certificates are scheduled to receive principal on the
____________ DISTRIBUTION DATE, referred to in this document as the CLASS A
EXPECTED FINAL PAYMENT DATE. The Class B certificates are scheduled to
receive principal on the ____________ DISTRIBUTION DATE, referred to in
this document as the CLASS B EXPECTED FINAL PAYMENT DATE. Principal may be
paid earlier if a PAY OUT EVENT occurs. Final payment of principal may also
be delayed if this series is paired with another series.
ACCUMULATION PERIOD
On each business day during the ACCUMULATION PERIOD, collections
of PRINCIPAL RECEIVABLES allocable to the Class A certificates will be
deposited in the PRINCIPAL FUNDING ACCOUNT. On each business day, the
amount to be deposited in the PRINCIPAL FUNDING ACCOUNT will generally be
the lesser of:
o the FIXED/FLOATING ALLOCATION PERCENTAGE of PRINCIPAL
COLLECTIONS but not more than the NET PRINCIPAL
COLLECTIONS, plus SHARED PRINCIPAL COLLECTIONS and other
amounts allocated to the Class A certificates, and
o the amount by which the CONTROLLED DEPOSIT AMOUNT for the
related DISTRIBUTION DATE exceeds the amount deposited in
the PRINCIPAL FUNDING ACCOUNT in the current month.
If no PAY OUT EVENT occurs, this amount will be paid to the Class A
certificateholders on the CLASS A EXPECTED FINAL PAYMENT DATE.
On each business day after the CLASS A INVESTED AMOUNT is paid in
full, the FIXED/FLOATING ALLOCATION PERCENTAGE of PRINCIPAL COLLECTIONS,
but not more than the NET PRINCIPAL COLLECTIONS, plus SHARED PRINCIPAL
COLLECTIONS and other principal amounts allocable to the Class B
certificates will be deposited into the PRINCIPAL ACCOUNT for distribution
to the Class B certificateholders on the Class B Expected Final Payment
Date.
The ability of the trust to distribute payments of principal on
the final payment date may depend on one or more of the following factors:
o the monthly payment rates on the receivables may vary due to
the following:
- cardholders fail to make a required minimum payment,
- cardholders pay only the minimum required amount,
- cardholders pay off the entire outstanding balance,
- seasonal purchasing, and
- payment habits of cardholders, and
o the amount of outstanding receivables, charge-offs and new
borrowings may vary due to:
- changes in credit terms and conditions,
- seasonal variations,
- changes in cardholders,
- the availability of other sources of credit,
- legal factors,
- general economic conditions,
- spending and borrowing habits of individual
cardholders, and
- other factors, and
o the potential issuance by the trust of additional series.
PAY OUT EVENT
If a PAY OUT EVENT occurs, you will receive payments of principal
on each Special Payment Date in which the event has occurred. These
payments will continue until the earlier of the payment in full of the
INVESTED AMOUNT or the SERIES 2000-__ TERMINATION DATE. The average life
and maturity of your certificates can be significantly reduced if a PAY OUT
EVENT occurs. See "Description of the Offered Certificates--Pay Out Events"
for additional discussion.
PAIRED SERIES
The transferor may cause the trust to issue one or more series
after the ACCUMULATION PERIOD begins that will be paired with your series.
The outstanding principal amount of that paired series may vary and the
interest rate for that series will be established on its date of issuance.
If a pay out event occurs for the other paired series before payment is
made in full on your certificates, the final payment of principal on your
certificates may be delayed. For example, the numerator used in the
FIXED/FLOATING ALLOCATION PERCENTAGE may be decreased or the denominator
used in the FIXED/FLOATING ALLOCATION PERCENTAGE may increase if a pay out
event occurs on the other paired series. This could cause a reduction of
the percentage of collections of PRINCIPAL RECEIVABLES for your series. See
"Description of the Offered Certificates--Paired Series" for additional
discussion.
HISTORICAL PAYMENT RATES OF THE FEDERATED PORTFOLIO
The following table provides you with the highest and lowest and
average cardholder monthly payment rates for the Federated portfolio during
any month in the periods shown. These payment rates are calculated as total
deemed payments of PRINCIPAL RECEIVABLES and FINANCE CHARGE RECEIVABLES for
each month as a percentage of total opening monthly account balances.
Monthly averages are shown as an arithmetic average of the payment rate for
each month during the indicated period.
<TABLE>
<CAPTION>
SUMMARY PAYMENT RATE INFORMATION
FOR THE FEDERATED PORTFOLIO
6 MONTHS ENDED YEAR ENDED
-------------------------------------- ------------------------------------------------
JULY 29, JULY 31, JANUARY 29, JANUARY 30, JANUARY 31,
2000 1999 2000 1999 1998
----------------- ----------------- ------------- ------------- ---------------
PAYMENT RATES
<S> <C> <C> <C> <C> <C>
Highest Monthly Rate......... % % % % %
Lowest Monthly Rate.......... % % % % %
Average Monthly Rate......... % % % % %
</TABLE>
Because the future composition of the portfolios may change over
time, this table does not necessarily indicate the composition or
performance of the Federated portfolio or the trust portfolio at any later
time.
RECEIVABLE YIELD CONSIDERATIONS
Gross revenues from finance charges and fees collected from
accounts in the Federated portfolio for each of the three fiscal years
1999, 1998 and 1997 and for the ____ months ended on ______ ___, 2000 and
______ ___, 1999 are set forth in the following table. In the following
table:
o all figures represent amounts billed to customers before
deductions due to charge-offs, fraud, returned goods,
customer disputes or other customer service adjustments,
shown on a sum of cycles basis,
o "Average Receivables Outstanding" is the average of
receivables outstanding at the beginning of each fiscal
month during the period indicated,
o "Finance Charges and Fees Billed" are based on beginning of
the month balances,
o "Yield from Finance Charges and Fees Billed" is the result
of dividing finance charges and fees billed by average
receivables outstanding,
o the percentage reflected for the _____ months ended ______
___, 2000 and _______, __, 1999 are annualized figures.
<TABLE>
<CAPTION>
REVENUE EXPERIENCE
FOR THE FEDERATED PORTFOLIO
(DOLLARS IN THOUSANDS)
6 MONTHS ENDED YEAR ENDED
-------------------------------- ------------------------------------------------
JULY 29, JULY 31, JANUARY 29, JANUARY 30, JANUARY 31,
2000 1999 2000 1999 1998
-------------- -------------- -------------- -------------- ---------------
Average Receivables
<S> <C> <C> <C> <C> <C>
Outstanding....................... $ $ $ $
Finance Charges and Fees Billed.......
Yield from Finance Charges % % % %
and Fees Billed...................
</TABLE>
USE OF PROCEEDS
The net proceeds from the sale of the Class A certificates and the
Class B certificates will be paid to PRC. PRC will use the net proceeds to
pay the purchase price of receivables purchased from the ORIGINATORS and to
make certain payments to Federated and its subsidiaries. Federated has
informed PRC that Federated and its subsidiaries will use these proceeds
for general corporate purposes.
DESCRIPTION OF THE OFFERED CERTIFICATES
The following is a summary of the material provisions of the
offered certificates. This summary is not a complete description of the
terms of the offered certificates. You should refer to "Description of the
Certificates" and "The Pooling and Servicing Agreement" in the attached
prospectus as well as the Pooling and Servicing Agreement and the Series
2000-__ Supplement for a complete description.
GENERAL
The offered certificates will be issued under the POOLING AND
SERVICING AGREEMENT and the SERIES 2000-__ SUPPLEMENT. Each offered
certificate represents the right to receive allocations of cardholder
payments that have been received from receivables transferred to the trust.
In particular, the offered certificates will be allocated:
o a percentage of collections of FINANCE CHARGE RECEIVABLES
that will be a floating percentage for so long as a PAY OUT
EVENT does not occur,
o a floating percentage of DEFAULT AMOUNTS that will reduce
your INVESTED AMOUNT if not paid from collections of FINANCE
CHARGE RECEIVABLES or REALLOCATED PRINCIPAL COLLECTIONS,
o during the REVOLVING PERIOD, a floating percentage of
collections of PRINCIPAL RECEIVABLES that will be paid to
PRC except for SHARED PRINCIPAL COLLECTIONS paid to holders
of certificates of other series, and
o during the ACCUMULATION PERIOD or the EARLY AMORTIZATION
PERIOD, a fixed/floating percentage of collections of
PRINCIPAL RECEIVABLES based on a fraction whose numerator
will be fixed at the end of the REVOLVING PERIOD.
In addition to representing the right to payment from collections
of FINANCE CHARGE RECEIVABLES and PRINCIPAL RECEIVABLES allocated to your
series, each offered certificate also represents the right to receive
payments from:
o EXCESS FINANCE CHARGE COLLECTIONS,
o TRANSFEROR FINANCE CHARGE COLLECTIONS, and
o SHARED PRINCIPAL COLLECTIONS.
Offered certificates will also be entitled to amounts in the
PRINCIPAL FUNDING ACCOUNT, and the series share of amounts in the EXCESS
FUNDING ACCOUNT and the COLLECTION ACCOUNT, and investment earnings on
amounts in these accounts.
Offered certificates will be issued in $1,000 denominations and
will be available only in book-entry form through DTC. As described in the
attached prospectus, as long as the offered certificates are held in
book-entry form, you will only be able to transfer your offered
certificates through the facilities of DTC. You will receive payments and
notices through DTC and its participants. Payments of interest and
principal will be made on each DISTRIBUTION DATE to offered
certificateholders in whose names certificates are registered on the RECORD
DATE, to the extent of available funds.
The trust has also issued the EXCHANGEABLE TRANSFEROR CERTIFICATE.
PRC initially will own the EXCHANGEABLE TRANSFEROR CERTIFICATE. PRC may
transfer the EXCHANGEABLE TRANSFEROR CERTIFICATE in whole or in part under
the limitations and conditions described in the POOLING AND SERVICING
AGREEMENT. See "Description of the Certificates--The Exchangeable
Transferor Certificate" in the attached prospectus.
INTEREST PAYMENTS
If you purchase Class A or Class B certificates you will receive
from available funds a payment of CLASS A MONTHLY INTEREST or CLASS B
MONTHLY INTEREST, plus CARRYOVER CLASS A INTEREST or CARRYOVER CLASS B
INTEREST on the 15th day of each month that the offered certificates are
outstanding. If that date is not a business day you will be paid on the
next business day.
On each DISTRIBUTION DATE, you will receive an interest payment
based on the interest rate for your Class A or Class B certificates, and
the outstanding balance of your Class A or Class B certificates, as
follows:
Interest on the Class A certificates or Class B certificates for
each DISTRIBUTION DATE will be paid to you by multiplying:
o the CLASS A CERTIFICATE RATE which is ___% per annum or the
CLASS B CERTIFICATE RATE which is __% per annum, by
o the outstanding principal balance of the Class A or Class B
certificates, as applicable, as of the last day of the
preceding MONTHLY PERIOD, by
o a fraction equal to 30 divided by 360.
If you do not receive your interest in full on any DISTRIBUTION
DATE, you will be paid the shortfall on the next succeeding DISTRIBUTION
DATE together with interest on the shortfall amount if there are funds
available to make that payment.
Interest payments will be funded from:
o FINANCE CHARGE RECEIVABLES allocated to your series for the
related MONTHLY PERIOD, and
o to the extent FINANCE CHARGE RECEIVABLES allocated to your
series are insufficient to pay the interest, from:
- EXCESS FINANCE CHARGE COLLECTIONS allocated to your
series,
- TRANSFEROR FINANCE CHARGE COLLECTIONS allocated to your
series, and
- REALLOCATED PRINCIPAL COLLECTIONS.
PRINCIPAL PAYMENTS
Principal payments on the offered certificates will be funded
from:
o collections of PRINCIPAL RECEIVABLES allocated to your
series, plus
o SHARED PRINCIPAL COLLECTIONS allocated to your series.
If there is a shortfall in the amount of collections of FINANCE
CHARGE RECEIVABLES available to pay the CLASS A REQUIRED AMOUNT,
collections of PRINCIPAL RECEIVABLES allocated to the Class C certificates
and, if necessary, the Class B certificates will be reallocated to pay the
shortfall amount. If there is a shortfall in the amount of collections of
FINANCE CHARGE RECEIVABLES available to pay the CLASS B REQUIRED AMOUNT,
collections of PRINCIPAL RECEIVABLES allocated to the Class C certificates
will be reallocated to pay the shortfall amount. These REALLOCATED CLASS B
PRINCIPAL COLLECTIONS or REALLOCATED CLASS C PRINCIPAL COLLECTIONS will not
be available to make principal payments to the Class A certificates or
Class B certificates, unless they are applied to cover INVESTOR DEFAULT
AMOUNTS, INVESTOR CHARGE-OFFS or unpaid ADJUSTMENT PAYMENTS. Collections of
PRINCIPAL RECEIVABLES allocated to your series but not needed to make
payments to your series may be reallocated to other series.
Revolving Period. During the REVOLVING PERIOD no principal
payments will be made to Class A or Class B certificateholders. The
REVOLVING PERIOD begins on the CLOSING DATE and ends on the day before the
ACCUMULATION PERIOD or EARLY AMORTIZATION PERIOD begins. On each
DISTRIBUTION DATE during the REVOLVING PERIOD, collections of PRINCIPAL
RECEIVABLES allocated to your series will be:
o treated as REALLOCATED CLASS C PRINCIPAL COLLECTIONS used to
pay the CLASS A REQUIRED AMOUNT and the CLASS B REQUIRED
AMOUNT,
o treated as REALLOCATED CLASS B PRINCIPAL COLLECTIONS used to
pay the CLASS A REQUIRED AMOUNT,
o treated as SHARED PRINCIPAL COLLECTIONS used to pay
principal to other series, or
o paid to PRC.
Accumulation Period. During the ACCUMULATION PERIOD, collections
of PRINCIPAL RECEIVABLES will be deposited in the PRINCIPAL FUNDING ACCOUNT
on each business day in an amount equal to the lesser of:
o the FIXED/FLOATING ALLOCATION PERCENTAGE of PRINCIPAL
COLLECTIONS, but not more than the NET PRINCIPAL
COLLECTIONS, plus SHARED PRINCIPAL COLLECTIONS and other
amounts allocated to the Class A certificates, and
o the amount by which the CONTROLLED DEPOSIT AMOUNT for the
related DISTRIBUTION DATE exceeds the amount deposited in
the PRINCIPAL FUNDING ACCOUNT in the current month.
On the CLASS A EXPECTED FINAL PAYMENT DATE, the trustee will pay
to Class A certificateholders the amount on deposit in the PRINCIPAL
FUNDING ACCOUNT. If a PAY OUT EVENT occurs during the ACCUMULATION PERIOD,
the amount on deposit in the PRINCIPAL FUNDING ACCOUNT will be paid to
Class A certificateholders on the first SPECIAL PAYMENT DATE.
On each business day after the amount deposited in the PRINCIPAL
FUNDING ACCOUNT is equal to the CLASS A INVESTED AMOUNT, the FIXED/FLOATING
ALLOCATION PERCENTAGE of PRINCIPAL COLLECTIONS, but not more than the NET
PRINCIPAL COLLECTIONS, plus SHARED PRINCIPAL COLLECTIONS and other
principal amounts allocable to the Class B certificates will be deposited
into the PRINCIPAL ACCOUNT for distribution to the Class B
certificateholders on the CLASS B EXPECTED FINAL PAYMENT DATE.
During the ACCUMULATION PERIOD until the final principal payment
to Class A or Class B certificateholders, the portion of principal
collections not allocated to the INVESTED AMOUNT will generally be treated
as SHARED PRINCIPAL COLLECTIONS or, under specified circumstances,
deposited in the EXCESS FUNDING ACCOUNT.
Early Amortization Period. On each SPECIAL PAYMENT DATE during the
EARLY AMORTIZATION PERIOD:
o the Class A certificateholders will be entitled to receive
collections for the related MONTHLY PERIOD until the earlier
of:
- the date the CLASS A INVESTED AMOUNT has been paid in
full,
- the SERIES 2000-__ TERMINATION DATE,
o after payment in full of the CLASS A INVESTED AMOUNT, Class
B certificateholders will be entitled to receive collections
for the related MONTHLY PERIOD until the earlier of:
- the date the CLASS B INVESTED AMOUNT has been paid in
full, and
- the SERIES 2000-__ TERMINATION DATE, and
o after payment in full of the CLASS B INVESTED AMOUNT, Class
C certificateholders will be entitled to receive collections
for the related MONTHLY PERIOD until the earlier of:
- the date the CLASS C INVESTED AMOUNT has been paid in
full, and
- the SERIES 2000-__ TERMINATION DATE.
The portion of PRINCIPAL COLLECTIONS for any MONTHLY PERIOD allocated to
the CLASS A INVESTED AMOUNT will be first used to cover required deposits
into the PRINCIPAL FUNDING ACCOUNT for the benefit of Class A
certificateholders, or required payments of principal to the Class A
certificateholders, during the ACCUMULATION PERIOD or EARLY AMORTIZATION
PERIOD. On and after the CLASS B PRINCIPAL PAYMENT COMMENCEMENT DATE, the
portion of PRINCIPAL COLLECTIONS for any MONTHLY PERIOD allocated to the
CLASS B INVESTED AMOUNT will be used to cover required deposits into the
PRINCIPAL ACCOUNT for the benefit of Class B certificateholders. On and
after the CLASS C PRINCIPAL PAYMENT COMMENCEMENT DATE, the portion of
PRINCIPAL COLLECTIONS for any MONTHLY PERIOD allocated to the CLASS C
INVESTED AMOUNT will be used to cover deposits into the PRINCIPAL ACCOUNT
for the benefit of Class C certificateholders. The balance of remaining
PRINCIPAL COLLECTIONS for any of these MONTHLY PERIODS will be treated as
SHARED PRINCIPAL COLLECTIONS and will be available to make payments to
certificateholders of other series or to PRC.
POSTPONEMENT OF ACCUMULATION PERIOD
The ACCUMULATION PERIOD is scheduled to last ____ months. However, the
servicer may elect to extend the REVOLVING PERIOD and postpone the start of
the ACCUMULATION PERIOD. The servicer may make this election only if the
number of months needed to fund the PRINCIPAL FUNDING ACCOUNT to pay the
Class A certificates is less than _____. On the second business day before each
DISTRIBUTION DATE beginning in _________, ____ until the ACCUMULATION
PERIOD begins, the servicer will determine the length of the ACCUMULATION
PERIOD needed to fund the PRINCIPAL FUNDING ACCOUNT to allow the CLASS A
INVESTED AMOUNT to be paid in full on the CLASS A EXPECTED FINAL PAYMENT
DATE. In making this determination, the servicer is required to assume
that:
o the principal payment rate will be no greater than the
lowest monthly payment rate for the previous 12 months,
o no additional series will be issued,
o the total amount of PRINCIPAL RECEIVABLES will remain the
same throughout the ACCUMULATION PERIOD, and
o no PAY OUT EVENT will occur for any series.
If the number of months determined to be required to fund the
PRINCIPAL FUNDING ACCOUNT is less than ____ months, the servicer may elect to
postpone the start of the ACCUMULATION PERIOD so that the number of months
included in the ACCUMULATION PERIOD will be equal to or exceed the length
of the required ACCUMULATION PERIOD as determined by the servicer. After
making an election to postpone the start of the ACCUMULATION PERIOD but
before the ACCUMULATION PERIOD begins, the servicer may elect to further
postpone the start of the ACCUMULATION PERIOD or be required to extend the
ACCUMULATION PERIOD in accordance with the requirements described above.
The length of the ACCUMULATION PERIOD will not be less than one month.
SUBORDINATION
The Class B certificates will be subordinated to the Class A
certificates. Principal payments on the Class B certificates will not begin
until the Class A certificates are paid in full. If there are insufficient
funds on any DISTRIBUTION DATE to pay the CLASS A REQUIRED AMOUNT and
REALLOCATED CLASS C PRINCIPAL COLLECTIONS are insufficient to cover the
CLASS A REQUIRED AMOUNT, principal payments allocable to Class B
certificateholders will be reallocated to cover amounts due on the Class A
certificates and the CLASS B INVESTED AMOUNT will be reduced. If these
REALLOCATED CLASS B PRINCIPAL COLLECTIONS are not sufficient to fund the
remaining CLASS A REQUIRED AMOUNT and the CLASS C INVESTED AMOUNT has been
reduced to zero, then the CLASS B INVESTED AMOUNT will be reallocated to
the Class A certificates as needed to absorb reductions in the INVESTED
AMOUNT of your series due to DEFAULT AMOUNTS. The Class B Invested Amount
may be reimbursed from subsequent collections of Finance Charge
Receivables.
The Class C certificates will be subordinated to the Class A
certificates and the Class B certificates. At the closing, the Class C
certificates will not have a stated interest rate and will not be entitled
to payments of interest. Principal payments on the Class C certificates
will not begin until the Class A certificates and the Class B certificates
have been paid in full.
If there are insufficient funds on any DISTRIBUTION DATE to pay
the CLASS A REQUIRED AMOUNT or the CLASS B REQUIRED AMOUNT, principal
payments allocable to the Class C certificateholders will be reallocated to
cover amounts due on the Class A certificates and the Class B certificates
and the CLASS C INVESTED AMOUNT will be reduced. If these REALLOCATED CLASS
C PRINCIPAL COLLECTIONS are not sufficient to fund the CLASS A REQUIRED
AMOUNT and the CLASS B REQUIRED AMOUNT, then the CLASS C INVESTED AMOUNT
will be reallocated to the Class A certificates or the Class B certificates
as needed to absorb reductions in the INVESTED AMOUNT of your series due to
DEFAULT AMOUNTS. The CLASS C INVESTED AMOUNT may be reimbursed from
subsequent collections of FINANCE CHARGE RECEIVABLES.
To the extent that the CLASS C INVESTED AMOUNT or the CLASS B
INVESTED AMOUNT is reduced, the amount of FINANCE CHARGE COLLECTIONS
allocated to the offered certificates in subsequent months will be reduced.
If the amount of any reduction of the CLASS B INVESTED AMOUNT is not
reimbursed, the amount of principal distributable to the Class B
certificateholders will be reduced.
TRANSFER OF THE CLASS C CERTIFICATES
PRC will initially retain the Class C certificates. PRC may sell
all or a portion of the Class C certificates. If PRC does sell the Class C
certificates, PRC will enter into an agreement with the trustee that will
specify the interest rate for the Class C certificates as well as other
relevant provisions of those certificates. PRC may only sell Class C
certificates if:
o PRC notifies the trustee, the servicer and the rating
agencies of the proposed transfer of the Class C
certificates,
o the rating agencies advise the trustee that the transfer
will not have a RATINGS EFFECT,
o no PAY OUT EVENT occurs before the transfer,
o PRC delivers an officer's certificate to the trustee
stating that the transferor believes that the transfer
will not cause a PAY OUT EVENT to occur, and
o the transferor delivers a tax opinion to the trustee
regarding the transfer.
ALLOCATION PERCENTAGES
For each MONTHLY PERIOD, the servicer will allocate collections of
FINANCE CHARGE RECEIVABLES, PRINCIPAL RECEIVABLES and all DEFAULT AMOUNTS
among:
o the Class A certificateholders, the Class B
certificateholders and the Class C certificateholders for
your series,
o the interests of certificateholders for all other series
issued and outstanding, and
o the TRANSFEROR INTEREST.
The trustee will use the FLOATING ALLOCATION PERCENTAGE to
allocate to your series DEFAULT AMOUNTS at all times, PRINCIPAL COLLECTIONS
during the REVOLVING PERIOD and FINANCE CHARGE COLLECTIONS before a PAY OUT
EVENT occurs. The trustee will use the FIXED/FLOATING ALLOCATION PERCENTAGE
to allocate to your series PRINCIPAL COLLECTIONS during the ACCUMULATION
PERIOD or EARLY AMORTIZATION PERIOD and FINANCE CHARGE COLLECTIONS after a
PAY OUT EVENT occurs.
The FLOATING ALLOCATION PERCENTAGE as determined on any business
day is generally a proportionate share equal to a fraction:
o whose numerator is the sum of the CLASS A ADJUSTED
INVESTED AMOUNT, CLASS B INVESTED AMOUNT and the CLASS C
INVESTED AMOUNT at the end of the preceding business day,
and
o whose denominator is the total amount of PRINCIPAL
RECEIVABLES and amounts on deposit in the EXCESS FUNDING
ACCOUNT at the end of the preceding business day.
The FIXED/FLOATING ALLOCATION PERCENTAGE with respect to PRINCIPAL
COLLECTIONS as determined at any time after the AMORTIZATION PERIOD
COMMENCEMENT DATE is generally equal to a fraction:
o whose numerator is the INVESTED AMOUNT at the end of the
REVOLVING PERIOD, and
o whose denominator is the greater of the sum of the amount
of PRINCIPAL RECEIVABLES and the amount on deposit in the
EXCESS FUNDING ACCOUNT at the end of the preceding
business day and the sum of the numerators used to
calculate the allocation percentages with respect to
PRINCIPAL COLLECTIONS for all classes of series
outstanding on that business day.
The numerator of this fraction can be reduced if the certificates
are paired with another series of certificates and a pay out event occurs
with respect to the paired series, in which case the numerator will be
equal to the INVESTED AMOUNT of this series on the business day before the
pay out event occurred.
The FIXED/FLOATING ALLOCATION PERCENTAGE with respect to FINANCE
CHARGE COLLECTIONS as determined at any time after a PAY OUT EVENT occurs
is generally equal to a fraction:
o whose numerator is the INVESTED AMOUNT at the end of the
business day preceding the occurrence of a PAY OUT EVENT,
and
o whose denominator is the greater of the sum of the amount
of PRINCIPAL RECEIVABLES and the amount on deposit in the
EXCESS FUNDING ACCOUNT at the end of the preceding
business day and the sum of the numerators used to
calculate the allocation percentages with respect to
FINANCE CHARGE COLLECTIONS for all series then
outstanding on that business day.
APPLICATION OF COLLECTIONS
Payment of Interest, Fees and Other Items. On each business day
during a MONTHLY PERIOD, the servicer will apply AVAILABLE SERIES FINANCE
CHARGE COLLECTIONS for the related MONTHLY PERIOD in the following order:
o an amount equal to CLASS A MONTHLY INTEREST and CARRYOVER
CLASS A INTEREST will be deposited into the INTEREST
FUNDING ACCOUNT for payment on the related DISTRIBUTION
DATE,
o an amount equal to CLASS B MONTHLY INTEREST and CARRYOVER
CLASS B INTEREST accrued on the CLASS B INVESTED AMOUNT
will be deposited into the INTEREST FUNDING ACCOUNT for
payment on the related DISTRIBUTION DATE,
o the MONTHLY SERVICING FEE will be paid to the servicer,
o an amount equal to the total INVESTOR DEFAULT AMOUNT for
that DISTRIBUTION DATE will be:
- treated as SHARED PRINCIPAL COLLECTIONS during
the REVOLVING PERIOD, and
- during the ACCUMULATION PERIOD, on and before
the date the CLASS A INVESTED AMOUNT is paid in
full or available in the PRINCIPAL FUNDING
ACCOUNT, deposited in the PRINCIPAL FUNDING
ACCOUNT and afterwards or during the EARLY
AMORTIZATION PERIOD will be deposited in the
PRINCIPAL ACCOUNT for payment to Class A
certificateholders or Class B
certificateholders,
o an amount equal to the unreimbursed CLASS A INVESTOR
CHARGE-OFFS, if any, will be applied to reimburse CLASS A
INVESTOR CHARGE-OFFS, and this amount will be:
- treated as SHARED PRINCIPAL COLLECTIONS during
the REVOLVING PERIOD, and
- during the ACCUMULATION PERIOD, on and before
the date an amount equal to the CLASS A INVESTED
AMOUNT is paid in full or deposited in the
PRINCIPAL FUNDING ACCOUNT, deposited in the
PRINCIPAL FUNDING ACCOUNT and afterwards or
during the EARLY AMORTIZATION PERIOD will be
deposited in the PRINCIPAL ACCOUNT for payment
to Class A certificateholders,
o an amount equal to the CLASS B MONTHLY INTEREST and
CARRYOVER CLASS B INTEREST accrued on the outstanding
principal amount of the Class B certificates, to the
extent not deposited into the INTEREST FUNDING ACCOUNT
above, will be deposited into the INTEREST FUNDING
ACCOUNT for payment on the related DISTRIBUTION DATE,
o an amount equal to the unreimbursed reduction in the
CLASS B INVESTED AMOUNT because of CLASS B INVESTOR
CHARGE-OFFS and REALLOCATED CLASS B PRINCIPAL
COLLECTIONS, if any, will be:
- treated as SHARED PRINCIPAL COLLECTIONS during
the REVOLVING PERIOD, and
- during the ACCUMULATION PERIOD, on and before
the date an amount equal to the CLASS A INVESTED
AMOUNT is paid in full or deposited in the
PRINCIPAL FUNDING ACCOUNT, deposited in the
PRINCIPAL FUNDING ACCOUNT and afterwards or
during the EARLY AMORTIZATION PERIOD will be
deposited in the PRINCIPAL ACCOUNT for payment
to Class A certificateholders or Class B
certificateholders,
o an amount equal to Class C Interest, if any.
o an amount equal to the unreimbursed reduction in the
CLASS C INVESTED AMOUNT because of CLASS C INVESTOR
CHARGE-OFFS and REALLOCATED CLASS C PRINCIPAL
COLLECTIONS, if any, will be:
- treated as SHARED PRINCIPAL COLLECTIONS during
the REVOLVING PERIOD, and
- during the ACCUMULATION PERIOD, on and before
the date an amount equal to the CLASS A INVESTED
AMOUNT is paid in full or deposited in the
PRINCIPAL FUNDING ACCOUNT, deposited in the
PRINCIPAL FUNDING ACCOUNT and afterwards or
during the EARLY AMORTIZATION PERIOD deposited
in the PRINCIPAL ACCOUNT for payment to Class A
certificateholders, Class B certificateholders
and Class C certificateholders, and
o the balance, if any, will constitute EXCESS FINANCE
CHARGE COLLECTIONS that will be made available to
certificateholders of other series to the extent of
shortfalls in amounts payable from FINANCE CHARGE
COLLECTIONS or paid to PRC, provided that during the
EARLY AMORTIZATION PERIOD these amounts will be retained
in the INTEREST FUNDING ACCOUNT until the last business
day of the month.
The following diagram provides you with an outline of the
allocation of collections of FINANCE CHARGE RECEIVABLES. This diagram is a
simplified demonstration of the allocation and payment provisions contained
in this prospectus supplement and the attached prospectus.
ALLOCATIONS OF COLLECTIONS OF FINANCE CHARGE RECEIVABLES
[GRAPHIC OMITTED]
Excess Finance Charge Collections. On each business day, EXCESS
FINANCE CHARGE COLLECTIONS allocated to Series 2000-__ will be applied to
cover shortfalls in amounts to be paid or deposited as described above in
"--Payment of Interest, Fees and Other Items."
EXCESS FINANCE CHARGE COLLECTIONS from Series 2000-__ will be
applied in the following order:
o to pay certificateholders of other series to the extent
of any shortfalls,
o to pay any unpaid reasonable costs and expenses of a
successor servicer, if any, and
o paid to PRC on any business day, or if a PAY OUT EVENT
has occurred, only on the last business day of a MONTHLY
PERIOD.
Transferor Finance Charge Collections. On each business day, the
trustee will apply TRANSFEROR FINANCE CHARGE COLLECTIONS allocated to your
series to cover the amount of the excess of:
o the amount that would be earned by funds on deposit in
the PRINCIPAL FUNDING ACCOUNT and the EXCESS FUNDING
ACCOUNT if they were invested at the BASE RATE over
o the actual amount of investment earnings on funds on
deposit in the PRINCIPAL FUNDING ACCOUNT and the EXCESS
FUNDING ACCOUNT.
Payment of Principal. On each DISTRIBUTION DATE during the
REVOLVING PERIOD, the product of:
o the FLOATING ALLOCATION PERCENTAGE, and
o collections of PRINCIPAL RECEIVABLES for that
DISTRIBUTION DATE,
will be treated as SHARED PRINCIPAL COLLECTIONS.
On each business day during the ACCUMULATION PERIOD, collections
of PRINCIPAL RECEIVABLES allocated to Class A certificateholders equal to
the NET PRINCIPAL COLLECTIONS, amounts on deposit in the EXCESS FUNDING
ACCOUNT allocated to the certificates, SHARED PRINCIPAL COLLECTIONS
allocated to the certificates and other amounts, but not more than the
CONTROLLED DEPOSIT AMOUNT, will be deposited in the PRINCIPAL FUNDING
ACCOUNT for payment to Class A certificateholders on the CLASS A EXPECTED
FINAL PAYMENT DATE.
On each business day after the CLASS A INVESTED AMOUNT is paid in
full, the NET PRINCIPAL COLLECTIONS, amounts on deposit in the EXCESS
FUNDING ACCOUNT allocated to the certificates, SHARED PRINCIPAL COLLECTIONS
allocated to the certificates and other amounts will be deposited into the
PRINCIPAL ACCOUNT for distribution to Class B certificateholders on the
CLASS B EXPECTED FINAL PAYMENT DATE.
On each SPECIAL PAYMENT DATE after the CLASS A EXPECTED FINAL
PAYMENT DATE and, if earlier, after a PAY OUT EVENT occurs, the trustee
will apply the amount on deposit in the [PRINCIPAL] ACCOUNT and available
for payment of principal in the following order:
o an amount equal to the CLASS A INVESTED AMOUNT to Class A
certificateholders,
o after the CLASS A INVESTED AMOUNT has been paid in full,
an amount equal to CLASS B PRINCIPAL to Class B
certificateholders,
o after the CLASS B INVESTED AMOUNT has been paid in full,
an amount equal to CLASS C PRINCIPAL to Class C
certificateholders, and
o an amount equal to the excess, if any, will be treated as
SHARED PRINCIPAL COLLECTIONS.
Any funds on deposit in the EXCESS FUNDING ACCOUNT at the
beginning of the ACCUMULATION PERIOD will be deposited in the PRINCIPAL
FUNDING ACCOUNT to the extent necessary to meet the CONTROLLED DEPOSIT
AMOUNT for the benefit of the Class A certificates.
You will receive the final payment of principal and interest on
the Class A certificates and the Class B certificates no later than
_______. After _______ the trust will have no further obligation to pay
principal or interest on the Class A certificates or Class B certificates.
The following diagram provides you with an outline of the
allocation of collections of PRINCIPAL RECEIVABLES. This diagram is a
simplified demonstration of the allocation and payment provisions contained
in this prospectus supplement and the attached prospectus.
ALLOCATIONS OF COLLECTIONS OF FINANCE CHARGE RECEIVABLES
[GRAPHIC OMITTED]
REALLOCATION OF CASH FLOWS
For each DISTRIBUTION DATE, the servicer will calculate the CLASS
A REQUIRED AMOUNT, which is generally equal to the excess, if any, of (1)
CLASS A MONTHLY INTEREST, CARRYOVER CLASS A INTEREST, the Class A portion
of the MONTHLY SERVICING FEE and the Class A portion of the INVESTOR
DEFAULT AMOUNT over (2) the AVAILABLE SERIES FINANCE CHARGE COLLECTIONS
plus any available TRANSFEROR FINANCE CHARGE COLLECTIONS, plus EXCESS
FINANCE CHARGE COLLECTIONS from other series allocated to the amounts
described above.
For each DISTRIBUTION DATE, the servicer will also calculate the
CLASS B REQUIRED AMOUNT, which is generally equal to the excess, if any, of
(1) CLASS B MONTHLY INTEREST, CARRYOVER CLASS B INTEREST, determined based
on the outstanding principal amount of the Class B certificates, the Class
B portion of the MONTHLY SERVICING FEE and the Class B portion of the
INVESTOR DEFAULT AMOUNT over (2) the AVAILABLE SERIES FINANCE CHARGE
COLLECTIONS, plus any available TRANSFEROR FINANCE CHARGE COLLECTIONS plus
EXCESS FINANCE CHARGE COLLECTIONS from other series applied to the amounts
described above.
The CLASS A REQUIRED AMOUNT and the CLASS B REQUIRED AMOUNT will
be paid from REALLOCATED CLASS C PRINCIPAL COLLECTIONS. If REALLOCATED
CLASS C PRINCIPAL COLLECTIONS are not sufficient to fund the CLASS A
REQUIRED AMOUNT and the CLASS B REQUIRED AMOUNT, then the CLASS C INVESTED
AMOUNT will be reduced to the extent of the INVESTOR DEFAULT AMOUNT but not
below zero. The remaining CLASS A REQUIRED AMOUNT will be paid from
REALLOCATED CLASS B PRINCIPAL COLLECTIONS. If REALLOCATED CLASS B PRINCIPAL
COLLECTIONS are not sufficient to fund the remaining CLASS A REQUIRED
AMOUNT then the CLASS B INVESTED AMOUNT will be reduced to the extent of
the remaining INVESTOR DEFAULT AMOUNT but not below zero. If the CLASS B
INVESTED AMOUNT and the CLASS C INVESTED AMOUNT have both been reduced to
zero, the CLASS A INVESTED AMOUNT will be reduced to the extent of the
remaining INVESTOR DEFAULT AMOUNT, but not below zero.
Any reduction in the CLASS B INVESTED AMOUNT or CLASS C INVESTED
AMOUNT will have the effect of slowing or reducing the return of principal
and interest to Class A certificateholders. If the CLASS C INVESTED AMOUNT
and the CLASS B INVESTED AMOUNT have been reduced to zero, Class A
certificateholders will bear the credit and other risks associated with
their interests in the trust.
Reductions of the CLASS A INVESTED AMOUNT, the CLASS B INVESTED
AMOUNT and the CLASS C INVESTED AMOUNT described in the four preceding
paragraphs will be reimbursed, and the CLASS A INVESTED AMOUNT, the CLASS B
INVESTED AMOUNT and the CLASS C INVESTED AMOUNT increased, on later
DISTRIBUTION DATES to the extent of:
o AVAILABLE SERIES FINANCE CHARGE COLLECTIONS,
o TRANSFEROR FINANCE CHARGE COLLECTIONS available for that
purpose on each DISTRIBUTION DATE, and
o EXCESS FINANCE CHARGE COLLECTIONS from other series.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS
Collections of FINANCE CHARGE RECEIVABLES--and other amounts
treated like collections of FINANCE CHARGE RECEIVABLES--in excess of the
amount required to make payments or deposits for the certificates of your
series will be made available to other series whose allocation of
collections of FINANCE CHARGE RECEIVABLES is not sufficient to make their
required payments or deposits. We call these amounts EXCESS FINANCE CHARGE
COLLECTIONS. If the certificates of your series require more collections of
FINANCE CHARGE RECEIVABLES than allocated to your series, you will have
access to collections of FINANCE CHARGE RECEIVABLES--and other amounts
treated like finance charge collections--from other series. Each series
that has a shortfall will receive a share of the total amount of EXCESS
FINANCE CHARGE COLLECTIONS available for that month based on the amount of
the shortfall for that series divided by the total shortfall for all series
for that same month. EXCESS FINANCE CHARGE COLLECTIONS remaining after
payment of all shortfalls for other series will be paid to PRC.
SHARED PRINCIPAL COLLECTIONS
Collections of PRINCIPAL RECEIVABLES allocated to the Series
2000-__ certificateholders' interest in excess of:
o during the REVOLVING PERIOD, the amount of REALLOCATED
PRINCIPAL COLLECTIONS,
o during the ACCUMULATION PERIOD before the CLASS A
EXPECTED FINAL PAYMENT DATE, the CONTROLLED DEPOSIT
AMOUNT and the amount of REALLOCATED PRINCIPAL
COLLECTIONS, and
o during the ACCUMULATION PERIOD after the CLASS A EXPECTED
FINAL PAYMENT DATE and during the EARLY AMORTIZATION
PERIOD, the INVESTED AMOUNT of the certificates,
will be made available to other series whose allocation of principal
collections is not sufficient to make payments or deposits required to be
made from principal collections allocated to those series. We call these
collections SHARED PRINCIPAL COLLECTIONS. If your certificates require more
principal collections than allocated to your series based on the
FIXED/FLOATING ALLOCATION PERCENTAGE, you will share in the excess
available from other outstanding series. Each outstanding series that has a
shortfall will receive a share of the total amount of SHARED PRINCIPAL
COLLECTIONS available for that month based on the amount of the shortfall
for that series divided by the total shortfall for all outstanding series
for that same month.
If SHARED PRINCIPAL COLLECTIONS exceed shortfalls for all series,
the trustee will deposit the remaining amount into the EXCESS FUNDING
ACCOUNT and distribute the remaining amount to PRC to the extent that the
TRANSFEROR INTEREST exceeds the MINIMUM TRANSFEROR INTEREST.
SHARED PRINCIPAL COLLECTIONS cover PRINCIPAL SHORTFALLS of the
Series 2000-__ certificates by using collections of PRINCIPAL RECEIVABLES
that would have been paid to PRC and, in specified circumstances, may allow
the length of the ACCUMULATION PERIOD to be shortened. This type of
reallocation of collections of PRINCIPAL RECEIVABLES will not result in a
reduction in the INVESTED AMOUNT of the series to which the collections
were initially allocated. There can be no assurance that there will be any
SHARED PRINCIPAL COLLECTIONS for any MONTHLY PERIOD.
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
The INVESTOR DEFAULT AMOUNT represents the investor's share of
receivables charged-off as uncollectible. On each business day, the
servicer will calculate the INVESTOR DEFAULT AMOUNT for your series by
multiplying:
o the FLOATING ALLOCATION PERCENTAGE for that business day,
by
o the DEFAULT AMOUNT for all DEFAULTED ACCOUNTS on that
business day.
The INVESTOR DEFAULT AMOUNT will be paid from:
o AVAILABLE SERIES FINANCE CHARGE COLLECTIONS,
o TRANSFEROR FINANCE CHARGE COLLECTIONS allocated to Series
2000-__,
o EXCESS FINANCE CHARGE COLLECTIONS from other series
allocated to Series 2000-__, and
o REALLOCATED PRINCIPAL COLLECTIONS.
If on any DISTRIBUTION DATE, the REQUIRED AMOUNT exceeds the sum of:
o TRANSFEROR FINANCE CHARGE COLLECTIONS allocable to Series
2000-__,
o EXCESS FINANCE CHARGE COLLECTIONS from other series
allocable to Series 2000-__, and
o REALLOCATED PRINCIPAL COLLECTIONS,
then the CLASS C INVESTED AMOUNT will be reduced by the amount of that
excess but not more than the INVESTOR DEFAULT AMOUNT. This type of
reduction is called a CLASS C INVESTOR CHARGE-OFF. If this reduction causes
the CLASS C INVESTED AMOUNT to be a negative number, then:
o the CLASS C INVESTED AMOUNT will be reduced to zero, and
o 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 more than the INVESTOR DEFAULT AMOUNT less the amount of the
reduction of the CLASS C INVESTED AMOUNT. This type of reduction is called
a CLASS B INVESTOR CHARGE-OFF.
If this reduction causes the CLASS B INVESTED AMOUNT to be a negative
number, then:
o the CLASS B INVESTED AMOUNT will be reduced to zero, and
o the CLASS A INVESTED AMOUNT will be reduced by the amount
by which the CLASS B INVESTED AMOUNT would have been
reduced below zero,
but not more than the INVESTOR DEFAULT AMOUNT less the amount of the
reduction of the CLASS B INVESTED AMOUNT and the CLASS C INVESTED AMOUNT.
This type of reduction is called a CLASS A INVESTOR CHARGE-OFF.
PRINCIPAL FUNDING ACCOUNT
Under the SERIES 2000-__ SUPPLEMENT, the trustee will establish
and maintain a PRINCIPAL FUNDING ACCOUNT in which it will collect principal
for payment to Class A certificateholders during the ACCUMULATION PERIOD.
Amounts collected in the PRINCIPAL FUNDING ACCOUNT will be used to
pay principal to Class A certificateholders on the earlier of:
o the CLASS A EXPECTED FINAL PAYMENT DATE, and
o if a PAY OUT EVENT occurs during the ACCUMULATION PERIOD,
the first SPECIAL PAYMENT DATE.
Amounts on deposit in the PRINCIPAL FUNDING ACCOUNT will be
invested until the following DISTRIBUTION DATE by the trustee in CASH
EQUIVALENTS. The proceeds from these investments will be deposited in the
COLLECTION ACCOUNT on each DISTRIBUTION DATE and applied as AVAILABLE
SERIES FINANCE CHARGE COLLECTIONS.
WITHDRAWALS FROM THE COLLECTION ACCOUNT
The servicer will withdraw the following amounts from the
COLLECTION ACCOUNT for application on each business day:
o an amount equal to the TRANSFEROR PERCENTAGE of the
amount of PRINCIPAL COLLECTIONS will be paid to PRC as
holder of the EXCHANGEABLE TRANSFEROR CERTIFICATE to the
extent those funds are not allocated to any series;
o an amount equal to the TRANSFEROR PERCENTAGE of the
amount of FINANCE CHARGE COLLECTIONS will be paid to PRC
as holder of the EXCHANGEABLE TRANSFEROR CERTIFICATE to
the extent those funds are not allocated to any series;
o an amount equal to:
- the FLOATING ALLOCATION PERCENTAGE of the amount
of FINANCE CHARGE COLLECTIONS,
- TRANSFEROR FINANCE CHARGE COLLECTIONS,
- investment earnings on amounts on deposit in the
PRINCIPAL FUNDING ACCOUNT to the extent on
deposit in the COLLECTION ACCOUNT on that
business day, and
- EXCESS FINANCE CHARGE COLLECTIONS from other
series allocable to Series 2000-_, and,
- if a DISCOUNT TRIGGER EVENT has occurred,
discounted PRINCIPAL COLLECTIONS allocable to
Series 2000-_,
will be allocated and paid as described above in
"--Application of Collections--Payment of Interest, Fees
and Other Items;"
o during the REVOLVING PERIOD, an amount equal to:
- the FLOATING ALLOCATION PERCENTAGE of PRINCIPAL
COLLECTIONS, less the resulting amount which may
be applied as REALLOCATED CLASS B PRINCIPAL
COLLECTIONS or REALLOCATED CLASS C PRINCIPAL
COLLECTIONS,
will be applied as SHARED PRINCIPAL COLLECTIONS;
provided, that during the continuance of a DISCOUNT
TRIGGER EVENT, discounted PRINCIPAL COLLECTIONS are
subject to reallocation as FINANCE CHARGE COLLECTIONS;
o during the ACCUMULATION PERIOD, an amount equal to:
- the FIXED/FLOATING ALLOCATION PERCENTAGE of
PRINCIPAL COLLECTIONS, less the resulting amount
applied as REALLOCATED PRINCIPAL COLLECTIONS,
- any amount on deposit in the EXCESS FUNDING
ACCOUNT allocated to certificateholders,
- any amounts to be paid in respect of the
INVESTOR DEFAULT AMOUNT, CLASS A INVESTOR
CHARGE-OFFS, CLASS B INVESTOR CHARGE-OFFS and
CLASS C INVESTOR CHARGE-OFFS, and
- any amount of SHARED PRINCIPAL COLLECTIONS on
that business day,
will be deposited in the PRINCIPAL FUNDING ACCOUNT;
provided, that during the continuance of a DISCOUNT
TRIGGER EVENT, discounted PRINCIPAL COLLECTIONS are
subject to reallocation as FINANCE CHARGE COLLECTIONS. On
any business day on which the amount on deposit in the
PRINCIPAL FUNDING ACCOUNT exceeds the CONTROLLED
DISTRIBUTION AMOUNT, the excess will be treated as SHARED
PRINCIPAL COLLECTIONS;
o during any EARLY AMORTIZATION PERIOD or on or after the
CLASS B PRINCIPAL PAYMENT COMMENCEMENT DATE, an amount
equal to:
- the FIXED/FLOATING ALLOCATION PERCENTAGE of
PRINCIPAL COLLECTIONS, less the resulting amount
which is applied as REALLOCATED PRINCIPAL
COLLECTIONS,
- any amount on deposit in the EXCESS FUNDING
ACCOUNT allocated to certificateholders,
- any amounts to be paid in respect of the
INVESTOR DEFAULT AMOUNT, CLASS A INVESTOR
CHARGE-OFFS, CLASS B INVESTOR CHARGE-OFFS and
CLASS C INVESTOR CHARGE-OFFS, and
- any amount of SHARED PRINCIPAL COLLECTIONS on
that business day, up to the amount of the
INVESTED AMOUNT,
will be deposited into the PRINCIPAL ACCOUNT; provided,
that during the continuance of a DISCOUNT TRIGGER EVENT,
discounted PRINCIPAL COLLECTIONS are subject to
reallocation as FINANCE CHARGE COLLECTIONS;
o SHARED PRINCIPAL COLLECTIONS will be allocated to each
outstanding series, on a proportional basis, based on the
investor allocation percentage for PRINCIPAL RECEIVABLES
applicable to any series:
- first to be applied to any shortfalls with
respect to the controlled distribution amount
for each series, and
- then to accelerate principal payments with
respect to any series which is in its
amortization period but not subject to a
controlled distribution amount, and
- then, at the option of the transferor, to make
payments of principal with respect to the
variable funding certificates.
The servicer will pay any remaining SHARED PRINCIPAL
COLLECTIONS on that business day to the holder of the
EXCHANGEABLE TRANSFEROR CERTIFICATE; and
o EXCESS FINANCE CHARGE COLLECTIONS will be allocated as
described above in "--Application of Collections--Payment
of Interest, Fees and Other Items."
Any SHARED PRINCIPAL COLLECTIONS and other amounts not paid to the
transferor because the TRANSFEROR INTEREST does not exceed the MINIMUM
TRANSFEROR INTEREST, will be deposited into and held in the EXCESS FUNDING
ACCOUNT, and on the AMORTIZATION PERIOD COMMENCEMENT DATE with respect to
any series, those amounts will be deposited in the principal account or
principal funding account of that series to the extent specified in the
related supplement until the principal funding account of that series has
been funded in full or the holders of certificates of that series have been
paid in full.
PAIRED SERIES
The Series 2000-__ certificates may be paired with one or more
other series. The paired series either:
o will be prefunded with an initial deposit in a
PRE-FUNDING ACCOUNT up to the initial principal balance
of that paired series, or
o will have a variable principal amount.
Any PRE-FUNDING ACCOUNT will be for the benefit of the paired series. As
principal is deposited in the PRINCIPAL FUNDING ACCOUNT or paid to the
Series 2000-__ certificates, either:
o in the case of a prefunded paired series, an equal amount
of funds on deposit in any PRE- FUNDING ACCOUNT for that
paired series will be released to PRC, or
o in the case of a paired series with a variable principal
amount, an interest in that paired series up to the
amount paid to your series may be sold by the trust.
The invested amount in the trust of that paired series will
increase by an amount up to the principal paid on your series. Upon payment
of the Series 2000-__ certificates, assuming no unreimbursed charge-offs
for any related paired series, the total invested amount of the related
paired series will have been increased by an amount up to the total amount
paid to Series 2000-__ certificateholders since the issuance of that paired
series.
If a PAY OUT EVENT occurs with respect to Series 2000-_, if
paired, or any related paired series during the ACCUMULATION PERIOD for
Series 2000-_, either:
o the numerators used in the FIXED/FLOATING ALLOCATION
PERCENTAGE for Series 2000-_ and the related paired
series will be reset to be equal to the respective
invested amounts of each series on the last day before
the PAY OUT EVENT occurred, or
o the denominator of the FIXED/FLOATING ALLOCATION
PERCENTAGE for Series 2000-_ may be increased upon the
occurrence of a PAY OUT EVENT with respect to a paired
series, in either case resulting in a possible reduction
of the percentage of PRINCIPAL COLLECTIONS allocated to
Series 2000-_ if the event allowed the payment of
principal at that time to the paired series and required
reliance by Series 2000-_ on the sum of the numerators or
the denominator of the FIXED/FLOATING ALLOCATION
PERCENTAGE.
PAY OUT EVENTS
The REVOLVING PERIOD shall continue until the earlier of:
o the start of the ACCUMULATION PERIOD, or
o the occurrence of a PAY OUT EVENT.
The following chart indicates whether each PAY OUT EVENT is an event which
automatically triggers an EARLY AMORTIZATION PERIOD or an event which
requires the vote of a majority of the certificateholders or the trustee to
trigger an EARLY AMORTIZATION PERIOD.
<TABLE>
<CAPTION>
REQUIRES A AUTOMATICALLY
MAJORITY VOTE OF CAUSES AN EARLY
CERTIFICATEHOLDERS AMORTIZATION OF
PAY OUT EVENTS OR THE TRUSTEE SERIES 2000-__
--------------
-------------------------- ---------------------------
<S> <C> <C>
1. The transferor fails to make a payment or deposit when X
required to under the POOLING X AND SERVICING
AGREEMENT or the SERIES 2000-___ SUPPLEMENT within
five business days after the required date.
2. The sale, pledge, assignment or transfer by the X
transferor or grant of any lien on any X receivable
other than as permitted under the POOLING AND
SERVICING AGREEMENT or the SERIES 2000-__ SUPPLEMENT.
3. The transferor fails to observe or perform any X
covenant or agreement and that failure X has a
material adverse effect on you and the failure
continues unremedied for 60 days after written notice
to the transferor.
4. The transferor makes a representation or warranty in X
the POOLING AND SERVICING AGREEMENT or the SERIES
2000-___ SUPPLEMENT that was materially incorrect when
made and that continues to be materially incorrect for
60 days after written notice to the transferor and as
a result you are materially and adversely affected,
unless the transferor accepts reassignment of the
related receivables.
5. The average of the PORTFOLIO YIELDS for three X
consecutive MONTHLY PERIODs is less than X the average
of the BASE RATE for such three consecutive monthly
periods.
6. A SERVICER DEFAULT occurs which has a material adverse X
effect on you.
7. Either FDS, FEDERATED DEPARTMENT STORES or the X
transferor admits in writing its X inability to pay
its debts, is subject to a bankruptcy proceeding or
enters receivership or conservatorship or otherwise
becomes subject to an insolvency event.
8. The transferor becomes unable to transfer receivables X
to the trust in accordance with the POOLING AND
SERVICING AGREEMENT.
9. The trust becomes subject to regulation as an X
"investment company" under the Investment Company Act.
10. The TRANSFEROR INTEREST is less than the MINIMUM X
TRANSFEROR INTEREST for fifteen consecutive days.
11. The total amount of PRINCIPAL RECEIVABLES and the X
amount on deposit in the EXCESS X FUNDING ACCOUNT is
less than the MINIMUM AGGREGATE PRINCIPAL RECEIVABLES
for 15 consecutive days.
</TABLE>
SERVICING FEES AND EXPENSES
The MONTHLY SERVICING FEE allocable to your series shall equal
one-twelfth of the product of:
o 2%, and
o an amount equal to the sum of the CLASS A ADJUSTED
INVESTED AMOUNT, the CLASS B INVESTED AMOUNT and the
CLASS C INVESTED AMOUNT at the end of the MONTHLY PERIOD
second preceding the related DISTRIBUTION DATE.
The remainder of the servicing fee not paid by Series 2000-_ will
be paid from amounts allocable to the holder of the EXCHANGEABLE TRANSFEROR
CERTIFICATE or the certificateholders of other series. The trust, the
trustee or the Series 2000-__ certificateholders will not be liable for the
share of the servicing fee to be paid from amounts allocable to the holder
of the EXCHANGEABLE TRANSFEROR CERTIFICATE, or the certificateholders of
any other series.
OPTIONAL TERMINATION
The Class A certificates and the Class B certificates may be
repurchased by the transferor after the INVESTED AMOUNT is less than or
equal to 11% of the initial INVESTED AMOUNT. The Class A certificates and
the Class B certificates may also be purchased by the transferor on the
second DISTRIBUTION DATE following the CLASS A EXPECTED FINAL PAYMENT DATE.
The purchase price for the certificates will equal the sum of:
o the CLASS A INVESTED AMOUNT, plus
o accrued and unpaid interest on the unpaid principal
amount of the Class A certificates through the day
preceding that DISTRIBUTION DATE at the CLASS A
CERTIFICATE RATE, and
o the CLASS B INVESTED AMOUNT, plus
o accrued and unpaid interest on the unpaid principal
amount of the Class B certificates through the day
preceding that DISTRIBUTION DATE at the CLASS B
CERTIFICATE RATE, and
o the CLASS C INVESTED AMOUNT.
SERIES TERMINATION
The trustee will solicit bids for the sale of some of the
PRINCIPAL RECEIVABLES together with the related FINANCE CHARGE RECEIVABLES
if the INVESTED AMOUNT is greater than zero on the SERIES 2000-___
TERMINATION DATE. The amount of receivables to be sold will not be more
than 110% of the INVESTED AMOUNT on the SERIES 2000-__ TERMINATION DATE.
The proceeds of the sale will be applied first to the Class A
certificates until paid in full, then to the Class B certificates until
paid in full and then to the Class C certificates.
You will incur a loss if the proceeds of the sale, together with
the amount of collections available in the COLLECTION ACCOUNT, are less
than the CLASS A ADJUSTED INVESTED AMOUNT plus accrued and unpaid interest
on the Class A certificates if you own Class A certificates or that amount
plus the Class B Invested Amount plus accrued and unpaid interest on the
Class B certificates if you own Class B certificates.
GENERAL INFORMATION
Copies of the POOLING AND SERVICING AGREEMENT, the SERIES 2000-___
SUPPLEMENT, the annual report of independent certified public accountants
described in "The Pooling and Servicing Agreement--Evidence as to
Compliance" in the attached prospectus, the documents listed under "Where
You Can Find More Information" and the reports to certificateholders
referred to under "Reports to Certificateholders" and "Description of the
Certificates--Reports to Certificateholders" in the attached prospectus may
be obtained [from the servicer]. Financial information reflecting PRC is
assimilated in the consolidated financial statements of Federated in its
Annual Report on Form 10-K for the fiscal year ended January 29, 2000.
The certificates, the POOLING AND SERVICING AGREEMENT and the
SERIES 2000-___ SUPPLEMENT are governed by the laws of the State of New
York.
UNDERWRITING
PRC has agreed to sell to the underwriters listed below the amount
of Class A certificates and Class B certificates indicated next to each
underwriter's name. Each underwriter has agreed to purchase that amount of
corresponding Class A certificates or Class B certificates.
PRINCIPAL
AMOUNT OF
CLASS A CLASS A
UNDERWRITERS CERTIFICATES
-------------- --------------
................................ $
................................
................................
................................ --------------
Total.................. $
------------- ====================
PRINCIPAL
AMOUNT OF
CLASS B CLASS B
UNDERWRITERS CERTIFICATES
-------------- --------------
................................ $
................................
................................
................................ --------------
Total.................. $
------------- ====================
The purchase commitment of the underwriters may be increased or
ended if any underwriter defaults. The price to public, underwriters'
discounts and commission, the concessions that the underwriters may allow
to some dealers, and the discounts that those dealers may reallow to other
dealers, each expressed as a percentage of the principal amount of the
Class A certificates or the Class B certificates, shall be as follows:
UNDERWRITING SELLING
PRICE TO DISCOUNT AND CONCESSIONS, REALLOWANCE
PUBLIC COMMISSIONS NOT TO EXCEED NOT TO EXCEED
--------- ------------ ------------- --------------
Class A certificates.... % % % %
Class B certificates.... % % % %
After the offering is completed, PRC will receive the proceeds,
after deduction of the underwriting and other expenses, listed below:
PROCEEDS TO
PRC
(AS % OF THE
PRINCIPAL AMOUNT OF
THE CLASS A
CERTIFICATES AND THE UNDERWRITING
PROCEEDS TO CLASS B DISCOUNTS AND
PRC CERTIFICATES) OMMISSIONS
-------------- -------------------- ------------
Class A certificates.... $ % $
Class B certificates.... $ % $
Total.......... $
============
After the public offering, the public offering price and other
selling terms may be changed by the underwriters. Additional offering
expenses are estimated to be $________.
Any underwriter may engage in the following transactions, to the
extent permitted by Regulation M under the Securities Exchange Act:
o over-allotment transactions, which involve syndicate
sales in excess of the offering size creating a syndicate
short position,
o stabilizing transactions, which permit bids to purchase
the Class A certificates and the Class B certificates so
long as the stabilizing bids do not exceed a specified
maximum,
o syndicate covering transactions, which involve purchases
of the Class A certificates and the Class B certificates
in the open market after the distribution has been
completed to cover syndicate short positions, and
o penalty bids, which permit the underwriters to reclaim a
selling concession from a syndicate member when the Class
A certificates and the Class B certificates originally
sold by the syndicate member are purchased in a syndicate
covering transaction.
The use of the above transactions may cause the prices of the
Class A certificates and the Class B certificates to be higher than they
would otherwise be. These transactions, if or once commenced, may be
stopped without notice.
Each underwriter has represented and agreed that:
o it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by it
in connection with the issue of the Class A certificates
and the Class B certificates to a person who is of a kind
described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1996,
as amended, or who is a person to whom the document may
otherwise lawfully be issued or passed on,
o it has complied and will comply with all provisions of
the Financial Services Act 1986 and other laws and
regulations for anything done by it which apply to the
Class A certificates and the Class B certificates in,
from or otherwise involving the United Kingdom, and
o if that underwriter is an authorized person under the
Financial Services Act 1986, it has only promoted and
will only promote, as that term is defined in Regulation
1.02 of the Financial Services (Promotion of Unregulated
Schemes) Regulations 1991, to any person in the United
Kingdom the scheme described in this prospectus
supplement if that person is of a kind described either
in Section 76(2) of the Financial Services Act 1986 or in
Regulation 1.04 of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991.
PRC may indemnify the underwriters against liabilities which
include liabilities under the securities laws. PRC may also contribute to
payments the underwriters may be required to make on these liabilities.
The underwriters and their respective affiliates have engaged and
may in the future engage in investment banking or commercial banking
transactions with PRC and its affiliates.
OTHER SERIES ISSUED AND OUTSTANDING
The trust has previously issued three other series that remain
outstanding. The table below discusses the principal characteristics of
these series. For more specific information relating to any series, any
prospective investor should contact the transferor at (513) 579-7580. The
transferor will provide, without charge, to any prospective purchaser of
the certificates, a copy of the disclosure documents for any previous
publicly issued series.
<TABLE>
<CAPTION>
SERIES 1992-3 VARIABLE FUNDING CERTIFICATES
<S> <C>
Invested Amount as of _________________..................... $____________
Maximum Permitted Invested Amount........................... $455,000,000
Certificate Rate............................................ Variable
Commencement of Amortization Period......................... December 31, 2000 (subject to extension)
Annual Servicing Fee Percentage............................. 2.00%
Scheduled Series Termination Date........................... May 15, 2004 (subject to extension)
Series Issuance Date........................................ January 5, 1993
SERIES 1995-1
1. CLASS A CERTIFICATES
Initial Invested Amount..................................... $546,000,000
Certificate Rate............................................ 6.75%
Current Invested Amount..................................... $546,000,000
Controlled Amortization Amount (subject to adjustment)...... $68,250,000
Accumulation Period Commencement Date....................... December 2001 Monthly Period
Annual Servicing Fee Percentage............................. 2.0%
Credit Support.............................................. Subordination of Series 1995-1
Class B and Class C Certificates
Expected Final Payment Date................................. August 15, 2002
Scheduled Series Termination Date........................... November 15, 2005
Series Issuance Date........................................ July 27, 1995
2. CLASS B CERTIFICATES
Initial Invested Amount..................................... $52,000,000
Certificate Rate............................................ 6.90%
Current Invested Amount..................................... $52,000,000
Controlled Amortization Amount.............................. N/A
Annual Servicing Fee Percentage............................. 2.0%
Credit Support.............................................. Subordination of Series 1995-1
Class C Certificates
Expected Final Payment Date................................. September 16, 2002
Scheduled Series Termination Date........................... November 15, 2005
Series Issuance Date........................................ July 27, 1995
3. CLASS C CERTIFICATES
Initial Invested Amount..................................... $52,000,000
Certificate Rate............................................ 9.00%
Current Invested Amount..................................... $52,000,000
Controlled Amortization Amount.............................. N/A
Annual Servicing Fee Percentage............................. 2.0%
Expected Final Payment Date................................. October 15, 2002
Scheduled Series Termination Date........................... November 15, 2005
Series Issuance Date........................................ July 27, 1995
SERIES 1996-1
1. CLASS A CERTIFICATES
Initial Invested Amount..................................... $218,000,000
Certificate Rate............................................ 6.70%
Current Invested Amount..................................... $218,000,000
Controlled Amortization Amount (subject to adjustment)...... $109,000,000.00
Accumulation Period Commencement Date....................... March 2001 Monthly Period
Annual Servicing Fee Percentage............................. 2.0%
Credit Support.............................................. Subordination of Series 1996-1
Class B and Class C Certificates
Expected Final Payment Date................................. May 15, 2001
Scheduled Series Termination Date........................... July 15, 2004
Series Issuance Date........................................ May 1, 1996
2. CLASS B CERTIFICATES
Initial Invested Amount..................................... $20,800,000
Certificate Rate............................................ 6.85%
Current Invested Amount..................................... $20,800,000
Controlled Amortization Amount.............................. N/A
Annual Servicing Fee Percentage............................. 2.0%
Credit Support.............................................. Subordination of Series 1996-1
Class C Certificates
Expected Final Payment Date................................. June 15, 2001
Scheduled Series Termination Date........................... July 15, 2004
Series Issuance Date........................................ May 1, 1996
3. CLASS C CERTIFICATES
Initial Invested Amount..................................... $20,800,000
Certificate Rate............................................ 9.00%
Current Invested Amount..................................... $20,800,000
Controlled Amortization Amount.............................. N/A
Annual Servicing Fee Percentage............................. 2.0%
Expected Final Payment Date................................. July 15, 2001
Scheduled Series Termination Date........................... July 15, 2004
Series Issuance Date........................................ May 1, 1996
</TABLE>
GLOSSARY OF TERMS FOR PROSPECTUS SUPPLEMENT
"ACCUMULATION PERIOD" means for Series 2000-__, the period:
o beginning on the first day of the _____ 20___ Monthly
Period, or a later date as described in "Description of
the Offered Certificates--Postponement of Accumulation
Period" and
o ending on the earliest of:
- the date a Pay Out Event occurs,
- the end of the _____ 20___ Monthly Period, and
- the Trust Termination Date; and
during which collections of Principal Receivables up to the Class A
Invested Amount are accumulated in a Principal Funding Account for payment
to Class A certificateholders on the Class A Expected Final Payment Date.
"ACCUMULATION SHORTFALL" initially means zero and with respect
to any Distribution Date shall mean the excess of:
o the Controlled Deposit Amount for that Distribution Date
over
o the Net Principal Collections received during the related
Monthly Period, plus
o the aggregate amount of Shared Principal Collections
received during the related Monthly Period and allocable
to the Class A certificates.
"ADJUSTED INVESTED AMOUNT" means for any business day, an amount
equal to:
o the Class A Adjusted Invested Amount on that day, plus
o the Class B Invested Amount on that day, plus
o the Class C Invested Amount on that day.
"AMORTIZATION PERIOD COMMENCEMENT DATE" means the earlier of the
date on which the Accumulation Period begins and the date on which a Pay
Out Event occurs or is deemed to have occurred.
"ANNUAL PORTFOLIO TURNOVER RATE" means with respect to any
business day during a Monthly Period:
o the total amount of credit sales arising under accounts
during each of the twelve Monthly Periods ending on the
last day of the second preceding Monthly Period, divided
by
o the average of the Outstanding Balances of receivables as
of the last day of each Monthly Period.
"AVAILABLE SERIES FINANCE CHARGE COLLECTIONS" means for any
Distribution Date, the sum of:
o the Total Finance Charge Collections on deposit in the
Collection Account and
o any investment earnings relating to amounts on deposit in
the Principal Funding Account and the Pre-Funding Account
deposited in the Collection Account,
allocated and distributed to Series 2000-__ as indicated under "Description
of the Offered Certificates-- Application of Collections."
"BASE RATE" means the sum of the weighted average of:
o the Class A Certificate Rate,
o the Class B Certificate Rate and
o the Class C Certificate Rate, plus
2%
"CARRYOVER CLASS A INTEREST" means for any Distribution Date:
o any Class A Monthly Interest due but not paid on any
previous Distribution Date, plus
o any Class A Additional Interest.
"CARRYOVER CLASS B INTEREST" means for any Distribution Date:
o any Class B Monthly Interest due but not paid on any
previous Distribution Date, plus
o any Class B Additional Interest.
"CARRYOVER CLASS C INTEREST" means for any Distribution Date:
o any Class C Monthly Interest due but not paid on any
previous Distribution Date, plus
o any Class C Additional Interest.
"CARRYOVER DISCOUNT AMOUNT" means for any series for any business
day, the excess, if any, of:
o the sum of the product of:
- the Discount Allocation Percentage
- the Discount Amount and
- the Carryover Discount Amount
for that series for the preceding business day, divided by
o the amount of Principal Collections added to Total
Finance Charge Collections for that series on that
preceding business day.
"CARRYOVER INTEREST" means for any Distribution Date, the sum of
Carryover Class A Interest, Carryover Class B Interest and Carryover Class
C Interest.
"CLASS A ADDITIONAL INTEREST" means for any Distribution Date, an
amount equal to one-twelfth of the product of:
o the excess, if any, of Class A Monthly Interest for the
preceding Distribution Date over the amount available to
be paid to Class A certificateholders relating to
interest on that preceding Distribution Date, and
o the sum of the Class A Certificate Rate plus 2% per
annum.
"CLASS A ADJUSTED INVESTED AMOUNT" means for any business day, an
amount equal to:
o the Class A Invested Amount, minus
o the total amount on deposit in the Principal Funding
Account on that day.
"CLASS A CERTIFICATE RATE" means a rate of ____% per annum.
"CLASS A EXPECTED FINAL PAYMENT DATE" means the ________
Distribution Date.
"CLASS A FLOATING ALLOCATION PERCENTAGE" means for any business
day:
o the percentage equivalent of the ratio that the amount of
the Class A Adjusted Invested Amount as of the end of the
preceding business day bears to the greater of
- the total amount of Principal Receivables and
amounts on deposit in the Excess Funding Account
as of the end of the preceding business day and
- the sum of the numerators used to calculate the
allocation percentage for all classes of the
Series then outstanding.
"CLASS A INITIAL INVESTED AMOUNT" means $_____.
"CLASS A INVESTED AMOUNT" means for any date, an amount equal to:
o the Class A Initial Invested Amount less the Class A
Percentage on the Closing Date of the initial deposit to
the Pre-Funding Account, plus the Class A Percentage of
any withdrawals from the Pre-Funding Account during the
Funding Period, minus
o the total amount of principal paid to Class A
certificateholders before that date, minus
o the excess, if any, of the total amount of Class A
Investor Charge-Offs for all previous business days
preceding that date over the total amount of any
reimbursements of Class A Investor Charge-Offs for all
Distribution Dates before that date, plus
o the amount of any increase in the Class A Invested Amount
because of the issuance of additional certificates, minus
o the amount of any reduction in the Class A Invested
Amount because of the purchase by the transferor and
later cancellation of Class A certificates.
"CLASS A INVESTOR CHARGE-OFF" means for any Monthly Period, the
amount by which the Class A Invested Amount is reduced after the Class B
Invested Amount has been reduced to zero because of Investor Charge-Offs
resulting from the allocation of the Investor Default Amount and the Series
2000-__ Allocation Percentage of any unpaid Adjustment Payments.
"CLASS A INVESTOR DEFAULT AMOUNT" means a portion of the Investor
Default Amount that is allocated to Class A certificateholders on each
Distribution Date in an amount equal to the product of:
o the Class A Floating Allocation Percentage for the
related Monthly Period, and
o the Default Amount for that Monthly Period.
"CLASS A MONTHLY INTEREST" means for any Distribution Date, an
amount equal to one-twelfth of the product of:
o the Class A Certificate Rate, and
o the outstanding principal balance of the Class A
certificates on the last business day of the preceding
Monthly Period;
except for the initial Distribution Date, Class A Monthly Interest will
equal $__________.
"CLASS A MONTHLY PRINCIPAL" for any Distribution Date relating to
the Accumulation Period or the Early Amortization Period will equal the sum
of:
o an amount equal to the aggregate Net Principal
Collections received during the Monthly Period
immediately preceding that Distribution Date, minus the
aggregate amount of Reallocated Principal Collections for
that Monthly Period,
o any amount on deposit in the Excess Funding Account
allocated to the Certificates on that Distribution Date,
and
o the amount allocated to the Class A Certificates with
respect to that Distribution Date on account of the
Investor Default Amount and any reimbursements of
unreimbursed Class A Investor Charge-Offs, Class B
Investor Charge-Offs, and Class C Investor Charge- Offs.
except for:
o on any Distribution Date during the Accumulation Period,
Class A Principal may not exceed the Controlled Deposit
Amount for that Distribution Date,
o on any Distribution Date, Class A Principal may not
exceed the Class A Adjusted Invested Amount, and
o on the Series 2000-__ Termination Date, Class A Principal
shall be an amount equal to the Class A Invested Amount.
"CLASS A PERCENTAGE" means the percentage equivalent of a
fraction:
o whose numerator is the Class A Adjusted Invested Amount, and
o whose denominator is the Series Invested Amount.
"CLASS A REQUIRED AMOUNT" means the amount required to be paid for
the benefit of the Class A certificates described under "Description of the
Offered Certificates--Reallocation of Cash Flows."
"CLASS B ADDITIONAL INTEREST" means for any Distribution Date, an
amount equal to one-twelfth of the product of:
o the excess, if any, of Class B Monthly Interest for the
preceding Distribution Date over the amount available to
be paid to Class B certificateholders relating to
interest on that preceding Distribution Date, and
o the sum of the Class B Certificate Rate plus 2% per annum.
"CLASS B CERTIFICATE RATE" means [ ]%.
"CLASS B EXPECTED FINAL PAYMENT DATE" means the ________
Distribution Date.
"CLASS B FIXED/FLOATING ALLOCATION PERCENTAGE" means the
percentage equivalent of the ratio which the Class B Invested
Amount at the end of the last day of the Revolving Period bears to
the greater of:
o the sum of the aggregate amount of Principle Receivables
and the amount on deposit in the Excess Funding Account
as of the end of the preceding business day and
o the sum of the numerators used to calculate the
allocation percentages with respect to Principles
Receivables for all classes of all Series outstanding on
that business day; provided, however, that, because the
Certificates are subject to being paired with a future
prefunded Series, if a Pay Out Event occurs with respect
to the Certificate during the Accumulation Period, and if
at that time the Certificates are paired with a prefunded
Series, the numerator will be reset to be equal to the
Class B Invested Amount at the end of the last day prior
to the occurrence of that Pay Out Event.
" CLASS B FLOATING ALLOCATION PERCENTAGE" means, with respect to
any business day, the percentage equivalent of the ratio that the
amount of the Class B Invested Amount as of the end of the
preceding business day bears to the greater of:
o the total amount of Principal Receivables and amounts on
deposit in the Excess Funding Account as of the end of
the preceding business day and
o the sum of the numerators used to calculate the
allocation percentages for all classes of all Series then
outstanding.
"CLASS B INITIAL INVESTED AMOUNT" means $______.
"CLASS B INVESTED AMOUNT" means for any day, an amount equal to:
o the Class B Initial Invested Amount less the Class B
Percentage on the Closing Date of the initial deposit to
the Pre-Funding Account, plus the Class B Percentage of
any withdrawals from the Pre-Funding Account during the
Funding Period, minus
o the total amount of principal paid to Class B
certificateholders before that date, minus
o the total amount of Class B Investor Charge-Offs for all
previous business days, including the amount by which the
Class B Invested Amount has been reduced to fund the
Investor Default Amount on all previous business days,
minus
o the total amount of Reallocated Class B Principal
Collections for all previous Distribution Dates for which
the Class C Invested Amount has not been reduced for
those previous days, plus
o the total amount of Available Series Finance Charge
Collections, Transferor Finance Charge Collections,
Excess Finance Charge Collections, and Transferor
Subordination Amount applied on all previous business
days for the purpose of reimbursing amounts deducted
under the two preceding bullet points.
"CLASS B INVESTOR CHARGE-OFF" means for any Monthly Period, the
amount by which the Class B Invested Amount is reduced because of Investor
Charge-Offs resulting from the application of Reallocated Principal
Collections and the allocation of the Investor Default Amount, and the
Series 2000- __ Allocation Percentage of any unpaid Adjustment Payments in
excess of Reallocated Class B Principal Collections.
"CLASS B INVESTOR DEFAULT AMOUNT" means a portion of the Investor
Default Amount that is allocated to Class B certificateholders on each
Distribution Date in an amount equal to the product of:
o the Class B Floating Allocation Percentage for the
related Monthly Period, and
o the Default Amount for that Monthly Period.
"CLASS B MONTHLY INTEREST" means for any Distribution Date, an
amount equal to one-twelfth of the product of:
o the Class B Certificate Rate, and
o the outstanding principal balance of the Class B
certificates on the last business day of the preceding
Monthly Period;
except for the initial Distribution Date, Class B Monthly Interest will
equal $__________.
"CLASS B MONTHLY PRINCIPAL" for any Distribution Date on or after
the Class B Principal Payment Commencement Date will equal the sum of:
o an amount equal to the total Net Principal Collections
received during the Monthly Period immediately preceding
that Distribution Date (less any payments to be made to
Class A Certificateholders to the extent of any remaining
Class A Invested Amount on that Distribution Date), minus
the aggregate amount of Reallocated Principal Collections
for that Monthly Period,
o any amount on deposit in the Excess Funding Account
allocated to the Class B Certificates on that
Distribution Date, and
o the amount allocated to the Class B Certificates with
respect to that Distribution Date on account of the
Investor Default Amount and any reimbursements of
unreimbursed Class B Investor Charge-Offs and Class C
Investor Charge-Offs;
"CLASS B PERCENTAGE" means the percentage equivalent of a
fraction:
o whose numerator is the Class B Invested Amount, and
o whose denominator is the Series Invested Amount.
except on the Series 2000-__ Termination Date, Class B Principal shall be
an amount equal to the Class B Invested Amount.
"CLASS B PRINCIPAL PAYMENT COMMENCEMENT DATE" means the earlier of :
o during:
- the Accumulation Period, the Class B Expected
Final Payment Date or
- the Early Amortization Period, the Distribution
Date on which the Class A Invested Amount is
paid in full or, if there are no Principal
Collections remaining after payments have been
made to the Class A certificates on that
Distribution Date, the next succeeding
Distribution Date, and
o the Distribution Date following a mandatory sale or
repurchase of the receivables under the Pooling and
Servicing Agreement.
"CLASS B REQUIRED AMOUNT" means the amount required to be paid for
the benefit of the Class B certificates described under "Description of the
Offered Certificates--Reallocation of Cash Flows."
"CLASS C ADDITIONAL INTEREST" means for any Distribution Date, an
amount equal to one-twelfth of the product of:
o the excess, if any, of Class C Monthly Interest for the
preceding Distribution Date over the amount available to
be paid to Class C certificateholders relating to
interest on that preceding Distribution Date, and
o the sum of the Class C Certificate Rate plus 2% per
annum.
"CLASS C CERTIFICATE RATE" means a rate of ____% per annum.
"CLASS C EXPECTED FINAL PAYMENT DATE" means the ________
Distribution Date.
"CLASS C FLOATING ALLOCATION PERCENTAGE" means
"CLASS C INITIAL INVESTED AMOUNT" means $______.
"CLASS C INVESTED AMOUNT" means for any date, an amount equal to:
o the Class C Initial Invested Amount, minus
o the total amount of principal paid to Class C
certificateholders before that date, minus
o the total amount of Class C Investor Charge-Offs for all
previous business days, equal to the amount by which the
Class C Invested Amount has been reduced to fund the
Investor Default Amount on all prior Distribution Dates,
minus
o the total amount of Reallocated Class C Principal
Collections for all previous Distribution Dates for which
the Class C Invested Amount has been reduced for those
previous dates, plus
o the total amount of Available Series Finance Charge
Collections, Transferor Finance Charge Collections, and
Excess Finance Charge Collections applied on all prior
business days for the purpose of reimbursing amounts
deducted under the preceding two bullet points.
"CLASS C INVESTOR CHARGE-OFF" means for any Monthly Period, the
amount by which the Class C Invested Amount is reduced because of Investor
Charge-Offs resulting from the application of Reallocated Principal
Collections and the allocation of the Investor Default Amount, and the
Series 2000- __ Allocation Percentage of any unpaid Adjustment Payments in
excess of Reallocated Class C Principal Collections.
"CLASS C INVESTOR DEFAULT AMOUNT" means a portion of the Investor
Default Amount that is allocated to Class C certificateholders on each
Distribution Date in an amount equal to the product of:
o the Class C Floating Allocation Percentage for the
related Monthly Period, and
o the Default Amount for that Monthly Period.
"CLASS C MONTHLY INTEREST" means, initially, zero. However, PRC
may, after issuing the Series 2000-__ certificates, set an interest rate
for the Class C certificates without the consent of Class A
certificateholders and Class B Certificateholders.
"CLASS C MONTHLY PRINCIPAL" with respect to any Distribution Date
on or after the Class Principal Payment Commencement Date will equal the
sum of:
o an amount equal to the aggregate Net Principal
Collections received during the Monthly Period
immediately preceding that Distribution Date (less any
payments to be made to Class B Certificateholders to the
extent of any remaining Class B Invested Amount on that
Distribution Date), minus the aggregate amount of
Reallocated Principal Collections for that Monthly
Period;
o any amount on deposit in the Excess Funding Account
allocated to the Class C Certificates on that
Distribution Date, and
o the amount allocated to the Class C Certificates with
respect to that Distribution Date on account of the
Investor Default Amount and any reimbursements of
unreimbursed Class C Investor Charge-Offs;
"CLASS C PERCENTAGE" means the percentage equivalent of a
fraction:
o whose numerator is the Class C Invested Amount, and
o whose denominator is the Series Invested Amount.
except on the Series 2000-__ Termination Date, Class C Principal shall be
an amount equal to the Class C Invested Amount.
"CLASS C PRINCIPAL PAYMENT COMMENCEMENT DATE" means the earlier
of:
o the Distribution Date on which the Class B Invested
Amount is paid in full or, if there are no Principal
Collections remaining after payments have been made to
the Class B certificates on that Distribution Date, the
next succeeding Distribution Date, and
o the Distribution Date following a mandatory sale or
repurchase of the receivables under the Pooling and
Servicing Agreement.
"CONTROLLED DEPOSIT AMOUNT" means for any Distribution Date during
the Accumulation Period, an amount equal to:
o the Controlled Accumulation Amount, plus
o any Deficit Controlled Accumulation Amount for the
preceding Distribution Date.
"CONTROLLED DISTRIBUTION AMOUNT" is the sum of the Controlled
Accumulation Amount and any existing Accumulation Shortfall.
o the balance of the Principal Funding Account on the first
day of that Interest Period.
"DEFAULT AMOUNT" means, on any business day:
o the aggregate outstanding balance of Receivables in
Accounts that became Defaulted Accounts on such Business
Day that do not constitute finance charges, late fees, or
any other fee or charge minus
o the portion of the Ineligible Default Amount that does
not constitute finance charges, late fees, or any other
fee or charge.
"DEFAULTED ACCOUNT" means each account with respect to which, in
accordance with the servicer's customary and usual servicing procedures,
the servicer has charged off the receivables in that account as
uncollectible.
"DELINQUENCY PERCENTAGE" means with respect to any business day,
the percentage equivalent of an amount determined on the preceding date of
determination, or on that business day with respect to each date of
determination, equal to:
o the product of:
- 0.5 and
- the total Outstanding Balance of all receivables
retail age 2 or greater--30 or more days past
due--divided by
o the total Outstanding Balance of all receivables on that
date of determination.
"DISCOUNT ALLOCATION PERCENTAGE" means with respect to any series
and any business day, the percentage equivalent of a fraction:
o whose numerator is the Series Discount Factor for that
series, and
o whose denominator is the Discount Factor on that business
day.
"DISCOUNT AMOUNT" means for any business day, the Discount Factor
multiplied by the Outstanding Balance of receivables transferred to the
trust on that business day.
"DISCOUNT FACTOR" means for any business day, an amount equal to
the sum of each Series Discount Factor for all series outstanding.
"DISCOUNT TRIGGER EVENT" means for any business day, the Discount
Factor for the second preceding Monthly Period being in excess of zero and
the rating agencies having consented to the discounting of purchases of
receivables before that business day and having not revoked that consent.
"DISTRIBUTION DATE" means the 15th day of each month, or if the
15th day is not a business day, the next business day.
"EARLY AMORTIZATION PERIOD" means for Series 2000-__, the period:
o beginning on the earlier of the day a Pay Out Event
occurs or the Class A Expected Final Payment Date if the
Class A Invested Amount has not been paid in full on that
date, and
o ending on the earlier of:
- the date the Invested Amount has been paid in full,
- the termination of the trust, and
- the Series 2000-__ Termination Date; and
during which collections of Principal Receivables allocable to Series
2000-__ will be paid on each Special Payment Date to certificateholders.
"FINANCE CHARGE RECEIVABLE FACTOR" means with respect to any date
of determination:
o the total amount of finance charges, late fees, and other
fees and charges outstanding on the last day of the
second preceding Monthly Period divided by
o the total Outstanding Balances of the Eligible
Receivables on the last day of that second preceding
Monthly Period, determined on the basis of a calculation
performed by the servicer.
"FIXED/FLOATING ALLOCATION PERCENTAGE" means with respect to
Principal Collections during the Accumulation Period or Early Amortization
Period and Finance Charge Collections after a Pay Out Event occurs, the
allocation percentage determined as described under "Description of the
Offered Certificates--Allocation Percentages."
"FLOATING ALLOCATION PERCENTAGE" means the Class A Floating
Allocation Percentage plus the Class B Floating Allocation Percentage, plus
the Class C Floating Allocation Percentage.
"INELIGIBLE DEFAULT AMOUNT" means, as of any business day, the
total Outstanding Balance of receivables in accounts that are:
o identified on the servicer's computer records as not
being Eligible Accounts and
o reported in the servicer's computer records on that
business day as becoming Defaulted Accounts.
"INTEREST ACCRUAL PERIOD" means in relation to any Distribution
Date, the period from the previous Distribution Date through the day before
that Distribution Date, except the first Interest Accrual Period begins on
the Closing Date and ends on the day before the first Distribution Date.
Each period is deemed to last 30 days.
"INVESTED AMOUNT" means, when used with respect to any business
day, the sum of the Class A Adjusted Invested Amount, the Class B Invested
Amount and the Class C Invested Amount.
"INVESTOR CHARGE-OFF" means for any Monthly Period for Series
2000-__ the sum of the Class A Investor Charge-Offs, the Class B Investor
Charge-Offs and the Class C Investor Charge-Offs.
"INVESTOR DEFAULT AMOUNT" means for any Monthly Period, an amount
equal to the product of the Default Amount and the Floating Allocation
Percentage as of the related Distribution Date.
"MINIMUM TRANSFEROR PERCENTAGE" means during each fiscal year for
the Series 2000-___ certificates:
o [ ]% for the period from the _____ Monthly Period to and
including the _____ Monthly Period,
o [ ]% for the _______ Monthly Period, and
o [ ]% for the ________ Monthly Period;
provided, however, that this percentage may be adjusted from time to time
upon written notice from the transferor to the trustee if:
o each rating agency initially rating the Class A
certificates, the Class B certificates, and, if
applicable, the Class C certificates:
- shall have been notified of the adjustment of
this percentage, and
- shall have provided notice to the trustee or the
servicer that the adjustment would not result in
a reduction or withdrawal of its rating of these
certificates, and
o that adjustment will not, in the opinion of counsel
satisfactory to the trustee, result in specified adverse
tax consequences.
"MONTHLY INTEREST" means the Class A Monthly Interest, the Class B
Monthly Interest and the Class C Monthly Interest.
"MONTHLY SERVICING FEE" means for any Distribution Date, the
amount determined as described under "Description of the Offered
Certificates--Servicing Fees and Expenses."
"NEGATIVE CARRY AMOUNT" means an amount equal to the excess of:
o the product of:
- the Base Rate, and
- the product of (1) the total amounts on deposit
in the Excess Funding Account and the Principal
Funding Account and (2) the number of days
elapsed since the previous business day divided
by the actual number of days in that year,
divided by
o the total amount of all earnings since the previous
business day available from the Cash Equivalents in which
funds on deposit in the Excess Funding Account and the
Principal Funding Account are invested.
"NET FINANCE CHARGE PORTFOLIO YIELD" means, with respect to any
Monthly Period, the annualized percentage equivalent of a fraction:
o whose numerator is the amount of Finance Charge
Collections for that Monthly Period, calculated on a cash
basis after subtracting the Investor Default Amount for
that Monthly Period, and
o whose denominator is the average daily Invested Amount
during the preceding Monthly Period.
"NET PRINCIPAL COLLECTIONS" means for any series on any business
day:
o the product, during the Revolving Period, of the Floating
Allocation Percentage for that series and, during the
Accumulation Period or any Early Amortization Period, the
Fixed/Floating Allocation Percentage for that series and
the amount of Principal Collections on that business day
minus
o on or after the occurrence and during the continuance of
a Discount Trigger Event, the lesser of:
- the sum of (1) the product of the Discount
Allocation Percentage and the Discount Amount
for that business day and (2) the Carryover
Discount Amount for that business day, and
- the amount determined under the first bullet point.
"OUTSTANDING BALANCE" means, with respect to a receivable on any
day, the total amount owed by the Obligor under that receivable on that
day.
"PAY OUT EVENT" means any of the events described under
"Description of the Offered Certificates--Pay Out Events."
"PORTFOLIO YIELD" means, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction:
o whose numerator is the amount equal to the sum of:
- the Total Finance Charge Collections for that
Monthly Period, calculated on a cash basis plus:
o the interest and other investment
income earned from amounts on deposit
in the Principal Funding Account which
shall be available on the related
Distribution Date and
o Transferor Finance Charge Collections
allocated to certificateholders with
respect to each business day in that
Monthly Period minus the total Investor
Default Amount for that Monthly Period,
and
o whose denominator is the sum of:
- the average daily Invested Amount during that
Monthly Period, and
- the average daily amount on deposit the
Principal Funding Account during that Monthly
Period.
"PRINCIPAL ACCOUNT" means a segregated trust account held for the
benefit of certificateholders:
o in which Principal Collections are deposited, and
o from which those collections are withdrawn and
distributed as described under "Description of the
Offered Certificates--Application of Collections."
"PRINCIPAL FUNDING ACCOUNT" means a segregated trust account held
for the benefit of the Class A certificateholders in which collections of
Principal Receivables allocated to the Class A certificateholders are
accumulated during the Accumulation Period as described under "Description
of the Offered Certificates--Principal Funding Account."
"REALLOCATED CLASS B PRINCIPAL COLLECTIONS" means for each Monthly
Period, collections of Principal Receivables allocable to the Class B
certificates for that Monthly Period in an amount not to exceed the greater
of:
o the Class B Invested Amount, and
o the amount applied to fund the Class A Required Amount,
if any.
"REALLOCATED CLASS C PRINCIPAL COLLECTIONS" means for each Monthly
Period, collections of Principal Receivables allocable to the Class C
certificates for that Monthly Period in an amount not to exceed the greater
of:
o the Class C Invested Amount, and
o the amount applied to fund the Class A Required Amount
and the Class B Required Amount, if any.
"REALLOCATED PRINCIPAL COLLECTIONS" equals the sum of Reallocated
Class B Principal Collections and Reallocated Class C Principal
Collections.
"RECORD DATE" means the last business day of the Monthly Period
preceding a Distribution Date which is the day a certificateholders must be
the registered holder of a certificate to receive a payment on that
Distribution Date.
"REQUIRED AMOUNT" means for any Monthly Period, the amount by
which:
o the sum of:
- Monthly Interest and Carryover Interest,
- Monthly Servicing Fee,
- the Investor Default Amount, and
- unreimbursed Investor Charge-Offs and
unreimbursed Reallocated Principal Collections,
exceeds
o the Available Series Finance Charge Collections.
"SERIES 2000-__ ALLOCATION PERCENTAGE" means on any date of
determination, the percentage equivalent of a fraction:
o whose numerator is the Series Invested Amount, and
o whose denominator is the sum of the invested amounts, or
adjusted invested amounts, as applicable, of all then
outstanding series.
"SERIES 2000-__ SUPPLEMENT" means the supplement to the Pooling
and Servicing Agreement relating to the Series 2000-__ certificates.
"SERIES 2000-__ TERMINATION DATE" means the ______ Distribution Date
"SERIES DISCOUNT FACTOR" means for any series and any business
day, the amount for that series, if any, calculated as of the second
preceding Monthly Period, by which either:
o the product of:
- the Base Rate plus one-half of one percent minus
the Net Finance Charge Portfolio Yield divided
by the Annual Portfolio Turnover Rate and the
Floating Allocation Percentage exceeds zero, or,
o solely at the option of the transferor, the amount by
which:
- the product of (1) the Base Rate plus one
percent minus the Net Finance Charge Portfolio
Yield divided by the Annual Portfolio Turnover
Rate and (2) the Floating Allocation Percentage
exceeds zero;
provided, however, that the Series Discount Factor will never exceed 4%.
"SERIES INVESTED AMOUNT" means for any date, an amount equal to
the sum of the Class A Adjusted Invested Amount, the Class B Invested
Amount and the Class C Invested Amount on that date.
"SPECIAL PAYMENT DATE" means each Distribution Date following:
o the Monthly Period in which a Pay Out Event occurs, and
o the Class A Expected Final Payment Date.
"TOTAL FINANCE CHARGE COLLECTIONS" means, with respect to a series
and any business day, the sum of:
o on any day before a Pay Out Event occurs, the product of
the Floating Allocation Percentage for that series and
the amount of Finance Charge Collections deposited in the
Collection Account for that business day or
o on and after a Pay Out Event occurs, the product of the
Fixed/Floating Allocation Percentage for that series and
the amount of Finance Charge Collections for that
business day, plus, on and after the occurrence of and
during the continuance of a Discount Trigger Event:
- the lesser of:
o the sum of (1) the product of the
Discount Allocation Percentage for that
series and the Discount Amount for that
business day and (2) the Carryover
Discount Amount for that series for
that business day, and
o the product of, during the Revolving
Period, the Floating Allocation
Percentage for that series and, during
the Accumulation Period or Early
Amortization Period, the Fixed/Floating
Allocation Percentage for that series
and the amount of Principal Collections
deposited in the Collection Account for
that business day.
"TRANSFEROR FINANCE CHARGE COLLECTIONS" means with respect to
Series 2000-__, the amount of Finance Charge Collections otherwise
allocable to the Exchangeable Transferor Certificate equal to the least of:
o the Required Amount,
o the product of the Transferor Percentage, the Finance
Charge Collections, and the Series 2000-__ Allocation
Percentage, and
o the Negative Carry Amount.
"TRANSFEROR SUBORDINATION AMOUNT" means with respect to the Series
2000-___ certificates, [ ], less the aggregate amount of collections
allocated to the holder of the Exchangeable Transferor Certificate or any
portion of the Transferor Interest previously applied to cover any
deficiency in the amount otherwise available, on and after the Class B
Principal Payment Commencement Date:
o to pay accrued and unpaid interest to the Class B
certificateholders, and
o to cover any Investor Default Amounts and Class B
Investor Charge-Offs.
"YIELD FACTOR" means with respect to any business day, the
percentage equivalent of an amount determined on the preceding
date of determination, or on that business day with respect to
each date of determination, equal to:
o an amount equal to:
- the product of the amount of finance charges,
late fees, and other fees and charges bill to
Cardholders on the receivables for the Monthly
Period preceding that date of determination and
one minus the Delinquency Percentage for the
preceding date of determination, or on that
business day with respect to each date of
determination, plus
- Recoveries for the Monthly Period preceding that
date of determination
divided by
o the total amount of collections on receivables for the
Monthly Period preceding that date of determination.
-------------------------------------------------------------------------------
Prospectus Supplement
PRIME CREDIT CARD MASTER TRUST
SERIES 2000-__
[$------------]
[---%]
CLASS A
ASSET BACKED CERTIFICATES
[$-------]
[----%]
CLASS B
ASSET BACKED CERTIFICATES
PRIME RECEIVABLES CORPORATION
Transferor
FDS BANK
Servicer
You should rely only on the information contained or incorporated
by reference in this prospectus supplement and the prospectus. We have not
authorized anyone to provide you with different information.
We are not offering these certificates in any state where the
offer is not permitted.
Dealers will deliver a prospectus supplement and prospectus when
acting as underwriters of these certificates and with respect to their
unsold allotments or subscriptions. In addition, all dealers selling these
certificates will deliver a prospectus supplement and prospectus until
________ ___, 2000.
-------------------------------------------------------------------------------
[FLAG]
The information in this prospectus is not complete and may be changed. We
cannot sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED ___________, 2000
Prospectus
PRIME CREDIT CARD MASTER TRUST
Issuer
PRIME RECEIVABLES CORPORATION
Transferor
FDS BANK
Servicer
ASSET BACKED SECURITIES
A security is not a deposit and neither the securities nor the
underlying accounts or receivables are insured or guaranteed by the FDIC or
any other governmental agency.
The securities will represent an interest in the trusts only and do not
represent interests in or recourse obligations of Federated Department
Stores, Inc., FDS Bank, Prime Receivables Corporation or any of their
affiliates.
This prospectus may be used to offer and sell any series of securities only
if accompanied by the prospectus supplement for that series.
THE TRUST -
o may periodically issue asset backed certificates in one or more series with
one or more classes, and
o will own -
o receivables in a portfolio of consumer open end credit card accounts,
o payments due on those receivables, and o other property described in
this prospectus and in the prospectus
supplement.
THE SECURITIES -
o will represent interests in the trust and will be paid only from the
assets of the trust,
o offered by this prospectus will be rated in one of the four highest
rating categories by at least one nationally recognized statistical
rating organization,
o may have one or more forms of enhancement, and
o will be issued as part of a series which may include one or more
classes of securities and enhancement.
THE SECURITYHOLDERS -
o will receive interest and principal payments from a varying percentage
of credit card account collections.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS AND THE ATTACHED
PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is _______, 2000
TABLE OF CONTENTS
Page
OVERVIEW OF THE INFORMATION IN THIS
PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT...............................................................4
THE PRIME CREDIT CARD MASTER TRUST...........................................5
FEDERATED DEPARTMENT STORES, INC.............................................5
FDS BANK.....................................................................6
PRIME RECEIVABLES CORPORATION................................................6
FEDERATED'S CREDIT CARD BUSINESS.............................................6
Credit Card Business.....................................................6
FDS' Underwriting Processes and
Account Origination....................................................7
Servicing of Accounts....................................................8
Delinquency and Collections
Procedures for FDS Credit Cards........................................9
THE RECEIVABLES.............................................................10
Addition of Accounts....................................................10
Removal of Accounts.....................................................11
Additional Information in the
Prospectus Supplement.................................................11
MATURITY CONSIDERATIONS.....................................................12
DESCRIPTION OF THE CERTIFICATES.............................................13
Form of Your Certificates...............................................14
DTC.....................................................................15
Clearstream.............................................................16
Euroclear...............................................................17
Book-Entry Registration.................................................18
Definitive Certificates.................................................21
Initial Settlement......................................................22
Secondary Market Trading................................................22
Investor Percentage.....................................................25
Interest................................................................26
Principal...............................................................27
The Exchangeable Transferor
Certificate...........................................................27
New Issuances...........................................................27
Trust Accounts..........................................................29
Deposits in Collection Account..........................................30
Sharing of Excess Finance Charge
Collections ..........................................................31
Shared Principal Collections............................................32
Excess Funding Account..................................................32
Paired Series...........................................................33
Funding Period..........................................................33
Defaulted Receivables...................................................34
Dilution................................................................34
Pay Out Event...........................................................34
Reports to Certificateholders...........................................35
List of Certificateholders..............................................36
ENHANCEMENT.................................................................36
Specific Forms of Enhancement...........................................38
THE POOLING AND SERVICING AGREEMENT.........................................41
Conveyance of Receivables...............................................41
Addition of Trust Assets................................................41
Removal of Accounts.....................................................43
Representations and Warranties..........................................44
Certain Covenants.......................................................47
Eligible Accounts; Eligible
Receivables...........................................................48
Collection and Other Servicing
Procedures............................................................49
Servicing Compensation and Payment
of Expenses...........................................................50
Certain Matters Regarding the Servicer..................................51
Servicer Default .......................................................52
Evidence as to Compliance...............................................53
Amendments..............................................................54
Trustee.................................................................55
Termination of the Trust................................................55
THE RECEIVABLES PURCHASE AGREEMENT..........................................56
Representations and Warranties..........................................56
Covenants...............................................................58
Termination.............................................................60
SECURITY RATINGS............................................................60
LEGAL ASPECTS OF THE RECEIVABLES............................................61
Transfer of Receivables.................................................61
Matters Relating to Bankruptcy or
Receivership..........................................................62
Consumer Protection Laws................................................64
Claims and Defenses of Cardholders
Against the Trust.....................................................66
TAX MATTERS.................................................................68
Tax Characterization of the Trust.......................................69
Tax Considerations Relating to
Certificateholders....................................................70
Non-U.S. Certificate Owners.............................................73
Information Reporting and Backup
Withholding...........................................................75
State and Local Taxation................................................76
EMPLOYEE BENEFIT PLAN CONSIDERATIONS........................................78
Regulation Under ERISA and the Tax
Code..................................................................78
Final Regulation Issued by the DOL......................................78
Exemptions to Prohibited Transactions...................................79
Special Considerations for Insurance
Companies.............................................................80
General Investment Considerations.......................................80
PLAN OF DISTRIBUTION FOR THE OFFERED
CERTIFICATES............................................................81
LEGAL MATTERS...............................................................82
REPORTS TO CERTIFICATEHOLDERS...............................................82
WHERE YOU CAN FIND MORE INFORMATION.........................................82
GLOSSARY OF TERMS FOR PROSPECTUS............................................84
OVERVIEW OF THE INFORMATION IN THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT
We provide information to you about the securities in two separate
documents that progressively provide more detail: (1) this prospectus,
which provides general information, some of which may not apply to a
particular series of securities, including your series, and (2) the
prospectus supplement, which will describe the specific terms of your
series of securities, including:
o the timing and amount of interest and principal payments;
o information about the receivables;
o information about enhancement for each offered class;
o credit ratings; and
o the method for selling the securities.
You should rely only on the information provided in this prospectus
and the prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information.
We include cross-references in this prospectus and in the prospectus
supplement to captions in these materials where you can find further
related discussions. The preceding table of contents and the table of
contents included in the prospectus supplement provide the pages these on
which captions are located.
You can find a glossary of the defined terms that appear in this
document in boldface type under the caption "Glossary of Terms for
Prospectus" beginning on page 84 in this prospectus.
THE PRIME CREDIT CARD MASTER TRUST
The Prime Credit Card Master Trust was formed when PRC, as the
transferor of the receivables, FDS, as the servicer and originator of the
receivables, and The Chase Manhattan Bank, as trustee, entered into the
POOLING AND SERVICING AGREEMENT. The POOLING AND SERVICING AGREEMENT is
governed by the laws of the State of NEW YORK. The trust was formed to
issue certificates representing interests in a pool of credit card
receivables held by the trust. Certificates issued by the trust will be
issued in amounts, at prices and on terms to be determined at the time of
sale as described in the attached prospectus supplement.
The trust will only engage in the following business activities:
o acquiring and holding receivables,
o issuing series of certificates and an EXCHANGEABLE TRANSFEROR
CERTIFICATE,
o making payments on these certificates,
o obtaining any credit enhancement or entering into any
enhancement contract necessary to issue certificates, and
o engaging in related activities.
Because of the restricted nature of its activities, we do not expect
that the claims against the trust will ever exceed the value of its assets.
FEDERATED DEPARTMENT STORES, INC.
Federated Department Stores, Inc. or FEDERATED is one of the leading
operators of full-line department stores in the United States. In general,
each of FEDERATED'S retail operating divisions is a separate subsidiary of
FEDERATED. However, the Macy's West division comprises three separate
subsidiaries of FEDERATED. Further realignment of the operations, corporate
structure, and/or assets of FEDERATED'S subsidiaries may be effected from
time to time, and the names under which the stores or businesses included
in or conducted through the FEDERATED STORES, Bloomingdale's By Mail,
Fingerhut, Macy's By Mail, macys.com and bloomingdales.com are operated may
be changed from time to time.
FEDERATED has advised PRC that FEDERATED believes the department
store business will continue to consolidate, and that it intends from time
to time to consider the possible acquisition of department store assets and
companies. In the event any acquisitions are consummated, subject to
compliance with the applicable provisions of the POOLING AND SERVICING
AGREEMENT, PRC may, but will not be obligated to, designate those accounts
as AUTOMATIC ADDITIONAL ACCOUNTS and cause the receivables therein to be
transferred to the trust.
FDS BANK
FDS Bank or FDS received its charter on September 8, 1993. As of July
3, 2000, FDS was converted to a federally chartered savings bank and is
subject to regulation and supervision by the Office of Thrift Supervision.
FDS is an indirect wholly owned subsidiary of FEDERATED. Under an
assumption agreement dated September 15, 1993, FDS replaced FEDERATED as
servicer under the POOLING AND SERVICING AGREEMENT. Following its formation
in September 1993, FDS was added as a party to the PURCHASE AGREEMENT and
FEDERATED caused substantially all its then existing accounts to be
transferred to FDS. Currently, FDS is the owner of substantially all of the
ACCOUNTS, although the other ORIGINATORS may from time to time establish
ACCOUNTS and sell the receivables arising in those ACCOUNTS to PRC for
transfer to the trust under the POOLING AND SERVICING AGREEMENT. The
principal executive offices of FDS are located at 9111 Duke Boulevard,
Mason, Ohio 45040-8999. The telephone number is (513) 573-2265.
PRIME RECEIVABLES CORPORATION
Prime Receivables Corporation or PRC was incorporated in
Delaware on September 23, 1992, and is a wholly owned subsidiary of
FEDERATED. PRC was organized for the limited purpose of purchasing the
receivables in the ACCOUNTS and any AUTOMATIC ADDITIONAL ACCOUNTS or
SUPPLEMENTAL ACCOUNTS from the ORIGINATORS, forming trusts such as the
Prime Credit Card Master Trust, and transferring the receivables to those
trusts, causing those trusts to issue securities from time to time. The
principal executive offices of PRC are located at 7 West Seventh Street,
Cincinnati, Ohio 45202. Its telephone number is (513) 579-7580.
FEDERATED'S CREDIT CARD BUSINESS
CREDIT CARD BUSINESS
Pursuant to the PURCHASE AGREEMENT, the ORIGINATORS sell
receivables arising in the Accounts to PRC; those receivables are
automatically transferred by PRC to the trust under the POOLING AND
SERVICING AGREEMENT. The ACCOUNTS are created by the respective ORIGINATORS
and enable the holders of the credit cards issued by the ORIGINATORS under
department store tradenames to purchase various types of merchandise and
services offered by the FEDERATED STORES. Cards bearing the Bloomingdale's
tradename may be used to purchase merchandise from Bloomingdale's By Mail,
one of FEDERATED'S nationwide catalog businesses and bloomingdales.com, one
of FEDERATED'S retail websites. Cards bearing the Goldsmith's or Rich's
tradename may be used to purchase merchandise at both Goldsmith's and
Rich's stores. FEDERATED has partnered with the WeddingChannel.com through
an equity position. Customers can make merchandise purchases on
WeddingChannel.com from the FEDERATED STORES. All other FEDERATED CARDS may
be used only to make purchases at stores bearing the same nameplate as the
tradename on the card.
FACS Group, a subsidiary of FEDERATED located in Mason, Ohio, Tampa,
Florida, and Tempe, Arizona, provides credit services for FDS pursuant to a
servicing agreement. These services currently include credit
authorizations, new account development and processing, customer service,
collections, statement processing and mailing, and remittance processing.
FACS Group may from time to time subcontract with other parties for the
performance of those functions by those other parties.
In addition to the FEDERATED STORES, which include a limited number
of Macy's stores which were formerly operated under other nameplates, and
Bloomingdale's By Mail, subsidiaries of FEDERATED currently operate other
department stores under the name "Macy's", and other businesses under the
names of Macy's By Mail and macys.com. Cards bearing the Macy's tradename
may be used to purchase merchandise from Macy's By Mail and macys.com.
Under the Macy's Credit Card Program, established by Macy's prior to
FEDERATED'S acquisition of Macy's in December 1994, a third-party financial
institution owns and establishes a majority of the revolving credit card
accounts of customers of those other stores. The initial term of the Macy's
Credit Card Program expires in 2006, and is subject to automatic one-year
renewal periods and certain termination rights. The receivables arising in
accounts subject to the Macy's Credit Card Program are not currently (and,
absent modifications to that program, will not be) purchased by the
transferor or transferred to the trust.
FDS' UNDERWRITING PROCESSES AND ACCOUNT ORIGINATION
CREATION OF ACCOUNT BALANCES
Account balances are created through the use of the FEDERATED CARDS
to charge purchases of merchandise and services from the FEDERATED STORES,
Bloomingdale's By Mail, Macy's By Mail, bloomingdales.com and macys.com and
other services such as credit life insurance and travel services.
Maintenance of account balances in the trust consistent with historical
levels will depend on the continued ability of the FEDERATED STORES,
Bloomingdale's By Mail, Macy's By Mail, bloomingdales.com and macys.com to
generate credit sales. In addition, because the FEDERATED STORES,
Bloomingdale's By Mail, Macy's By Mail, bloomingdales.com and macys.com
accept, in addition to the FEDERATED CARDS, other cards, including American
Express charge cards and MasterCard, Visa and JCB credit cards and, in the
case of FEDERATED STORES operated under the "Macy's" nameplate, Macy's
cards issued by a third-party financial institution, Maintenance of account
balance levels in the trust also will depend upon decisions of customers
purchasing merchandise and services to use the FEDERATED CARDS rather than
other cards or cash.
FEDERATED CARDS may be used to make both major purchase plan charges
and regular plan charges. Major purchase plan charges are charges of
certain categories of merchandise, including furniture and fine jewelry,
generally over $100.00 per purchase. Regular plan charges consist of all
other charges except for charges to a small number of accounts opened under
a discontinued credit program under which the entire outstanding balance is
due monthly.
The regular plan payment schedule is the greater of $5.00 or 2.50% of
the new balance rounded up to the next whole dollar amount, not to exceed
the entire new balance.
The following payments schedule is typical for major purchase plan
charges under the ACCOUNTS:
MAJOR PURCHASE PLAN CHARGES
HIGHEST NEW BALANCE MINIMUM PAYMENT
$ 0.01 - 4.99 New Balance
$ 5.00 - 200 $ 5.00
$ 200.01 and over 2.50%
Minimum payment is subject to increase for new purchases but not
subject to decrease.
FDS periodically offers promotional incentives to solicit new
accounts and to encourage the use of previously issued FEDERATED CARDS,
including the waiver of finance charges for a specified initial period
typically ranging from three to twelve months on major purchase plan
charges made during the course of the promotion.
Balances due with respect to both regular plan charges and major
purchase plan charges are and will be included in the receivables.
FEDERATED may change the terms applicable to, or may eliminate, either
category of charges at any time.
New accounts are generated both:
o by account applications made at the stores currently operated by
the ORIGINATORS under the names "Bloomingdale's," "Burdines,"
"Goldsmith's," "Lazarus," "Rich's," "Stern's," "The Bon Marche,"
and, in the case of those stores formerly operated under other
nameplates, "Macy's",
o by account applications made over the telephone to Bloomingdale's
By Mail and Macy's By Mail or on the internet at macys.com and
bloomingdales.com, and
o as a result of direct mail solicitations on a preapproved credit
basis to a prescreened group of individuals based on information
obtained from credit services and other entities in the business of
selling customer lists.
Currently, FDS does not use non-prescreened or "blind" mailings to solicit
new accounts. Before an account is opened in response to an unsolicited
application, the prospective cardholder's application is reviewed for
completeness and creditworthiness. A credit report issued by an independent
credit reporting agency is generally obtained. In the case of prescreened
mailings, consumer credit records are reviewed by the credit reporting
agency maintaining those records to identify the individuals that meet the
standards for receiving a preapproved account solicitation.
Prospective cardholders, whether unsolicited or preapproved,
generally are evaluated through the use of computerized credit scoring
systems. These systems assign point values to the credit bureau information
of potential preapproved solicitation recipients or the application
information and credit bureau records of unsolicited applicants. Point
values, in turn, are based on statistical analyses of empirical data
concerning the performance of sample populations of applicants in various
geographic regions served by the ORIGINATORS. The total of the values
obtained for a prospective cardholder determines both the decision whether
to offer or open an account and the initial credit guideline. FDS has also
found that it can open accounts for applicants for whom no credit service
information is available at a level of risk deemed acceptable by FDS by
independently verifying the information contained in the application and
establishing low initial credit guidelines. FDS may change its credit
evaluation policies or screening methods at any time.
Each cardholder is subject to an agreement governing the terms and
conditions of that cardholder's account. Under each agreement, FDS reserves
the right, subject to applicable law, to change or terminate any terms,
conditions, services, or features of the related account, including
increasing or decreasing finance charges, other charges, or minimum
payments. Credit guidelines are maintained by FDS and are revised upward or
downward based on changes in credit scoring formulas and on cardholders'
purchase and payment histories. Each charge to an account is entered and
approved at the time the charge is made through direct communication with
the central processing system maintained by FACS for the purpose of
monitoring credit guidelines and possible fraudulent activity.
SERVICING OF ACCOUNTS
The accounts are grouped into billing cycles for purposes of
administrative convenience for each FEDERATED subsidiary. Each billing
cycle has a separate monthly billing date (which may vary slightly from
month to month) at which time the activity in the related accounts during
the month ending on that billing date is processed and billed to
cardholders. New accounts are assigned to billing cycles in a manner which
is intended, for purposes of administrative convenience, to equalize the
number of accounts in the billing cycles.
Monthly billing statements are sent to holders of the FEDERATED CARDS
who have positive or negative balances. The billing statements present the
total amount due and show the allocation between principal, current fees,
current finance charges, scheduled due date and the minimum payment due.
Subject to applicable law, late fees and returned check fees are also added
to a cardholder's outstanding balance. No issuance, annual, over credit
limit, or transaction fees are currently charged to obligors on the
ACCOUNTS. FDS may change its billing practices, including the minimum
monthly payment amounts, at any time. For a description of the servicing
procedures, see "The Pooling and Servicing Agreement-Collection and Other
Servicing Procedures."
A monthly finance charge is assessed on the ACCOUNTS. The charge is
based on the average daily balance outstanding on an ACCOUNT during a
monthly billing period and is calculated by multiplying the average daily
balance by the applicable finance charge rate. Current purchase
transactions are included in the average daily balance where permitted by
applicable law. Finance charges are assessed from date of purchase,
although a grace period is available to avoid the finance charge if the
account is paid in full. Payments by obligors generally are applied in the
following order (pursuant to applicable law): (i) to finance charges, (ii)
to other charges or fees, and (iii) to the unpaid principal balance of
purchases allocated first to the longest outstanding receivable. The annual
finance charge rate is 21.6% per annum, generally subject (where permitted)
to a minimum monthly charge of $0.50, except where a lower rate is
established by law and in those states in which a lower rate is chosen by
FDS in consultation with the applicable FEDERATED subsidiary for
competitive reasons. Under the terms of the account agreements governing
the ACCOUNTS, FDS may change its finance charge rates at any time. There
can be no assurance that finance charges, fees, and other charges will
remain at current levels in the future. For discussions of the factors
possibly affecting finance charges, fees and other charges and,
accordingly, the amount of collections on receivables and payments on your
certificates, see "Risk Factors," "Trust Credit Card
Portfolio--Characteristics of the Trust Portfolio" and "Legal Aspects of
the Receivables--Consumer Protection Laws" in the attached prospectus and
"The Receivables", "Maturity Considerations" and "The Pooling and Servicing
Agreement--Addition of Trust Assets" in this prospectus supplement.
DELINQUENCY AND COLLECTIONS PROCEDURES FOR FDS CREDIT CARDS
All of the receivables in a particular ACCOUNT are considered to
become delinquent immediately upon the failure of any payment due thereon
to be made in full on or prior to the date due. Efforts to collect
delinquent credit card receivables are made by FACS personnel and
collection agencies and attorneys retained by FACS. Under current
procedures, FACS automatically prints a statement message on all customer
statements after a scheduled payment has been missed. If payment has not
been received by 14 days after the billing date, a reminder letter is sent
to the cardholder. If payment still has not been received by the next
billing date, the account is eligible for assignment to a FACS collector,
who may send additional letters and initiate telephone contact with the
cardholder in an effort to make payment arrangements. The current policy of
the ORIGINATORS is generally to recognize losses no later than the eighth
month of delinquency (or, in the case of certain major purchase plan
accounts, no later than the ninth month of delinquency), although
charge-offs may be made earlier in certain circumstances. The ORIGINATORS
may change their charge-off policies and collection practices at any time
in accordance with their business judgment and applicable law. Under the
terms of the POOLING AND SERVICING AGREEMENT, any Recoveries received in
respect of receivables in charged-off Accounts, net of the estimated
expenses of collection, will be paid to the trust.
THE RECEIVABLES
The receivables in the trust include PRINCIPAL RECEIVABLES and
FINANCE CHARGE RECEIVABLES. These receivables are generated from eligible
accounts selected by FDS from the FEDERATED portfolio to be conveyed to the
trust.
ADDITION OF ACCOUNTS
FDS has sold to PRC and PRC has transferred to the trust, all
receivables existing in each initial account on the CUT-OFF DATE. Each
company has also agreed to sell or transfer receivables existing in any
AUTOMATIC ADDITIONAL ACCOUNT on the date of its creation and receivables
generated in the initial accounts and the AUTOMATIC ADDITIONAL ACCOUNTS
after these dates.
PRC also has the right, and in some cases the obligation, to assign
additional accounts to the trust. All receivables in these SUPPLEMENTAL
ACCOUNTS are then conveyed to the trust, whether these receivables already
exist or are later created.
Under the PURCHASE AGREEMENT, FDS has the obligation to sell
receivables to PRC to allow PRC to satisfy its obligations and to exercise
its options under the POOLING AND SERVICING AGREEMENT. The accounts must
meet eligibility requirements, as specified in the POOLING AND SERVICING
AGREEMENT, as of the date PRC designates that receivables in those accounts
will be included in the trust. According to the eligibility requirements,
FDS will represent and warrant to PRC and PRC will represent and warrant to
the trust that:
o the account has not been, and does not have:
- any receivables that have been sold, pledged or assigned
to any person except according to the POOLING AND
SERVICING AGREEMENT,
- any receivables that are charged off receivables, and
- any receivables identified as having been incurred
through fraudulent use of any related credit cards, and
o for any receivable existing under these accounts, the receivable:
- has arisen under an eligible account,
- arises under a CHARGE ACCOUNT AGREEMENT and constitutes a
legal, valid, binding and enforceable obligation of the
cardholder and
- at the time of transfer to the trust will be transferred
free and clear of any liens and security interests
arising through the transferor, except PERMITTED LIENS.
There can be no assurance that all the accounts will continue to meet
the applicable eligibility requirements throughout the life of the trust.
See "The Pooling and Servicing Agreement -- Representations and Warranties"
for a detailed discussion.
It is possible that ADDITIONAL ACCOUNTS will not be accounts of the
same type previously included in the trust. There can be no assurance that
ADDITIONAL ACCOUNTS will be of the same credit quality as the initial
accounts. ADDITIONAL ACCOUNTS may contain receivables which consist of
fees, charges and amounts that are different from the fees, charges and
amounts described in this prospectus. ADDITIONAL ACCOUNTS may also have
different credit limits, balances and ages. As a result, there can be no
assurance that the accounts will continue to have the characteristics
described in this prospectus as ADDITIONAL ACCOUNTS are added. In addition,
the inclusion in the trust of ADDITIONAL ACCOUNTS with lower periodic
finance charges or fees may have the effect of reducing the PORTFOLIO
YIELD. See "The Pooling and Servicing Agreement--Addition of Trust Assets"
and "-- Removal of Accounts" for a description of the conditions to
addition and removal of accounts.
REMOVAL OF ACCOUNTS
PRC may also designate accounts as REMOVED ACCOUNTS. The receivables
in the REMOVED ACCOUNTS will be removed from the trust and reassigned to
PRC. Throughout the term of the trust, the trust portfolio will consist of
the initial ACCOUNTS plus any ADDITIONAL ACCOUNTS minus any REMOVED
ACCOUNTS. See "The Pooling and Servicing Agreement--Removal of Accounts"
for a description of the conditions to any removal of accounts.
ADDITIONAL INFORMATION IN THE PROSPECTUS SUPPLEMENT
The prospectus supplement for each series of certificates will
provide information about the trust portfolio. This information will
include:
o the composition of the ACCOUNTS by account balance,
o the composition of the ACCOUNT by credit guidelines,
o the composition of the ACCOUNTS by payment status,
o the composition of the ACCOUNTS by age,
o the composition of the ACCOUNTS by geographic distribution, and
o the delinquency and loss statistics relating to the accounts.
MATURITY CONSIDERATIONS
Following the REVOLVING PERIOD, each series of certificates is
expected to begin to accumulate principal or begin to distribute principal
to certificateholders. The attached prospectus supplement describes the
conditions under which the ACCUMULATION PERIOD or AMORTIZATION PERIOD will
begin for your class of certificates.
Principal will accumulate in a funding account if your series
features a CONTROLLED ACCUMULATION PERIOD or RAPID ACCUMULATION PERIOD and
one of these principal ACCUMULATION PERIODS begins. As described in the
attached prospectus supplement, during a CONTROLLED ACCUMULATION PERIOD on
each business day an amount of principal, up to the amount specified, will
be set aside in the funding account. If a PAY OUT EVENT or a similar event
described in the related prospectus supplement occurs and your series
features a RAPID ACCUMULATION PERIOD, the full amount of principal
available to your series will be deposited in a funding account, up to the
amount specified in the related prospectus supplement. This accumulated
principal will be paid to you on the EXPECTED FINAL PAYMENT DATE for your
class of certificates, or earlier if an AMORTIZATION PERIOD begins before
your first EXPECTED FINAL PAYMENT DATE. Note that, although your series may
feature an ACCUMULATION PERIOD, your class of certificates may not make use
of it.
Principal will be paid to you in increments, up to the amount
specified in the attached prospectus supplement, if your class of
certificates features a CONTROLLED AMORTIZATION PERIOD and this period
begins. Your class of certificates might also begin to pay principal to you
if the attached prospectus supplement specifies that your class will begin
early amortization. Early amortization will begin, for all classes of your
series, when a PAY OUT EVENT occurs. Principal will be paid to you only on
a DISTRIBUTION DATE during any AMORTIZATION PERIOD.
The prospectus supplement provides the following information about
maturity:
o the date any ACCUMULATION PERIOD or AMORTIZATION PERIOD is
scheduled to begin,
o the principal amount of the payments expected or available for each
period,
o the priority of accumulations and payments among the classes of
each series,
o any PAY OUT EVENTS that may cause a RAPID ACCUMULATION PERIOD or an
EARLY AMORTIZATION PERIOD,
o historical data showing payments by cardholders and total
charge-offs, and
o other information about the FEDERATED portfolio.
We can give you no assurance that principal will be available when
expected, either to accumulate or to pay you. Collection of principal may
or may not be constant from month to month or be similar to any historical
experience. Collections may be affected by seasonality, by changes in
payment habits of cardholders or by general economic conditions. A slowdown
in the payment rate may extend the expected life of your certificates if
principal is collected more slowly. This may affect your anticipated yield
to maturity. Also, the occurrence of any PAY OUT EVENT may substantially
shorten the average life of your certificates. You may find it difficult to
reinvest funds in an instrument with a comparable interest rate and
comparable risk characteristics if the certificates are paid sooner than
anticipated.
DESCRIPTION OF THE CERTIFICATES
Following is a summary describing the material provisions common to
each series of certificates. If you are purchasing certificates, the
attached prospectus supplement describes any series-specific provisions
supplementing the information in this prospectus. Each series of
certificates will be issued through the POOLING AND SERVICING AGREEMENT and
a supplement to that agreement. This prospectus and the attached prospectus
supplement do not contain all information about your certificates. For a
detailed description of the certificates, also read the POOLING AND
SERVICING AGREEMENT and the SUPPLEMENT.
The certificates offered through this prospectus and the attached
prospectus supplement will be issued in "series" consisting of one or more
"classes," which may be senior to other classes. Each series of
certificates will represent an interest in the trust distinct from the
EXCHANGEABLE TRANSFEROR CERTIFICATE and any other series of certificates
issued by the trust. Each class of a series will evidence the right to
receive a specified portion of principal and finance charge collections on
receivables in the trust portfolio. Each class of a series may differ from
other classes in some aspects, including:
o maturity date,
o interest rate, and
o availability and amount of enhancement.
Payments will be made to certificateholders in whose names the certificates
were registered on the RECORD DATES specified in the attached prospectus
supplement.
For each series of certificates, the INVESTED AMOUNT on any date
generally will be equal to the initial INVESTED AMOUNT for that series
reduced by:
o the amount of principal paid to the related certificateholders, AND
o the amount of unreimbursed INVESTOR CHARGE-OFFS and reallocated
principal collections for that series.
The INVESTED AMOUNT may further be adjusted by:
o the amount of principal on deposit in any specified account, and
o any other amount stated in the related prospectus supplement.
Each series of certificates may consist of one or more classes, one
or more of which may be senior certificates and one or more of which may be
subordinated certificates. Each class of a series will have the right to
receive a specified portion of each distribution of principal or interest
or both. PRC currently owns the EXCHANGEABLE TRANSFEROR CERTIFICATE. The
EXCHANGEABLE TRANSFEROR CERTIFICATE represents the undivided interest in
the trust not represented by the certificates or the rights of any
enhancement providers to receive payments from the trust. The holder of the
EXCHANGEABLE TRANSFEROR CERTIFICATE will have the right to a percentage of
all collections on the receivables in the trust.
Certificates offered through this prospectus and the attached
prospectus supplement will be:
o represented by certificates registered in the name of a DTC nominee,
o available for purchase in minimum denominations and integral
multiples of $1,000, and
o available for purchase in book-entry form only.
The certificates in book-entry form, in which you will hold a beneficial
interest as described under "--Book-Entry Registration," are "global
securities." The attached prospectus supplement will specify if:
o your series of certificates, or one or more classes of your series,
may be issued in a different form, and
o your certificates have any other characteristics different from
those listed above.
The attached prospectus supplement may state that application will be
made to list your series or class of certificates on the Luxembourg Stock
Exchange or another exchange.
FORM OF YOUR CERTIFICATES
The following description of the form of your certificates includes
how they are transferred and how the trust makes payments to you. One or
more of the following clearing systems performs transactions in your
certificates:
o The Depository Trust Company or "DTC,"
o Clearstream Banking, societe anonyme or "CLEARSTREAM," and
o the system operated by Morgan Guaranty Trust Company of New York's
Brussels, Belgium office referred to as "EUROCLEAR."
DTC provided the information in this section concerning DTC and its
book-entry system. PRC has not independently verified the accuracy of this
information.
DTC has informed PRC that its nominee is Cede & Co. or "Cede." Cede
is expected to be the holder of record of each class of certificates
offered under this prospectus. This means that you, as an owner of
certificates, will only be entitled to a DEFINITIVE CERTIFICATE
representing your interest in the issued certificates under specified
circumstances. Instead, you will own certificates through a book-entry
record maintained by DTC. All references in this document to:
o distributions, reports, notices and statements will be made to DTC
or Cede, as the registered holder of the certificates, for
distribution to you following DTC procedures, and
o actions by certificateholders refer to actions taken by DTC upon
instructions from DTC PARTICIPANTS.
You may hold your certificates through DTC in the U.S., CLEARSTREAM
or EUROCLEAR in Europe or in any other manner described in the attached
prospectus supplement. You may hold your certificates directly with one of
these systems if you are a participant in the system, or indirectly through
organizations which are participants. Descriptions of the clearing systems
follow.
DTC
DTC is:
o a limited-purpose trust company organized under the New York
Banking Law,
o a "banking organization" within the meaning of the New York Banking
Law,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and
o a "clearing agency" registered under the Securities Exchange Act of
1934, as amended.
DTC performs various services for its participating organizations, referred
to as DTC PARTICIPANTS. These services include:
o holding securities that DTC PARTICIPANTS deposit with it, and
o providing a system where DTC PARTICIPANTS may clear and settle
securities transactions, including transfers and pledges, in
deposited securities through electronic book-entry changes in their
accounts, so there is no physical movement of securities
certificates.
DTC PARTICIPANTS:
o include securities brokers and dealers, banks, trust companies, and
clearing corporations, and
o may include other organizations, including the underwriters of any
series of certificates issued through this document.
A number of DTC PARTICIPANTS, the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. own DTC. Securities brokers and dealers, banks, trust
companies and other financial organizations that clear through or maintain
a custodial relationship with a DTC PARTICIPANT, either directly or
indirectly, have indirect access to the DTC system. The rules applicable to
DTC and its DTC PARTICIPANTS are on file with the SEC.
CLEARSTREAM
CLEARSTREAM is incorporated under the laws of Luxembourg as a
professional depository and:
o holds securities for CLEARSTREAM CUSTOMERS,
o provides a system where CLEARSTREAM CUSTOMERS may clear and settle
securities transactions through electronic book-entry changes in
their accounts, so there is no physical movement of securities
certificates,
o settles transactions in any of 36 currencies, including U.S. dollars,
o provides for CLEARSTREAM CUSTOMERS, among other services,
safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and
borrowing, and
o deals with domestic securities markets in over 30 countries through
established depository and custodial relationships.
CLEARSTREAM has established an electronic bridge with Morgan Guaranty's
Brussels, Belgium office, acting as EUROCLEAR operator, to facilitate
settlement of trades between CLEARSTREAM and EUROCLEAR. CLEARSTREAM
currently accepts over 110,000 securities issues on its books. As a
professional depository, CLEARSTREAM is regulated by the Luxembourg
Commission for the Supervision of the Financial Sector, which supervises
Luxembourg banks. CLEARSTREAM CUSTOMERS:
o are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and other organizations,
o may include the underwriters of any series of certificates issued
through this document, and
o in the U.S., are limited to securities brokers, dealers and banks.
Currently, CLEARSTREAM has approximately 2,000 customers located in over 80
countries, including all major European countries, Canada and the United
States. Banks, brokers, dealers, trust companies and other organizations
that clear through or maintain a custodial relationship with a CLEARSTREAM
CUSTOMER, either directly or indirectly, have indirect access to
CLEARSTREAM.
EUROCLEAR
The EUROCLEAR system was created in 1968:
o to hold securities of its participating organizations, referred to
as EUROCLEAR PARTICIPANTS, and
o to clear and settle transactions between EUROCLEAR PARTICIPANTS
through simultaneous electronic book-entry delivery against
payment, so there is:
- no need for physical movement of securities certificates,
and
- no risk from lack of simultaneous transfers of securities
and cash.
The EUROCLEAR system's various services include:
o settlement of transactions in any of 34 currencies, including U.S.
dollars, and
o securities lending and borrowing and interfaces with domestic
markets in several countries similar to the arrangements for
cross-market transfers with DTC.
The EUROCLEAR system is operated by Morgan Guaranty's Brussels, Belgium
office, acting as EUROCLEAR operator, under contract with the Euroclear
Clearance System, S.C., a Belgian cooperative corporation, which
establishes policy for the EUROCLEAR system on behalf of EUROCLEAR
PARTICIPANTS. EUROCLEAR PARTICIPANTS:
o include central banks and other banks, securities brokers and
dealers and other professional financial intermediaries, and
o may include the underwriters of any series of certificates offered
through this document.
Other firms that clear through or maintain a custodial relationship with a
EUROCLEAR PARTICIPANT, either directly or indirectly, have indirect access
to the EUROCLEAR system.
The EUROCLEAR operator conducts all operations for EUROCLEAR, and
holds all EUROCLEAR securities clearance accounts and cash accounts. The
EUROCLEAR operator is the Belgian branch of a New York banking corporation
which is a member bank of the Federal Reserve System. 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.
The Terms and Conditions Governing Use of EUROCLEAR and the related
Operating Procedures of the EUROCLEAR system and applicable Belgian law
govern:
o securities clearance accounts and cash accounts with the EUROCLEAR
operator,
o transfers of securities and cash within the EUROCLEAR system,
o withdrawal of securities and cash from the EUROCLEAR system, and
o receipts of payments for securities in the EUROCLEAR system.
The EUROCLEAR system holds all securities (1) on a fungible basis and (2)
without knowledge of the actual owners holding through EUROCLEAR
PARTICIPANTS and to whose accounts the securities are credited. The
EUROCLEAR operator acts under these terms and conditions only on behalf of
EUROCLEAR PARTICIPANTS and has no record of or relationship with persons
holding through EUROCLEAR PARTICIPANTS.
BOOK-ENTRY REGISTRATION
Cede, as DTC's nominee, holds the global securities. CLEARSTREAM will
hold omnibus positions on behalf of CLEARSTREAM CUSTOMERS, while EUROCLEAR
will do the same on behalf of EUROCLEAR PARTICIPANTS, through customers'
securities accounts in CLEARSTREAM'S and EUROCLEAR'S names on the books of
each of their depositaries. These depositaries will, in turn, hold these
positions in customers' securities accounts in the depositaries' names on
DTC's books.
Transfers between:
o DTC PARTICIPANTS occur under the DTC rules, and
o CLEARSTREAM CUSTOMERS and EUROCLEAR PARTICIPANTS occur in the
ordinary way under their applicable rules and operating procedures.
Cross-market transfers occur through DTC, under its rules, on behalf of
CLEARSTREAM or EUROCLEAR by each of their depositaries, whether between
persons holding securities directly or indirectly:
o through DTC, on the one hand, and
o through CLEARSTREAM CUSTOMERS or EUROCLEAR PARTICIPANTS, on the
other hand.
However, these cross-market transactions will require delivery of
instructions to CLEARSTREAM or EUROCLEAR by the counterparty in its system
under either clearing system's rules and procedures, and within its
established European time deadlines. CLEARSTREAM or EUROCLEAR will, if the
transaction meets its settlement requirements, deliver instructions to its
depositary to take action to accomplish final settlement on its behalf by:
o delivering or receiving securities in DTC, and
o making or receiving payment under normal procedures for same-day
funds settlement applicable to DTC.
CLEARSTREAM CUSTOMERS and EUROCLEAR PARTICIPANTS may not deliver
instructions directly to the depositaries.
Because of time-zone differences, credits of securities in
CLEARSTREAM or EUROCLEAR due to a transaction with a DTC PARTICIPANT will
be made during the subsequent securities settlement processing, dated the
business day following the DTC settlement date. These credits or any other
transactions in the securities settled during that processing will be
reported to the relevant CLEARSTREAM CUSTOMERS or EUROCLEAR PARTICIPANTS on
that day. Cash received in CLEARSTREAM or EUROCLEAR because of sales of
securities by or through a CLEARSTREAM CUSTOMER or a EUROCLEAR PARTICIPANT:
o will be received with value on the DTC settlement date, and
o will only be available in the relevant CLEARSTREAM or EUROCLEAR
cash account only as of the business day following settlement in
DTC.
Your purchases of certificates under the DTC system must be made by
or through DTC PARTICIPANTS, which will receive a credit for the
certificates on DTC's records. Your ownership interest is, in turn,
recorded on the DTC PARTICIPANTS' and indirect participants' records. You
will not receive written confirmation from DTC of their purchase, but you
can expect to receive written confirmation providing details of the
transaction, as well as periodic statements of your holdings, from the DTC
PARTICIPANT or indirect participant through which you entered into the
transaction. Transfers of ownership interests in the certificates are
accomplished by entries made on the books of DTC PARTICIPANTS acting on
behalf of you and other certificateholders. You will not receive
certificates representing your ownership interest in the certificates
offered through this document, unless use of the book-entry system for
these certificates has ended.
DTC registers all certificates deposited with it by DTC PARTICIPANTS
in the name of its nominee, Cede, to make all later transfers of
certificates easier. The deposit of certificates with DTC and their
registration in the name of Cede will not change beneficial ownership of
the certificates. DTC has no knowledge of the actual owners of the
certificates; its records reflect only the identity of the DTC PARTICIPANTS
to whose accounts the certificates are credited, which may or may not be
the actual certificate owners. DTC PARTICIPANTS remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by:
o DTC to DTC PARTICIPANTS,
o DTC PARTICIPANTS to indirect participants, and
o DTC PARTICIPANTS and indirect participants to certificateholders,
will be governed by arrangements among them, under any applicable statutory
or regulatory requirements.
Neither DTC nor Cede will consent or vote on these certificates.
Under its usual procedures, DTC mails an omnibus proxy to PRC as soon as
possible after the record date. In this way, DTC assigns Cede's consenting
or voting rights to those DTC PARTICIPANTS to whose accounts these
certificates are credited on the relevant record date.
For each DISTRIBUTION DATE:
o the trustee makes principal and interest payments on the
certificates to DTC, and
o DTC credits each of those payments to DTC PARTICIPANTS' accounts on
that date according to each of the participants' holdings shown on
DTC's records unless DTC has reason to believe that it will not
receive payment on that date.
Payments by any DTC PARTICIPANT to certificateholders will be:
o governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in
bearer form or registered in "street name," and
o the responsibility of that DTC PARTICIPANT and not of DTC, the
trustee or PRC, under any applicable statutory or regulatory
requirements.
The responsibility for:
o payment of principal and interest to DTC belongs to the trustee,
o disbursement of these payments to DTC PARTICIPANTS belongs to DTC,
and
o disbursement of these payments to certificateholders belongs to DTC
PARTICIPANTS and indirect participants.
DTC may stop providing its services as securities depository for
these certificates at any time by giving reasonable notice to PRC or the
trustee. If this occurs and if a successor securities depository is not
obtained, DEFINITIVE CERTIFICATES will be printed and delivered. PRC may
decide to end use of the system of book-entry transfers through DTC or a
successor securities depository. If so, DEFINITIVE CERTIFICATES will be
delivered to each certificateholder. See "--Definitive Certificates" for a
description of the circumstances under which the trust will issue
Definitive Certificates to you.
CLEARSTREAM or EUROCLEAR will credit distributions on certificates
held through it to the cash accounts of CLEARSTREAM CUSTOMERS or EUROCLEAR
PARTICIPANTS under its rules and procedures, to the extent received by its
depositary. These distributions will require tax reporting under relevant
U.S. tax laws and regulations as described under "Tax Matters." CLEARSTREAM
or the EUROCLEAR operator will take any other action permitted to be taken
by a certificateholder under the POOLING AND SERVICING AGREEMENT on behalf
of a CLEARSTREAM CUSTOMER or EUROCLEAR PARTICIPANT:
o only under its relevant rules and procedures, and
o to the extent its depositary can carry out those actions on its
behalf through DTC.
Although DTC, CLEARSTREAM and EUROCLEAR have agreed to the procedures
above to provide a system that makes transfers of certificates among their
participants or customers easier:
o they are under no obligation to perform or continue to perform
these procedures, and
o they may stop these procedures at any time.
DEFINITIVE CERTIFICATES
The certificates offered through this prospectus will be initially
issued in book-entry form. DEFINITIVE CERTIFICATES in fully registered,
certificated form will not be issued to any party except DTC or its nominee
unless:
o PRC advises the trustee in writing:
- that DTC is no longer willing or able to discharge
properly its responsibilities as depository for this
series of certificates, and the trustee or PRC is unable
to locate a qualified successor,
- that it chooses to end the book-entry system through DTC, or
o after a SERVICER DEFAULT occurs:
- certificateholders representing (1) not less than 50% or
(2) another percentage specified in the attached
prospectus supplement of the total unpaid principal
amount of the certificates advise the trustee and DTC
through DTC PARTICIPANTS in writing that the continuation
of a book-entry system through DTC or its successor is
no longer in the best interests of the
certificateholders.
If any of these events occurs, DTC must notify all DTC PARTICIPANTS
of the availability through DTC of DEFINITIVE CERTIFICATES. Once DTC gives
the definitive certificate representing these certificates and instructions
for re-registration to the trustee:
o the trustee will issue the certificates as DEFINITIVE CERTIFICATES,
and
o afterwards, the trustee will recognize the holders of these
DEFINITIVE CERTIFICATES as holders under the POOLING AND SERVICING
AGREEMENT.
The trustee then makes payments:
o directly to holders of DEFINITIVE CERTIFICATES under the procedures
provided in this prospectus and in the POOLING AND SERVICING
AGREEMENT, and
o on each DISTRIBUTION DATE, to holders in whose names the DEFINITIVE
CERTIFICATES were registered at the close of business on the
related RECORD DATE.
If you own DEFINITIVE CERTIFICATES, payments will be made by check
and mailed to you at an address maintained by the trustee.
The final payment will be made only when a certificate is presented
and surrendered at the office or agency specified in the notice of final
distribution to certificateholders, whether it is:
o a DEFINITIVE CERTIFICATE, or
o a certificate registered in the name of DTC or its nominee.
The trustee will provide this notice to registered certificateholders no
later than the fifth day of the month in which the final distribution will
occur.
DEFINITIVE CERTIFICATES will be transferable and exchangeable at the
office of the transfer agent and registrar, which shall initially be the
trustee. The transfer agent and registrar will impose no service charge but
may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection with the transfer or exchange.
The transfer agent and registrar shall not be required to register the
transfer or exchange of DEFINITIVE CERTIFICATES for a period of fifteen
days preceding the due date for any payment on the DEFINITIVE CERTIFICATES.
INITIAL SETTLEMENT
Each class of certificates offered under this prospectus and the
attached prospectus supplement will be held in book-entry form by DTC in
the name of its nominee, Cede. Investors' interests in the certificates
will be represented through financial institutions acting on their behalf
as direct and indirect participants in DTC. As a result, CLEARSTREAM and
EUROCLEAR will hold positions on behalf of their customers or participants
through their respective depositaries, which will hold positions in
accounts as DTC PARTICIPANTS.
Custody accounts of investors who elect to hold certificates through
DTC will be credited with their holdings against payment in same-day funds
on the settlement date.
Investors who elect to hold certificates through CLEARSTREAM or
EUROCLEAR accounts will follow the settlement procedures that apply to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Certificates will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
SECONDARY MARKET TRADING
Trading between DTC Participants. Secondary market trading between
investors holding certificates through DTC will be conducted according to
the rules and procedures for U.S. corporate debt obligations. Secondary
market trading between DTC PARTICIPANTS will be settled in same-day funds.
Trading between Clearstream Customers and/or Euroclear Participants.
Secondary market trading between investors holding certificates through
CLEARSTREAM and EUROCLEAR will be conducted in the ordinary way under:
o their normal rules and operating procedures, and
o conventional eurobond practice, which means a seven calendar day
settlement.
Secondary market trading between CLEARSTREAM CUSTOMERS or EUROCLEAR
PARTICIPANTS will be settled using the procedures for conventional
eurobonds in same-day funds.
Trading between DTC seller and Clearstream or Euroclear purchaser.
Transfers of certificates from the account of a DTC PARTICIPANT to the
account of a CLEARSTREAM CUSTOMER or a EUROCLEAR PARTICIPANT usually occur
as follows:
the purchaser sends instructions to CLEARSTREAM or EUROCLEAR through
that customer or participant at least one business day before settlement,
o CLEARSTREAM or EUROCLEAR instructs its depositary to receive the
securities against payment, which includes interest accrued on the
securities from and including the last coupon payment date to and
excluding the settlement date,
o that depositary credits payments to the DTC PARTICIPANT'S account
against delivery of the securities, and
o after settlement has been completed, the depositary credits
securities to the relevant clearing system, which, in turn, under
its usual procedures, credits those securities to that customer's
or participant's account.
The securities credit will appear the next day, European time, and the cash
debit will be back-valued to, and the interest on the 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, which means the trade fails, the CLEARSTREAM or
EUROCLEAR cash debit will be valued instead as of the actual settlement
date.
CLEARSTREAM CUSTOMERS or EUROCLEAR PARTICIPANTS will need to make
available to each of their clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing
lines of credit, as they would for any settlement occurring within
CLEARSTREAM or EUROCLEAR. Under this approach, they may take on credit
exposure to CLEARSTREAM or EUROCLEAR until the securities are credited to
their accounts one day later.
As an alternative, if CLEARSTREAM or EUROCLEAR has extended a line of
credit to them, CLEARSTREAM CUSTOMERS or EUROCLEAR PARTICIPANTS can elect
not to pre-position funds and allow that credit line to be drawn upon to
finance settlement. Under this procedure, CLEARSTREAM CUSTOMERS or
EUROCLEAR PARTICIPANTS purchasing securities would incur overdraft charges
for one day, assuming they cleared the overdraft when the securities were
credited to their accounts. However, interest on the securities would
accrue from the value date. So, the investment income on the securities
earned during that one-day period may substantially reduce or offset the
amount of the overdraft charges, although this result will depend on each
CLEARSTREAM CUSTOMER'S or EUROCLEAR PARTICIPANT'S particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC PARTICIPANTS can use their usual procedures for sending securities to
their depositaries for the benefit of CLEARSTREAM CUSTOMERS or EUROCLEAR
PARTICIPANTS. The sale proceeds will be available to the DTC seller on the
settlement date. In this way, to the DTC PARTICIPANT a cross-market
transaction will settle no differently than a trade between two DTC
PARTICIPANTS.
Trading between Clearstream or Euroclear seller and DTC purchaser.
Due to time zone differences in their favor, CLEARSTREAM CUSTOMERS and
EUROCLEAR PARTICIPANTS may use their customary procedures for transfers of
securities by a clearing system, through its depositary, to a DTC
Participant. Trading usually occurs as follows:
o the seller sends instructions to CLEARSTREAM or EUROCLEAR through a
CLEARSTREAM CUSTOMER or EUROCLEAR PARTICIPANT at least one business
day before settlement,
o CLEARSTREAM or EUROCLEAR instructs its depositary to deliver the
bonds to the DTC PARTICIPANT'S account against payment, which
includes interest accrued on the securities from and including the
last coupon payment date to and excluding the settlement date, and
o the payment is reflected in the account of that customer or
participant the next day, and receipt of the cash proceeds in that
customer's or participant's account is back-valued to the value
date--the preceding day when settlement occurred in New York.
Should the CLEARSTREAM CUSTOMER 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 cancel
out any overdraft charges incurred over that one-day period. If settlement
is not completed on the intended value date, which means the trade fails,
receipt of the cash proceeds in the CLEARSTREAM CUSTOMER'S or EUROCLEAR
PARTICIPANT'S account would instead be valued as of the actual settlement
date. Finally, day traders that use CLEARSTREAM or EUROCLEAR and that
purchase securities from DTC PARTICIPANTS for delivery to CLEARSTREAM
CUSTOMERS 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:
o borrowing through CLEARSTREAM or EUROCLEAR for one day--until the
purchase side of the day trade is reflected in their CLEARSTREAM or
EUROCLEAR accounts--under the clearing system's customary
procedure,
o borrowing the securities in the U.S. from a DTC PARTICIPANT no
later than one day before settlement which would give the
securities sufficient time to be reflected in their CLEARSTREAM or
EUROCLEAR account to settle the sale side of the trade, or
o 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 before the value date for the sale to the
CLEARSTREAM CUSTOMER or EUROCLEAR PARTICIPANT.
INVESTOR PERCENTAGE
The assets of the trust are allocated among:
o certificateholders of each series,
o providers of uncertificated enhancement backed by receivables, and
o the holder of the EXCHANGEABLE TRANSFEROR CERTIFICATE.
Each series issued by the trust is backed by an amount of PRINCIPAL
RECEIVABLES and amounts on deposit in various trust bank accounts. The
attached prospectus supplement may describe how your series' INVESTED
AMOUNT will be adjusted by the amount of funds deposited in a bank account
or accounts or in any other way. The INVESTED AMOUNT can vary from period
to period, and on any date is generally equal to:
(initial INVESTED AMOUNT on the series' CLOSING DATE) - (total
principal payments made to the series' certificateholders) - (total
unreimbursed charge-offs and reallocated principal collections for
the series)
Any COLLATERAL INVESTED AMOUNT in a series will also be included in
that series' INVESTED AMOUNT. If your series includes a COLLATERAL INVESTED
AMOUNT, a description will be included in the attached prospectus
supplement. During each series' REVOLVING PERIOD, the INVESTED AMOUNT is
expected to remain constant to the extent noted in the attached prospectus
supplement unless certificates are purchased by PRC.
The total INVESTED AMOUNT in the trust is the sum of the INVESTED
AMOUNTS for all series issued from the trust.
The certificates of each series represent undivided interests in the
assets of the trust, including the right to each series' INVESTOR
PERCENTAGE of all cardholder payments on receivables in the trust.
Certificateholders of each series will receive varying amounts of
collections of principal and finance charges each month, and will also be
allocated a varying portion of receivables in defaulted accounts written
off during each month. Principal collections, finance charge collections
and receivables in defaulted accounts may be allocated to your series in
different ways: the attached prospectus supplement will describe how the
various INVESTOR PERCENTAGES are calculated. If your series includes
multiple classes of certificates, collections allocated to your series may
be further allocated among each class.
As a certificateholder, your right to collections is limited to the
amounts needed to make required payments to you. Collections allocated to
your series or your class of certificates might be reallocated. The
attached prospectus supplement and the POOLING AND SERVICING AGREEMENT
explain how collections will be allocated to, or reallocated from, your
certificates.
Each series of certificates may be included in a group of series.
Series in a group may share excess principal collections, finance charge
collections or both among themselves. The attached prospectus supplement
will state if your series is in a group and, if it is, what other series in
your group were outstanding on your series' CLOSING DATE. In addition, the
attached prospectus supplement will state whether classes of your series
are entitled to TRANSFEROR FINANCE CHARGE COLLECTIONS.
Each series of certificates represents interests in the trust only,
and does not represent interests in or recourse obligations of FEDERATED,
FDS or PRC or any of their affiliates. A certificate is not a deposit and
neither the certificates nor the underlying trust accounts or receivables
are insured or guaranteed by the FDIC or any other governmental agency.
INTEREST
Interest will accrue from the CLOSING DATE on the related certificate
principal balance, or other amount specified in the related prospectus
supplement, at the CERTIFICATE RATE. The CERTIFICATE RATE may be a fixed,
floating or variable rate as specified in the related prospectus
supplement. Interest will be distributed to certificateholders on the
DISTRIBUTION DATES specified in the related prospectus supplement.
Interest payments on any DISTRIBUTION DATE will most likely be funded
from FINANCE CHARGE COLLECTIONS allocated to the certificateholders'
interest during the previous MONTHLY PERIOD. Interest payments on any
DISTRIBUTION DATE may also be funded from:
o investment earnings on funds held in accounts of the trust,
o FINANCE CHARGE COLLECTIONS allocated initially to
certificateholders of other series or PRC as holder of the
EXCHANGEABLE TRANSFEROR CERTIFICATE,
o any applicable enhancement, if necessary, or
o other amounts as specified in the related prospectus supplement.
If the DISTRIBUTION DATES for payment of interest for a series or
class occur less frequently than monthly, any collections or other amounts
may be deposited in one or more trust accounts for distribution to the
certificateholders of that series or class. Each class may have a separate
INTEREST FUNDING ACCOUNT if a series has more than one class of
certificates.
The prospectus supplement relating to each series of certificates and
each class will describe:
o the amounts and sources of interest payments to be made,
o the CERTIFICATE RATE, and
o for a series or class bearing interest at a floating or a variable
CERTIFICATE RATE:
- the dates and the manner for determining the CERTIFICATE
RATES, and
- the formula, index or other method by which the
CERTIFICATE RATES are determined.
PRINCIPAL
No principal payments will be made to the certificateholders of a
series during the REVOLVING PERIOD, except to the extent specified in the
related prospectus supplement. Principal will be paid to the
certificateholders in the amounts and on the DISTRIBUTION DATES specified
in the related prospectus supplement or will be accumulated in a PRINCIPAL
FUNDING ACCOUNT for later distribution to certificateholders on the
EXPECTED FINAL PAYMENT DATE during:
o the ACCUMULATION PERIOD, or
o the EARLY AMORTIZATION PERIOD.
Principal payments for any series or class will be funded from
collections of PRINCIPAL RECEIVABLES received during the related MONTHLY
PERIOD or periods allocated to that series or shared from other series or
from PRC as holder of the EXCHANGEABLE TRANSFEROR CERTIFICATE and from
other sources as specified in the related prospectus supplement. These
payments will be allocated to the certificateholders' interest of the
related series or class. If a series has more than one class of
certificates, the certificateholders of one or more classes may receive
payments of principal at different times. The related prospectus supplement
will describe the manner, timing and priority of payments of principal to
certificateholders of each class.
THE EXCHANGEABLE TRANSFEROR CERTIFICATE
The certificate evidencing the TRANSFEROR INTEREST in the trust is
referred to as the EXCHANGEABLE TRANSFEROR CERTIFICATE. The EXCHANGEABLE
TRANSFEROR CERTIFICATE represents the right to a percentage of all
cardholder payments on the receivables equal to 100% minus the sum of the
applicable allocation percentages for all series of certificates then
outstanding. The EXCHANGEABLE TRANSFEROR CERTIFICATE may be transferred
subject to limitations and conditions described in the POOLING AND
SERVICING AGREEMENT.
NEW ISSUANCES
The POOLING AND SERVICING AGREEMENT allows the transferor to direct
the trustee to issue a new series. Each new issuance will have the effect
of decreasing the TRANSFEROR INTEREST by the INVESTED AMOUNT of the new
series.
The transferor, the servicer, the trustee and the trust are not
required to and do not intend to obtain the consent of, or allow prior
review by, any certificateholder of any outstanding series to issue any
additional series. The transferor may offer any series to the public under
a prospectus or other disclosure document in transactions either registered
under the Securities Act of 1933, as amended, or exempt from registration.
Each new series may be offered:
o directly, through one or more underwriters or placement agents,
o in fixed-price offerings, or
o in negotiated transactions or otherwise.
Any new series may be issued in fully registered or book-entry form
in minimum denominations determined by the transferor.
Under the POOLING AND SERVICING AGREEMENT, the transferor may
designate principal terms so that each series has an ACCUMULATION PERIOD or
an AMORTIZATION PERIOD. In addition, one or more series may be in their
ACCUMULATION PERIOD or AMORTIZATION PERIOD while other series are not.
The related prospectus supplement specifies whether PRINCIPAL
COLLECTIONS otherwise available to a series that is not amortizing or
accumulating principal may be treated as SHARED PRINCIPAL COLLECTIONS and
reallocated to a series that is amortizing or accumulating principal. In
addition, PRINCIPAL COLLECTIONS and FINANCE CHARGE COLLECTIONS otherwise
payable to the transferor may be designated to be paid to the
certificateholders of the applicable series. Each series may have the
benefits of enhancement issued by enhancement providers different from the
enhancement providers used in any other series. Under the POOLING AND
SERVICING AGREEMENT, the trustee will hold the enhancement only on behalf
of the certificateholders of the series to which the enhancement is given.
For each enhancement, the transferor may deliver a different form of
enhancement agreement.
The transferor also has the option under the POOLING AND SERVICING
AGREEMENT to vary among series the terms on which a series may be
repurchased by the transferor or remarketed to other investors.
There is no limit to the number of new issuances the transferor may issue
under the POOLING AND SERVICING AGREEMENT. The trust will end only as
described in the POOLING AND SERVICING AGREEMENT. There can be no assurance
that the terms of any series might not have an impact on the timing and
amount of payments received by a certificateholder of another series.
A new issuance may only be issued after the satisfaction of the
conditions given in the POOLING AND SERVICING AGREEMENT and under the
related SUPPLEMENT. The obligation of the trustee to authenticate the
certificates of each new series and to execute and deliver the related
SUPPLEMENT must satisfy the following conditions:
o the transferor gives the trustee written notice of the new issuance
and its date of issuance, at least five business days before the
date of the new issuance,
o the transferor delivers to the trustee the related SUPPLEMENT, in a
form satisfactory to the trustee,
o the transferor delivers to the trustee the related enhancement
agreement, if any, executed by each party to that agreement,
o the transferor, the servicer, and the trustee receive confirmation
from each rating agency that the new issuance will not result in a
RATINGS EFFECT,
o the transferor delivers to the trustee and each rating agency an
opinion of counsel acceptable to the trustee that for federal
income tax purposes:
- the certificates of the new series will be characterized
as indebtedness or as partnership interests, and
- the new issuance will not adversely affect the federal
income tax characterization of any outstanding series.
o the TRANSFEROR INTEREST will not be less than the MINIMUM
TRANSFEROR INTEREST on the date of the new issuance, and
o any other conditions specified in any SUPPLEMENT.
After satisfying these conditions, the trustee will execute the
SUPPLEMENT and issue to the transferor the certificates of the new series
for execution and redelivery to the trustee for authentication.
TRUST ACCOUNTS
The servicer has established and will maintain in the name of the
trust and for the benefit of the certificateholders of each series, an
account called the COLLECTION ACCOUNT. The COLLECTION ACCOUNT is a
non-interest-bearing segregated account that must be maintained with the
servicer or a QUALIFIED INSTITUTION. The trustee will establish and
maintain with a QUALIFIED INSTITUTION for the benefit of the
certificateholders two segregated accounts for each series, the INTEREST
FUNDING ACCOUNT and the PRINCIPAL ACCOUNT. The trustee also maintains for
the benefit of the certificateholders a DISTRIBUTION ACCOUNT, which is a
non-interest-bearing segregated demand deposit account established with a
QUALIFIED INSTITUTION.
A QUALIFIED INSTITUTION means a United States depository institution
which at all times is acceptable to each rating agency.
Funds in the INTEREST FUNDING ACCOUNT and PRINCIPAL ACCOUNT will be
invested in the following CASH EQUIVALENTS:
o obligations fully guaranteed by the United States,
o time deposits, promissory notes or certificates of deposit of
depository institutions or trust companies having at the time of
investment the highest short-term debt rating from Moody's and
Standard & Poor's,
o commercial paper having, at the time of the trust's investment, a
rating in the highest rating category from Moody's and Standard &
Poor's,
o money market funds rated P-1 by Moody's and AAA-m or AAA-mg by
Standard & Poor's or otherwise approved in writing by each Rating
Agency,
o certain open end diversified investment companies which the Rating
Agency designates in writing will not result in a withdrawal or
downgrading of its then-current rating of any series then rated by
it,
o bankers' acceptances issued by any depository institution or trust
company having the highest rating from Moody's and Standard &
Poor's,
o Eurodollar time deposits with an entity having the highest rating
from Moody's and Standard & Poor's, and
o any other investments approved in writing by each rating agency.
Any earnings, net of losses and investment expenses, on funds in the
INTEREST FUNDING ACCOUNT or the PRINCIPAL ACCOUNT will be paid to the
servicer on the last day of the MONTHLY PERIOD. 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 INTEREST
FUNDING ACCOUNT or the PRINCIPAL ACCOUNT for the purpose of carrying out
its duties under the POOLING AND SERVICING AGREEMENT and the SUPPLEMENTS.
Under the POOLING AND SERVICING AGREEMENT, a paying agent will be appointed
having the revocable power to withdraw funds from the DISTRIBUTION ACCOUNT
to make distributions to the certificateholders. The paying agent will
initially be the trustee.
DEPOSITS IN COLLECTION ACCOUNT
Cardholders make payments on the receivables:
o to LOCK-BOX ACCOUNTS maintained by LOCK-BOX BANKS under LOCK-BOX
AGREEMENTS,
o to the servicer, who deposits all those payments in LOCK-BOX
ACCOUNTS no later than the second business day following receipt,
or
o as IN-STORE PAYMENTS.
All collections on receivables deposited in the LOCK-BOX ACCOUNTS will be
held for the benefit of the trust and will be deposited into the COLLECTION
ACCOUNT as promptly as possible after the date of processing. IN-STORE
PAYMENTS will be deposited in the COLLECTION ACCOUNT as promptly as
possible after the date of processing, but in no event later than the
second business day following that date of processing. On the same day as
any deposit to the COLLECTION ACCOUNT is made, the servicer makes the
deposits and payments to the accounts and parties as indicated below;
provided, that if FDS or any affiliate of FDS remains the servicer under
the POOLING AND SERVICING AGREEMENT, and
o with respect to any enhancement covering the risk of collection of
the servicer:
- the servicer provides to the trustee a letter of credit
or other form of enhancement covering that risk
acceptable to the rating agency and
- the transferor has not received a notice from the rating
agency that the letter of credit or other form of
enhancement would result in the lowering of that rating
agency's then-current rating of any series of
certificates then outstanding,
o the servicer has and maintains a short-term credit rating of at
least P-1 by Moody's and of at least A-1 by Standard & Poor's, or
o each rating agency confirms that the action will not result in a
downgrading or withdrawal of the then-current rating of any
outstanding series,
then the servicer may make deposits and payments on the business day
immediately before the DISTRIBUTION DATE in an amount equal to the net
amount of those deposits and payments which would have been made had the
conditions of this proviso not applied and some payments and allocations
described in this prospectus supplement may be made on a monthly, rather
than a daily, basis.
If any of the criteria above are satisfied, payments on the
receivables collected by the servicer will not be segregated from the
assets of the servicer. Until payments on the receivables collected by the
servicer are deposited into the COLLECTION ACCOUNT, those funds may be used
by the servicer for its own benefit, and the proceeds of any short-term
investment of those funds will accrue to the servicer. While the servicer
holds funds representing payments on the receivables collected by the
servicer and is permitted to use those funds for its own benefit, the
certificateholders are subject to risk of loss, including risk resulting
from the bankruptcy or insolvency of the servicer. The servicer will pay no
fee to the trust or any certificateholder for any use by the servicer of
funds collected on the receivables.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS
The related prospectus supplement specifies if the certificateholders
of a series or any class may be entitled to receive all or a portion of
EXCESS FINANCE CHARGE COLLECTIONS of another series to cover any shortfalls
on amounts payable from FINANCE CHARGE COLLECTIONS allocable to that series
or class. EXCESS FINANCE CHARGE COLLECTIONS for any MONTHLY PERIOD will
equal the excess of FINANCE CHARGE COLLECTIONS and other amounts allocated
to the certificateholders' interest of a series or class over the sum of:
o interest accrued for the current month and overdue monthly interest
on the certificates,
o accrued and unpaid monthly servicing fees,
o the INVESTOR DEFAULT AMOUNT,
o unreimbursed INVESTOR CHARGE-OFFS, and
o other amounts specified in the related prospectus supplement.
EXCESS FINANCE CHARGE COLLECTIONS will be applied to cover any
shortfalls to amounts payable from FINANCE CHARGE COLLECTIONS allocable to
any other series in the same group. EXCESS FINANCE CHARGE COLLECTIONS will
be distributed evenly to each series based on the amount of the shortfall,
if any, to each other series. There can be no assurance that any other
series will be outstanding or that there will be any EXCESS FINANCE CHARGE
COLLECTIONS available to that group for any MONTHLY PERIOD.
SHARED PRINCIPAL COLLECTIONS
The related prospectus supplement will specify if PRINCIPAL
COLLECTIONS for any MONTHLY PERIOD allocated to the certificateholders'
interest of that series, after required distributions for that series, will
be available to other series. The servicer will determine SHARED PRINCIPAL
COLLECTIONS as follows:
o the amount of PRINCIPAL COLLECTIONS for any MONTHLY PERIOD, plus
o other amounts described in the SUPPLEMENT of that series, allocated
to that series remaining after covering the required deposits and
distributions and any similar amount remaining for any other
series.
The servicer will allocate the SHARED PRINCIPAL COLLECTIONS to cover
any principal distributions to certificateholders and deposits to PRINCIPAL
FUNDING ACCOUNTS for any series that are either scheduled or permitted and
that have not been covered out of the investor principal collections and
other amounts for that series. If these PRINCIPAL SHORTFALLS exceed SHARED
PRINCIPAL COLLECTIONS for any MONTHLY PERIOD, SHARED PRINCIPAL COLLECTIONS
will be allocated evenly among the applicable series based on the
respective PRINCIPAL SHORTFALLS of each series. To the extent that SHARED
PRINCIPAL COLLECTIONS exceed PRINCIPAL SHORTFALLS, the balance will be
allocated to the holder of the EXCHANGEABLE TRANSFEROR CERTIFICATE, but
only if:
o the TRANSFEROR INTEREST is greater than the MINIMUM TRANSFEROR
INTEREST, or
o in all other circumstances the SHARED PRINCIPAL COLLECTIONS will be
deposited in the EXCESS FUNDING ACCOUNT.
Any reallocation of PRINCIPAL COLLECTIONS will not result in a
reduction in the INVESTED AMOUNT of the series to which collections were
initially allocated. There can be no assurance that there will be any
SHARED PRINCIPAL COLLECTIONS in any MONTHLY PERIOD.
EXCESS FUNDING ACCOUNT
The servicer will establish and maintain with a Qualified Institution
in the name of the trust, for the benefit of the certificateholders of all
series, an EXCESS FUNDING ACCOUNT. Whenever the TRANSFEROR INTEREST would
otherwise be less than the MINIMUM TRANSFEROR INTEREST, funds otherwise
payable to the transferor will be deposited in the EXCESS FUNDING ACCOUNT
on each business day until the TRANSFEROR INTEREST is at least equal to the
MINIUM TRANSFEROR INTEREST.
Funds on deposit in the EXCESS FUNDING ACCOUNT will be withdrawn and
paid to the transferor to the extent that following the distribution the
TRANSFEROR INTEREST will continue to exceed the MINIMUM TRANSFEROR
INTEREST. The SUPPLEMENT may provide for the payments to be made to
certificateholders instead of the transferor. Deposits in and withdrawals
from the EXCESS FUNDING ACCOUNT may be made on a daily basis.
Funds on deposit in the EXCESS FUNDING ACCOUNT will be invested by
the trustee at the direction of the transferor in CASH EQUIVALENTS maturing
on the next business day. All net investment income earned on amounts in
the EXCESS FUNDING ACCOUNT during each MONTHLY PERIOD will be withdrawn
from the EXCESS FUNDING ACCOUNT and treated as FINANCE CHARGE COLLECTIONS
for that MONTHLY PERIOD.
PAIRED SERIES
Each series may be paired with another series only if specified in
the attached prospectus supplement. A paired series is a series which has
been paired with a previously issued series and has an INVESTED AMOUNT that
increases as the INVESTED AMOUNT of the previously issued series decreases,
or any series designated as a paired series in the related SUPPLEMENT. The
prospectus supplement will specify the relationship between the paired
series.
There can be no assurance that the terms of any paired series might
not have an impact on the timing or amount of payments received by your
series. If a PAY OUT EVENT OCCURS with respect to either series, if paired,
either:
o the numerator used in the FIXED/FLOATING ALLOCATION PERCENTAGE for
each series will be reset to be equal to the respective invested
amounts at the end of the last day before a Pay Out Event occurs or
o the denominator of the FIXED/FLOATING ALLOCATION PERCENTAGE for
your series may be increased, in either case resulting in a
possible reduction of the percentage of PRINCIPAL COLLECTIONS
allocated to your series.
FUNDING PERIOD
The related prospectus supplement may specify a FUNDING PERIOD that
begins on the CLOSING DATE and ends on a specified date before the start of
an AMORTIZATION PERIOD or an ACCUMULATION PERIOD. During the FUNDING
PERIOD, the total amount of PRINCIPAL RECEIVABLES in the trust may be less
than the total principal amount of the certificates of that series. The
amount of this deficiency will be held in a trust account established with
the trustee for the benefit of the certificateholders of that series
awaiting the transfer of additional PRINCIPAL RECEIVABLES to the trust or
awaiting the reduction of the INVESTED AMOUNTS of other series.
The related prospectus supplement for a series will define:
o the initial INVESTED AMOUNT on the CLOSING DATE,
o the total principal amount, and
o the date when the INVESTED AMOUNT is expected to equal the total
principal amount.
The INVESTED AMOUNT will increase as receivables are delivered to the
trust or as the INVESTED AMOUNTS of other series are reduced. The INVESTED
AMOUNT may also decrease due to INVESTOR CHARGE-OFFS as described in the
related prospectus supplement.
During the FUNDING PERIOD, funds on deposit in the PRE-FUNDING
ACCOUNT for a series of certificates will be withdrawn and paid to the
transferor to the extent there are any increases in the INVESTED AMOUNT. If
the INVESTED AMOUNT does not for any reason equal the full INVESTED AMOUNT
by the end of the FUNDING PERIOD, any amount remaining in the PRE-FUNDING
ACCOUNT and any additional amounts specified in the related prospectus
supplement will be payable to the certificateholders of that series
described in the related prospectus supplement.
The related prospectus supplement specifies if monies in the
PRE-FUNDING ACCOUNT:
o are invested by the trustee at PRC's direction in CASH EQUIVALENTS,
o have a guaranteed rate, or
o have an investment agreement or other similar arrangement.
In connection with each DISTRIBUTION DATE during the FUNDING PERIOD,
investment earnings on funds in the PRE-FUNDING ACCOUNT will be withdrawn
from the PRE-FUNDING ACCOUNT and deposited, together with any other payment
under a guaranteed rate or investment agreement or other similar
arrangement, into the COLLECTION ACCOUNT for distribution as interest on
the certificates of that series as specified in the related prospectus
supplement.
DEFAULTED RECEIVABLES
Receivables in any ACCOUNT will be charged off as uncollectible in
accordance with the servicer's CREDIT AND COLLECTION POLICIES, which, in
general, currently provide that receivables in any ACCOUNT will be charged
off when the ACCOUNT becomes retail age 8 (210 days past due) or, in the
case of certain major purchase plan accounts, when the ACCOUNT becomes
retail age 9 (240 days past due), unless the cardholder cures the default
by making payments which qualify under the standards customarily applied by
the servicer. The INVESTOR DEFAULT AMOUNT will be allocated to the
certificateholders of each series on each business day in an amount
generally equal to the product of the floating allocation percentage
applicable on that business day for that series and the amount of PRINCIPAL
RECEIVABLES in DEFAULTED ACCOUNTS for that business day.
DILUTION
If on any business day the servicer adjusts the amount of any
PRINCIPAL RECEIVABLE because of a rebate or refund to a cardholder, or
because the PRINCIPAL RECEIVABLE was created in respect of merchandise that
was refused or returned by a cardholder, then the amount of the TRANSFEROR
INTEREST in the trust will be reduced by the amount of the adjustment on
that business day. In addition, the TRANSFEROR INTEREST in the trust will
be reduced as a result of transactions in respect of any PRINCIPAL
RECEIVABLE which was discovered as having been created through a fraudulent
or counterfeit charge.
The transferor will be required to pay an amount equal to the
deficiency into the EXCESS FUNDING ACCOUNT if the adjustment of any
receivables would cause the TRANSFEROR INTEREST at that time to be less
than the MINIMUM TRANSFEROR INTEREST.
PAY OUT EVENT
A PAY OUT EVENT for each series would occur automatically when:
o FEDERATED, FDS or PRC is bankrupt, insolvent or enters receivership,
o the trust becomes an "investment company" within the meaning of the
Investment Company Act, or
o the transferor becomes unable for any reason to transfer
receivables to the trust.
The related prospectus supplement for any series may specify
additional PAY OUT EVENTS that apply to that series.
The EARLY AMORTIZATION PERIOD or the RAPID ACCUMULATION PERIOD, if
specified for a series, will begin on the date a PAY OUT EVENT occurs.
Certificateholders may begin receiving distributions of principal earlier
than expected if the EARLY AMORTIZATION PERIOD or the RAPID ACCUMULATION
PERIOD begins before the series CONTROLLED AMORTIZATION PERIOD or before an
EXPECTED FINAL PAYMENT DATE. This may shorten the average life of the
certificates.
REPORTS TO CERTIFICATEHOLDERS
On each DISTRIBUTION DATE, the paying agent will forward to each
certificateholder of record a statement prepared by the servicer with
respect to certificates of that series with the following information:
o the total amount distributed,
o the amount of the distribution allocable to principal on each class
of the certificates,
o the amount of the distribution allocable to interest on each class
of the certificates,
o the amount of collections of PRINCIPAL RECEIVABLES processed during
the related MONTHLY PERIOD and allocated in respect of each class
of the certificates
o the amount of collections of FINANCE CHARGE RECEIVABLES processed
during the related MONTHLY PERIOD and allocated in respect of each
class of the certificates,
o the aggregate amount of PRINCIPAL RECEIVABLES, the INVESTED AMOUNT,
the INVESTED AMOUNT of each class of the certificates, the FLOATING
ALLOCATION PERCENTAGE, and during the Amortization Period, the
FIXED/FLOATING ALLOCATION PERCENTAGE with respect to PRINCIPAL
COLLECTIONS as of the close of business on the RECORD DATE,
o the aggregate outstanding balance of ACCOUNTS which are 30, 60, 90,
120, 150, and 180 days delinquent as of the end of the day on the
RECORD DATE,
o the aggregate INVESTOR DEFAULT AMOUNT for the related MONTHLY
PERIOD,
o the aggregate amount of INVESTOR CHARGE-OFFS for each class of the
certificates for the related MONTHLY PERIOD and
o the aggregate amount of the MONTHLY SERVICING FEE.
The servicer and the trustee will not be required to provide any
reports directly to beneficial owners. See "--Book-Entry Registration" for
a general description of DTC procedures.
On or before January 31 of each calendar year, the paying agent will
provide to any certificateholder of record during the preceding year a
statement containing the information required to be given by an issuer of
debt under the Internal Revenue Code along with any other customary
information which is necessary to allow the certificateholders to prepare
their tax returns.
LIST OF CERTIFICATEHOLDERS
Certificateholders representing 10% or more of the invested amount of
a series, or of all outstanding series, may request access to the current
list of certificateholders of the series, or of all outstanding series, for
purposes of communicating with other certificateholders about their rights
under the POOLING AND SERVICING AGREEMENT, any SUPPLEMENT or the
certificates. See "--Book-Entry Registration" for a general description of
distribution of notices under DTC procedures.
The POOLING AND SERVICING AGREEMENT does not provide for any annual
or other meetings of certificateholders.
ENHANCEMENT
The related prospectus supplement will state if the trust provides
enhancement for one or more classes of a series, including your series,
offered by this prospectus. If so, any form of enhancement may be
structured so as to be drawn upon by more than one class to the extent
described in that prospectus supplement.
The type, characteristics and amount of enhancement for any series or
class:
o will be determined based on several factors, including the
characteristics of the receivables and accounts included in the
trust portfolio as of the CLOSING DATE for that series and the
desired rating for each class, and
o will be established on the basis of requirements of each rating
agency rating the certificates of that series or class.
Enhancement may be in the form of:
o the subordination of one or more classes of the certificates of a
series,
o the establishment of any cash collateral guaranty or account,
o a COLLATERAL INVESTED AMOUNT,
o a letter of credit,
o a surety bond,
o an insurance policy,
o a guaranteed rate agreement,
o a maturity guaranty facility,
o a tax protection agreement,
o an interest rate swap or cap,
o a spread account,
o a reserve account,
o the use of cross-support features, or
o any combination of the above.
Enhancement will not provide protection against all risks of loss or
guarantee repayment of the entire principal balance of the certificates
and/or payment of interest. If losses occur which exceed the amount covered
by enhancement or which are not covered by enhancement, certificateholders
will bear their allocable share of deficiencies.
If enhancement is provided for a series or class of certificates, the
related prospectus supplement will describe:
o the amount payable under the enhancement,
o any additional conditions to payment under enhancement not
described in this prospectus,
o the conditions, if any, under which:
- the amount payable under enhancement may be reduced, and
- enhancement may be ended or replaced, and
o any material provision of any agreement relating to enhancement.
The related prospectus supplement may also provide information about
any enhancement provider, including:
o a brief description of its principal business activities,
o its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do
business,
o if applicable, the identity of regulatory agencies which exercise
primary jurisdiction over the conduct of its business, and
o its total assets, and its stockholders' or policy holders' surplus,
if applicable, and other appropriate financial information as of
the date specified in the related prospectus supplement.
The related prospectus supplement may specify if enhancement for a
series may be available to pay principal of the series' certificates after
PAY OUT EVENTS occur for that series. If so, the enhancement provider may
have an interest in cash flows relating to the receivables, to the extent
described in the related prospectus supplement.
SPECIFIC FORMS OF ENHANCEMENT
The related prospectus supplement will also specify the manner and to
what extent the following forms of enhancement or other enhancement applies
to your series of certificates or any class of your series:
SUBORDINATION
One or more classes of certificates of any series may be subordinated
as described in the related prospectus supplement to the extent necessary
to fund payments on the senior certificates. The rights of the holders of
any subordinated certificates to receive distributions of principal and/or
interest on any DISTRIBUTION DATE for that series will be subordinated in
right and priority to the rights of the holders of senior certificates, but
only to the extent described in the related prospectus supplement. The
related prospectus supplement may specify if subordination may apply only
for some types of losses not covered by another enhancement. The related
prospectus supplement will also provide information concerning:
o the amount of subordination of a class or classes of subordinated
certificates in a series,
o the circumstances in which subordination will be applicable,
o the manner, if any, in which the amount of subordination will
decrease over time, and
o the conditions under which amounts available from payments that
would otherwise be made to holders of subordinated certificates
will be distributed to holders of senior certificates.
If collections of receivables otherwise distributable to holders of a
subordinated class of a series will be used as support for a class of
another series, the related prospectus supplement will specify the manner
and conditions for applying this cross-support feature.
CASH COLLATERAL GUARANTY OR ACCOUNT
Support for a series or one or more classes of certificates may be
provided by:
o a CASH COLLATERAL GUARANTY secured by the deposit of cash or some
CASH EQUIVALENTS in a CASH COLLATERAL ACCOUNT reserved for the
beneficiaries of the CASH COLLATERAL GUARANTY, or
o a CASH COLLATERAL ACCOUNT alone.
The amount available from the CASH COLLATERAL GUARANTY or the CASH
COLLATERAL ACCOUNT will be the lesser of (1) amounts on deposit in the CASH
COLLATERAL ACCOUNT and (2) an amount specified in the related prospectus
supplement. The related prospectus supplement will describe the
circumstances under which payments are made to beneficiaries of the CASH
COLLATERAL GUARANTY from the CASH COLLATERAL ACCOUNT or from the CASH
COLLATERAL ACCOUNT directly.
COLLATERAL INVESTED AMOUNT
An undivided interest in the trust called the COLLATERAL INVESTED
AMOUNT, in an amount initially equal to the percentage of the certificates
of a series specified in the prospectus supplement for that series, may
initially provide support for a series or one or more classes of
certificates. That series may also have the benefit of a CASH COLLATERAL
GUARANTY or CASH COLLATERAL ACCOUNT with an initial amount on deposit in
that account, if any, as specified in the related prospectus supplement
which will be increased to the extent:
o PRC chooses, under the conditions specified in the related
prospectus supplement, to apply principal collections allocable to
the COLLATERAL INVESTED AMOUNT to decrease the COLLATERAL INVESTED
AMOUNT,
o principal collections allocable to the COLLATERAL INVESTED AMOUNT
are required to be deposited into the CASH COLLATERAL ACCOUNT as
specified in the related prospectus supplement, and
o excess finance charge collections are required to be deposited into
the CASH COLLATERAL ACCOUNT as specified in the related prospectus
supplement.
The total amount of enhancement available from the COLLATERAL
INVESTED AMOUNT and, if applicable, the CASH COLLATERAL GUARANTY or CASH
COLLATERAL ACCOUNT will be the lesser of the sum of:
o the COLLATERAL INVESTED AMOUNT and the amount on deposit in the
CASH COLLATERAL ACCOUNT, and
o an amount specified in the related prospectus supplement.
The related prospectus supplement will describe the circumstances
under which:
o payments which otherwise would be made to holders of the COLLATERAL
INVESTED AMOUNT will be distributed to holders of certificates, and
o if applicable, payment will be made under the CASH COLLATERAL
GUARANTY or under the CASH COLLATERAL ACCOUNT.
LETTER OF CREDIT
One or more letters of credit may provide support for a series or one
or more classes of certificates. The letter of credit may provide limited
protection against some losses in addition to or instead of other
enhancement. The issuer of the letter of credit will be obligated to honor
demands as to the letter of credit, to the extent of the amount available
under the letter of credit, to provide funds under the circumstances and
under the conditions specified in the related prospectus supplement.
SURETY BOND OR INSURANCE POLICY
A surety bond may be purchased for the benefit of the holders of any
series or class of certificates to assure distributions of interest or
principal for that series or class in the manner and amount specified in
the related prospectus supplement.
One or more insurance companies may provide insurance, to a series or
one or more classes of certificates, to guarantee, for one or more classes
of that series, distributions of interest or principal in the manner and
amount specified in the related prospectus supplement.
SPREAD ACCOUNT
Support for a series or one or more classes of certificates may be
provided by the periodic deposit of available excess cash flow from the
trust assets into a spread account, intended to assist with subsequent
distribution of interest and principal on that series or class in the
manner specified in the related prospectus supplement.
RESERVE ACCOUNT
The establishment of a RESERVE ACCOUNT provides support for a series
or one or more classes of certificates. The RESERVE ACCOUNT may be funded,
to the extent provided in the related prospectus supplement, by:
o an initial cash deposit,
o the retention of excess cash,
o periodic distributions of principal or interest or both otherwise
payable to one or more classes of certificates, including
subordinated certificates,
o the provision of a letter of credit, guarantee, insurance policy or
other form of credit, or
o any combination of these items.
The RESERVE ACCOUNT will assist with the subsequent distribution of
principal or interest on that series or class in the manner provided in the
related prospectus supplement.
THE POOLING AND SERVICING AGREEMENT
CONVEYANCE OF RECEIVABLES
Under the POOLING AND SERVICING AGREEMENT, PRC has transferred to the
trust its interest in:
o all receivables and proceeds existing on and after the INITIAL
CUT-OFF DATE and all receivables and proceeds existing on and after
each ADDITION DATE in any AUTOMATIC ADDITIONAL ACCOUNTS,
o the PURCHASE AGREEMENT, and
o RECOVERIES.
PRC must indicate in its computer records that the receivables
transferred to the trust have been conveyed to the trust. PRC must also
file all necessary Uniform Commercial Code financing statements:
The physical documentation relating to the accounts or the
receivables will not be stamped or marked to show the transfer of
receivables to the trust. FDS will retain all other records or agreements
about the accounts or the receivables.
ADDITION OF TRUST ASSETS
ACCOUNTS will be designated to have their receivables added to the
trust automatically as they are originated and the receivables in these
accounts will be immediately sold by the ORIGINATOR to PRC and then
transferred by PRC to the trust. Each AUTOMATIC ADDITIONAL ACCOUNT will be
included as an account from the date it is created, and all existing and
future receivables in these accounts will be transferred to the trust after
being purchased by PRC.
PRC may elect at any time to end or suspend the inclusion of accounts
that would otherwise be AUTOMATIC ADDITIONAL ACCOUNTS by delivering to the
trustee and the servicer, written notice of this election. PRC will be
permitted to continue designating AUTOMATIC ADDITIONAL ACCOUNTS if the
AGGREGATE ADDITION LIMIT would not be exceeded because of the inclusion of
the AUTOMATIC ADDITIONAL ACCOUNTS as accounts.
In any event, the number of accounts to be included as AUTOMATIC
ADDITIONAL ACCOUNTS for the related period must be less than or equal to:
o 20% of the number of Active Accounts as of the first day of the
then-current twelve-month period, and
o 15% of the number of Active Accounts as of the first day of the
then-current three-month period.
The AGGREGATE ADDITION LIMIT is intended to limit the extent to which
PRC, by designating AUTOMATIC ADDITIONAL ACCOUNTS, may alter the
composition of the accounts without rating agency consent.
If the transferor has elected to terminate or suspend the inclusion
of AUTOMATIC ADDITIONAL ACCOUNTS, PRC must make an addition to the trust on
the required designation date if, on the last business day of any MONTHLY
PERIOD, either:
o the TRANSFEROR INTEREST is less than the MINIMUM TRANSFEROR
INTEREST, or
o the amount of PRINCIPAL RECEIVABLES in the trust is less than the
MINIMUM AGGREGATE PRINCIPAL RECEIVABLES.
PRC will not be required to add receivables in ADDITIONAL ACCOUNTS if
the TRANSFEROR INTEREST equals or exceeds the MINIMUM TRANSFEROR INTEREST
or the total amount of PRINCIPAL RECEIVABLES in the trust equals or exceeds
the MINIMUM AGGREGATE PRINCIPAL RECEIVABLES before the proposed ADDITION
DATE. The receivables to be added will be from receivables generated from
accounts owned by FDS or another ORIGINATOR.
In connection with an addition of a SUPPLEMENTAL ACCOUNT, FDS or
another ORIGINATOR may sell to PRC and PRC will then transfer to the trust
the receivables from these accounts on the following conditions:
o on or before the twentieth business day before any addition, PRC
has given the trustee, the servicer, each rating agency and the
enhancement providers, if any, written notice that the receivables
from SUPPLEMENTAL ACCOUNTS will be included as trust assets,
o for SUPPLEMENTAL ACCOUNTS, on or before the date the receivables
are added to the trust, PRC has delivered to the trustee a written
assignment and a computer file, microfiche list or printed list
containing a true and complete list of these SUPPLEMENTAL ACCOUNTS
specifying for each account its account number and the total amount
outstanding in the account, and
o PRC has received confirmation from each rating agency that the
addition will not result in a RATINGS EFFECT.
FDS or its affiliates may originate or acquire portfolios of open end
credit card accounts. The receivables in an acquired portfolio may be sold
to PRC and then transferred to the trust. These sales must meet the
conditions for additions of SUPPLEMENTAL ACCOUNTS.
ADDITIONAL ACCOUNTS may include accounts originated using criteria
different from those that were applied to the initial accounts. These
accounts may have been originated at a later date or may have been part of
a portfolio of open end credit card accounts that were not part of the
FEDERATED portfolio as of the CUT-OFF DATE. Some of these accounts may have
been acquired from other institutions. ADDITIONAL ACCOUNTS may not be of
the same type as those previously included in the trust. For these reasons,
there can be no assurance that the ADDITIONAL ACCOUNTS will be of the same
credit quality or have the same payment characteristics as the initial
accounts or the ADDITIONAL ACCOUNTS previously included in the trust.
ADDITIONAL ACCOUNTS of a type different from the initial accounts may
consist of fees, charges and amounts that are different from the FINANCE
CHARGE RECEIVABLES and PRINCIPAL RECEIVABLES in the initial FEDERATED
portfolio. The servicer will designate the portions of funds collected or
to be collected for these receivables to be treated for purposes of the
POOLING AND SERVICING AGREEMENT as PRINCIPAL RECEIVABLES and FINANCE CHARGE
RECEIVABLES.
REMOVAL OF ACCOUNTS
PRC has the right to require reassignment to itself, or another
company designated by it, of all of the trust's rights in and to the
receivables from REMOVED ACCOUNTS under the following conditions on each
second business day preceding each Distribution Date on which the
TRANSFEROR INTEREST exceeds 17% of the PRINCIPAL RECEIVABLES with respect
to that day:
o on or before twenty days before the removal date, PRC gives the
trustee, the servicer and each rating agency written notice of the
removal including the date for removal of the REMOVED ACCOUNTS,
o on the removal date, PRC delivers to the trustee a computer file,
microfiche list or printed list containing an accurate and complete
list of the REMOVED ACCOUNTS specifying the account number and the
total amount outstanding in the account,
o PRC will represent and warrant that as of the removal date the list
of REMOVED ACCOUNTS delivered to the trustee is accurate and
complete in all material respects,
o PRC receives confirmation from each rating agency that the removal
will not result in a RATINGS EFFECT, and
o PRC delivers to the trustee and any enhancement provider entitled
under the SUPPLEMENT a certificate of an authorized officer, dated
the removal date, confirming the above items.
The removal can occur for a number of reasons including a
determination by PRC that the trust contains more receivables than PRC is
obligated to retain in the trust under the POOLING AND SERVICING AGREEMENT
and any SUPPLEMENTS and a determination that PRC does not desire to obtain
additional financing through the trust at that time.
After satisfying the above conditions, the trustee will execute and
deliver to PRC or its designee a written reassignment. The trustee will
then be considered to sell, transfer, assign, set over and otherwise convey
to PRC or its designee, all of its rights in the receivables arising in the
REMOVED ACCOUNTS.
In addition, the transferor will be permitted to designate REMOVED
ACCOUNTS in connection with the sale by FEDERATED or any affiliate of
FEDERATED of all or substantially all of the capital stock or assets of any
ORIGINATOR. The transferor will be permitted to deposit funds in the EXCESS
FUNDING ACCOUNT in connection with any designation of REMOVED ACCOUNTS to
the extent necessary to permit designation.
REPRESENTATIONS AND WARRANTIES
On the CLOSING DATE, PRC will represent and warrant to the trustee on
behalf of the trust that:
o on the INITIAL CUT-OFF DATE, and, on the date of creation for each
AUTOMATIC ADDITIONAL ACCOUNT, and on the ADDITION CUT-OFF DATE for
each SUPPLEMENTAL ACCOUNT, each account that PRC classifies as an
"eligible account" satisfied or will satisfy the requirements of an
ELIGIBLE ACCOUNT,
o on the INITIAL CUT-OFF DATE, and, on the date of creation for each
AUTOMATIC ADDITIONAL ACCOUNT, and on the ADDITION CUT-OFF DATE for
each SUPPLEMENTAL ACCOUNT, each receivable that PRC classifies as
an "eligible receivable" satisfied or will satisfy the requirements
of an ELIGIBLE RECEIVABLE, and
o on the date of creation of any new receivable, that receivable will
be an ELIGIBLE RECEIVABLE.
A receivable will be designated an INELIGIBLE RECEIVABLE and will be
assigned a principal balance of zero for the purpose of determining the
total amount of PRINCIPAL RECEIVABLES on any day that any representation or
warranty of PRC is not true and correct in any material respect for any
receivables transferred to the trust by PRC and, as a result the servicer
will:
o deduct an amount equal to the unpaid balance of the INELIGIBLE
RECEIVABLE multiplied by one minus the FINANCE CHARGE RECEIVABLE
FACTOR from the PRINCIPAL RECEIVABLES in the trust and
o decrease PRC's interest in the trust by the same amount.
Under the POOLING AND SERVICING AGREEMENT, the transferor represents
and warrants that,
o the transferor is duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has the
corporate power and authority to execute, deliver, and perform its
obligations under the POOLING AND SERVICING AGREEMENT, any
SUPPLEMENT and the PURCHASE AGREEMENT,
o the execution and delivery of the POOLING AND SERVICING AGREEMENT,
any SUPPLEMENT, and the PURCHASE AGREEMENT, and the consummation of
the transactions provided for in those documents, have been duly
authorized by the transferor by all necessary corporate action on
its part,
o each of the POOLING AND SERVICING AGREEMENT, any SUPPLEMENT, and
the PURCHASE AGREEMENT constitutes a legal, valid, and binding
obligation of the transferor, and
o the transfer of receivables by it to the trust under the POOLING
AND SERVICING AGREEMENT constitutes either:
- a valid transfer and assignment to the trust of all
right, title, and interest of the transferor in and to
the receivables and their proceeds, or
- the grant of a first priority security interest, subject
to PERMITTED LIENS, in the receivables and their
proceeds.
If there is a breach of any of the representations and warranties described
in this paragraph, either the trustee or the holders of certificates
aggregating more than 50% of the invested amount of any series, by written
notice to the transferor and to the trustee and the servicer if given by
the certificateholders of the Series, may direct the transferor to accept
reassignment of an amount of PRINCIPAL RECEIVABLES equal to the invested
amount to be repurchased as described below, within 60 days of the notice,
or within a longer period as specified in that notice. The transferor will
then be obligated to accept reassignment of the receivables on a
DISTRIBUTION DATE occurring within the applicable period. The reassignment
will not be required to be made, however, if at any time during the
applicable period the representations and warranties are then true and
correct in all material respects or the reassignment would cause either a
PAY OUT EVENT to occur or a rating agency to reduce or withdraw its
then-current rating on the certificates of any class of any series. The
amount to be deposited by the transferor for distribution to
certificateholders in connection with a reassignment will be equal to:
o the invested amount for all series of certificates required to
be repurchased, less the amount, if any, previously allocated
for payment of principal to those certificateholders, plus
o an amount equal to all interest accrued but unpaid on those
certificates at the applicable certificate rate, less the
amount transferred to the DISTRIBUTION ACCOUNT from the
Interest Funding Account in respect of interest on those
certificates.
The payment of the reassignment deposit amount and the transfer of all
other amounts deposited for the preceding month in the DISTRIBUTION ACCOUNT
will be considered a payment in full of the investor interest for all
series of certificates required to be repurchased and will be distributed
upon presentation and surrender of the certificates for each series.
The obligation of the transferor to make this deposit will be the sole
remedy available to the trustee and the certificateholders with respect to
any breach of these representations and warranties of the transferor.
Under the POOLING AND SERVICING AGREEMENT, the transferor also
represents and warrants that
o the execution and delivery of the POOLING AND SERVICING
AGREEMENT, any SUPPLEMENT and the PURCHASE AGREEMENT, do not
contravene the transferor's charter or by-laws, violate any
provision of law applicable to it or require any filing except
for filing under the UCC, registration, consent, or approval
under any such law except for those filings, registrations,
consents, or approvals as have already been obtained and are in
full force and effect,
o the transferor has filed all tax returns required to be filed
and has paid or made adequate provision for the payment of all
taxes, assessments, and other governmental charges due from the
transferor,
o there are no proceedings or investigations pending or
threatened against the transferor, asserting the invalidity of
the POOLING AND SERVICING AGREEMENT, any SUPPLEMENT or the
PURCHASE AGREEMENT, seeking to prevent the transactions
contemplated by those documents, seeking any determination that
would materially and adversely affect the performance by the
transferor of its obligations under those documents, or seeking
any determination or ruling that would materially and adversely
affect the validity or enforceability of those documents or of
the tax attributes of the trust,
o with respect to each receivable:
- it is or will be an account receivable arising out of the
transferor's performance in accordance with the terms of
the CHARGE ACCOUNT AGREEMENT,
- the transferor has no knowledge that should have led it
to expect at the time of the classification of any
receivable as an ELIGIBLE RECEIVABLE that the receivable
would not be paid in full when due, and
- each receivable classified as an ELIGIBLE RECEIVABLE by
the transferor in any document or report delivered under
the POOLING AND SERVICING AGREEMENT satisfies the
requirements of eligibility contained in the definition
of ELIGIBLE RECEIVABLE, and
o the transferor is not an "investment company" within the
meaning of the Investment Company Act.
If any of these representations or warranties proves to have been incorrect
in any material respect when made, and continues to be incorrect for 60
days after notice to the transferor by the trustee or to the transferor and
the trustee by more than 50% of the certificateholders' interest and as a
result the interest of the certificateholders are materially adversely
affected, then the trustee or 50% of the certificateholders' interest of
any class may give notice to the transferor declaring that a PAY OUT EVENT
has occurred; provided, that a PAY OUT EVENT will not be deemed to have
occurred if the transferor has accepted a reassignment of the affected
receivables.
In addition, it is not anticipated or required that the trustee make
any initial or periodic general examination of PRC or the servicer for the
purpose of establishing:
o the compliance by PRC or the servicer with their respective
representations or warranties or
o the performance by PRC or the servicer of their respective
obligations under the POOLING AND SERVICING AGREEMENT or
o for any other purpose.
The servicer, however, will deliver to the trustee on or before March 31 of
each calendar year an opinion of counsel as to the validity of the interest
of the trust in and to the receivables and other components of the trust.
CERTAIN COVENANTS
Under the POOLING AND SERVICING AGREEMENT, the transferor covenants
that:
o it will not cause any receivable to be evidenced by an
instrument or to be anything except an account, general
intangible, or chattel paper,
o except for the conveyances under the POOLING AND SERVICING
AGREEMENT, it will not sell any receivable or grant a lien,
other than a PERMITTED LIEN, on any receivable,
o it will comply with and perform its obligations under, and will
cause each ORIGINATOR to comply with and perform its
obligations under, any CHARGE ACCOUNT AGREEMENT to which it is
a party and its credit and collection policies and it will not
change the terms of those agreements or policies except as
provided in the POOLING AND SERVICING AGREEMENT,
o if it is unable for any reason to transfer receivables to the
trust, it will continue to allocate and pay all collections
from all receivables to the trust,
o if it receives a collection on any receivables, it will pay
that collection to the servicer as soon as practicable,
o it will notify the trust promptly after becoming aware of any
lien on any receivable except PERMITTED LIENS,
o it will engage in no other business except the business
contemplated under the POOLING AND SERVICING AGREEMENT and the
PURCHASE AGREEMENT,
o it will take all actions necessary to enforce its rights and
claims under the PURCHASE AGREEMENT,
o except with respect to IN-STORE PAYMENTS, it will not commingle
its assets with those of FEDERATED or any affiliate of
FEDERATED, and
o it will not acquire receivables from any person except an
ORIGINATOR.
ELIGIBLE ACCOUNTS; ELIGIBLE RECEIVABLES
An ELIGIBLE ACCOUNT means each ACCOUNT owned by an ORIGINATOR:
o which is payable in United States dollars,
o which has not been identified by its ORIGINATOR in its computer
files as an account as to which the ORIGINATOR or the servicer
has any confirmed record of any fraud-related activity by the
cardholder,
o which has not been sold or pledged to any other party and does
not have receivables that have been sold or pledged to any
other party,
o which was created in accordance with the credit and collection
policies of its ORIGINATOR at the time of creation of the
account or the receivables which each rating agency permits to
be added automatically to the trust,
o the receivables in which the ORIGINATOR has not charged off in
its customary and usual manner for charging off receivables,
and
o which is not an AUTOMATIC ADDITIONAL ACCOUNT designated by the
transferor to be included as an ACCOUNT after the occurrence of
specified events or in excess of the AGGREGATE ADDITION LIMIT
unless the rating agencies have consented to the inclusion of
the AUTOMATIC ADDITIONAL ACCOUNT as an ELIGIBLE ACCOUNT.
An ELIGIBLE RECEIVABLE means each receivable that satisfies the
following criteria:
o it arises under an ELIGIBLE ACCOUNT,
o it constitutes an "account," a "general intangible," or
"chattel paper" as defined in Article 9 of the UCC as then in
effect in each jurisdiction in which the filing of a UCC
financing statement is necessary to evidence the security
interest of the trustee established under the POOLING AND
SERVICING AGREEMENT,
o it is the legal, valid, and binding obligation of a person who:
- is living,
- is not a minor under the laws of his/her state of
residence, and
- is competent to enter into a contract and incur debt,
o it and the underlying CHARGE ACCOUNT AGREEMENT do not
contravene in any material respect any applicable laws, rules,
or regulations that could reasonably be expected to have an
adverse impact on the amount of collections under the
receivable, and the ORIGINATOR of the receivable is not in
violation of any of those laws, rules, or regulations in any
respect material to the CHARGE ACCOUNT AGREEMENT,
o all material consents, licenses, or authorizations of, or
registrations with, any governmental authority required to be
obtained or given in connection with the creation of the
receivable or the execution, delivery, creation, and
performance of the underlying CHARGE ACCOUNT AGREEMENT have
been duly obtained or given and are in full force and effect as
of the date of the creation of the receivables,
o at the time of its transfer to the trust, the transferor or the
trust will have good and marketable title free and clear of all
liens and security interests arising under or through the
transferor except PERMITTED LIENS,
o it is not, at the time of its transfer to the trust, a
receivable in a DEFAULTED ACCOUNT, and
o it arises under a CHARGE ACCOUNT AGREEMENT that has been duly
authorized and which, together with the receivable, is in full
force and effect and constitutes the legal, valid, and binding
obligation of the obligor of the receivable enforceable against
the obligor in accordance with its terms and is not subject to
any dispute, offset, counterclaim, or defense whatsoever except
the discharge in bankruptcy of the obligor.
COLLECTION AND OTHER SERVICING PROCEDURES
The servicer is responsible for servicing, collecting, enforcing and
administering the receivables under the CREDIT AND COLLECTION POLICIES and
doing any and all things in connection with the servicing and
administration which it considers necessary or desirable.
Servicing activities to be performed by the servicer include:
o collecting and recording payments,
o communicating with cardholders,
o collection activities for delinquent accounts,
o evaluating the issuance of credit cards,
o providing billing and tax records, if any, to cardholders, and
o maintaining internal records of each account.
Under the POOLING AND SERVICING AGREEMENT, the servicer is authorized
and empowered to:
o make withdrawals from the COLLECTION ACCOUNT,
o after the delinquency of any receivable, to commence
enforcement proceedings with respect to that receivable, and
o make all filings, reports, notices, applications, registrations
with, and to seek any consents or authorizations from
government agencies as may be necessary or advisable to comply
with all federal and state securities laws.
Unless the trustee revokes the power and authority following the
occurrence of a SERVICER DEFAULT, under the POOLING AND SERVICING
AGREEMENT, the servicer is authorized and empowered to:
o instruct the trustee to make withdrawals and payments, from the
INTEREST FUNDING ACCOUNT, the EXCESS FUNDING ACCOUNT, the
PRINCIPAL ACCOUNT and any series ACCOUNT and
o instruct the trustee in writing to take any action permitted or
required under any enhancement at a time specified under the
POOLING AND SERVICING AGREEMENT and any SUPPLEMENT.
Under the POOLING AND SERVICING AGREEMENT, FDS, as servicer, has the
right to delegate any of its responsibilities and obligations as servicer
to any person who agrees to conduct FDS' servicing duties under the POOLING
AND SERVICING AGREEMENT and the CREDIT AND COLLECTION POLICIES.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
As compensation for its servicing activities and as reimbursement for
its expenses, the servicer will receive a servicing fee payable on each day
specified in the applicable SUPPLEMENT in an amount equal to the product
of:
o a fraction, whose numerator is the actual number of days in the
measuring period specified in the applicable SUPPLEMENT and
whose denominator is the actual number of days in the year,
o the weighted average series servicing fee percentage and
o the daily average total outstanding balance of all PRINCIPAL
RECEIVABLES over the term of that measuring period.
The share of the servicing fee for any particular series with respect
to any date of payment will be equal to the product of:
o a fraction, whose numerator is the actual number of days in the
measuring period specified in the applicable SUPPLEMENT and
whose denominator is the actual number of days in the year,
o the applicable series servicing fee percentage for that series
and
o the INVESTED AMOUNT of that series, as appropriate, as of the
date of determination for that payment as specified in the
applicable SUPPLEMENT.
The remainder of the servicing fee shall be paid by PRC or retained by the
servicer and none of the trust, the trustee or any enhancement provider
will be liable to pay the share of the servicing fee to be paid by PRC.
The servicer's expenses include:
o amounts due to the trustee under the POOLING AND SERVICING
AGREEMENT,
o the reasonable fees and disbursements of independent public
accountants, and
o all other expenses incurred by the servicer in connection with
its activities under the POOLING AND SERVICING AGREEMENT.
However, the servicer will not be liable for any liabilities, costs or
expenses of the trust, the investor certificateholders or the certificate
owners arising under any tax law.
If the servicer fails to pay any amounts due to the trustee by the
servicer under the POOLING AND SERVICING AGREEMENT, the trustee will be
entitled to deduct and receive the portion of the servicing fee that is
equal to the unpaid amounts from the servicing fee before the payment is
made to the servicer. The servicer shall be required to pay expenses for
its own account and will not be entitled to any payment other than the
servicing fee.
CERTAIN MATTERS REGARDING THE SERVICER
The servicer may not resign from its obligations and duties under the
POOLING AND SERVICING AGREEMENT, except:
o on the determination that its duties are no longer permissible
under applicable law, or
o as may be required for any merger or consolidation of the
servicer or the conveyance or transfer of all or substantially
all of the servicer's assets.
No resignation will become effective until the trustee or a successor
to the servicer has assumed the servicer's responsibilities and obligations
under the POOLING AND SERVICING AGREEMENT. FDS may also transfer its
servicing obligations to an affiliate and be relieved of its obligations
and duties under the POOLING AND SERVICING AGREEMENT.
Any person with whom the servicer may be merged or consolidated or
any person resulting from any merger or consolidation to which the servicer
is a party, or any person succeeding to the business of the servicer, will
be the successor to the servicer under the POOLING AND SERVICING AGREEMENT.
SERVICER DEFAULT
A SERVICER DEFAULT refers to:
o any failure by the servicer to make any payment, transfer or
deposit or to give instructions or notice to the trustee as
required by the POOLING AND SERVICING AGREEMENT or any
SUPPLEMENT or to instruct the trustee to make any required
drawing, withdrawal or payment under any enhancement on or
before the date occurring five business days after the date the
payment, transfer or deposit or instruction or notice is
required to be made or given,
o failure by the servicer to observe or perform any other
covenants or agreements of the servicer as described in the
POOLING AND SERVICING AGREEMENT or any SUPPLEMENT which has a
material adverse effect on the interests of the
certificateholders of any series and which continues unremedied
for 60 days after written notice was given to the servicer
requiring that the situation be remedied,
o any representation, warranty or certification made by the
servicer in the POOLING AND SERVICING AGREEMENT or any
SUPPLEMENT or in any certificate delivered under the POOLING
AND SERVICING AGREEMENT or any SUPPLEMENT which proves to have
been incorrect when made, and has a material adverse effect on
the rights of the certificateholders of any series and which
continues incorrect in any material respect for 60 days after
written notice was given to the servicer requiring that the
situation be remedied, or
o the occurrence of some events of bankruptcy, insolvency or
receivership of the servicer.
If the delay or failure was caused by an act of God or other similar
occurrence and could not be prevented by the use of reasonable diligence in
the case of a failure to observe or perform any other covenants or
agreements, or in the case of any representation, warranty or certification
proving to have been incorrect when made, the failure for a period of 60
business days will not constitute a SERVICER DEFAULT. However, in the case
of a failure to make payment, transfer or deposit, or notice, the servicer
is allowed an additional five business days to remedy the situation before
a SERVICER DEFAULT occurs.
The servicer agrees to provide the trustee, each rating agency,
enhancement providers, if any, PRC and the certificateholders of each
series with a description of any failure or delay by it to perform its
obligation, together with its notice to the trustee. The servicer shall not
be relieved from using its best efforts to perform its obligations in a
timely manner after a SERVICER DEFAULT occurs.
If a SERVICER DEFAULT occurs, the trustee may end all of the rights
and obligations of the servicer under the POOLING AND SERVICING AGREEMENT
by sending a termination notice, in writing, to the servicer.
Certificateholders holding certificates comprising more than 50% of the
aggregate INVESTED AMOUNT of all outstanding series may also end all the
rights and obligations of the servicer under the POOLING AND SERVICING
AGREEMENT by sending termination notices, in writing, to the servicer, the
trustee and to any enhancement providers.
The trustee will appoint a successor servicer after the receipt by
the servicer of a termination notice. All rights, authority, power and
obligations of the servicer under the POOLING AND SERVICING AGREEMENT will
pass to and be vested in the trustee if:
o no successor servicer is appointed by the trustee, or
o no successor servicer has accepted the appointment by the time
the servicer stops acting as servicer.
The trustee shall, if it is legally unable to act as successor servicer,
petition a court to appoint any established financial institution meeting
the eligibility requirements described in the POOLING AND SERVICING
AGREEMENT as the successor servicer.
Before any successor servicer is appointed, the trustee will seek to
obtain bids from potential servicers meeting eligibility requirements
described in the POOLING AND SERVICING AGREEMENT to serve as a successor
servicer for servicing compensation which may be in excess of the servicing
fee specified in any SUPPLEMENT. The rights and interest of PRC as holder
of the EXCHANGEABLE TRANSFEROR CERTIFICATE will not be affected by any
termination notice or appointment of a successor servicer.
If the trustee within 60 days of receipt of a termination notice is
unable to obtain any bids from eligible successor servicers and the
servicer delivers an officer's certificate stating that the servicer cannot
in good faith cure the SERVICER DEFAULT that gave rise to the transfer of
servicing and if the trustee is legally unable to act as the successor
servicer, then the trustee will sell the receivables. The purchase price
for the purchase will not be less than an amount equal to the total
invested amount of the series on the date of the purchase plus all interest
accrued but unpaid on all outstanding investor certificates at the
applicable certificate rate through the date of the purchase.
EVIDENCE AS TO COMPLIANCE
The POOLING AND SERVICING AGREEMENT requires the servicer to cause a
firm of independent public accountants to prepare a report to the effect
that the firm has compared the mathematical calculations in the monthly
statements described in the first paragraph under "Description of the
Certificate--Reports to Certificateholders" for the MONTHLY PERIODS covered
by the report with the transferor's computer reports regarding the
receivables and that those reports are in agreement, except for any
exceptions the firm believes to be immaterial and any other exceptions set
forth in the report. A copy of this report will be sent to each
certificateholder of record.
The POOLING AND SERVICING AGREEMENT requires the servicer to cause a
firm of independent public accountants to prepare on an annual basis a
report to the effect that the firm has made a study and evaluation in
accordance with generally accepted auditing standards of the servicer's
internal accounting controls relative to the servicing of the ACCOUNTS and
that, on the basis of the examination, the firm is of the opinion that
o the system of internal controls in effect at the end of the
reporting period relating to servicing procedures performed by
the servicer provided reasonable assurance that the internal
control system was sufficient for the prevention and detection
of errors and irregularities and
o the servicing was conducted in compliance with the provisions
of the POOLING AND SERVICING AGREEMENT, except for any
exceptions as the firm believes to be immaterial and any other
exceptions stated in the report. A copy of this report will be
sent to each certificateholder record.
The POOLING AND SERVICING AGREEMENT also requires delivery to the
trustee, on or before a specified date each year, of a certificate signed
by an officer of the servicer stating that the servicer has fulfilled its
obligations under the POOLING AND SERVICING AGREEMENT throughout the
preceding twelve months or, if there has been a default in the fulfillment
of any of its obligations, describing each default. A copy of this
certificate may be obtained by any certificateholder upon submission of a
written request addressed to the trustee.
AMENDMENTS
The POOLING AND SERVICING AGREEMENT and any SUPPLEMENT may be amended
without the consent of certificateholders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of the POOLING AND SERVICING AGREEMENT and that SUPPLEMENT or of
modifying in any manner the rights of the certificateholders; provided,
that:
o the servicer has provided an officer's certificate to the
effect that the amendment will not adversely affect in any
material respect the interests of the certificateholders,
o except in the case of any amendment for the sole purpose of
curing any ambiguity or correcting or supplementing any
inconsistent provision of the POOLING AND SERVICING AGREEMENT
or revising any schedule except the list of receivables, each
rating agency shall have confirmed that the amendment would not
result in a reduction or withdrawal of its rating of the
certificates, and
o the amendment will not, in the opinion of counsel, result in
specified adverse tax consequences.
The POOLING AND SERVICING AGREEMENT and any SUPPLEMENT may be amended
with the consent of the holders of certificates representing not less than
662/3% of the investor interests of each and every series adversely
affected, for the purpose of adding any provisions to, changing in any
manner or eliminating any of the provisions of the POOLING AND SERVICING
AGREEMENT or any SUPPLEMENT or of modifying in any manner the rights of
certificateholders of any then outstanding series. No amendment, however,
may:
o reduce in any manner the amount of, or delay the timing of,
distributions required to be made on any series,
o change the definition of or the manner of calculating the
interest of any certificateholder of any series, or
o reduce the percentage of undivided interests those holders are
required to consent to any amendment,
in each case without the consent of all certificateholders of all series
adversely affected.
TRUSTEE
The Chase Manhattan Bank is the trustee under the POOLING AND
SERVICING AGREEMENT. The Corporate Trust Department of the trustee is
located at 450 West 33rd Street, New York, NY 10001.
The trustee and its affiliates may:
o enter into normal banking and trust relationships with the
transferor, the servicer and their affiliates,
o hold certificates of any series in its name but will not be
allowed to participate in any decisions or instructions to be
given to the trust by certificateholders as a group,
o appoint a co-trustee or separate trustees for all or any part
of the trust, or
o resign at any time.
If the trustee appoints a co-trustee or separate trustees, all
rights, powers, duties and obligations of the trustee will be conferred or
imposed on the trustee and each separate trustee or co-trustee jointly. In
any jurisdiction in which the trustee is incompetent or unqualified to
perform some acts, those rights, powers, duties and obligations will be
conferred or imposed on each separate trustee or co-trustee individually.
If so, each separate trustee or co-trustee will exercise and perform those
rights, powers, duties and obligations only at the direction of the
trustee.
If the trustee resigns, PRC will be required to appoint a successor
trustee. The trustee may also be removed by the servicer if the trustee
becomes ineligible to continue as a trustee under the POOLING AND SERVICING
AGREEMENT or if the trustee becomes insolvent. The servicer will then be
required to appoint a successor trustee. Any resignation or removal of the
trustee and appointment of a successor trustee will not become effective
until the successor trustee accepts the appointment.
TERMINATION OF THE TRUST
Unless PRC instructs the trustee otherwise, the trust will end on the
TRUST TERMINATION DATE. Once the trust has ended, all right, title and
interest in and to the receivables and other funds of the trust will be
conveyed and transferred to the holder of the EXCHANGEABLE TRANSFEROR
CERTIFICATE and any SUPPLEMENTAL CERTIFICATE except for amounts in accounts
maintained by the trust for the final payment of principal and interest to
certificateholders.
THE RECEIVABLES PURCHASE AGREEMENT
The receivables transferred by PRC to the trust under the POOLING AND
SERVICING AGREEMENT are purchased by PRC under a Receivables Purchase
Agreement among PRC, as purchaser, and the ORIGINATORS, as sellers. On each
business day before the PURCHASE TERMINATION DATE applicable to an
ORIGINATOR, each ORIGINATOR is required to deliver all of its receivables
to the transferor. Under the POOLING AND SERVICING AGREEMENT, those
receivables are then transferred immediately by the transferor to the
trust.
Since September 1993, substantially all of the ACCOUNTS have been
established by FDS. However, the other ORIGINATORS remain as parties to the
PURCHASE AGREEMENT and may still establish ACCOUNTS and sell receivables to
the transferor.
REPRESENTATIONS AND WARRANTIES
In the PURCHASE AGREEMENT, each ORIGINATOR represents and warrants to
PRC as of the INITIAL CLOSING DATE - or, in the case of some ORIGINATORS,
the date upon which they first become ORIGINATORS - and on each ADDITION
DATE that:
o each ORIGINATOR is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly qualified to do
business and in good standing, or is exempt from these
requirements, in any state required in order to conduct its
business and has obtained all necessary licenses and approvals
required under applicable law, and has the requisite corporate
power and authority to conduct its business and to perform its
obligations under the PURCHASE AGREEMENT.
o the execution and delivery of the PURCHASE AGREEMENT and the
consummation of the transactions provided for in the PURCHASE
AGREEMENT have been duly authorized by the ORIGINATOR by all
necessary corporate action on its part,
o the execution, delivery, and performance of the PURCHASE
AGREEMENT does not contravene the ORIGINATOR'S charter or
by-laws, violate any provision of law applicable to it, require
any filing, except for filings under the UCC, registration,
consent, or approval under any of those laws, except for
filings, registrations, consents, or approvals that have
already been obtained and are in full force and effect,
o the ORIGINATOR has filed all tax returns required to be filed
and has paid or made adequate provision for the payment of all
taxes, assessments, and other governmental charges due from
that ORIGINATOR,
o there are no proceedings or investigations pending or, to the
best knowledge of the ORIGINATOR, threatened against that
ORIGINATOR before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality
asserting the invalidity of the PURCHASE AGREEMENT or seeking
to prevent the consummation of any of the transactions
contemplated by the PURCHASE AGREEMENT,
o each receivable of the ORIGINATOR is or will be an account
receivable arising out of that ORIGINATOR'S performance in
accordance with the terms of the CHARGE ACCOUNT AGREEMENT which
creates that receivable,
o the ORIGINATOR has no knowledge of any fact which should have
led it to expect at the time of the classification of a
receivable as an ELIGIBLE RECEIVABLE that ELIGIBLE RECEIVABLE
would not be paid in full when due, and each receivable
classified as an ELIGIBLE RECEIVABLE by the ORIGINATOR in any
document or report delivered under the PURCHASE AGREEMENT
satisfies the requirements of eligibility contained in the
definition of ELIGIBLE RECEIVABLE,
o the PURCHASE AGREEMENT constitutes the legal, valid, and
binding obligation of the ORIGINATOR, enforceable against that
ORIGINATOR in accordance with its terms,
o the ORIGINATOR is not insolvent,
o the ORIGINATOR is the legal and beneficial owner of all right,
title, and interest in and to each receivable conveyed to the
transferor by that ORIGINATOR under the PURCHASE AGREEMENT, and
each of those receivables has been or will be transferred to
the transferor free and clear of any lien except PERMITTED
LIENS,
o the PURCHASE AGREEMENT constitutes a valid transfer,
assignment, and conveyance to the transferor of all of the
ORIGINATOR'S right, title, and interest in and to the
receivables conveyed to the transferor under that agreement,
o all material information with respect to the ACCOUNTS and the
receivables provided to the transferor by the ORIGINATOR was
true and correct as of the CLOSING DATE or as of the day
receivables arising under an ACCOUNT are created, and
o each of the ORIGINATOR'S receivables has been conveyed to the
transferor free and clear of any lien of any person claiming
through or under that ORIGINATOR or any of its affiliates,
except PERMITTED LIENS, and in compliance in all material
respects with all requirements of law applicable to that
ORIGINATOR.
In the PURCHASE AGREEMENT, each of the ORIGINATORS additionally
represents and warrants that, among other things:
o each receivable of that ORIGINATOR is an account receivable
arising out of that ORIGINATOR'S performance in accordance with
the terms of the CHARGE ACCOUNT AGREEMENT giving rise to that
receivable,
o the ORIGINATOR has no knowledge of any fact which should have
led it to expect at the time of the classification of the
receivable as an ELIGIBLE RECEIVABLE that the ELIGIBLE
RECEIVABLE would not be paid in full when due, and each
receivable classified as an ELIGIBLE RECEIVABLE by an
ORIGINATOR in any document or report under the PURCHASE
AGREEMENT satisfies the requirements of eligibility contained
in the definition of ELIGIBLE RECEIVABLE in the PURCHASE
AGREEMENT,
o each receivable of the ORIGINATOR has been conveyed to the
transferor free and clear of any lien of any person claiming
through or under that ORIGINATOR or any of its affiliates,
except PERMITTED LIENS,
o all consents, licenses, approvals or authorizations of or any
declarations with any governmental authority required to be
obtained by the ORIGINATOR in connection with the transfer of a
receivable to the transferor have been duly obtained and remain
in full force and effect, and
o all material information with respect to a receivable provided
to the transferor by the ORIGINATOR is true and correct as of
the INITIAL CLOSING DATE.
If any of the representations or warranties of any ORIGINATOR as to
matters described in the three immediately preceding paragraphs were not
true at the time the representation or warranty was made and as a result of
that breach:
o the transferor is required to repurchase any receivable from
the trust under the POOLING AND SERVICING AGREEMENT or
o any receivable is designated an INELIGIBLE RECEIVABLE under the
POOLING AND SERVICING AGREEMENT,
then the ORIGINATOR will be obligated to pay to the transferor an amount
equal to the amount of all losses, damages, and liabilities of the
transferor that result from that breach, including but not limited to the
cost of any of the transferor's repurchase obligations under the POOLING
AND SERVICING AGREEMENT.
Upon any exercise by the transferor of its right to designate REMOVED
ACCOUNTS in connection with the sale by FEDERATED or any affiliate of
FEDERATED of all or substantially all of the capital stock or assets of any
ORIGINATOR and to remove receivables arising in that REMOVED ACCOUNT from
the trust, the ORIGINATOR of the removed receivables is required to
immediately repurchase each receivable from the transferor by paying to the
transferor an amount in immediately available funds equal to the amount the
transferor remitted to the trust in consideration for the transfer of the
removed receivables from the trust to the transferor.
COVENANTS
In the PURCHASE AGREEMENT, each ORIGINATOR covenants that, among
other things, subject to specified exceptions and limitations:
o it will take no action to cause any receivable to be anything
other than an account, general intangible, or chattel paper,
o except for the conveyances under the PURCHASE AGREEMENT, it
will not sell any receivable or grant a lien, other than a
PERMITTED LIEN, on any receivable,
o it will comply with and perform its obligations under any
charge account agreement to which it is a party and its credit
and collection policies and that it will not change the terms
of these agreements or policies except as provided in the
PURCHASE AGREEMENT,
o if it receives a collection on any receivable, it will pay that
collection to the servicer as soon as practicable,
o it will not convey or transfer any ACCOUNTS, except for
transfers to FDS and as otherwise provided in the PURCHASE
AGREEMENT,
o it will comply with all laws, rules, and regulations applicable
to the receivables,
o it will maintain in all material respects its corporate
existence and corporate franchises,
o it will permit PRC or its agents to examine the records
relating to the receivables,
o it will maintain and implement any administrative or operating
procedure reasonably necessary for the collection of
receivables,
o if PRC purchases a receivable that does not satisfy the
eligibility requirements in the PURCHASE AGREEMENT, the
ORIGINATOR will give prompt notice of that failure to PRC, and
will furnish to PRC the information, documents, records, or
reports as PRC may reasonably request,
o it will take all actions reasonably necessary to maintain its
rights under all charge account agreements to which it is a
party,
o it will record each sale of a receivable as a sale on its books
and records, reflect each sale in its financial statements and
tax returns as a sale, and recognize gain or loss on that sale,
if applicable,
o it will maintain PRC'S valid and properly perfected title to
each receivable and will execute and deliver all other
documents or take all further action to protect PRC'S rights in
the receivables and enable PRC to exercise those rights,
including without limitation, by filing UCC financing
statements in each relevant jurisdiction,
o it will cause any receivable that constitutes chattel paper to
bear a legend stating that the receivable has been conveyed to
the trust, and
o it will not effect any change in the nature of its business
that could reasonably be expected to have a material adverse
effect on the value or collectibility of the receivables.
FDS may reduce required minimum monthly payment charges, the
calculation of the amount or the timing of charge-offs and the periodic
finance charges and other fees to be assessed or change the terms and
provisions of charge account agreements or the CREDIT AND COLLECTION
POLICIES. However, FDS may not otherwise take these actions if, either:
o as a result of a reduction or change it is reasonably expected
that the reduction or change will cause A PAY OUT EVENT to
occur for that series, or
o a reduction or change:
- when FDS owns a comparable segment of receivables, is not
applied to the comparable segment of consumer open end
credit accounts owned by FDS with the same
characteristics as the receivables that are being reduced
or changed, and
- when FDS does not own a comparable segment of receivables
will be made with the intent to benefit PRC over the
certificateholders or to materially adversely affect the
certificateholders, unless restricted by an endorsement,
sponsorship, or other agreement between PRC and an
unrelated third party or by the terms of the accounts.
TERMINATION
If any of the ORIGINATORS becomes insolvent, PRC'S obligations under
the PURCHASE AGREEMENT to that ORIGINATOR will automatically be terminated.
In addition, if a PAY OUT EVENT occurs as to all series of certificates,
PRC'S obligations under the PURCHASE AGREEMENT as to all of the ORIGINATORS
will automatically be terminated. The date of that termination will be the
"PURCHASE TERMINATION DATE" as to the related ORIGINATOR.
SECURITY RATINGS
Any rating of the certificates by a rating agency will indicate:
o its view on the likelihood that certificateholders will receive
required interest and principal payments, and
o its evaluation of the receivables and the availability of any
enhancement for the certificates.
Among the things a rating will not indicate are:
o the likelihood that A PAY OUT EVENT will occur,
o the likelihood that a United States withholding tax will be
imposed on non-U.S. certificateholders,
o the marketability of the certificates
o the market price of the certificates, or
o whether the certificates are an appropriate investment for you.
A rating will not be a recommendation to buy, sell or hold the
certificates. A rating may be lowered or withdrawn at any time by a rating
agency.
PRC will request a rating of the certificates offered by this
prospectus and the prospectus supplement from at least one rating agency.
It will be a condition to the issuance of the certificates of each series
or class offered by this prospectus and the related prospectus supplement
that they be rated in one of the four highest rating categories by at least
one nationally recognized rating organization selected by PRC to rate any
series. The rating or ratings applicable to the certificates of each series
or class offered by this prospectus will be provided in the related
prospectus supplement. Rating agencies other than those requested could
assign a rating to the certificates and that rating could be lower than any
rating assigned by a rating agency chosen by PRC.
LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
The transfer of the receivables by PRC to the trust constitutes
either a valid transfer and assignment of all of PRC'S interest in and to
the receivables or a grant of a security interest in the receivables. See
"The Pooling and Servicing Agreement--Representations and Warranties."
The receivables are accounts, general intangibles or chattel paper
for purposes of the UCC. Both the transfer and assignment of accounts and
the transfer of accounts as security for an obligation are treated under
Article 9 of the UCC as creating a security interest. The filing of a
financing statement is required to perfect the trust's interest. If a
transfer of general intangibles is considered the creation of a security
interest, rather than a sale, Article 9 of the UCC applies and the filing
of one or more financing statements is also required to perfect the trust's
security interest. Financing statements covering the receivables of the
trust will be filed under the UCC.
If a transfer of general intangibles is treated as a sale, the UCC is
not applicable and no further action is required to protect the trust's
interest. Although the priority of general intangibles that come into
existence after the initial closing date in this case is not as clear, FDS
and PRC believe that it would not be consistent for a court to give the
trust less favorable treatment if the transfer of the receivables is
considered to be a sale than if it were considered to be creating a
security interest.
There are some limited circumstances under the UCC in which an
earlier or later transferee of receivables could have an interest in the
receivables with priority over the trust's interest. Under the POOLING AND
SERVICING AGREEMENT, PRC will represent and warrant that it has transferred
the receivables to the trust free and clear of all liens and security
interests other than tax liens and the interest of PRC as holder of the
EXCHANGEABLE TRANSFEROR CERTIFICATE. In addition, PRC will covenant that it
will not sell, pledge, assign or transfer, or grant, create, incur, assume
or suffer to exist any lien on, any receivable except to the trust or in
connection with any transfer of the accounts selected for the trust. A tax
or other governmental lien on PRC's property arising before a receivable
comes into existence also may have priority over the interest of the trust
in the receivable. There is a good possibility that the trust may not have
a perfected security interest in any of the receivables created after the
filing of a petition for relief by or against an ORIGINATOR or PRC under
the U.S. bankruptcy code or after the appointment of a receiver or
conservator for FDS. It is anticipated that the trust will either own or
have a perfected security interest in receivables existing on the date of
filing a petition by or against an ORIGINATOR or PRC under the U.S.
bankruptcy code or after the date of appointment of a receiver or
conservator or for FDS and will be able to make payments of principal and
interest on the investor certificates, although there can be no assurance
that any of these payments would be timely.
Because the trust's interest in the receivables is dependent upon
PRC's interest in the receivables, any negative change in the priority or
perfection of PRC's security interest would correspondingly affect the
trust's interest in the affected receivables. In addition, if a receiver or
conservator were appointed for FDS, some administrative expenses of the
receiver or conservator also may have priority over the interest of the
trust in those receivables. While FDS is the servicer, some cash
collections on the receivables may be held by FDS and commingled with its
funds for brief periods, and if an insolvency event occurs, the trust may
not have a perfected interest in the commingled collections.
MATTERS RELATING TO BANKRUPTCY OR RECEIVERSHIP
FDS has represented and warranted to PRC that the sale of the
receivables is a valid sale. In addition, FDS and PRC have treated and will
treat the transfer of the receivables as a sale. FDS has taken or will take
all actions that are required by the UCC to perfect PRC's ownership
interest in the receivables.
The FDIC may be appointed a conservator or receiver of FDS. In that
capacity, the FDIC has the power to repudiate or disaffirm the obligations
of the transferor under the POOLING AND SERVICING AGREEMENT or to request a
stay of any judicial action or proceeding involving FDS.
A valid perfected security interest of PRC should be enforceable, to
the extent of PRC's "actual direct compensatory damages," regardless of the
insolvency of FDS or the appointment of a receiver or conservator for FDS
if:
o FDS granted a security interest in the receivables to PRC and
PRC granted a security interest in the receivables to the
trust,
o the interest was validly perfected before FDS' insolvency,
o the interest was not taken or granted in contemplation of FDS'
insolvency or with the intent to hinder, delay or defraud FDS
or its creditors,
o each of the PURCHASE AGREEMENT and the POOLING AND SERVICING
AGREEMENT is continuously a record of FDS, and
o each of the PURCHASE AGREEMENT and the POOLING AND SERVICING
AGREEMENT represents a bona fide and arm's length transaction
undertaken for adequate consideration in the ordinary course of
business.
If so, payments to the trust should not be open to an automatic stay
of payment or to recovery by the FDIC as unperfected or unenforceable. The
FDIC has the right to require the trustee to establish its right to
payments by submitting to and completing the administrative claims
procedure established under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989. The conservator or receiver has the right to
request a stay of proceedings as to FDS. This could result in delays in
payments on the certificates and possible losses to you.
The amount that the FDIC is required to pay is limited to your
"actual direct compensatory damages" determined as of the date of the
FDIC's appointment as receiver. There is not a statutory definition of
"actual direct compensatory damages." The staff of the FDIC takes the
position that upon repudiation or disaffirmation these damages would not
include interest accrued to the date of actual repudiation or
disaffirmation. Under the FDIC interpretation, you would receive interest
only through the date of the appointment of the receiver. Since the FDIC
may delay actual repudiation or disaffirmation for up to 180 days following
its appointment as receiver, you may not receive the full amount of
interest owing to you under the certificates. There is one reported federal
district court decision that construes the term "actual direct compensatory
damages." This 1993 court case construed the term, in the context of the
repudiation of zero coupon bonds, to mean the fair market value of those
bonds as of the date of repudiation. You would not be compensated for the
period between the appointment of the receiver and the date of repudiation
under either interpretation.
In a 1993 decision, Octagon Gas Systems, Inc. v. Rimmer, 997 F.2d 948
(10th Cir. 1993), cert. denied, 114 S. Ct. 554 (1993), the United States
Court of Appeals for the 10th Circuit suggested that even where a transfer
of accounts from a seller to a buyer constitutes a "true sale," the
accounts would nevertheless constitute property of the seller's bankruptcy
estate in a bankruptcy of the seller. If PRC were to become part of a
bankruptcy proceeding or FDS were to become subject to receivership and a
court were to follow the Octagon court's reasoning, certificateholders
might experience delays in payment and possibly losses in their investment
in the certificates. Counsel has advised PRC that the facts of the Octagon
case are distinguishable from those in the sale transaction between FDS and
PRC and between PRC and the trust and that the reasoning of the Octagon
case appears to be inconsistent with established precedent and the UCC.
Also, because FDS, PRC, the trust and the transaction governed by the
POOLING AND SERVICING AGREEMENT do not have any particular link to the 10th
Circuit, it is unlikely that FDS or PRC would be subject to an insolvency
proceeding in the 10th Circuit. For this reason, the Octagon case should
not be binding precedent on a court or receiver in an insolvency proceeding
involving the receivables.
PRC has taken or will take all actions that are required under the
UCC to perfect the trust's interest in the receivables. PRC has also
warranted to the trust that the trust will have a first priority interest
in the receivables and, with some exceptions, in the proceeds as well.
However, a tax or government lien on property of FDS or PRC which predates
the time a receivable is conveyed to the trust may have priority over the
interest of the trust in that receivable. PRC's articles of incorporation
state that it shall not file a voluntary petition for relief under the U.S.
bankruptcy code without the unanimous affirmative vote of all of its
directors, including the independent directors. According to the POOLING
AND SERVICING AGREEMENT, the trustee will covenant that it will not at any
time institute against PRC any bankruptcy, reorganization or other
proceedings under any federal or state bankruptcy or similar law. In
addition, other steps have been or will be taken to avoid PRC's becoming a
debtor in a bankruptcy case. Aside from these steps, if PRC were to become
a debtor in a bankruptcy case, and a bankruptcy trustee for PRC or a
creditor of PRC were to take the position that the transfer of the
receivables from PRC to the trust should be recharacterized as a pledge of
the receivables, then delays in payments on the certificates and, should
the court rule in favor of the trustee or any creditor, reductions in the
amount of the payments could result.
PRC has been structured in a manner intended to reduce the likelihood
of the voluntary or involuntary application for relief under the U.S.
bankruptcy code or similar applicable state laws. PRC is also structured to
avoid the substantive consolidation of PRC with FDS. PRC is a separate,
special purpose subsidiary, whose articles of incorporation contain
limitations on the nature of PRC's business and restrictions on the ability
of PRC to commence voluntary or involuntary cases or proceedings under
these laws without the unanimous vote of all its directors. Additionally,
PRC does not intend to file, and FDS has agreed that it will not file, a
voluntary petition for relief under the U.S. bankruptcy code or any similar
state laws as to PRC.
If PRC were to become a debtor in a bankruptcy case causing a PAY OUT
EVENT to occur, then, under the POOLING AND SERVICING AGREEMENT, additional
PRINCIPAL RECEIVABLES would not be transferred to the trust. On the
occurrence of some events of bankruptcy, insolvency or receivership, if no
PAY OUT EVENT except the commencement of the bankruptcy or similar event
exists, the trustee-in-bankruptcy may have the power to continue to require
PRC to transfer new receivables to the trust and to prevent the
commencement of the EARLY AMORTIZATION PERIOD or, if applicable for any
series as specified in the related prospectus supplement, the RAPID
ACCUMULATION PERIOD.
Specified events of insolvency, conservatorship or receivership of
the servicer will result in a SERVICER DEFAULT, which will result in A PAY
OUT EVENT. A conservator or receiver of the servicer may have the power to
prevent the trustee and the certificateholders from appointing a successor
servicer if no SERVICER DEFAULT exists except the commencement of a
bankruptcy or similar event.
Payments made on repurchases of receivables by FDS or PRC may be
recoverable by FDS or PRC, or by a creditor, conservator, receiver or a
trustee-in-bankruptcy of FDS or PRC, as a preferential transfer from FDS or
PRC if these payments are made within one year before the filing of a
bankruptcy case as to FDS or PRC.
CONSUMER PROTECTION LAWS
The relationship of the cardholder and credit card issuer is
extensively regulated by federal and state consumer protection and related
laws. For credit cards issued by FDS, the most significant laws include:
o the federal Truth-in-Lending Act,
o the Fair Credit Billing Act,
o the Fair Debt Collection Practices Act,
o the Equal Credit Opportunity Act,
o the Fair Credit Reporting Act,
o the Electronic Funds Transfer Act,
o the National Banking Act, and
o applicable state laws.
Claims may be brought under these statutes by private consumers as
well as federal and state regulators. These statutes impose disclosure
requirements when a credit card account is advertised, when it is opened,
at the end of monthly billing cycles and at year end and, in addition,
prohibit discriminatory practices in extending credit and impose
limitations on the type of account-related charges that may be assessed.
Federal law requires credit card issuers to disclose to consumers:
o the interest rates,
o cardholder fees,
o grace periods, and
o balance calculation methods.
In addition, cardholders are entitled under current laws to have
payments and credits applied to the credit card account promptly, to
receive prescribed notices and to require billing errors to be resolved
promptly.
Some laws, including the laws described above, may limit FDS' ability
to collect amounts owing on the receivables regardless of any act or
omission on the part of FDS. For example, under the federal Fair Credit
Billing Act, a credit card issuer is open to all claims, other than tort
claims, and defenses arising out of transactions in which a credit card is
used as a method of payment or extension of credit if:
o the obligor has made a good faith attempt to obtain
satisfactory resolution of a disagreement or problem relative
to the transaction from the person honoring the credit card,
and
o except in cases where there is a relationship between the
person honoring the card and the credit card issuer, the amount
of the initial transaction exceeds $50 and the place where the
initial transaction occurred was in the same state as the
cardholder's mailing address or within 100 miles of that
address.
These statutes further provide that in some cases cardholders cannot
be held liable for, or the cardholder's liability is limited to, charges to
the credit card account that result from unauthorized use of the credit
card.
Various proposed laws and amendments to existing laws may be enacted
that would further regulate the credit card industry. [In particular,
certain proposed legislation would impose a ceiling on the rate at which a
financial institution may assess finance charges and fees on credit card
accounts that would be substantially below the rates of the finance charges
and fees the FDS currently assesses on its accounts.] The potential effect
of any legislation which limits the amount of finance charges and fees that
may be charged on credit cards could be to reduce the PORTFOLIO YIELD on
the accounts. If the PORTFOLIO YIELD is reduced, a PAY OUT EVENT may occur,
and the EARLY AMORTIZATION PERIOD would commence. Any new laws or rulings
that may be adopted, and existing consumer protection laws, may adversely
affect the ability to collect on the receivables. In addition, failure of
the servicer to comply with those requirements could adversely affect the
servicer's ability to enforce the receivables.
Some jurisdictions may attempt to require out-of-state credit card
issuers to comply with their consumer protection laws in connection with
their operations in those jurisdictions. These laws may include a
limitation on the charges imposed by credit card issuers. If it were
determined that out-of-state credit card issuers must comply with a
jurisdiction's laws limiting the charges imposed by credit card issuers,
those actions could have an adverse impact on FDS' credit card operations.
Application of federal and state bankruptcy and debtor relief laws,
including the Soldiers' and Sailors' Civil Relief Act of 1940, would affect
the interests of the holders of the certificates if the protection provided
to debtors under those laws result in any receivables of the trust being
written off as uncollectible.
The trust may be liable for violations of consumer protection laws
that apply to the receivables transferred to it, either as assignee from
PRC for obligations arising before the transfer or as a party directly
responsible for obligations arising after the transfer. In addition, a
cardholder may be entitled to assert these violations by way of set-off
against his or her obligation to pay the amount of receivables owing. PRC
will warrant to the trust in the POOLING AND SERVICING AGREEMENT that all
receivables transferred to the trust have been and will be created in
compliance with the requirements of these laws. See "The Pooling and
Servicing Agreement--Representations and Warranties" for additional
discussion.
CLAIMS AND DEFENSES OF CARDHOLDERS AGAINST THE TRUST
The UCC provides that unless a cardholder has made an enforceable
agreement not to assert defenses or claims arising out of a transaction,
the rights of the trust are limited by:
o all the terms of the cardholder agreement between FDS and the
cardholder,
o any defense or claim of the cardholder,
o rights of set-off, and
o any other defense or claim of the cardholder against FDS that
accrues before the cardholder receives notification of the
assignment.
The UCC also provides that any cardholder is authorized to continue
to pay FDS until:
o the cardholder 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 or
successor servicer, and
o if requested by the cardholders, the trustee or successor
servicer has furnished reasonable proof of assignment.
No agreement as to defenses has been entered into and no notice of
the assignment of the receivables to the trust will be sent to the
cardholders obligated on the accounts in connection with the transfer of
the receivables to the trust.
TAX MATTERS
The following general discussion summarizes material U.S. federal
income tax consequences relating to the purchase, ownership and disposition
of a certificate. This discussion applies only to certificates offered
under this Prospectus. This summary deals primarily with U.S. CERTIFICATE
OWNERS who acquire their certificates at their original issue price in the
original issuance of those certificates and who hold their certificates as
a capital asset.
This discussion is based on present provisions of the Internal
Revenue Code of 1986, as amended, the proposed, temporary and final
Treasury regulations under the tax code, and administrative rulings or
pronouncements and judicial decisions:
o all as in effect on the date of this prospectus, and
o all of which are subject to change, possibly with retroactive
effect.
This discussion does not address all of the tax consequences that may
be relevant to a certificateholder because of that certificateholder's
particular circumstances. It does not address the U.S. federal income tax
consequences that may be relevant to some types of certificateholders that
are subject to special treatment under the tax code, including:
o dealers in securities or currencies,
o financial institutions,
o tax-exempt entities,
o life insurance companies,
o persons holding certificates as a part of a hedging,
integrated, conversion or constructive sale transaction or a
straddle, or
o persons whose functional currency is not the U.S. dollar.
Also, the following discussion does not consider the alternative minimum
tax consequences, if any, of the investment in the certificates, or the
state, local or foreign tax consequences of the investment. Each
prospective certificateholder is urged to consult its own tax advisor in
determining the federal, state, local and foreign income and any other tax
consequences of the purchase, ownership and disposition of a certificate.
The trust will not ask the IRS for a ruling regarding any of the U.S.
federal income tax consequences discussed in this prospectus. As a result,
the trust can give no assurance that the IRS will not take positions
contrary to those described below. Opinions of counsel are not binding on
the IRS or the courts. In addition, the opinions of Jones, Day, Reavis &
Pogue described below are based on the representations and assumptions
described in those opinions, including, but not limited to, the assumption
that all of the relevant parties will comply with all terms of the POOLING
AND SERVICING AGREEMENT, the SUPPLEMENT, and the PURCHASE AGREEMENT. The
conclusions of tax counsel described in the opinions and the discussion of
the U.S. federal income tax consequences in this prospectus may not be
accurate:
o if those representations are inaccurate, and/or
o if the relevant parties fail to comply with the terms of these
agreements.
TAX CHARACTERIZATION OF THE TRUST
The transferor anticipates that Jones, Day, Reavis & Pogue will
furnish an opinion to the transferor, in relation to the issuance of
certificates of any series offered by this prospectus, that the trust will
not be classified as an association or as a publicly traded partnership
taxable as a corporation for U.S. federal income tax purposes. The opinion
will be based on the assumptions and qualifications described in that
opinion and on certain representations or covenants. As discussed in the
previous paragraph, however, this opinion is not binding on the IRS and no
assurance can be given that this characterization will prevail. See the
last two paragraphs of this subsection for discussion of possible
alternative characterizations of the trust.
The assumptions and qualifications described in the opinion will
include:
o an assumption that any secondary transactions entered into for
any certificates or other interests in the trust, like the
deposit of certificates into a second trust and the issuance of
securities out of that trust, will not adversely affect the
U.S. federal income tax status of the trust, and
o the qualification that the opinion is limited to the issuance
of the certificates of that series by the trust.
If other interests in the trust, excluding the certificates, for
which no opinion will be rendered that those interests would constitute
debt for U.S. federal income tax purposes, are characterized as equity
interests in a partnership, then the trust could be treated as a publicly
traded partnership.
If all or part of the trust were treated as a partnership in which
some or all holders of one or more series were partners, that partnership
could be classified as a publicly traded partnership taxable as a
corporation. Unless specified exceptions apply, a partnership will be
classified as a publicly traded partnership taxable as a corporation if
equity interests in that partnership:
o are traded on an "established securities market", or
o are "readily tradeable" on a "secondary market" or its
"substantial equivalent".
One exception would be if the trust is not engaged in a "financial
business" and 90% or more of its income consists of interest and other
types of passive income. Because Treasury regulations do not clarify the
meaning of "financial business" for this purpose, it is unclear whether
this exception applies. The POOLING AND SERVICING AGREEMENT and each
SUPPLEMENT contains provisions designed to reduce the risk that the trust
could be classified as a publicly traded partnership taxable as a
corporation due to trading of interests in the trust other than the
certificates for which an opinion is furnished that the certificates
constitute debt for U.S. federal income tax purposes. There can be no
assurance, however, that the trust could not become a publicly traded
partnership taxable as a corporation, because some of the actions necessary
to comply with the exception are not fully within the control of the
transferor.
If the trust were treated in whole or in part as a publicly traded
partnership taxable as a corporation, the taxable income of the trust would
be subject to U.S. federal income tax at the applicable marginal corporate
income tax rates applicable to that income. This entity-level tax could
result in reduced distributions to certificateholders. In addition, the
distributions from the trust would not be deductible in computing the
taxable income of the deemed corporation, except to the extent that:
o any certificates were treated as debt of the corporation, and
o distributions to the related certificateholders were treated as
payments of interest on the certificates.
Further, distributions to certificateholders not treated as holding debt
would be treated as dividends for U.S. federal income tax purposes to the
extent of the current and accumulated earnings and profits of the deemed
corporation.
TAX CONSIDERATIONS RELATING TO CERTIFICATEHOLDERS
Tax Characterization of the Certificates as Debt
The transferor will express in the POOLING AND SERVICING AGREEMENT
its intent that the certificates will be treated as debt for all U.S. tax
purposes. The transferor, by entering into the POOLING AND SERVICING
AGREEMENT, and each certificateholder, by the acceptance of a beneficial
interest in a certificate, will agree to treat the certificates as debt for
U.S. tax purposes. However, the POOLING AND SERVICING AGREEMENT generally
refers to the transfer of receivables as a "transfer, assignment and
conveyance," and the transferor will treat the POOLING AND SERVICING
AGREEMENT, for some non-tax accounting purposes, as causing a transfer of
an ownership interest in the receivables and not as creating a debt
obligation.
For U.S. federal income tax purposes, the economic substance of a
transaction usually determines its tax consequences. The form of a
transaction, while a relevant factor, is generally not conclusive evidence
of the economic substance of the transaction. In appropriate circumstances,
the courts have allowed the IRS, as well as taxpayers, in more limited
circumstances, to treat a transaction in accordance with its economic
substance, as determined under U.S. federal income tax law, even though the
participants in the transaction have characterized it differently for
non-tax purposes. In a 1967 case, however, the courts substantially limited
the circumstances in which a taxpayer for tax purposes could ignore the
form of a transaction. Nevertheless, Jones, Day, Reavis & Pogue has advised
that, in a properly presented case, this would not prevent a determination
of the tax characterization of the certificates based on the economic
substance of the transaction.
The IRS and the courts have determined whether the economic substance
of a purported sale of an interest in property is, instead, a loan secured
by the transferred property based on numerous factors designed to determine
whether the seller has relinquished and the purchaser has obtained
substantial incidents of ownership in the transferred property. The primary
factors examined are whether the purchaser has the opportunity for gain if
the property increases in value and has the risk of loss if the property
decreases in value. Except as specified in the related Prospectus
Supplement, Jones, Day, Reavis & Pogue is of the opinion that, although no
transaction closely comparable to that contemplated in this prospectus has
been the subject of any Treasury regulation, revenue ruling or judicial
decision, the certificates will be properly characterized as indebtedness
for U.S. federal income tax purposes. The discussion below assumes that the
certificates will be considered debt for U.S. federal income tax purposes.
Taxation of Interest Income on the Certificates
General. The transferor intends to take the position that a U.S.
CERTIFICATE OWNER generally will include the stated interest on a
certificate in gross income when that interest income is received or
accrued according to that U.S. CERTIFICATE OWNER'S regular method of tax
accounting. This conclusion is based on the transferor's position that the
stated interest on a certificate is unconditionally payable.
Under the applicable Treasury regulations, the stated interest on the
certificates will be considered unconditionally payable only if the terms
and conditions of the certificates make the likelihood of late payment or
non-payment of the stated interest a remote contingency. The transferor
believes that the late payment or non-payment of stated interest on the
certificates is a remote contingency:
o because the trust and the trustee will have no discretion to
withhold, delay or otherwise defer scheduled monthly payments
of stated interest on the certificates, if the trust has
sufficient cash on hand to allow the trustee to make those
interest payments, and
o based on the ratings of the certificates.
If, however, the stated interest on the certificates is not
considered unconditionally payable:
o the stated interest on the certificates will be considered
original issue discount, and
o a U.S. CERTIFICATE OWNER will be required to include that
stated interest in income, as original issue discount, on a
daily economic accrual basis despite that person's regular
method of tax accounting and without regard to whether cash
related to that income is paid at the same time.
In addition, if the stated interest on the certificates is not paid in full
on a DISTRIBUTION DATE, the certificates may at that time, and at all later
times, be considered to be issued with original issue discount and all U.S.
CERTIFICATE OWNERS would be required to include that stated interest in
income as original issue discount on an economic accrual basis.
Original Issue Discount Obligations. Assuming that the stated
interest on the certificates is considered to be "unconditionally payable,"
a series of certificates will not be considered to have been issued with
original issue discount unless:
o a substantial amount of that series of certificates is sold, in
the original issuance of those certificates, to investors at a
price that is less than the stated principal amount of those
certificates, and
o the amount of the discount exceeds a statutory de minimis
amount of original issue discount.
Under applicable regulations, a holder of a certificate issued with de
minimis original issue discount must include the original issue discount in
income proportionately as principal payments are made on a class of
certificates.
A U.S. CERTIFICATE OWNER must include the amount of the original
issue discount in income on a daily economic accrual basis without regard
to that person's method of accounting and without regard to receipt of cash
related to that income. A U.S. CERTIFICATE OWNER will not be required to
include in income separately any payments received on the certificates of
the original issue discount. The relevant prospectus supplement will
disclose if any series of certificates is issued with original issue
discount.
A certificateholder who purchases a certificate at a discount from
its adjusted issue price may be subject to the "market discount" rules of
the tax code. The relevant parts of these rules provide:
o for gain attributable to accrued market discount to be treated
as ordinary income when partial principal payments are
received, or when the certificate is sold or disposed of, and
o for interest deductions related to any debt incurred to acquire
or carry the market discount certificate to be deferred.
A certificateholder that purchases a certificate for an amount
greater than the sum of all amounts payable on that certificate after the
purchase date other than payments of "qualified stated interest", the
"stated redemption amount," will be considered to have purchased the
certificate at a premium. That certificateholder may generally choose to
amortize the premium as an offset to interest income using a constant yield
method over the remaining term of the certificate.
Sale, Exchange or Retirement of Certificates
Upon a sale or other taxable exchange, retirement or disposition of a
certificate, a U.S. CERTIFICATE OWNER will recognize gain or loss equal to
the difference between:
o the amount realized on that sale, exchange, retirement or other
disposition, less an amount equal to any accrued but unpaid
interest that the U.S. CERTIFICATE OWNER has not included in
gross income previously, which will be taxable as gross income,
and
o the U.S. CERTIFICATE OWNER'S adjusted tax basis in that
certificate:
- as increased by any original issue discount or market
discount previously included in income by the holder, and
- as decreased by any deductions previously allowed for
amortizable bond premium and by any payments reflecting
principal or original issue discount received for that
certificate.
This gain or loss generally will be capital gain or loss and generally will
be considered long-term capital gain or loss if the U.S. CERTIFICATE OWNER
held the certificate for more than one year at the time of the sale,
exchange, retirement or other disposition and subject to the market
discount provisions of the tax code. The long-term capital gains of
individuals, estates, and trusts generally are eligible for reduced rates
of taxation. Capital losses generally may be used only to offset capital
gains.
NON-U.S. CERTIFICATE OWNERS
Assuming that all of the certificates issued to NON-U.S. CERTIFICATE
OWNERS are considered debt of the transferor for U.S. federal income tax
purposes, under present U.S. federal income tax law, and subject to the
discussion on backup withholding below under "--Information Reporting and
Backup Withholding":
o no withholding of U.S. federal income tax will be required for
the payment by the transferor or any withholding agent of
principal or interest on a certificate owned by a NON-U.S.
CERTIFICATE OWNER if:
- the beneficial owner does not actually or constructively
own 10% or more of the total combined voting power of all
classes of stock of the transferor entitled to vote
within the meaning of section 871(h)(3) of the tax code
and the Treasury regulations under the tax code,
- the beneficial owner is not a controlled foreign
corporation that is related to the transferor through
stock ownership,
- the beneficial owner is not a bank whose receipt of
interest on a certificate is described in section
881(c)(3)(A) of the tax code, and
- the beneficial owner satisfies the statement requirement
provided in section 871(h) and section 881(c) of the tax
code and the Treasury regulations under the tax code.
To satisfy the statement requirement referred to above, the
certificateholder or a financial institution holding the certificate on
behalf of the owner, must provide, in accordance with specified procedures,
the transferor or any withholding agent with a statement to the effect that
the certificateholder is not a U.S. CERTIFICATE OWNER. Currently, these
requirements will be met if:
o the certificateholder provides its name and address, and
certifies, under penalties of perjury, that it is not a U.S.
CERTIFICATE OWNER, which certification may be made on an IRS
Form W-8 or successor form, or
o a financial institution holding the certificate on behalf of a
certificate owner certifies, under penalties of perjury, that
the statement has been received by it and furnishes any
withholding agent with a copy.
Under recently finalized Treasury regulations, the statement requirement
also may be satisfied with other documentary evidence for interest paid
after December 31, 2000 to an offshore account or through some foreign
intermediaries.
If a NON-U.S. CERTIFICATE OWNER cannot satisfy the requirements
described above, payments of interest made to that beneficial owner will be
subject to a 30% withholding tax unless that beneficial owner provides the
transferor or any withholding agent with a properly executed:
o IRS Form 1001, or successor form, claiming an exemption from,
or a reduction in the rate of, that withholding tax under the
benefit of an applicable U.S. income tax treaty, or
o IRS Form 4224, or successor form, stating that the interest
paid on the certificate is not subject to that withholding tax
because it is effectively connected with the
certificateholder's conduct of a trade or business in the
United States.
Under recently finalized Treasury regulations, NON-U.S. CERTIFICATE OWNERS
generally will be required to provide an IRS Form W-8 in lieu of an IRS
Form 1001 and IRS Form 4224, although alternative documentation may be
applicable in some situations.
The NON-U.S. CERTIFICATE OWNER, although exempt from the U.S.
withholding tax discussed above, will be subject to U.S. federal income tax
on the interest on a net income basis in the same manner as if it were a
U.S. CERTIFICATE OWNER if:
o it is engaged in a trade or business in the United States, and
o the interest on its certificates is effectively connected with
the conduct of that trade or business.
In addition, if that NON-U.S. CERTIFICATE OWNER is a foreign corporation,
it may be subject to a U.S. branch profits tax equal to 30%, or lower
applicable treaty rate, of its effectively connected earnings and profits
for the taxable year, subject to adjustments. For this purpose, the
interest income will be included in that foreign corporation's earnings and
profits.
Any gain realized by a NON-U.S. CERTIFICATE OWNER upon the sale,
exchange, retirement or other disposition of a certificate generally will
not be subject to U.S. federal income or withholding tax unless:
o the gain is effectively connected with a U.S. trade or business
of the NON-U.S. CERTIFICATE OWNER in the United States,
o for a NON-U.S. CERTIFICATE OWNER who is an individual, that
individual is present in the United States for 183 days or more
in the taxable year of the sale, exchange, retirement or other
disposition, and other conditions are met, or
o to the extent the gain is considered accrued but unpaid
interest, the requirements described above for interest are not
satisfied.
If the certificates were treated as an interest in a partnership,
except a publicly traded partnership taxable as a corporation, instead of
indebtedness that characterization could cause a NON-U.S. CERTIFICATE OWNER
to be treated as engaged in a trade or business in the United States, in
which case, the NON-U.S. CERTIFICATE OWNER:
o would be required to file a U.S. federal income tax return, and
o generally would be subject to U.S. federal income tax,
including, for a NON-U.S. CERTIFICATE OWNER that is a
corporation, the U.S. branch profits tax, on its allocable
share of the net income from the partnership.
Further, withholding may apply to partnership income that is allocable to a
NON-U.S. CERTIFICATE OWNER that is considered to be a partner in the
partnership. That withholding would be imposed at a rate equal to the
highest marginal U.S. federal income tax rate applicable to the NON-U.S.
CERTIFICATE OWNER. Alternatively, if some or all of the certificates were
treated as equity interests in a publicly traded partnership taxable as a
corporation, the gross amount of any related dividend distributions to a
NON-U.S. CERTIFICATE OWNER generally would be subject to U.S. withholding
tax at the rate of 30%, unless that rate were reduced under an applicable
U.S. income tax treaty. See the last three paragraphs of "--Tax
Characterization of the Trust" above for discussion of possible alternative
characterizations of the trust.
Special rules may apply for NON-U.S. CERTIFICATE OWNERS who:
o have an office or other fixed place of business in the U.S.,
o are former U.S. citizens,
o are engaged in a banking, financing, insurance or similar
business in the U.S., or
o are "controlled foreign corporations," "foreign personal
holding companies," "passive foreign investment companies" or
corporations that accumulate earnings in order to avoid U.S.
federal income tax.
These persons should consult their own U.S. tax advisors before investing
in the certificates.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to some
payments of principal and interest paid on certificates and to the proceeds
of the sale of a certificate made by U.S. CERTIFICATE OWNERS except some
exempt recipients, like corporations. A 31% backup withholding tax will
apply to those payments if the U.S. CERTIFICATE OWNER fails to provide a
taxpayer identification number or certification of exempt status or fails
to report in full dividend and interest income.
No information reporting or backup withholding will be required for
payments made by the transferor or any withholding agent to a NON-U.S.
CERTIFICATE OWNER if the statement described above under "--Non-U.S.
Certificate Owners" has been received and the payor does not have knowledge
that the NON-U.S. CERTIFICATE OWNER is actually a U.S. CERTIFICATE OWNER.
In addition, backup withholding and information reporting will not
apply if payments of principal and interest on a certificate are paid or
collected by a foreign office of a custodian, nominee or other foreign
agent on behalf of a certificateholder or if a foreign office of a broker,
as defined in applicable Treasury regulations, pays the proceeds of the
sale of a certificate to the owner of that security. If, however, the
custodian, nominee, agent or broker is, for U.S. federal income tax
purposes:
o a United States person,
o a controlled foreign corporation,
o a foreign person that derives 50% or more of its gross income
for specified periods from the conduct of a trade or business
in the United States, or
o for taxable years beginning after December 31, 2000, a foreign
partnership in which one or more United States persons, in
total, own more than 50% of the income or capital interests in
the partnership or which is engaged in a trade or business in
the United States,
those payments will not be subject to backup withholding but will be
subject to information reporting, unless:
o that custodian, nominee, agent or broker has documentary
evidence in its records that the relevant certificateholder is
not a United States person and other conditions are met, or
o the certificateholder establishes an exemption.
Payments of principal and interest on a certificate paid to the
certificateholder by a United States office of a custodian, nominee or
agent, or the payment by the United States office of a broker of the
proceeds of the sale of a certificate, will be subject to both backup
withholding and information reporting unless:
o the relevant certificateholder provides the statement referred
to above under "--Non-U.S. Certificate Owners, and
o the payor has no knowledge that the certificateholder is
actually a U.S. CERTIFICATE OWNER or the certificateholder
establishes an exemption.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against a certificateholder's U.S. federal
income tax liability if the required information is furnished to the IRS.
STATE AND LOCAL TAXATION
The discussion above does not address the tax consequences of the
purchase, ownership or disposition of a certificate under any state or
local tax law. Each investor should consult its own tax advisor regarding
state and local tax consequences of purchasing, owning and disposing of a
certificate.
EMPLOYEE BENEFIT PLAN CONSIDERATIONS
A plan fiduciary considering an investment in the offered
certificates should consider that an investment might constitute or give
rise to a prohibited transaction under Employee Retirement Income Security
Act of 1974, as amended, and the tax code or any substantially similar
federal, state or local law. ERISA and the tax code impose restrictions on:
o employee benefit plans as defined in Section 3(3) of ERISA,
o plans described in Section 4975(e)(1) of the tax code,
including retirement accounts and Keogh plans,
o entities whose underlying asset include plan assets by reason
of a plan's investment in these entities, and
o persons who have specified relationships to a plan described as
"parties in interest" under ERISA and "disqualified persons"
under the tax code.
REGULATION UNDER ERISA AND THE TAX CODE
ERISA imposes duties on persons who are fiduciaries of a plan. Under
ERISA, any person who exercises any authority or control over the
management or disposition of a plan's assets is considered to be a
fiduciary of that plan. Both ERISA and the tax code prohibit some
transactions involving "plan assets" between a plan and parties in interest
or disqualified persons. Violations of these rules may result in the
imposition of an excise tax or penalty.
The term "plan assets" is not defined by ERISA or the tax code.
However, a plan's assets may be considered to include an interest in the
underlying assets of the trust if the plan acquires an "equity interest" in
the trust. An equity interest includes the certificates. If so, the
operation of the trust may result in a prohibited transaction under ERISA
and the tax code.
FINAL REGULATION ISSUED BY THE DOL
The U.S. Department of Labor issued a final regulation which provides
exceptions to a plan which acquires an equity interest in the trust. If a
plan acquires a "publicly-offered security," the issuer of the security is
not treated as holding plan assets. A publicly-offered security is a
security that:
o is freely transferable,
o is part of a class of securities that is owned by 100 or more
investors independent of the issuer and of one another, and
o is either:
- part of a class of securities registered under Section
12(b) or 12(g) of the Securities Exchange Act, or
- sold to the plan as part of an offering of securities to
the public under an effective registration statement
under the Securities Act and the class of securities of
which that security is part is registered under the
Securities Exchange Act within the requisite time.
Although it is anticipated that the conditions of this exception may
be met for some classes of certificates, no assurances can be given and no
monitoring will be done.
In addition, the final regulation provides that if at all times more
than 75% of the value of all classes of equity interests in certificates of
a series are held by investors other than plan investors, an investing
plan's assets will not include any of the underlying assets of the trust.
If the criteria for publicly-offered securities are not met for any
class of offered certificates, the trust assets may be treated as including
assets of plans that are certificateholders. If so, transactions involving
the trust and parties in interest or disqualified persons relating to plans
that are certificateholders might be prohibited under ERISA and the tax
code. For example, if a participant in any plan is a cardholder of one of
the accounts, under DOL interpretations the holding of interests in
certificates by that plan could constitute a prohibited transaction. In
addition, if PRC or any underwriter of that series is a party in interest
or a disqualified person for an investing plan, the purchase of an interest
in certificates by that plan could constitute a prohibited transaction. An
investment by a plan in certificates could result in liability under ERISA
and the tax code unless a statutory or administrative exemption exists and
the plan satisfies all conditions for exemptive relief.
EXEMPTIONS TO PROHIBITED TRANSACTIONS
There are five class exemptions issued by the DOL that could apply in
the event of a prohibited transaction. These DOL Prohibited Transaction
Class Exemptions apply to:
o plan asset transactions determined by independent qualified
professional asset managers (PTE 84-14),
o some transactions involving bank collective investment funds
(PTE 91-38),
o some transactions involving insurance company pooled separate
accounts (PTE 90-1),
o some transactions involving insurance company general accounts
(PTE 95-60), and
o plan asset transactions determined by in-house asset managers
(PTE 96-23).
We can provide no assurance that these exemptions or any other
exemption will apply, even if all of the conditions specified are
satisfied.
SPECIAL CONSIDERATIONS FOR INSURANCE COMPANIES
Based on the reasoning of the United States Supreme Court in John
Hancock Life Ins. Co. v. Harris Trust and Savings Bank, 114 S. Ct. 517
(1993), an insurance company's general account may be deemed to include
assets of the plans investing in the general account, e.g., through the
purchase of an annuity contract, and the insurance company might be treated
as a party-in-interest with respect to a plan by virtue of that investment.
Any purchaser that is an insurance company using the assets of an
insurance company general account should note that the Small Business Job
Protection Act of 1996 added new Section 401(c) of ERISA relating to the
status of the assets of insurance company general accounts under ERISA and
Section 4975 of the tax code. Pursuant to Section 401(c), the Department of
Labor issued final regulations effective January 5, 2000 with respect to
insurance policies issued on or before December 31, 1998 that are supported
by an insurer's general account. As a result of these regulations, assets
of an insurance company general account will not be treated as "plan
assets" for purposes of the fiduciary responsibility provisions of ERISA
and Section 4975 of the tax code to the extent those assets relate to
contracts issued to employee benefit plans on or before December 31, 1998
and the insurer satisfies various conditions.
Section 401(c) also provides that, except in the case of avoidance of
the final regulations issued by the Department of Labor and actions brought
by the Secretary of Labor relating to certain breaches of fiduciary duties
that also constitute breaches of state or federal criminal law, until the
date that is 18 months after the final regulations issued by the Department
of Labor become final, no liability under the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 of the tax code
may result on the basis of a claim that the assets of the general account
of an insurance company constitute the "plan assets" of any such plan.
The plan asset status of insurance company separate accounts is
unaffected by new Section 401(c) of ERISA, and separate account assets
continue to be treated as the plan assets of any of those plans invested in
a separate account. Potential investors considering the purchase of
certificates of any series on behalf of an insurance company general
account should consult their legal advisors regarding the effect of these
regulations on the investment.
GENERAL INVESTMENT CONSIDERATIONS
Prospective fiduciaries of a plan considering the purchase of
interests in certificates of any series should consult with their legal
advisors concerning the impact of ERISA and the tax code and the potential
consequences of making an investment in the certificates based on their
specific circumstances. Each plan fiduciary should take into account, among
other considerations:
o whether the fiduciary has the authority to make the investment,
o the composition of the plan's portfolio as to diversification
by type of asset,
o the plan's funding objectives,
o the tax effects of the investment,
o whether the assets of the trust which are represented by these
interests would be considered plan assets, and
o whether, under the general fiduciary standards of investment
prudence and diversification an investment in certificates of
any series is appropriate for the plan taking into account the
overall investment policy of the plan and the composition of
the plan's investment portfolio.
Some employee benefit plans, for example, governmental plans and some
church plans, are not subject to the provisions of Title I of ERISA and
Section 4975 of the tax code. For this reason, assets of these plans may be
invested in the certificates of each series without regard to the ERISA
considerations described here, subject to the provisions of any other
applicable federal and state law. It should be noted that any plan that is
qualified and exempt from taxation under the tax code is subject to the
prohibited transaction rules described in the tax code.
PLAN OF DISTRIBUTION FOR THE OFFERED CERTIFICATES
The place and time of delivery for any series of certificates will be
described in the accompanying prospectus supplement. PRC may sell
certificates:
o through underwriters or dealers,
o directly to one or more purchasers, or
o through agents.
The prospectus supplement for any offered series will describe the
terms of the offering of the offered certificates, including:
o the name or names of any underwriters for the certificates,
o the purchase price of the certificates,
o the proceeds to PRC from the sale,
o any underwriting discounts,
o any other compensation of the underwriters,
o the initial offering price, and
o any discounts or concessions allowed or reallowed or paid to
dealers.
Under each underwriting agreement, PRC will agree to sell to each of
the underwriters in the related prospectus supplement the principal amount
of the offered certificates. In turn, each of those underwriters will agree
to purchase from PRC the principal amount of certificates described in the
underwriting agreement and in the related prospectus supplement. The
underwriting agreement may allow for a proportional adjustment in the event
of an increase or decrease in the full amount of the offered certificates.
If there is a default by any underwriter, the underwriting agreement will
provide that, in some circumstances, purchase commitments of the
nondefaulting underwriters may be increased or the underwriting agreement
may be ended.
Each underwriting agreement will provide that PRC will indemnify the
related underwriters against some liabilities, including liabilities under
the federal securities laws.
LEGAL MATTERS
Legal matters relating to the issuance of certificates will be passed
upon for PRC by Jones, Day, Reavis & Pogue, New York, New York. Legal
matters relating to the issuance of certificates will be passed upon for
the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York.
REPORTS TO CERTIFICATEHOLDERS
Unless and until DEFINITIVE CERTIFICATES are issued, monthly and
annual reports, which contain unaudited information concerning the trust
and which are prepared by the servicer, will be sent on behalf of the trust
to Cede & Co., as nominee of DTC and registered holder of the related
certificates. These reports will not constitute financial statements
prepared under generally accepted accounting principles. PRC does not
intend to send any of its financial reports to registered holders of
certificates or to owners of beneficial interests in the certificates. PRC
will file with the SEC the periodic reports relating to the trust that are
required under federal securities laws. PRC may suspend the filing of
periodic reports to the extent the filings are no longer required of PRC.
See "Description of the Certificates--Book-Entry Registration" and
"--Reports to Certificateholders" and "The Pooling and Servicing
Agreement--Evidence as to Compliance."
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the securities with the
SEC. This prospectus is part of the registration statement, but the
registration statement includes additional information.
The SEC allows us to incorporate information by reference to SEC
filings. This means that we can disclose information to you by referring to
those documents. The information incorporated by reference is considered to
be part of this prospectus. We refer you to the registration statement for
additional information, including any amendments and exhibits. We also
incorporate by reference any future annual, monthly and special SEC reports
and proxy materials filed by or on behalf of the trust until the offering
of the certificates has ended.
Information that we file later with the SEC will automatically update
the information in this prospectus. You should always rely on the later
information over different information included in this prospectus or the
related prospectus supplement. All reports, statements and other
information we file are available for inspection without charge at the
public reference facilities maintained by the SEC at:
o 450 Fifth Street, N.W., Washington, D.C. 20549,
o 7 World Trade Center, New York, New York 10048, and
o Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511.
Copies of the filings may be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Please call the SEC at (800) SEC-0330 for further
information on the operation of the public reference rooms. In addition,
the SEC maintains a Web site at "http://www.sec.gov" that contains filings
and information regarding registrants that file electronically with the
SEC.
As a recipient of this prospectus, you may request a copy of any
document we incorporate, except exhibits to those documents (unless the
exhibits are specifically incorporated by reference in those documents), at
no cost, by writing us at: Prime Receivables Corporation, 7 West 7th
Street, Cincinnati, Ohio 45202, attention: David Dawson, or calling us at
(513) 579-7580.
GLOSSARY OF TERMS FOR PROSPECTUS
"ACCOUNTS" means all of the consumer revolving credit card accounts
owned by the originators on the Cut-Off Date, each Automatic Additional
Account, and each Supplemental Account.
"ACCUMULATION PERIOD" means for any series or class, a period:
o beginning on a date determined as described in the related
prospectus supplement, and
o ending on the earliest of:
- the start of the Early Amortization Period,
- the date specified in the related prospectus supplement, and
- the date that the trust terminates; and
during which collections of Principal Receivables up to the amount
specified in the related prospectus supplement are accumulated in a
Principal Funding Account for payment to certificateholders of that series
or class on the Expected Final Payment Date.
"ACTIVE ACCOUNTS" means any Account in which there has been either
purchase or merchandise return activity during the preceding 12 Monthly
Periods.
"ADDITION CUT-OFF DATE" means any date PRC designates any
Supplemental Account for inclusion in the trust.
"ADDITION DATE" means the date PRC, under the conditions specified in
the Pooling and Servicing Agreement, adds receivables arising in Accounts
owned by FDS or another Originator to the trust.
"ADDITIONAL ACCOUNT" means each Automatic Additional Account and
Supplemental Account.
"ADDITIONAL INTEREST" means interest on overdue Monthly Interest at
the rate specified in the related prospectus supplement.
"ADJUSTMENT PAYMENT" means any payment PRC must make into the Excess
Funding Account equal to the amount by which the servicer adjusts downward
the Principal Receivables:
o for which it received no collections and no charge-off has
occurred, and
o which causes the Minimum Transferor Interest to exceed the
Transferor Interest.
"AGGREGATE ADDITION LIMIT" means a number of accounts which either:
o for any three-month period, may not exceed 15% of the number of
active accounts as of the first day of the calendar year during
which those Monthly Periods begin, or
o for any twelve-month period, equals 20% of the number of active
accounts as of the first day of that twelve-month period.
"AMORTIZATION PERIOD" means, for any series or any class within a
series, any Early Amortization or Accumulation period.
"AUTOMATIC ADDITIONAL ACCOUNTS" means:
o each consumer revolving credit card account:
- originated by an Originator during the normal operation
of its credit card business and not acquired by the
transferor or that Originator from another credit card
issuer,
- in existence and owned by that Originator and the
receivables of which had been transferred to the
transferor under the Purchase Agreement on the Addition
Date and in existence at the close of business on the
date that receivables generated in that account are
designated for inclusion in the trust,
- payable in United States dollars, and
- whose receivables have not been charged off before the
date of their designation for inclusion in the trust, and
o other consumer credit card accounts whose receivables each
rating agency permits to be added automatically to the trust.
"BASE RATE" means, generally, for any Monthly Period, the annualized
percentage equivalent of the sum of:
o a fraction:
- whose numerator is the sum of the Monthly Interest of
each class of certificates for the related Interest
Accrual Period, and
- whose denominator is the Invested Amount on the last
business day of that Monthly Period, and
o a fraction:
- whose numerator is the monthly servicing fee for that
Monthly Period, and
- whose denominator is the Invested Amount on the last
business day of the preceding Monthly Period;
provided that this fraction for the Base Rate may be altered in the related
Supplement.
"CASH COLLATERAL ACCOUNT" means an account providing credit
enhancement for a series or class of certificates directly or indirectly as
security for a Cash Collateral Guaranty.
"CASH COLLATERAL GUARANTY" means a guaranty secured by the deposit of
cash or Cash Equivalents in a Cash Collateral Account reserved for the
beneficiaries of that Cash Collateral Guaranty.
"CASH EQUIVALENTS" means those investments described under
"Description of the Certificates--Trust Accounts."
"CERTIFICATE RATE" means the interest rate per annum applicable for
any series or class of certificates.
"CHARGE ACCOUNT AGREEMENT" means the agreement:
o consisting of one or more documents,
o whose terms and conditions obligates a person to pay for
purchased merchandise or services under a credit plan that
permits that person to purchase merchandise and services on
credit, together with any finance charges and other related
charges,
as that agreement may be amended, modified or supplemented from time to
time; provided, however, that only agreements between that person and (1)
an Originator or (2) a creditor approved by each of the ratings agencies
will be considered a Charge Account Agreement.
"CLEARSTREAM" means Clearstream Banking, societe anonyme, an
institution administering a book-entry settlement system for trading of
securities in Europe.
"CLEARSTREAM CUSTOMERS" means organizations participating in
Clearstream's book-entry system.
"CLOSING DATE" means the date of issuance of a series.
"COLLATERAL INVESTED AMOUNT" means a subordinated interest in a
series of certificates in an amount initially equal to the percentage of
the certificates of that series specified in the related prospectus
supplement.
"COLLECTION ACCOUNT" means a non-interest bearing segregated account
held for the benefit of the certificateholders into which the servicer
deposits collections on the receivables.
"CONTROLLED ACCUMULATION PERIOD" means for any series or class, a
period:
o beginning on a date specified in the related prospectus
supplement after the Revolving Period, and
o ending on the earliest of:
- the start of the Early Amortization Period or the Rapid
Accumulation Period,
- the date specified in the related prospectus supplement, and
- the Trust Termination Date; and
during which collections of Principal Receivables up to the amount
specified in the related prospectus supplement are deposited monthly into
the Principal Funding Account for payment to certificateholders on the
Expected Final Payment Date.
"CONTROLLED AMORTIZATION PERIOD" means for any series or class, a
period:
o beginning on a date specified in the related prospectus
supplement, and
o ending on the earliest of:
- the start of the Early Amortization Period, and
- the date specified in the related prospectus supplement; and
during which collections of Principal Receivables allocable to the Invested
Amount and other amounts up to an amount specified in the related
prospectus supplement are paid to certificateholders of that series or
class on each Distribution Date.
"CREDIT AND COLLECTION POLICIES" means the written policies and
procedures of any Originator relating to the operation of its consumer
revolving lending business, including:
o determining the creditworthiness of credit card customers,
o the extension of credit to credit card customers, and
o relating to the maintenance of credit card accounts and
collection of receivables,
as these policies and procedures may be modified in accordance with
requirements of law, the Pooling and Servicing Agreement and the Purchase
Agreement.
"CUT-OFF DATE" means for Receivables in Accounts owned by each
Originator, the date on which the last cycle of the Originator was billed
in the [ ] fiscal month.
"DATE OF DETERMINATION" means with respect to the Yield Factor or the
Finance Charge Receivable Factor, respectively, the date on which that
factor is determined, which will in no event be later than the tenth
business day after the end of the preceding Monthly Period.
"DEFAULT AMOUNT" means on any business day, the amount of defaulted
receivables described under "Description of the Certificates--Defaulted
Receivables" and calculated as described in the related prospectus
supplement.
"DEFAULTED ACCOUNT" means each account with respect to which, in
accordance with the servicer's customary and usual servicing procedures,
the servicer has charged off the receivables in that account as
uncollectible.
"DEFINITIVE CERTIFICATES" means certificates in fully registered,
certificated form that are only issued to certificateholders under the
circumstances described under "Description of the Certificates--Definitive
Certificates."
DISTRIBUTION ACCOUNT" means a non-interest bearing segregated demand
account from which the trust makes all distributions to certificateholders.
"DISTRIBUTION DATE" means each date specified in the related
prospectus supplement on which distributions of interest or principal are
to be made to certificateholders.
"DTC PARTICIPANTS" means participants of DTC including securities
brokers and dealers, banks, trust companies, clearing corporations, and
certain other organizations.
"EARLY AMORTIZATION PERIOD" means for any series, a period:
o beginning on the earliest of:
- the day a Pay Out Event occurs,
- the Expected Final Payment Date for the most senior
class, if the Invested Amount for that class has not been
paid in full on that date and
- any other date specified in the related prospectus
supplement, and
o ending on the earlier of:
- the Trust Termination Date and
- the Series Termination Date; and
"ELIGIBLE ACCOUNT" means each account satisfying the requirements
listed in "The Pooling and Servicing Agreement--Eligible Accounts; Eligible
Receivables."
"ELIGIBLE RECEIVABLE" means each receivable satisfying the
requirements listed in "The Pooling and Servicing Agreement--Eligible
Accounts; Eligible Receivables."
"ENHANCEMENT" means, with respect to any Series:
o any letter of credit
o cash collateral account
o guaranty
o guaranteed rate agreement
o maturity guaranty facility
o tax protection agreement
o interest rate swap, or
o other contract or agreement
for the benefit of certificateholders or any class of certificateholders of
such series.
"ENHANCEMENT INVESTED AMOUNT" means a subordinated interest in cash
flows in respect of the receivables to the extent described in the related
prospectus supplement.
"EUROCLEAR" means the system operated by Morgan Guaranty Trust
Company of New York's Brussels, Belgium office under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation.
"EUROCLEAR PARTICIPANTS" means participants of the Euroclear system.
"EXCESS FINANCE CHARGE COLLECTIONS" means those Finance Charge
Collections and other amounts described under "Description of the
Certificates--Sharing of Excess Finance Charge Collections."
"EXCESS FUNDING ACCOUNT" means a demand deposit account held for the
benefit of the certificateholders in which principal collections are held
as collateral if the Transferor Interest is less than the Minimum
Transferor Interest.
"EXCHANGEABLE TRANSFEROR CERTIFICATE" means collectively the
certificate that represents the Transferor Interest in the trust.
"EXPECTED FINAL PAYMENT DATE" means for a series or class with an
Accumulation Period, the expected date of final payment of principal and
any accrued and unpaid interest for that series or class specified in the
Supplement.
"FEDERATED CARDS" means the holders of the credit cards issued by the
Originators under department store tradenames to purchase virtually all of
the various types of merchandise and services offered by the Federated
Stores.
"FEDERATED STORES" means stores currently operated by the Originators
under the names "Bloomingdale's," "Burdines," "Goldsmith's," "Lazarus,"
"Rich's," "Stern's," "The Bon Marche," and, in the case of those stores
formerly operated under other nameplates, "Macy's."
"FINANCE CHARGE COLLECTIONS" means with respect to any series for any
business day:
o the product of (1) collections received with respect to the
receivables minus Recoveries and (2) the Yield Factor plus
o any investment earnings on amounts on deposit in the Excess
Funding Account plus
o Recoveries.
"FINANCE CHARGE RECEIVABLE FACTOR" means with respect to any Date of
Determination:
o the total amount of finance charges, late fees, and other fees
and charges outstanding on the last day of the preceding
Monthly Period divided by
o the total Outstanding Balances of the Eligible Receivables on
the last day of that preceding Monthly Period, determined on
the basis of a calculation performed by the servicer.
"FINANCE CHARGE RECEIVABLES" means for any business day, the product
of:
o the Finance Charge Receivable Factor determined on the
preceding Date of Determination, or on that business day with
respect to each Date of Determination, and
o the total amount of Eligible Receivables as of that business
day, determined on the basis of a calculation performed by the
servicer.
"FIXED/FLOATING ALLOCATION PERCENTAGE" means for each Monthly Period,
the percentage used to allocate to your series collections of Finance
Charge Receivables and collections of Principal Receivables as described in
the related prospectus supplement.
"FLOATING ALLOCATION PERCENTAGE" means for each Monthly Period, the
percentage used to allocate to your series Default Amounts and collections
of Finance Charge Receivables as described in the related prospectus
supplement.
"FUNDING PERIOD" means for any pre-funded series, the period the
earliest of
- the first day on which the amount on deposit in the
pre-funding account is reduced to zero as a result of
increases in the total amount of Principal Receivables in
the trust,
- the day immediately preceding the day on which a Pay Out
Event is deemed to occur, and
- the first day of a Monthly Period specified in the
related prospectus supplement
"INELIGIBLE RECEIVABLES" means receivables not satisfying the
requirements of Eligible Receivables.
"INITIAL CLOSING DATE" means December 15, 1992.
"INITIAL CUT-OFF DATE" means for receivables in Accounts owned by
each Originator, the date on which the last cycle of that Originator was
billed in the September 1992 fiscal month.
"IN-STORE PAYMENTS" means any payment made by an Obligor with respect
to a receivable by delivery of cash, check, money order, or any other form
of payment to a cashier or other employee of any Originator or any merchant
which sells merchandise or services on credit under a CHARGE ACCOUNT
AGREEMENT.
"INTEREST FUNDING ACCOUNT" means a segregated trust account held for
the benefit of the certificateholders of a series in which amounts to be
paid to those certificateholders as interest will be deposited on a monthly
basis, if interest payments are made to certificateholders less frequently
than monthly.
"INVESTED AMOUNT" means for certificateholders in a series, the total
principal amount of their interest in trust assets as specified in the
related prospectus supplement.
"INVESTOR CHARGE-OFF" means for any Monthly Period and for any
series, the amount by which the Invested Amount will be reduced to cover
Default Amounts allocated to the series and other amounts as may be
specified in the prospectus supplement for any series that are not covered
from collections of Finance Charge Receivables or other sources as
specified in the prospectus supplement for any series.
"INVESTOR DEFAULT AMOUNT" means, with respect to each business day,
an amount equal to the product of:
o the Floating Allocation Percentage applicable for that business
day, and
o the total Default Amount for all Defaulted Accounts on that
business day.
"INVESTOR PERCENTAGE" means with respect to Principal Collections,
Finance Charge Collections and Receivables in Defaulted Accounts for any
Series of Certificates, the Floating Allocation Percentage or the
Fixed/Floating Allocation Percentage, as applicable.
"LOCK-BOX ACCOUNT" means an account in the name of the trustee with a
Lock-Box Bank.
"LOCK-BOX AGREEMENT" means each agreement between the respective
Originator, the trustee, and the respective Lock-Box Bank, under which the
Lock-Box Bank receives collections from time to time as provided in that
agreement.
"LOCK-BOX BANK" means any of the banks that holds one or more
Lock-Box Accounts for receiving collections, under a Lock-Box Agreement.
"MINIMUM AGGREGATE PRINCIPAL RECEIVABLES" means, as of any date of
determination, an amount equal to the sum of:
o the initial invested amounts for all outstanding series on that
date, except any series created under a variable funding
supplement or a paired series,
o with respect to any series created under a variable funding
supplement, during the revolving period for that series, the
invested amount on that date of determination or, during the
amortization period for that series, the invested amount of
that series on the last day of the revolving period for that
series, and
o with respect to any paired series, the invested amount of that
series as of that date, after taking into account any payments,
deposits or adjustments made on that date.
"MINIMUM TRANSFEROR INTEREST" means the product of:
o the sum of:
- the aggregate Principal Receivables and
- the amounts on deposit in the Excess Funding Account and
o the highest minimum transferor percentage for any series
specified in the related prospectus supplement.
"MONTHLY INTEREST" means interest accrued for a monthly interest
accrual period as specified in the related prospectus supplement for any
series or class.
"MONTHLY PERIOD" means a fiscal month of PRC.
"MONTHLY SERVICING FEE" means for any Distribution Date with respect
to any Series, the amount payable to the Servicer with respect to a Monthly
Period described in the related Prospectus Supplement
"NON-U.S. CERTIFICATE OWNER" means a beneficial owner of a
certificate that is not a U.S. Certificate Owner.
"OBLIGOR" means a person or persons obligated to make payments with
respect to a Receivable arising under an Account under to a Charge Account
Agreement.
"ORIGINATOR" means FDS and any transferee, successor or assign of FDS
or any other originator of consumer open end credit card accounts
designated to have their receivables included in the trust.
"PAY OUT EVENT" means for any series of certificates issued by the
trust, any of the events identified in the related prospectus supplement
and any of the events described under "Description of the Certificates--Pay
Out Events" causing the Rapid Accumulation Period or the Early Amortization
Period to begin.
"PERMITTED LIEN" means, with respect to the receivables:
o liens in favor of the transferor created under the Purchase
Agreement assigned to the trustee under the Pooling and
Servicing Agreement,
o liens in favor of the trustee under the Pooling and Servicing
Agreement and
o liens which secure the payment of taxes, assessments, and
governmental charges or levies, if those taxes are either (1)
not delinquent or (2) being contested in good faith by
appropriate legal or administrative proceedings and as to which
adequate reserves in accordance with generally accepted
accounting principles shall have been established.
"POOLING AND SERVICING AGREEMENT" means the Amended and Restated
Pooling and Servicing Agreement, dated as of December 15, 1992, among PRC,
as transferor of the receivables to the trust, FDS, as servicer and
originator of the receivables, and The Chase Manhattan Bank, as trustee, as
amended from time to time.
"PORTFOLIO YIELD" means with respect to any series for any Monthly
Period, the annualized percentage specified in the related prospectus
supplement.
"PRE-FUNDING ACCOUNT" means a trust account:
o established with the trustee for the benefit of certificateholders
of a pre-funded series, and
o in which is deposited the pre-funded amount.
"PRINCIPAL ACCOUNT" means a segregated trust account held for the
benefit of certificateholders:
o in which Principal Collections are deposited, and
o from which those collections are withdrawn and distributed as
described in the related Prospectus Supplement under
"Description of the Offered Certificates--Application of
Collections."
"PRINCIPAL COLLECTIONS" means with respect to any series for any
business day, the product of :
o collections received with respect to the receivables minus
Recoveries and
o one minus the Yield Factor.
"PRINCIPAL FUNDING ACCOUNT" means a segregated trust account held for
the benefit of the certificateholders of a series with an Accumulation
Period in which collections of Principal Receivables are accumulated during
the Accumulation Period. At the end of the Accumulation Period, the amount
in this account will be paid to certificateholders of that series or any
class.
"PRINCIPAL RECEIVABLES" means for any business day, the total amount
of Eligible Receivables as of that business day, determined on the basis of
a calculation performed by the servicer, minus the amount of Finance Charge
Receivables on that business day.
"PRINCIPAL SHORTFALLS" means for any series, the deficiency that
occurs when Principal Collections allocable to certificateholders and other
amounts are insufficient to cover required principal payments or deposits.
"PURCHASE AGREEMENT" means the Receivables Purchase Agreement among
PRC, as purchaser, and the Originators, as sellers, under which PRC
purchases the receivables from the Originators.
"PURCHASE TERMINATION DATE" means the date described under "The
Receivable Purchase Agreement--Termination."
"QUALIFIED INSTITUTION" means a United States depository institution
which at all times is acceptable to each rating agency holding the trust
accounts described under "Description of the Certificates--Trust Accounts."
"RAPID ACCUMULATION PERIOD" means for any series or class, a period:
o beginning when a Pay Out Event occurs or at another time
specified in the related prospectus supplement, and
o ending on the earliest of:
- the start of the Early Amortization Period,
- payment in full of the Invested Amount of the certificates of
that series or class, and
- the Series Termination Date; and
during which collections of Principal Receivables allocable to a series or
class will be deposited on each Transfer Date into the Principal Funding
Account and used to pay principal to the certificateholders of that series
on the Expected Final Payment Date.
"RATINGS EFFECT" means a reduction or withdrawal by any rating agency
of its then-current rating of the investor certificates of any outstanding
series or class for which it is a rating agency.
"RECORD DATE" means with respect to any payment to
certificateholders, the date specified in the related prospectus supplement
as of which a certificateholder must be the registered holder of a
certificate to receive a payment on the following Distribution Date.
"RECOVERIES" means any amounts received by the servicer with respect
to receivables in accounts that previously became Defaulted Accounts.
"REMOVED ACCOUNTS" means accounts designated by PRC to have their
receivables conveyed from the trust to PRC and which will no longer
constitute trust accounts if PRC satisfies the conditions specified in the
Pooling and Servicing Agreement.
"RESERVE ACCOUNT" means a bank account established to provide support
for a series or one or more classes of certificates. This account may be
funded by an initial cash deposit or any other method specified in the
related prospectus supplement.
"REVOLVING PERIOD" means for any series, a period:
o beginning on the Closing Date, and
o ending when an Amortization Period or Accumulation Period
begins; and
during which collections of Principal Receivables allocable to that series
are not paid to certificateholders or accumulated but are paid to the
holder of the Exchangeable Transferor Certificate or distributed in any
other manner described in the related prospectus supplement.
"SERIES ALLOCATION PERCENTAGE" means on any date of determination,
the percentage equivalent of a fraction:
o whose numerator is the Invested Amount of a series, and
o whose denominator is the sum of the Invested Amounts of all
then outstanding series.
"SUPPLEMENT" means the supplement to the Pooling and Servicing
Agreement relating to a particular series.
"SERIES TERMINATION DATE" means for any series, the final
Distribution Date on which principal and accrued and unpaid interest is
scheduled to be paid as described in the related prospectus supplement.
"SERVICER DEFAULT" means any failure of the servicer under the
Pooling and Servicing Agreement and any Supplement:
o to perform its duties or fulfill its obligations (each, a
"breach") which has a material adverse impact on
certificateholders, and
o to cure the breach within a specified period of time, including
any grace period, after discovery or notice of the breach,
and certain events of bankruptcy and insolvency. See "The Pooling and
Servicing Agreement--Servicer Default" for a description of the specific
events that could result in a Servicer Default.
"SHARED PRINCIPAL COLLECTIONS" means those principal collections and
other amounts described under "Description of the Certificates--Shared
Principal Collections."
"SUPPLEMENTAL ACCOUNTS" means after the Initial Cut-Off Date, those
accounts, except Automatic Additional Accounts, PRC designates to be added
to the trust only if they are eligible accounts. However, PRC must add
Supplemental Accounts to the trust if:
o the Transferor Interest is less than the Minimum Transferor
Interest, or
o the total amount of Principal Receivables in the trust is less
than the Minimum Aggregate Principal Receivables.
"TRANSFER DATE" means the business day immediately before a
Distribution Date.
"TRANSFEROR FINANCE CHARGE COLLECTIONS" means those Finance Charge
Collections allocated to the transferor described in the applicable
prospectus supplement.
"TRANSFEROR INTEREST" means on any date of determination:
o the total amount of Principal Receivables in the trust at the
end of the day immediately before that date of determination,
and
o amounts on deposit in the Excess Funding Account excluding any
investment earnings in those accounts and other trust assets,
including any other accounts specified in the related
prospectus supplement, and
not allocated to certificateholders or any enhancement provider.
"TRANSFEROR PERCENTAGE" means a percentage of all cardholder payments
on the receivables in the trust equal to 100% minus the sum of the
applicable investor allocation percentage for all series of certificates
then outstanding.
"TRUST TERMINATION DATE" means the earliest to occur of:
o unless a Trust extension has occurred, the day after the
Distribution Date with respect to any Series following the date
on which funds have been deposited in the Distribution Account
or the applicable Series Account for the payment of Investor
Certificateholders of each Series then issued and outstanding
sufficient to pay in full the Aggregate Invested Amount plus
interest accrued at the applicable Certificate Rate through the
end of the day prior to the Distribution Date with respect to
each such Series,
o if a Trust extension has occurred in accordance with the
Pooling and Servicing Agreement, the extended Trust Termination
Date.
"U.S. CERTIFICATE OWNER" means a beneficial owner of a certificate
that is:
o a citizen or resident of the United States,
o a corporation or partnership created or organized in the United
States or under the laws of the United States or any political
subdivision of the United States,
o an estate whose income is subject to United States federal
income taxation regardless of its source, or
o a trust that is subject to the supervision of a court within
the United States and the control of a United States person as
described in section 7701(a)(30) of the tax code or that has a
valid election in effect under applicable U.S. Treasury
regulations to be treated as a United States person.
"YIELD FACTOR" means with respect to any business day, the percentage
equivalent of an amount determined on the preceding date of determination,
or on that business day with respect to each date of determination, equal
to:
o an amount equal to:
- the product of the amount of finance charges, late fees, and other
fees and charges billed to cardholders on the receivables for the
Monthly Period preceding that date of determination and one minus
the Delinquency Percentage for the preceding date of
determination, or on that business day with respect to each date
of determination, plus
- Recoveries for the Monthly Period preceding that date of determination
divided by
o the total amount of collections on receivables for the Monthly Period
preceding that date of determination.
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
Registration Fee................................................. $264,000.00
Printing and Engraving........................................... *
Trustee's Fees................................................... *
Legal Fees and Expenses.......................................... *
Blue Sky Fees and Expenses....................................... *
Accountants' Fees and Expenses................................... *
Rating Agency Fees............................................... *
Miscellaneous Fees and Expenses.................................. *
-----------
Total........................................................ $
===========
---------------
* To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Transferor's Certificate of Incorporation and By-Laws provide for
the indemnification of the directors, officers, employees, and agents of
the Transferor to the full extent that may be permitted by Delaware law
from time to time, and the By-Laws provide for various procedures relating
thereto. Certain provisions of the Transferor's Certificate of
Incorporation protect the Transferor's directors against personal liability
for monetary damages resulting from breaches of their fiduciary duty of
care, except as set forth below. Under Delaware law, absent these
provisions, directors could be held liable for gross negligence in the
performance of their duty of care, but not for simple negligence. The
Transferor's Certificate of Incorporation absolves directors of liability
for negligence in the performance of their duties, including gross
negligence. However, the Transferor's directors remain liable for breaches
of their duty of loyalty to the Transferor, as well as for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law and transactions from which a director derives
improper personal benefit. The Transferor's Certificate of Incorporation
also does not absolve directors of liability under section 174 of the
Delaware General Corporation Law, which makes directors personally liable
for unlawful dividends or unlawful stock repurchases or redemptions in
certain circumstances and expressly sets forth a negligence standard with
respect to such liability.
Under Delaware law, directors, officers, employees, and other
individuals may be indemnified against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement in connection with
specified actions, suits or proceedings, whether civil, criminal,
administrative, or investigative (other than an action by or in the right
of the corporation--a "derivative action") if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
A similar standard of care is applicable in the case of a derivative
action, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with defense or settlement of such
an action and Delaware law requires court approval before there can be any
indemnification of expenses where the person seeking indemnification has
been found liable to the corporation.
The Transferor's Certificate of Incorporation provides, among other
things, that each person who was or is made a party to, or is threatened to
be made a party to any action, suit, or proceeding by reason of the fact
that he or she is or was a director, officer, employee, or agent of the
Transferor (or was serving at the request of the Transferor as a director,
officer, employee, or agent of another entity), will be indemnified and
held harmless by the Transferor to the full extent authorized by Delaware
law against all expense, liability, or loss (including attorneys' fees,
judgments, fines, and amounts to be paid in settlement) actually and
reasonably incurred by such person in connection therewith. The rights
conferred thereby will be deemed to be contract rights and will include the
right to be paid by the Transferor for the expenses incurred in defending
the proceedings specified above in advance of their final disposition.
The Transferor has entered into indemnification agreements with each
of its directors and officers. These indemnification agreements provide
for, among other things, (i) the indemnification by the Transferor of the
indemnitees thereunder to the extent described above, (ii) the advancement
of attorneys' fees and other expenses, and (iii) the establishment, upon
approval by its Board of Directors, of trusts or other funding mechanisms
to fund the Transferor's indemnification obligations thereunder.
ITEM 16. EXHIBITS
(a) Exhibits
Form of Underwriting Agreement*
4.1 Amended and Restated Pooling and Servicing Agreement, dated as of
December 15, 1992 (the "Pooling and Servicing Agreement"), among
Federated, Prime Receivables Corporation and The Chase Manhattan
Bank, as Trustee.(1)
4.2 Receivables Purchase Agreement, dated as of December 15, 1992 (the
"Purchase Agreement"), among Abraham & Straus, Inc., Bloomingdale's,
Inc., Burdines, Inc., Jordan Marsh Stores Corporation, Lazarus, Inc.,
Rich's Department Stores, Inc., Stern's Department Stores, Inc., The
Bon, Inc., and Prime Receivables Corporation.(1)
4.3 First Amendment, dated as of December 1, 1993, to the Pooling and
Servicing Agreement.(2)
4.4 Second Amendment, dated as of February 28, 1994, to the Pooling and
Servicing Agreement.(2)
4.5 Third Amendment, dated as of May 31, 1994, to the Pooling and
Servicing Agreement.(2)
4.6 Assumption Agreement under the Pooling and Servicing Agreement, dated
as of September 15, 1993.(2)
4.7 Form of Series 2000-_ Supplement.*
4.8 First Amendment, dated as of June 23, 1993, to the Purchase
Agreement.(2)
4.9 Second Amendment, dated as of December 1, 1993, to the Purchase
Agreement.(2)
4.10 Third Amendment, dated as of February 28, 1994, to the Purchase
Agreement.(2)
4.11 Fourth Amendment, dated as of May 31, 1994, to the Purchase
Agreement.(2)
4.12 First Supplement, dated as of September 15, 1993, to the Purchase
Agreement.(2)
4.13 Second Supplement, dated as of May 31, 1994, to the Purchase
Agreement.(2)
4.14 Fourth Amendment, dated as of January 18, 1995, to the Pooling and
Servicing Agreement.(3)
4.15 Fifth Amendment, dated as of April 30, 1995, to the Pooling and
Servicing Agreement.(3)
4.16 Sixth Amendment, dated as of July 27, 1995, to the Pooling and
Servicing Agreement.(3)
4.17 Fifth Amendment, dated as of April 30, 1995, to the Purchase
Agreement.(3)
4.18 Seventh Amendment, dated as of May 14, 1996, to the Pooling and
Servicing Agreement.(4)
4.19 Sixth Amendment, dated as of August 26, 1995, to the Purchase
Agreement.(3)
4.20 Seventh Amendment, dated as of August 26, 1995, to the Purchase
Agreement.(3)
4.21 Eighth Amendment, dated as of May 14, 1996, to the Purchase
Agreement.(5)
4.22 Third Supplement, dated as of August 26, 1995, to the Purchase
Agreement.(3)
4.23 Fourth Supplement, dated as of May 14, 1996, to the Purchase
Agreement.
4.24 Eighth Amendment, dated as of March 3, 1997, to the Pooling and
Servicing Agreement.(6)
4.25 Ninth Amendment, dated as of March 3, 1997, to the Receivables
Purchase Agreement.(7)
4.26 Ninth Amendment, dated as of August 28, 1997, to the Pooling and
Servicing Agreement.(8)
4.27 Tenth Amendment, dated as of August 3, 1998, to Pooling and Servicing
Agreement. (9)
4.28 Eleventh Amendment, dated as of March 23, 2000, to the Pooling and
Servicing Agreement.*
4.29 Tenth Amendment, dated as of March 23, 2000, to the Purchase
Agreement.*
5 Opinion of Jones, Day, Reavis & Pogue with respect to legality.*
8 Opinion of Jones, Day, Reavis & Pogue with respect to tax matters.*
23 Consent of Jones, Day, Reavis & Pogue (included in its opinions filed
as Exhibits 5 and 8).*
24 Powers of Attorney (located on the "Signatures" section of this Part
II).
----------
* To be filed by amendment.
(1)Incorporated by reference to the exhibit to the Transferor's
Registration Statement on Form S-1 (Registration No. 33-52374) having
the same numerical designation.
(2)Incorporated by reference to the exhibit to the Transferor's
Registration Statement on Form S-1 (Registration No. 33-92850) having
the same numerical designation.
(3)Incorporated by reference to the exhibit to the Transferor's
Registration Statement on Form S-1 (Registration No. 333-1790-01) having
the same numerical designation.
(4)Incorporated by reference to exhibit 10.6.7 to Federated's Annual Report
on Form 10-K for the fiscal year ended February 1, 1997.
(5)Incorporated by reference to exhibit 10.13.8 to Federated's Annual
Report on Form 10-K for the fiscal year ended February 1, 1997.
(6)Incorporated by reference to exhibit 10.6.8 to Federated's Annual Report
on Form 10-K for the fiscal year ended February 1, 1997.
(7)Incorporated by reference to exhibit 10.13.9 to Federated's Annual
Report on Form 10-K for the fiscal year ended February 1, 1997.
(8)Incorporated by reference to Exhibit 10.1 to Federated's Quarterly
Report on Form 10-Q for the period ended August 28, 1997.
(9)Incorporated by reference to Exhibit 10.1 to Federated's Quarterly
Report on Form 10-Q for the period ended October 31, 1998.
(b) Financial Statements
All financial statements, schedules and historical financial information
have been omitted as they are not applicable.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement: (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement; notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; provided, however, that (a)(i) and (a)(ii) will not
apply if the information required to be included in a post-effective
amendment by those sub-paragraphs is contained in periodic reports filed by
the registrant pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this registration
statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(d) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(e) To provide to the underwriters at the closing specified in the
underwriting agreements certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to
each purchaser.
(f) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of each issue.
(g) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this Registration Statement as of the time it was declared
effective.
(h) That, 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Wilmington, State of Delaware, on
September 8, 2000.
PRIME CREDIT CARD MASTER TRUST
By: PRIME RECEIVABLES CORPORATION
as originator of the Trust
By /s/ Susan P. Storer
-------------------------
Name: Susan P. Storer
Title: President
PRIME RECEIVABLES CORPORATION
as Co-Registrant
By /s/ Susan P. Storer
--------------------------
Name: Susan P. Storer
Title: President
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned does
hereby constitute and appoint each of Karen M. Hoguet and Susan P. Storer,
individually, his or her true and lawful attorney-in-fact and agent, with
full power of substitution, for him or her and on his or her behalf to
sign, execute and file this Registration Statement and any or all
amendments (including, without limitation, post-effective amendments and
any amendment or amendments increasing the amount of securities for which
registration is being sought) to this Registration Statement, with all
exhibits and any and all documents required to be filed with respect
thereto, with the Securities and Exchange Commission or any regulatory
authority, granting unto each such attorney-in-fact and agent individually
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he or she might
or could do if personally present hereby ratifying and confirming all that
each such attorney-in-fact and agent may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
PRIME RECEIVABLES CORPORATION
SIGNATURE TITLE DATE
Principal Executive Officer:
/s/ Karen M. Hoguet Chairman of the Board September 8, 2000
---------------------------
Name: Karen M. Hoguet
Principal Financial and Accounting
Officer:
/s/ Susan P. Storer President September 8, 2000
---------------------------
Name: Susan P. Storer
Directors:
/s/ Karen M. Hoguet Director September 8, 2000
---------------------------
Name: Karen M. Hoguet
/s/ Susan P. Storer Director September 8, 2000
---------------------------
Name: Susan P. Storer
/s/ John R. Sims Director September 8, 2000
---------------------------
Name: John R. Sims
/s/ Joan Dobrzynski Director September 8, 2000
---------------------------
Name: Joan Dobrzynski
/s/ Francis B. Jacobs II Director September 8, 2000
---------------------------
Name: Francis B. Jacobs II
EXHIBIT INDEX
EXHIBITS
PAGE
1 Form of Underwriting Agreement*....................................
4.1 Amended and Restated Pooling and Servicing Agreement.(1)...........
4.2 Purchase Agreement.(1).............................................
4.3 First Amendment to the Pooling and Servicing Agreement.(2).........
4.4 Second Amendment to the Pooling and Servicing Agreement.(2)........
4.5 Third Amendment to the Pooling and Servicing Agreement.(2).........
4.6 Assumption Agreement under the Pooling and Servicing Agreement.(2).
4.7 Form of Series 2000-_ Supplement.*................................
4.8 First Amendment to the Purchase Agreement.(2)......................
4.9 Second Amendment to the Purchase Agreement.(2).....................
4.10 Third Amendment to the Purchase Agreement.(2)......................
4.11 Fourth Amendment to the Purchase Agreement.(2).....................
4.12 First Supplement to the Purchase Agreement.(2).....................
4.13 Second Supplement to the Purchase Agreement.(2)....................
4.14 Fourth Amendment to the Pooling and Servicing Agreement.(3)........
4.15 Fifth Amendment to the Pooling and Servicing Agreement.(3)........
4.16 Sixth Amendment to the Pooling and Servicing Agreement.(3)........
4.17 Fifth Amendment to the Receivables Purchase Agreement.(3).........
4.18 Seventh Amendment to the Pooling and Servicing Agreement.(4).......
4.19 Sixth Amendment to the Purchase Agreement.(3)......................
4.20 Seventh Amendment to the Purchase Agreement.(3)....................
4.21 Eighth Amendment to the Purchase Agreement.(5).....................
4.22 Third Supplement to the Purchase Agreement.(3).....................
4.23 Fourth Supplement to the Purchase Agreement........................
4.24 Eighth Amendment to the Pooling and Servicing Agreement.(6)........
4.25 Ninth Amendment to the Purchase Agreement.(7).....................
4.26 Ninth Amendment, dated as of August 28, 1997, to the Pooling and
Servicing Agreement.(8)]
4.27 Tenth Amendment, dated as of August 3, 1998, to Pooling and
Servicing Agreement. (9)
4.28 Eleventh Amendment, dated as of March 23, 2000, to the Pooling and
Servicing Agreement.*
4.29 Tenth Amendment, dated as of March 23, 2000 to the Purchase Agreement. *
5 Opinion of Jones, Day, Reavis & Pogue with respect to legality.*...
8 Opinion of Jones, Day, Reavis & Pogue with respect to tax matters.*
23 Consent of Jones, Day, Reavis & Pogue (included in its opinions
filed as Exhibits 5 and 8).*
24 Powers of Attorney (located on the "Signatures" section of this Part II)
---------
* To be filed by amendment.
(1)Incorporated by reference to the exhibit to the Transferor's
Registration Statement on Form S-1 (Registration No. 33-52374) having
the same numerical designation.
(2)Incorporated by reference to the exhibit to the Transferor's
Registration Statement on Form S-1 (Registration No. 33-92850) having
the same numerical designation.
(3)Incorporated by reference to the exhibit to the Transferor's
Registration Statement on Form S-1 (Registration No. 333-1790-01) having
the same numerical designation.
(4)Incorporated by reference to exhibit 10.6.7 to Federated's Annual Report
on Form 10-K for the fiscal year ended February 1, 1997.
(5)Incorporated by reference to exhibit 10.13.8 to Federated's Annual
Report on Form 10-K for the fiscal year ended February 1, 1997.
(6)Incorporated by reference to exhibit 10.6.8 to Federated's Annual Report
on Form 10-K for the fiscal year ended February 1, 1997.
(7)Incorporated by reference to exhibit 10.13.9 to Federated's Annual
Report on Form 10-K for the fiscal year ended February 1, 1997.
(8)Incorporated by reference to Exhibit 10.1 to Federated's Quarterly
Report on Form 10-Q for the period ended August 28, 1997.
(9)Incorporated by reference to Exhibit 10.1 to Federated's Quarterly
Report on Form 10-Q for the period ended October 31, 1999.
