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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 14, 1996.
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DISCOVER CARD MASTER TRUST I
(Issuer with respect to the Certificates)
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GREENWOOD TRUST COMPANY
(Exact name of registrant as specified in its charter)
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DELAWARE 6022 51-0020270
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
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12 READ'S WAY, NEW CASTLE, DELAWARE 19720
(302) 323-7826
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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GREENWOOD TRUST COMPANY
12 READ'S WAY, NEW CASTLE, DELAWARE 19720
ATTENTION: JOHN J. COANE
(302) 323-7474
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
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CARL E. WITSCHY, ESQ. RICHARD M. SCHETMAN, ESQ.
LATHAM & WATKINS CADWALADER, WICKERSHAM & TAFT
Sears Tower, Suite 5800 100 Maiden Lane
Chicago, Illinois 60606 New York, New York 10033
Counsel to Registrant Counsel to Underwriters
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number for the earlier effective registration statement
for the same offering. [ ]
If delivery of prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) REGISTRATION FEE
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Credit Card Pass-Through Certificates of
Discover Card Master Trust I............ $5,000,000,000 100% $5,000,000,000 $1,515,151.52
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(1) This registration statement and the registration fee pertain to the initial
offering of $5,000,000,000 aggregate principal amount of Credit Card
Pass-Through Certificates of Discover Card Master Trust I, and in addition
cover offers and sales related to market-making transactions by Dean Witter
Reynolds Inc., an affiliate of the registrant, and offers and sales in
connection with the proportionate share of underwriters' stabilization
activities (if any) by Dean Witter Reynolds Inc. with respect to all such
Credit Card Pass-Through Certificates.
(2) Estimated solely for purpose of calculating the registration fee.
Pursuant to Rule 429 promulgated under the Securities Act of 1933, the
Prospectus which forms part of this Registration Statement also relates to
$2,184,220,000 of Credit Card Pass-Through Certificates of Discover Card Master
Trust I registered under the Registrant's Registration Statement on Form S-3,
File No. 33-99448, which was declared effective on January 4, 1996.
------------------------------------
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.
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EXPLANATORY NOTE
This Registration Statement pertains to (i) the initial offering of
$5,000,000,000 aggregate principal amount of Credit Card Pass-Through
Certificates of Discover Card Master Trust I (all such Pass-Through
Certificates, the "Investor Certificates") registered hereunder by the
registrant, (ii) offers and sales in connection with the proportionate share of
underwriters' stabilization activities (if any) by Dean Witter Reynolds Inc., an
affiliate of the registrant, with respect to the Investor Certificates and (iii)
offers and sales related to market-making transactions in the Investor
Certificates by Dean Witter Reynolds Inc.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 199
PROSPECTUS
DISCOVER(R) CARD MASTER TRUST I
CREDIT CARD PASS-THROUGH CERTIFICATES
GREENWOOD TRUST COMPANY
MASTER SERVICER, SERVICER AND SELLER
------------------------------
Greenwood Trust Company ("Greenwood") intends to sell from time to time up to
$7,184,220,000 aggregate principal amount of Credit Card Pass-Through
Certificates ("investor certificates") consisting of one or more series,
representing an undivided interest in the Discover Card Master Trust I
(the "Trust "), formed pursuant to a Pooling and Servicing Agreement
between Greenwood as Master Servicer, Servicer and Seller and First
Bank National Association (successor trustee to Bank of America
Illinois, formerly Continental Bank, National Association), as
Trustee, dated as of October 1, 1993, as amended. The property of
the Trust includes a pool of receivables (the "Receivables")
arising under selected Discover Card accounts in the portfolio
of Discover Card accounts originated by Greenwood and all
monies due or to become due in payment of the Receivables.
Investor certificates will be sold from time to time under
this Prospectus on terms determined for each series at
the time of sale and described in the related
Prospectus Supplement. Each series will consist of one
or more
(Continued on next page)
------------------------------
THE INVESTOR CERTIFICATES WILL REPRESENT INTERESTS IN THE TRUST AND WILL NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF GREENWOOD TRUST COMPANY.
NEITHER THE INVESTOR CERTIFICATES NOR THE UNDERLYING ACCOUNTS OR
RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
The investor certificates may be sold through underwriting syndicates
represented by one or more managing underwriters, which may include Dean Witter
Reynolds Inc., by underwriters without a syndicate, through agents designated
from time to time, or directly to purchasers. If underwriters or agents are
involved in the offering of investor certificates, the name of the managing
underwriter or underwriters or agents will be set forth in the related
Prospectus Supplement. If an underwriter, agent or dealer is involved in the
offering of investor certificates, the underwriter's discount, agent's
commission or dealer's purchase price will be set forth in, or may be calculated
from the information contained in, the related Prospectus Supplement, and the
net proceeds to Greenwood from such offering will be the public offering price
of such investor certificates less such discount in the case of an underwriter,
the purchase price of such investor certificates less such commission in the
case of an agent, or the purchase price of such investor certificates in the
case of a dealer, and less, in each case, the other expenses of Greenwood
associated with the issuance and distribution of such investor certificates. See
"Plan of Distribution."
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF ANY SERIES OF
INVESTOR CERTIFICATES UNLESS ACCOMPANIED BY THE RELATED PROSPECTUS SUPPLEMENT.
------------------------------
DEAN WITTER REYNOLDS INC.
, 199
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(Continued from previous page)
classes of investor certificates. Each investor certificate will represent an
undivided interest in the Trust and the interest of the investor
certificateholders of each class of a series will include the
right to receive a varying percentage of each month's
collections with respect to the Receivables at the times,
in the manner and to the extent described herein
and in the related Prospectus Supplement.
Although the specific terms of each series in respect to which this Prospectus
is being delivered will be described in the related Prospectus
Supplement, the terms of such series will not be subject to
prior review by, or consent of, the holders of the
investor certificates of any
previously issued series.
Interest and principal payments with respect to each series will be made as
specified in the related Prospectus Supplement. One or more classes of a
series may be entitled to the benefits of a form of credit
enhancement as specified in the related Prospectus Supplement. In
addition, each series may include one or more classes that
are subordinated in right and priority to payment of
principal of, and/or interest on, one or more
other classes of such series or another
series, in each case, to the extent
described in the related Prospectus
Supplement.
2
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TABLE OF CONTENTS
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Reports to Investor Certificateholders................ 3
Incorporation of Certain Documents by Reference....... 3
Prospectus Summary.................................... 4
Risk Factors.......................................... 7
The Trust............................................. 14
Formation of the Trust.............................. 14
The Trustee......................................... 14
Indemnification of the Trust and the Trustee........ 15
Sale and Assignment of Receivables to the Trust..... 15
Addition of Accounts................................ 16
Removal of Accounts................................. 17
Termination of the Trust............................ 17
Description of the Investor Certificates.............. 17
General............................................. 18
Interest Payments................................... 18
Principal Payments.................................. 19
Issuance of Additional Series....................... 19
Collections Account and Group Collections
Accounts.......................................... 20
Class Percentages and Seller Percentage............. 21
Allocations, Reallocations and Subordination
of Collections.................................... 21
Adjustments to Receivables.......................... 22
Distributions of Collections and Application of
Collections and Certain Other Amounts............. 22
Additional Funds.................................... 23
Final Payment of Principal; Termination of Series... 23
Credit Enhancement.................................. 24
Repurchase of Trust Portfolio....................... 24
Repurchase of Specified Receivables................. 25
Repurchase of a Series.............................. 25
Repurchase of Investor Certificates................. 26
Sale of Seller Interest............................. 26
Reallocation of Series Among Groups................. 27
Amendments.......................................... 27
List of Investor Certificateholders................. 28
Meetings............................................ 28
Book-Entry Registration............................. 28
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Definitive Certificates............................. 31
Servicing............................................. 32
Master Servicer and Servicer........................ 32
Servicing Compensation and Payment
of Expenses....................................... 32
Certain Matters Regarding the Master Servicer and
the Servicers..................................... 33
Master Servicer Termination Events.................. 33
Servicer Termination Events......................... 34
Evidence as to Compliance........................... 35
The Seller............................................ 36
Greenwood........................................... 36
Insolvency-Related Matters.......................... 36
Certain Legal Matters Relating to the Receivables..... 37
Transfer of Receivables............................. 37
Certain UCC Matters................................. 38
Consumer Protection Laws and Debtor Relief Laws
Applicable to the Receivables..................... 39
Claims and Defenses of Cardmembers Against the
Trust............................................. 39
Use of Proceeds....................................... 40
Certain Federal Income Tax Consequences............... 40
General............................................. 40
Tax Treatment of the Investor Certificates
as Indebtedness................................... 40
United States Investor Certificateholders........... 41
Foreign Investor Certificateholders................. 43
Backup Withholding and Information Reporting........ 44
Possible Characterization of the Investor
Certificates...................................... 45
Certain State Income Tax Consequences................. 46
ERISA Considerations.................................. 47
Plan of Distribution.................................. 49
Legal Matters......................................... 50
Available Information................................. 50
Glossary of Terms..................................... 51
ANNEX I -- Global Clearance, Settlement and Tax
Documentation Procedures............................ 62
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REPORTS TO INVESTOR CERTIFICATEHOLDERS
Monthly and annual reports with respect to each outstanding series of
investor certificates containing information concerning the Trust and such
outstanding series of investor certificates, prepared by the Master Servicer,
will be made available to certificate owners free of charge upon request by
calling 302-323-7130, extension 328. See "Reports to Investor
Certificateholders" in the related Prospectus Supplement. The annual reports
will not contain financial information that has been examined and reported on by
independent public accountants. Greenwood does not intend to send any of its
financial reports to investor certificateholders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
by Greenwood on behalf of the previously formed Trust are incorporated in this
Prospectus by reference: the Trust's Annual Reports on Form 10-K for the years
ended December 31, 1993, December 31, 1994 and December 31, 1995 and Current
Reports on Form 8-K filed since the formation of the Trust.
All reports and other documents filed by Greenwood on behalf of the Trust
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Securities Exchange Act of 1934"), subsequent to the date
of this Prospectus and prior to the termination of the offering of the investor
certificates shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as modified or superseded, to constitute
a part of this Prospectus.
The Master Servicer will provide without charge to each person, including
any beneficial owner of investor certificates, to whom a copy of this Prospectus
is delivered, a copy of any and all the documents incorporated herein by
reference (other than exhibits to such documents) upon request by calling
813-288-3418.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety with respect to any
series of investor certificates issued by the Trust by the more detailed
information appearing elsewhere in this Prospectus and in the related Prospectus
Supplement. Reference is made to the Glossary of Terms contained in this
Prospectus and in the related Prospectus Supplement for the definitions of
certain capitalized terms. Unless the context requires otherwise, capitalized
terms used in this Prospectus relate separately to individual series of investor
certificates issued by the Trust.
OVERVIEW OF TRUST............ Discover Card Master Trust I has issued, and is
expected to issue, series of investor
certificates from time to time. The securities
offered in each series will represent a
Fractional Undivided Interest in the Trust. The
assets of the Trust include the accounts
receivable arising under certain Discover(R) Card
accounts selected from the Discover Card
Portfolio of accounts originated by Greenwood,
the cash received in payment of those Receivables
(including recoveries on charged-off
Receivables), Participation Interests, if any,
included in the Trust, funds available with
respect to the Credit Enhancement for any
outstanding series of investor certificates, any
additional funds that are included in the Trust,
currency swaps for any outstanding series of
investor certificates that has one or more
classes denominated in a foreign currency, and
interest rate cap or other interest rate
protection agreements for any outstanding series
of investor certificates that has one or more
classes with a floating certificate rate that is
not capped at a specified maximum rate.
The Trust was formed pursuant to the Pooling and
Servicing Agreement between Greenwood and the
Trustee. Upon formation of the Trust, Greenwood
transferred to the Trust all the Receivables in
the Accounts selected for inclusion in the Trust
prior to the Initial Closing Date. In addition,
Greenwood has transferred the Receivables in
Additional Accounts to the Trust, and may do so
again in the future. Greenwood also transfers
additional Receivables generated in the Accounts
to the Trust on an ongoing basis. Greenwood, the
originator of the Accounts, will continue to
service the Accounts. First Bank National
Association (successor trustee to Bank of America
Illinois, formerly Continental Bank, National
Association), is Trustee for the Trust.
The Trust, as a master trust, has issued series
of investor certificates, and is expected to
issue additional series of investor certificates
in the future, subject to certain requirements
and restrictions set forth in the Pooling and
Servicing Agreement. The consent of the
certificateholders of outstanding series will not
be required or requested in order for the Trust
to issue additional series of investor
certificates.
The terms governing each particular series of
investor certificates are set forth in the
Pooling and Servicing Agreement (which applies to
all series issued from the Trust) and will be set
forth in a Series Supplement (which will be
specific to each particular series). The Series
Supplement for each series will specify, among
other things, the number of classes of investor
certificates in the series, the size of the
series, its payment
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terms, and the kind and size of the Credit
Enhancement for the series.
The investor certificates of each series issued
from the Trust will represent a Fractional
Undivided Interest in the Trust and will be
entitled to receive a specified portion of funds
received in payment of the Receivables, plus the
benefits of the Credit Enhancement for that
series, the currency swap and interest rate cap
or other interest rate protection agreements for
that series, if any. The remaining Fractional
Undivided Interest in the Trust not represented
by investor certificates of any series is
represented by the Seller Certificate, which is
owned by Greenwood.
SELLER....................... Greenwood Trust Company ("Greenwood"). The
executive office of Greenwood (302-323-7184) is
located at 12 Read's Way, New Castle, Delaware
19720.
MASTER SERVICER AND
SERVICER..................... Greenwood.
TRUSTEE...................... First Bank National Association (successor
trustee to Bank of America Illinois, formerly
Continental Bank, National Association), its
successors and assigns.
INTEREST ON INVESTOR
CERTIFICATES............... Interest on the investor certificates will accrue
at the per annum rate either specified in, or
determined in the manner specified in, the
related Prospectus Supplement.
See "Description of the Investor Certificates --
Interest Payments" herein and in the related
Prospectus Supplement.
PRINCIPAL ON INVESTOR
CERTIFICATES............... The principal of the investor certificates of
each series will be scheduled to be paid either
in full on a date specified in the related
Prospectus Supplement (the "Expected Final
Payment Date"), in which case such series will
have an Accumulation Period as described below
under "-- Accumulation Period," or in
installments commencing on the Principal
Commencement Date specified in the related
Prospectus Supplement, in which case such series
will have a Controlled Liquidation Period as
described below under "-- Controlled Liquidation
Period." If a series has more than one class of
investor certificates, a different method of
paying principal, Expected Final Payment Date
and/or Principal Commencement Date may be
specified for each class. The payment of
principal with respect to the investor
certificates of a series or class may commence
earlier than the Expected Final Payment Date or
Principal Commencement Date specified in the
related Prospectus Supplement, and the final
principal payment with respect to the investor
certificates of a series or class may be made
earlier or later than the Expected Final Payment
Date or other expected date specified in the
related Prospectus Supplement, if an Amortization
Event occurs with respect to such series or class
or under certain other circumstances described
herein and in the related Prospectus Supplement.
See "Description of the Investor Certificates --
Principal Payments" herein and in the related
Prospectus Supplement.
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REVOLVING PERIOD............. The investor certificates of each series will
have a Revolving Period, which will commence on
the Series Cut-Off Date specified in the related
Prospectus Supplement and continue to, but not
including, the earlier of (i) the Principal
Commencement Date and (ii) the Amortization Date
with respect to such series.
CONTROLLED LIQUIDATION
PERIOD....................... If the related Prospectus Supplement specifies
that a series will have a Controlled Liquidation
Period, unless an Amortization Event has occurred
during the Revolving Period, the Controlled
Liquidation Period will begin on the Principal
Commencement Date specified in such Prospectus
Supplement and continue until the earliest of (i)
the payment in full of the Series Invested
Amount, (ii) the Amortization Commencement Date
with respect to such series and (iii) the Series
Termination Date.
ACCUMULATION PERIOD.......... If the related Prospectus Supplement specifies
that a series will have an Accumulation Period,
unless an Amortization Event has occurred during
the Revolving Period, the Accumulation Period
will begin on the Principal Commencement Date
specified in such Prospectus Supplement and
continue until the earliest of (i) the payment in
full of the Series Invested Amount, (ii) the
Amortization Commencement Date with respect to
such series and (iii) the Series Termination
Date.
AMORTIZATION PERIOD.......... The Amortization Period with respect to a series,
if any, will begin on the Amortization
Commencement Date and continue until the earlier
of (i) the payment in full of the Series Invested
Amount and (ii) the Series Termination Date.
CREDIT ENHANCEMENT........... The Credit Enhancement with respect to a series
may include a cash collateral account, a letter
of credit, a surety bond, an insurance policy or
any other form of credit enhancement described in
the related Prospectus Supplement. The Credit
Enhancement may also be provided to a series or
class of a series by subordination provisions
that require distributions of principal and/or
interest to be made with respect to the investor
certificates of such series or class before
distributions are made to one or more other
series or other classes of such series.
See "Risk Factors -- Credit Enhancement" herein
and "Description of the Investor Certificates --
Principal Payments" and "-- Credit Enhancement"
herein and in the related Prospectus Supplement.
CLEARANCE AND SETTLEMENT..... Investor certificateholders may elect to hold
their investor certificates through any of DTC
(in the United States) or Cedel or Euroclear (in
Europe). Transfers within DTC, Cedel or
Euroclear, as the case may be, will be in
accordance with the usual rules and operating
procedures of the relevant system. Cross-market
transfers between persons holding directly or
indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly
through Cedel or Euroclear, on the other hand,
will be effected in DTC through the relevant
Depositaries of Cedel or Euroclear. See
"Description of the Investor Certificates --
Book-Entry Registration."
6
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RISK FACTORS
Limited Liquidity. It is anticipated that, to the extent permitted, the
underwriters, if any, of any series will make a market in the investor
certificates for such series. There can be no assurance, however, that a
secondary market will develop or, if a secondary market does develop, that it
will provide holders of investor certificates of any particular series with
adequate liquidity or that it will continue until the termination of any such
series.
Certain Legal Aspects. Greenwood has agreed in the Pooling and Servicing
Agreement to repurchase all of the Receivables in the event that the transfer of
the Receivables by Greenwood or any Additional Seller to the Trust is neither a
sale of the Receivables to the Trust nor a grant to the Trust of a security
interest in the Receivables, or, if the transfer by a Seller to the Trust is
deemed to be a grant to the Trust of a security interest in the Receivables, the
Trustee does not have a perfected security interest therein of first priority
under the Uniform Commercial Code (the "UCC") as in effect in the state in which
the chief executive office of each Seller is located (the "Applicable State"
with respect to each Seller). See "Description of the Investor Certificates --
Repurchase of Trust Portfolio." Greenwood has taken certain actions to perfect
and will (along with Additional Sellers, if any) continue the perfection of the
Trust's interest in the Receivables. Unless continuation statements are filed
within the time specified in the UCC in respect of the security interest of the
Sellers or the Trust in the Receivables, the perfection of the security interest
will lapse. A tax or statutory lien on property of a Seller may have priority
over the Trust's interest in the Receivables.
It is anticipated that Greenwood will be the only Servicer until such time
as receivables in credit accounts other than accounts originated by Greenwood
are added to the Trust. See "The Trust -- Addition of Accounts." Under certain
conditions, a Servicer may use Collections received by it in each Due Period
until the related Distribution Date. If these conditions are not met, however,
the Servicer will pay from Collections with respect to Receivables serviced by
such Servicer for any day an amount equal to the sum of the Required Daily
Deposits for each series then outstanding with respect to such Servicer to, or
at the direction of, Greenwood as Master Servicer, for deposit into the
Collections Account, within two business days following the date of processing
of such Collections. Any such Collections not deposited into the Collections
Account will be used by the Servicer for its own benefit until the related
Distribution Date. If Greenwood or any other future Servicer is so entitled to
use Collections received by it and becomes insolvent, the Trust may not have a
perfected interest in such Collections. See "The Seller -- Insolvency-Related
Matters," "Certain Legal Matters Relating to the Receivables -- Transfer of
Receivables" and "Description of the Investor Certificates -- Collections
Account and Group Collections Accounts."
Effect of Subordination. With respect to any series having a class of
subordinated certificates (referred to herein as the "Class B Certificates"),
although the Class B Certificates may have the benefit of Credit Enhancement,
which may include the exclusive direct benefit of all or a portion of such
Credit Enhancement, the Class B Certificates will be subordinated in right of
payment to the senior certificates (the "Class A Certificates") to the extent
described herein and in the related Prospectus Supplement. See "Description of
the Investor Certificates -- Allocations, Reallocations and Subordination of
Collections -- Subordination of Class B Certificates" herein and, if applicable,
in the related Prospectus Supplement and, if applicable, "Description of the
Investor Certificates -- Distributions of Collections and Application of
Collections and Certain Other Amounts" in the related Prospectus Supplement. If
the Class B Investor Interest suffers a reduction as a result of such
subordination, the Class B Percentage of Finance Charge Collections and
Principal Collections on future Distribution Dates may be reduced and future
interest payments, as well as final payment of principal, also may be reduced or
delayed.
Consumer Protection Laws and Regulations. The Accounts and the Receivables
are subject to numerous federal and state consumer protection laws and
regulations that impose requirements on the making and enforcement of consumer
loans. Such laws, as well as any new laws or new rulings regarding new or
existing laws that may be adopted, may adversely affect a Servicer's ability to
7
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collect on the Receivables or maintain previous levels of monthly periodic
finance charges, and failure by any Servicer to comply with such requirements
could adversely affect such Servicer's ability to collect the Receivables with
respect to which it is the Servicer. Greenwood has agreed in the Pooling and
Servicing Agreement that if a Receivable was not created in compliance in all
material respects with all Requirements of Law applicable to a Seller with
respect to such Receivable, and if such noncompliance continues beyond a
specified cure period and has a material adverse effect on the interest of the
Trust in all the Receivables, Greenwood will repurchase all Receivables in the
Accounts containing the Receivables affected by such noncompliance. See
"Description of the Investor Certificates -- Repurchase of Specified
Receivables." It is not anticipated that the Trustee will make any examination
of the Receivables or the records relating thereto for the purpose of
establishing the presence or absence of defects in the Accounts, or for any
other purpose. See "Certain Legal Matters Relating to the Receivables --
Consumer Protection Laws and Debtor Relief Laws Applicable to the Receivables."
Consumer Protection Laws and Regulations; Litigation. Greenwood is involved
from time to time in various legal proceedings that arise in the ordinary course
of its business. Greenwood does not believe that the resolution of any of these
proceedings will have a material adverse effect on Greenwood's financial
condition or on the Receivables. There can be no assurance, however, regarding
any of these effects.
Certain legal and administrative proceedings have challenged, under the
laws of several states, the imposition of late payment fees (or other incidental
charges) by Greenwood on Discover Cardmembers. In each of these matters, the
party proceeding against Greenwood has claimed that applicable state law
prohibits or limits the imposition of late payment fees, has sought to enjoin
Greenwood from imposing late payment fees on Discover Card accounts of residents
of the state in question and has sought refunds of (and, in some cases, civil
penalties with respect to) late payment fees previously imposed on such
accounts.
Greenwood has asserted as a defense in these proceedings that federal law
preempts any state law prohibition against or limitation on charging a late
payment fee or other fee with respect to Discover Card accounts. On June 3,
1996, the United States Supreme Court ruled in a case not involving Greenwood
that state laws limiting late charges are preempted with respect to national
banks by federal law. On June 10, 1996, the Court declined to review two lower
court decisions (one of which involved Greenwood) that reached the same result
with respect to federally insured, state-chartered banks. At the same time, the
Court vacated and remanded for reconsideration a contrary 1995 New Jersey
Supreme Court decision against Greenwood.
Although Greenwood believes that none of the above referenced legal
proceedings will have a material effect on the Receivables, if a legal
proceeding were to result in a significant reduction in the Receivables, this
reduction could result in a decline in the Seller Interest to an amount that
would require Greenwood to transfer to the Trust the Receivables in Additional
Accounts (or Participation Interests) in order to avoid the commencement of the
Amortization Period with respect to one or more series or in shortfalls of
Certificate Interest or losses to the investor certificateholders of one or more
series. See "Description of the Investor Certificates -- Amortization Events" in
the related Prospectus Supplement.
Legislation. The Competitive Equality Banking Act of 1987 ("CEBA") contains
provisions that limit the ability of nonbanking companies, such as Dean Witter,
Discover & Co. ("DWDC") and DWDC's wholly owned subsidiary, NOVUS Credit
Services Inc. ("NOVUS"), the owner of Greenwood, to own banks. However, the
legislation permits any nonbanking company that owned a bank on March 5, 1987 to
retain control of the bank. DWDC and NOVUS are permitted to retain control of
Greenwood under this legislation. CEBA provides that if DWDC, NOVUS or Greenwood
fails to comply with certain statutory restrictions, DWDC and NOVUS will be
required to divest control of Greenwood or to limit its activities
significantly. Greenwood believes, however, that in light of the programs it has
in place, the limitations of CEBA will not have a material impact on Greenwood's
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ability to service, or maintain the level of, the Receivables. In addition,
future federal or state legislation, regulation or interpretation of federal or
state legislation or regulation could adversely affect the business of Greenwood
or the relationship of DWDC or NOVUS with Greenwood. See "The Seller --
Greenwood."
Social, Legal and Economic Factors. Changes in account use and payment
patterns by cardmembers may result from a variety of social and economic
factors, as well as from legislative initiatives. Economic factors, including
the rate of inflation and relative interest rates offered for various types of
loans, also may be reflected in changes in account use and payment patterns,
including increased risk of defaults by cardmembers. Discover Card accounts from
all of the states of the United States and from the United States' territories
and possessions are represented in the Accounts. Greenwood is unable to
determine and has no basis to predict whether, or to what extent, economic or
social factors will affect future credit use or payment patterns. However,
heightened levels of consumer debt, large numbers of personal bankruptcies and a
weakened national economy may cause increases in delinquencies in, and
charge-offs of, credit card receivables underlying securities such as the
investor certificates.
Competition in the Credit Card Industry. The credit card industry in which
the Discover Card competes is highly competitive. This competition focuses on
features and financial incentives of credit cards such as annual fees, finance
charges, rebates and other enhancement features. The market includes bank-issued
credit cards (including "co-branded" cards issued by banks in cooperation with
industrial, retail or other companies) and charge cards issued by travel and
entertainment companies. The vast majority of the bank-issued credit cards bear
the Visa or MasterCard service mark and are issued by the many banks that
participate in one or both of the national bank card networks operated by Visa
U.S.A. Inc. and MasterCard International Incorporated. The Visa and MasterCard
associations have been in existence for approximately 25 years. Cards bearing
their service marks have worldwide acceptance by merchants of goods and services
and recognition by consumers and the general public. Co-branded credit cards,
which offer the cardholder certain benefits relating to the industrial, retail
or other business of the bank's co-branding partner (e.g., credits towards
purchases of airline tickets or rebates for the purchase of an automobile),
currently represent a rapidly growing segment of the bank-issued credit card
market. The majority of travel and entertainment cards are issued by American
Express Company, which has been issuing cards since 1958. Travel and
entertainment cards differ from bank cards in that they have no pre-established
credit limits and have limited provisions for repayment in installments.
American Express Company, through a subsidiary bank, also issues cards with both
a pre-established credit limit and provisions for repayment in installments. The
Discover Card was introduced nationwide in 1986 and competes with general
purpose credit cards issued by other banks and with travel and entertainment
cards. Greenwood currently is the primary issuer of the Discover Card. Greenwood
also issues, and intends from time to time to introduce, additional general
purpose credit, charge and financial transaction cards; however, none of the
accounts associated with these cards is included in the Discover Card Portfolio.
Many bank credit card issuers have instituted balance transfer programs.
Generally, under these transfer programs, cardholders are offered a favorable
annual percentage rate or other financial incentives for a specified length of
time on any portion of their account balances arising from the transfer to their
accounts of outstanding account balances maintained on another credit card. The
annual percentage rates for balance transfers often are more favorable to
cardholders than the annual percentage rates for account balances arising from
purchases or cash advances.
This competition affects Greenwood's ability to obtain applicants for
Discover Card accounts, to encourage usage of the accounts by cardmembers and to
obtain participation in the Discover Card program by service establishments. A
significant adverse change in any of these factors could result in a decrease in
the level of the Receivables, and of the receivables in the Discover Card
Portfolio. If there is a decrease in the level of Receivables, and if sufficient
Receivables in Additional Accounts or sufficient Participation Interests are not
available to be added to the Trust or are not added, an
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Amortization Event with respect to one or more series could result, causing the
commencement of the Amortization Period with respect to such series. See "--
Payments and Maturity" herein and "Description of the Investor Certificates --
Amortization Events" in the related Prospectus Supplement.
DWDC, the indirect owner of Greenwood, pursues a general purpose credit
card strategy of multiple bank association and proprietary card products. For
example, in early 1994, MountainWest Financial Corporation, a Utah industrial
loan corporation that is indirectly owned by DWDC, began participating in a
program by NationsBank of Delaware, N.A. to issue a new, nationally marketed co-
branded MasterCard(R) credit card under the name "Prime Option(SM)." Greenwood
expects that from time to time additional general purpose credit card products
will be introduced through Greenwood or other DWDC subsidiaries in order to
attract additional consumers. The introduction of a new general purpose credit
card product by any market competitor poses incremental competition for Discover
Card and for other credit card issuers. Although Greenwood currently does not
expect that the issuance of any new card by Greenwood or another DWDC subsidiary
will have a materially greater impact on the Discover Card program than the
introduction of a comparable product by any other market competitor, no
assurance can be given with respect to the future competitive impact of such
programs on the Discover Card Portfolio.
Ability of the Seller to Change Terms of the Accounts. Pursuant to the
Pooling and Servicing Agreement, a Seller does not transfer Accounts to the
Trust, but only the Receivables arising in the Accounts. As owner of any
Account, the Seller has the right to determine the periodic finance charges
applicable from time to time to the Account, to alter the minimum monthly
payment required under the Account, to change the credit limit with respect to
the Account and to change various other terms with respect to the Account. A
decrease in the periodic finance charges or other fees with respect to an
Account could decrease the Finance Charge Collections, which would decrease the
effective yield on the Receivables and could also cause commencement of the
Amortization Period with respect to one or more series, as well as decreased
protection to investor certificateholders against shortfalls in Certificate
Interest and against charged-off Receivables. In addition, an increase in credit
limits could result in increases in Charged-Off Amounts, which could result in a
decrease in the level of the Receivables, and of the receivables in the Discover
Card Portfolio. If there is a decrease in the level of Receivables, and if
sufficient Receivables in Additional Accounts or sufficient Participation
Interests are not available to be added to the Trust or are not added, an
Amortization Event with respect to one or more series could result, causing the
commencement of the Amortization Period with respect to such series. See
"Description of the Investor Certificates -- Distributions of Collections and
Application of Collections and Certain Other Amounts" and "-- Amortization
Events" in the related Prospectus Supplement.
The Pooling and Servicing Agreement provides that each Servicer must
administer, process and enforce the Accounts with respect to which it is the
Servicer in accordance with its customary and usual servicing procedures for
servicing credit accounts comparable to the Accounts and in accordance with its
Credit Guidelines. Each Seller also must agree that the terms governing an
Account will not be changed unless the change is also made to the terms of other
accounts of such Seller of the same general type, obligors of which are resident
in a particular affected state or similar jurisdiction. There can be no
assurance that any such change may not affect the Accounts to a greater or
lesser degree than other such accounts. Except as set forth above, there are no
restrictions on the ability of any Seller to change the terms of the Accounts or
the Receivables.
There can be no assurance that changes in applicable laws, changes in the
marketplace or prudent business practice might not result in a determination by
Greenwood to take actions that would result in other changes in the terms of
some or all of the Greenwood Discover Card Accounts.
Payments and Maturity. The Receivables may be paid at any time, and there
is no assurance that there will be additional Receivables created in the
Accounts or that any particular pattern of payments will occur. Changes in
credit use and payment patterns may result from a variety of social,
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legal and economic factors. A significant decline in the amount of Receivables
generated could result in a decline in the Seller Interest to an amount that
would require Greenwood to transfer to the Trust the Receivables in Additional
Accounts or Participation Interests in order to avoid an Amortization Event with
respect to one or more series and commencement of the Amortization Period with
respect to such series. Greenwood's ability to continue to compete in the
current industry environment will affect the generation of new Receivables to be
conveyed to the Trust and also may affect payment patterns. In addition,
increased convenience use, where cardmembers pay their Receivables within the
grace period to avoid all finance charges on purchases of merchandise and
services, would decrease the effective yield on the Receivables and also could
cause commencement of the Amortization Period with respect to one or more
series, as well as decreased protection to the investor certificateholders
against shortfalls in Certificate Interest and against charged-off Receivables.
Conversely, the terms governing the Accounts require only a minimum monthly
payment, and a significant decrease in the percentage of repayment by
cardmembers or in the usage of the Accounts could delay the payment of principal
to the investor certificateholders of one or more series. Any delay in the
payment of principal with respect to any series will extend the period during
which charged-off Receivables may be allocated to the investor certificates of
such series. See "Description of the Investor Certificates -- Amortization
Events" and "Composition and Historical Performance of the Discover Card
Portfolio" in the related Prospectus Supplement.
Basis Risk. In general, accounts in the Discover Card Portfolio accrue
periodic finance charges at variable rates based upon factors such as the
prevailing prime rate, the amount of a cardmember's annual purchases and his or
her payment status (although certain account balances may accrue periodic
finance charges at fixed rates, in most instances for specified periods of
time). See "The Accounts -- Billing and Payments" in the related Prospectus
Supplement. As a result, a significant portion of the Receivables currently bear
interest at the prevailing prime rate plus a margin, while the investor
certificates of a series may bear interest at fixed rates or rates that float
against a different index, as specified in the related Prospectus Supplement. If
there is a decline in the prime rate, the amount of Series Finance Charge
Collections with respect to one or more series may be reduced, which could cause
the commencement of the Amortization Period with respect to such series or
result in either shortfalls of Certificate Interest or losses to the investor
certificateholders of such series. In addition, the investor certificates of a
series may bear interest at a floating rate and may not be subject to a maximum
rate. If increases in the Certificate Rate of such investor certificates are not
offset by increases in Series Finance Charge Collections, Series Excess Spread
may be reduced, which could cause the commencement of the Amortization Period
with respect to such series, and, in the event that the Available Class B Credit
Enhancement Amount of such Series has been reduced to zero, shortfalls of
Certificate Interest or losses to the investor certificateholders of such series
may result.
Rating of the Investor Certificates. Any rating assigned to the investor
certificates of a series or class of a series by a Rating Agency will not be a
recommendation to purchase, hold or sell such investor certificates, inasmuch as
the ratings do not reflect market price or suitability for a particular
investor. There is no assurance that such ratings will remain for any given
period of time or that those ratings will not be lowered or withdrawn entirely
if, in the judgment of the Rating Agencies, circumstances in the future so
warrant.
Book-Entry Registration. Unless otherwise specified in the related
Prospectus Supplement, the investor certificates of each class of a series will
be represented initially by one or more certificates registered in the name of
Cede & Co., the nominee for The Depository Trust Company ("DTC"), and will not
be registered in the names of the certificate owners or their nominees. Because
of this, unless and until definitive certificates are issued, certificate owners
will not be recognized by the Trustee as holders of such investor certificates,
as the term is used in the Pooling and Servicing Agreement or any Series
Supplement. Hence, until such time, certificate owners only will be able to
exercise the rights of investor certificateholders indirectly through DTC, Cedel
or Euroclear and their
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participating organizations. See "Description of the Investor Certificates --
Book-Entry Registration" and "-- Definitive Certificates."
Issuance of Additional Series. The Trust, as a master trust, has issued,
and in the future is expected to issue, from time to time additional series of
investor certificates. Although the terms of any such series will be specified
in a Series Supplement with respect to such series, the provisions of each
Series Supplement and, therefore, terms of any additional series will not be
subject to the prior review or consent of holders of the investor certificates
of any previously issued series. Such terms may include methods for determining
applicable Class Percentages and allocating Collections, provisions creating
different or additional security or other Credit Enhancement, provisions
establishing one or more classes of investor certificates (including one or more
classes subordinated to other classes of such series), provisions subordinating
such series to one or more other series (if the Series Supplement relating to
such series provides for such subordination), and any other amendment or
supplement to the Pooling and Servicing Agreement that is made applicable to
that series.
The Trustee will authenticate and deliver a new series of investor
certificates only upon satisfaction of certain conditions, including
confirmation from the Rating Agencies that the issuance of the new series will
not result in the reduction or withdrawal of the rating of any class of investor
certificates of any series outstanding at the time of such new issuance. See
"Description of the Investor Certificates -- Issuance of Additional Series."
There can be no assurance, however, that the issuance of one or more additional
series from time to time hereafter might not have an impact on the timing and
amount of payments received by an investor certificateholder of any previously
issued series.
The Pooling and Servicing Agreement permits the issuance of one or more
series that would be subordinate in right of payment to another series. The
terms of any such subordination will be set forth in the Series Supplement for
the Subordinate Series. Unless otherwise specified in the related Prospectus
Supplement, a series will not be subordinated to any other series. The Seller
may, but is under no obligation to, issue a series in the future that is
subordinate in right of payment to one or more series. See "Description of the
Investor Certificates -- Allocations, Reallocations and Subordination of
Collections -- Subordinate Series."
Credit Enhancement Account. Although Credit Enhancement may be provided
with respect to a series of investor certificates or any class thereof, the
amount available from such Credit Enhancement will be limited and may be subject
to certain reductions. If the amount under any Credit Enhancement is reduced to
zero, investor certificateholders of the series or class thereof covered by the
Credit Enhancement will bear directly the credit and other risks associated with
their Fractional Undivided Interest in the Trust. See "Description of the
Investor Certificates -- Adjustments to Receivables" and "-- Distributions of
Collections and Application of Collections and Certain Other Amounts --
Distributions and Application of Funds" in the related Prospectus Supplement and
"Description of the Investor Certificates -- Credit Enhancement" herein and in
the related Prospectus Supplement.
Reallocations of Cash Flows Among Series. The Series Supplement for a
series may provide that, under certain limited circumstances, Collections
originally available to one series in a Group will be reallocated to other
series in such Group. Under no circumstances, however, will Collections
originally allocated to one series on any Distribution Date be reallocated to
any other series unless all amounts to be funded with respect to the first
series by the Collections allocated to such series on that Distribution Date
have been funded. There can be no assurance that any series will not be moved
from its original Group to any other Group, in which event such provisions
allowing such reallocations with respect to the original Group may not be
operative and reallocation provisions with respect to the other Group may apply.
See "Description of the Investor Certificates -- Reallocation of Series Among
Groups" herein and "Description of the Investor Certificates -- Allocations,
Reallocations and Subordination of Collections" in the related Prospectus
Supplement.
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Addition of Accounts. Greenwood has designated, and may voluntarily, and in
certain circumstances may be obligated to, designate Additional Accounts to be
included as Accounts, the receivables in which will be transferred to the Trust,
or to add Participation Interests to the Trust. Additional Accounts may be
Discover Card accounts originated by Greenwood or any other type of credit
account originated by Greenwood or an affiliate of Greenwood. Additional
Accounts also may be newly originated accounts. All assignments of Additional
Accounts or Participation Interests to the Trust are subject to certain
conditions set forth in the Pooling and Servicing Agreement, including, with
respect to Additional Accounts, the condition that the assignment of Additional
Accounts to the Trust comply with the conditions established by the Rating
Agencies or that the assignment of such Additional Accounts to the Trust will
not cause the rating of any class of any series of investor certificates then
outstanding to be lowered or withdrawn. See "The Trust -- Addition of Accounts."
However, because any such Additional Accounts, or the accounts underlying any
Participation Interests, need not be accounts of the same type as the Accounts
already included in the Trust, may contain a higher proportion of newly
originated accounts than the Accounts already included in the Trust or be
composed entirely of newly originated accounts, and may include accounts
originated using criteria different from those that were applied to the Accounts
already included in the Trust, there can be no assurance that any Additional
Accounts, or the accounts underlying any Participation Interests, will be of the
same credit quality as the Accounts already included in the Trust. Also, any
Additional Accounts, or the accounts underlying any Participation Interests, may
consist of credit accounts that have different terms than the Accounts already
included in the Trust, including lower periodic finance charges, which may have
the effect of reducing the average yield on the Accounts.
Effects of the Selection Process, Seasoning and Performance
Characteristics. The Accounts have been selected from accounts from all Discover
Card operations centers and from accounts of residents of the 50 states, the
District of Columbia and the United States' territories and possessions, and the
Accounts are consequently geographically diversified. Due to the absence of
comparative historical statistical data with respect to the Accounts and other
accounts in the Discover Card Portfolio and the inherent uncertainty of future
events, there can be no assurance that the payment performance of the Obligors
on the Accounts will be representative of the Discover Card Portfolio in all
material respects. Based on historical experience, fixed pools of accounts (such
as the Accounts) in general experience more volatile performance characteristics
(particularly in the first few months following the selection of such fixed
pools of accounts) and may also experience somewhat higher yields and
charge-offs than the portfolios of accounts from which they are selected (such
as the Discover Card Portfolio), and monthly variations may tend to be greater
than annual changes. See "The Accounts -- Effects of the Selection Process" and
"The Accounts -- Composition of the Accounts" in the related Prospectus
Supplement. In addition, less seasoned pools of accounts may experience
somewhat higher charge-offs and/or lower yields, as well as different payment
characteristics, than more seasoned pools of accounts. See "The Accounts --
Composition of the Accounts -- Seasoning" and "Composition and Historical
Performance of the Discover Card Portfolio -- Composition of Discover Card
Portfolio -- Seasoning" in the related Prospectus Supplement.
Historical Information. All of the information describing the composition
and historical performance of the Discover Card accounts in the related
Prospectus Supplement reflects the composition and historical performance of the
Discover Card Portfolio (except as presented under "The Accounts -- Composition
of the Accounts" and where otherwise noted), and not that of the Accounts. See
"The Accounts -- Effects of the Selection Process" in the related Prospectus
Supplement. There can be no assurance that the historical performance of the
Discover Card Portfolio will be representative of its performance in the future
in all material respects.
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THE TRUST
FORMATION OF THE TRUST
The Trust was formed pursuant to the Pooling and Servicing Agreement
between Greenwood and the Trustee. As discussed below, the property of the Trust
currently includes, among other things, Receivables arising under certain
Greenwood Discover Card Accounts. Greenwood, pursuant to the Pooling and
Servicing Agreement, has transferred and will transfer to the Trust all
Receivables existing as of the Cut-Off Date and any Additional Account Cut-Off
Date. On a daily basis as the Receivables arise, Greenwood is obligated to
transfer and will continue to transfer to the Trust all Receivables arising in
the Accounts (including any Additional Accounts) from time to time until the
termination of the Trust. In exchange for the transfer of Receivables, Greenwood
received the Seller Certificate. As additional Receivables are transferred,
Greenwood receives an additional interest in the Seller Certificate. Greenwood
also received the net cash proceeds from the sale of the investor certificates
of each previously issued series and will receive the net cash proceeds from
each future sale of investor certificates.
The property of the Trust includes the Receivables, all monies due or to
become due thereunder, all proceeds of the Receivables, including Collections
that may be used by Greenwood or any other Servicer for its own benefit prior to
each Distribution Date, all monies on deposit in the Investor Accounts,
Participation Interests included in the Trust, if any, any additional funds that
may be added to the Trust from time to time, any Credit Enhancement and any
interest rate cap and currency swap or other interest rate protection agreements
with respect to any outstanding series of investor certificates. Pursuant to the
Pooling and Servicing Agreement, Greenwood has the right, and in some
circumstances the obligation, to designate Additional Accounts, which may be
Greenwood Discover Card accounts or credit accounts originated by Greenwood or
an affiliate of Greenwood, to be included as Accounts, or to add Participation
Interests to the Trust, subject to certain conditions. See "-- Addition of
Accounts." In addition, Greenwood has the right, subject to certain conditions,
to designate Accounts for removal from the Trust. See "-- Removal of Accounts."
The Trust was formed for the purpose of issuing investor certificates of
various series pursuant to the Pooling and Servicing Agreement and a Series
Supplement for each series. The Trust, as a master trust, has issued and is
expected to issue additional series from time to time and to continue as a trust
after the Series Termination Date of any particular series. The Trust will not
engage in any business activity other than acquiring and holding the Receivables
and the proceeds therefrom, issuing investor certificates and the Seller
Certificate and making payments thereon, investing funds on deposit in the
Investor Accounts pursuant to the Pooling and Servicing Agreement and the
relevant Series Supplements and entering into interest rate cap and currency
swap or other rate protection agreements and other agreements with third parties
for the benefit of the investor certificateholders of one or more series. As a
consequence, the Trust is not expected to have any need for additional capital
resources except for the Receivables in Additional Accounts or Participation
Interests, if applicable.
THE TRUSTEE
First Bank National Association (successor trustee to Bank of America
Illinois, formerly Continental Bank, National Association), is the Trustee under
the Pooling and Servicing Agreement. Greenwood and its affiliates may from time
to time enter into normal banking and trustee relationships with the Trustee.
The Trustee, Greenwood and any of their respective affiliates may hold investor
certificates in their own names. In addition, for purposes of meeting the legal
requirements of certain local jurisdictions, the Trustee has the power to
appoint a co-trustee or separate trustees of all or any part of the Trust. In
the event of such an appointment, all rights, powers, duties and obligations
conferred or imposed upon the Trustee by the Pooling and Servicing Agreement or
any Series Supplement will be conferred or imposed upon the Trustee and such
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separate trustee or co-trustee jointly or, in any jurisdiction in which the
Trustee will be incompetent or unqualified to perform certain acts, singly upon
such separate trustee or co-trustee, who will exercise and perform such rights,
powers, duties and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Master Servicer will
be obligated to appoint a successor Trustee. The Master Servicer also may remove
the Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Master Servicer may be obligated to appoint a successor
Trustee. Any resignation or removal of the Trustee and appointment of a
successor Trustee will not become effective until acceptance of the appointment
by the successor Trustee.
INDEMNIFICATION OF THE TRUST AND THE TRUSTEE
The Pooling and Servicing Agreement provides that the Holder of the Seller
Certificate will indemnify the Trust and the Trustee from and against any loss,
liability, expense, damage or injury suffered or sustained arising out of the
activities of the Sellers with respect to the Trust or the Trustee; provided,
however, that the Holder of the Seller Certificate will not indemnify (a) the
Trustee for liabilities imposed by reason of fraud, negligence, breach of
fiduciary duty or misconduct by the Trustee in the performance of its duties
under the Pooling and Servicing Agreement or any Series Supplement, (b) the
Trust or the investor certificateholders for liabilities arising from actions
taken by the Trustee at the request of investor certificateholders or (c) the
Trust or the investor certificateholders with respect to any federal, state or
local income or franchise taxes (or any interest or penalties with respect
thereto) required to be paid by the Trust or the investor certificateholders.
Any such indemnification only will be from the assets of the related Seller,
will be subordinate to the security interest of the Trust in the Receivables and
will not constitute a claim against such Seller in excess of the lesser of (i)
that Seller's assets available to pay such claim or (ii) the amount of such
claim multiplied by a fraction the numerator of which is the aggregate amount of
Principal Receivables in the Trust that were transferred to the Trust by that
Seller and the denominator of which is the aggregate amount of Principal
Receivables in the Trust.
SALE AND ASSIGNMENT OF RECEIVABLES TO THE TRUST
On the Initial Closing Date and the Addition Dates to date, Greenwood sold
and transferred to the Trust, and as of any future Addition Date Greenwood will
sell and transfer to the Trust, all of its right, title and interest in and to
existing Receivables and in and to all Receivables created thereafter, on a
daily basis as they arise, until the termination of the Trust, in exchange for
the Seller Certificate and the right to direct the issuance of, and receive the
proceeds from the sale of, new series of investor certificates. See "--
Formation of the Trust."
In connection with the transfer of the Receivables to the Trust by
Greenwood, Greenwood has indicated in its computer files that the Receivables
have been transferred to the Trust. In addition, Greenwood has provided (and,
with respect to any Additional Accounts, will provide) to the Trustee a computer
file containing a true and complete list of each Account (including each
Additional Account) identified by account number. Greenwood is not obligated to
deliver to the Trustee any other records or agreements relating to the Accounts
or the Receivables. Greenwood will not segregate the records and agreements that
it maintains relating to the Accounts and the Receivables from records and
agreements relating to other credit accounts and receivables, nor will Greenwood
mark these records or agreements to reflect the sale of the Receivables to the
Trust, except insofar as an electronic or other indicator is necessary to
service the Accounts in accordance with the Pooling and Servicing Agreement and
any Series Supplement. The Trustee will have reasonable access to these records
and agreements as required by applicable law and to enforce the rights of the
certificateholders. Greenwood filed a UCC-1 financing statement in accordance
with applicable state law to perfect the Trust's interest in the Receivables,
and will file any continuation
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statements with respect thereto which may be necessary to maintain such
perfection. See "Certain Legal Matters Relating to the Receivables."
ADDITION OF ACCOUNTS
Pursuant to the Pooling and Servicing Agreement, Greenwood, in its sole
discretion, has designated, and may again in the future designate, credit
accounts originated by Greenwood or an affiliate of Greenwood as Additional
Accounts, the receivables in which have been or will be transferred to the
Trust, or to convey Participation Interests to the Trust. In addition, Greenwood
will be required to designate Additional Accounts or convey Participation
Interests if the aggregate amount of Principal Receivables in the Trust on the
last day of any Due Period is less than the Minimum Principal Receivables
Balance.
Additional Accounts may consist of additional Discover Card accounts
originated by Greenwood or other credit accounts originated by Greenwood or an
affiliate of Greenwood, including, in each case, newly originated accounts. Each
assignment of Additional Accounts will be subject to certain conditions,
including the execution and delivery of a written assignment and an Opinion or
Opinions of Counsel relating to the Trust's security interest in the Receivables
in the Additional Accounts and insolvency and related matters, and delivery of a
certificate of a Servicing Officer regarding the selection criteria used to
select such Additional Accounts. Each assignment of Additional Accounts will
also be subject to the condition that either (i) the Rating Agencies confirm
that the proposed assignment of Additional Accounts will not cause the rating of
any class of any series of investor certificates then outstanding to be lowered
or withdrawn or (ii) the proposed assignment of Additional Accounts complies
with any limitations established by the Rating Agencies on the ability of
Greenwood to designate Additional Accounts. Unless each Rating Agency otherwise
consents, as of the last day of any calendar year, the number of Accounts
designated as Additional Accounts in reliance on clause (ii) of the preceding
sentence with respect to such calendar year or the amount of Principal
Receivables in those Accounts, as applicable, will not exceed a number equal to
20% of the number of Accounts in the Trust or the amount of Principal
Receivables in the Trust, as applicable, in each case as of the first day of
that calendar year; and, as of the last day of any three calendar month period,
the number of Accounts designated as Additional Accounts in reliance on clause
(ii) of the preceding sentence with respect to such three-month period or the
amount of Principal Receivables in those Accounts, as applicable, will not
exceed a number equal to 15% of the number of Accounts in the Trust or the
amount of Principal Receivables in the Trust, as applicable, in each case as of
the first day of such three-month period.
Additional Accounts will be selected on the basis of selection criteria
that are believed by the Servicer of such accounts to be not materially adverse
to the interests of the holders of any class of any series of investor
certificates then outstanding or any Credit Enhancement Provider.
The Trust will receive all Collections in respect of Receivables in
Additional Accounts in the same manner as Collections in respect of other
Receivables, except that Finance Charge Receivables deemed billed on the
Receivables in the Additional Accounts for the Due Period during which the
Additional Accounts were added to the Trust may be an estimate of such amount
prepared by the Servicer with respect to the Additional Accounts.
The terms governing any Additional Accounts or Participation Interests may
differ from the terms governing the Accounts initially included in the Trust,
including the possibility that some or all Additional Accounts or Participation
Interests will have lower periodic finance charges or fees than the initial
Accounts, which may have the effect of reducing the percentage of Finance Charge
Collections relative to the amount of Principal Collections.
The addition of Participation Interests to the Trust will be effected by an
amendment to the Pooling and Servicing Agreement that will not require the
consent of any investor certificateholders. Each conveyance of Participation
Interests to the Trust will be subject to certain conditions, including delivery
of a certificate of Greenwood stating that Greenwood reasonably believes that
the
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addition of the Participation Interests will not be materially adverse to the
interests of the holders of any class of any series of investor certificates
then outstanding or any Credit Enhancement Provider, delivery of an Opinion of
Counsel relating to the Trust's security interest in Participation Interests and
insolvency and related matters and confirmation from the Rating Agencies that
the proposed conveyance of Participation Interests will not cause the rating of
any class of any series of investor certificates then outstanding to be lowered
or withdrawn.
Additional Accounts or accounts underlying Participation Interests need not
be Discover Card accounts or accounts originated by Greenwood, may be composed
entirely of newly originated accounts or contain a higher proportion of newly
originated accounts than the Accounts currently included in the Trust and may
contain accounts originated using criteria different from those applied to the
Accounts currently included in the Trust. Accordingly, there can be no assurance
that any Additional Accounts or accounts underlying Participation Interests will
be of the same credit quality as the Accounts currently included in the Trust.
REMOVAL OF ACCOUNTS
Pursuant to the Pooling and Servicing Agreement, Greenwood may, but will
not be obligated to, designate Accounts for removal from the Trust (such
Accounts being referred to hereinafter as the "Removed Accounts"). Such removal
will be effective as of the last day of the Due Period in which Greenwood
designates Accounts for removal from the Trust.
Each removal of Accounts will be subject to certain conditions, including
the delivery of an Officer's Certificate confirming that (i) the aggregate
amount of Principal Receivables in the Trust less the aggregate amount of
Principal Receivables in the Removed Accounts is not less than the Minimum
Principal Receivables Balance, (ii) the removal of the Removed Accounts will
not, in the reasonable belief of Greenwood, cause either (A) an Amortization
Event to occur with respect to any series then outstanding or (B) the Deficit
Accumulation Amount or Deficit Liquidation Amount, as applicable, with respect
to any series then outstanding to be greater than zero on any Distribution Date
with respect to that series, (iii) no selection procedures believed by Greenwood
to be materially adverse to the investor certificateholders were utilized in
selecting the Removed Accounts and (iv) the Rating Agencies have advised
Greenwood that the removal will not cause the rating of any class of any
outstanding series of investor certificates to be lowered or withdrawn.
TERMINATION OF THE TRUST
The Pooling and Servicing Agreement provides that the Trust will terminate
on October 16, 2014 (the "Final Trust Termination Date") or, if earlier, at the
option of the Sellers, on the day after the Distribution Date on which funds
have been deposited into the Series Distribution Accounts sufficient to pay in
full the Aggregate Investor Interest plus all accrued and unpaid Certificate
Interest on all series then outstanding.
DESCRIPTION OF THE INVESTOR CERTIFICATES
The investor certificates of a series will be issued pursuant to the
Pooling and Servicing Agreement, which was filed as an exhibit to the
Registration Statement of which this Prospectus is a part, and a Series
Supplement. The following summary of the investor certificates does not purport
to be complete and is subject to, and is qualified in its entirety by reference
to, the Pooling and Servicing Agreement and the applicable Series Supplement. On
written request to the Trustee at its principal corporate trust office, the
Trustee will provide to any investor certificateholder without charge a copy of
the Pooling and Servicing Agreement (without exhibits or schedules) and the
applicable Series Supplement (without exhibits).
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GENERAL
Each series will be issued pursuant to the Pooling and Servicing Agreement
and a Series Supplement. The Series Supplement will consist of two parts, a
Series Term Sheet and an Annex. The Series Term Sheet will set forth the basic
terms pertaining to the series. The Annex will constitute the bulk of the Series
Supplement and will contain the detailed provisions regarding allocations of
Collections and payments to the investor certificateholders of the series. The
Annex is designed to be used for a variety of different types of series, and,
accordingly, contains some provisions that will not be applicable to all series.
The Series Term Sheet, in conjunction with the Annex, will set forth all of the
specific terms of the series.
Each series will consist of one or more classes of investor certificates.
Each investor certificate will represent a Fractional Undivided Interest in the
Trust, including the right to a percentage of all Collections on the Receivables
in the Trust. See "-- Class Percentages and Seller Percentage." Each investor
certificate of a series will represent the right to receive payments of interest
on Interest Payment Dates with respect to such series at the applicable
Certificate Rate on the Class Invested Amount with respect to such investor
certificate. If a series has a Controlled Liquidation Period, each investor
certificate of such series will represent the right to receive monthly payments
of principal during the Controlled Liquidation Period and the Amortization
Period, if any, with respect to such series. If a series has an Accumulation
Period, each investor certificate of such series will represent the right to
receive repayment of principal on an applicable Expected Final Payment Date and
monthly payments of principal during the Amortization Period, if any, with
respect to such series. See "Description of the Investor Certificates --
Interest Payments" and "-- Principal Payments" herein and in the related
Prospectus Supplement. With respect to a series having a class of subordinated
certificates, the rights of the Class B Certificateholders to receive payments
will be subordinated to the rights of the Class A Certificateholders with
respect to such series to the extent described in the related Prospectus
Supplement. See "Description of the Investor Certificates -- Allocations,
Reallocations and Subordination of Collections -- Subordination of Class B
Certificates" herein and in the related Prospectus Supplement.
Greenwood holds a residual interest in the Trust (the "Seller Interest"),
which is represented by the Seller Certificate. The Seller Interest represents
the interest in the Principal Receivables not represented by the investor
certificates of any series outstanding at any given time. The Seller Certificate
represents an undivided interest in the Principal Receivables, including the
right to a varying percentage (the "Seller Percentage") of all Collections on
the Receivables in the Trust. See "-- Class Percentages and Seller Percentage."
The amount of Principal Receivables in the Trust will vary each day as new
Principal Receivables are created and others are paid. The amount of the Seller
Interest, therefore, will fluctuate each day to reflect the changes in the
amount of Principal Receivables in the Trust. The amount of the Seller Interest
also will change when additional series are issued, when the Series Investor
Interest for any series declines as principal payments are made to, or
segregated into Investor Accounts for the benefit of, the investor
certificateholders of that series, and when Receivables in Additional Accounts
are added to the Trust or Receivables in Removed Accounts are removed from the
Trust.
INTEREST PAYMENTS
Interest will accrue on the Invested Amount of the investor certificates of
a series or class at the per annum rate either specified in or determined in the
manner specified in the related Prospectus Supplement. Except as otherwise
provided herein or in the related Prospectus Supplement, Finance Charge
Collections and certain other amounts allocable to the investor
certificateholders of a series will be used to make interest payments to
investor certificateholders of such series on each Interest Payment Date
specified in the related Prospectus Supplement. If the Interest Payment Dates
for a series or class occur less frequently than monthly, such Finance Charge
Collections or other
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amounts (or the portion thereof allocable to such series or class) will be
deposited in one or more Series Interest Funding Accounts and used to make
interest payments to investor certificateholders of such series or class on the
following Interest Payment Date. If a series has more than one class of investor
certificates, each such class may have a separate Interest Funding Account.
Funds on deposit in a Series Interest Funding Account will be invested in
Permitted Investments. Any earnings (net of losses and investment expenses) on
funds in a Series Interest Funding Account will be paid to, or at the direction
of, Greenwood except as otherwise specified in the Prospectus Supplement.
Interest with respect to the investor certificates of each series will accrue
and be calculated on the basis described in the related Prospectus Supplement.
PRINCIPAL PAYMENTS
The investor certificates of each series will have a Revolving Period
during which no distributions of Principal Collections will be made to the
investor certificateholders unless otherwise specified in the related Prospectus
Supplement. Principal Collections allocable to the investor certificates during
the Revolving Period will first be made available, under certain circumstances,
to fund Certificate Principal with respect to other series then outstanding in
the Group to which such series belongs that are eligible for such reallocation.
Any remaining Principal Collections generally will be paid to Greenwood, up to
the amount of the Seller Interest. See "-- Allocations, Reallocations and
Subordination of Collections -- Allocations Among Series and to Sellers."
Unless otherwise specified in the related Prospectus Supplement, following
the Revolving Period, unless an Amortization Period commences with respect to a
series, each series will have either an Accumulation Period or a Controlled
Liquidation Period. If a series has an Accumulation Period, the principal of the
investor certificates of the series will be scheduled to be paid in full on an
Expected Final Payment Date. If a series has a Controlled Liquidation Period,
the principal of the investor certificates of the series will be paid in
installments commencing on the Principal Commencement Date. If a series has more
than one class of investor certificates, a different method of paying principal,
Expected Final Payment Date and/or Principal Commencement Date may be specified
for each class. If an Amortization Event occurs with respect to a series, the
payment of principal with respect to the investor certificates of such series
may commence earlier than the Expected Final Payment Date or Principal
Commencement Date, as applicable, and the final principal payment with respect
to the investor certificates of such series may be made earlier or later than
the Expected Final Payment Date or other expected date. See "Description of the
Investor Certificates -- Distributions of Collections and Application of
Collections and Certain Other Amounts" in the related Prospectus Supplement.
ISSUANCE OF ADDITIONAL SERIES
Series of investor certificates have previously been issued and are
outstanding. The Pooling and Servicing Agreement provides that Greenwood may
direct the Trustee from time to time to issue additional series of investor
certificates, subject to certain conditions (each such issuance, a "New
Issuance"). Each New Issuance will be pursuant to the Pooling and Servicing
Agreement and a Series Supplement. Unless otherwise specified in the related
Prospectus Supplement, each New Issuance will have the effect of reducing the
amount of the Seller Interest by an amount equal to the Series Initial Investor
Interest for the new series.
Pursuant to the Pooling and Servicing Agreement, Greenwood will designate
the terms of any New Issuance including, but not limited to, its Series Initial
Investor Interest, the number of classes, the Class Initial Investor Interest
for each class, the Certificate Rate for each class, the Payment Dates, the
Series Termination Date and the Group to which the series will belong. The
Pooling and Servicing Agreement does not require the consent of investor
certificateholders of any series to issue a new series, and Greenwood, any
Additional Sellers, the Master Servicer, the Servicer and the Trustee do not
intend to request the consent of investor certificateholders of any series to
the issuance of a new series.
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Greenwood and any Additional Sellers may offer for sale any series under a
prospectus or other disclosure document in transactions either registered under
the Securities Act of 1933, as amended (the "Securities Act of 1933"), or exempt
from registration thereunder. Such offerings may be direct, through one or more
underwriters or placement agents, in fixed price offerings or in negotiated
transactions or otherwise. Any such series may be issued in fully registered or
book-entry form (or in bearer form, if offered outside the United States), in
minimum denominations determined by the Sellers. Greenwood intends to offer
additional series from time to time, but is under no obligation to do so. See
"Plan of Distribution."
COLLECTIONS ACCOUNT AND GROUP COLLECTIONS ACCOUNTS
The Trustee has established and maintains in the name of the Trust a
"Collections Account" and, for each Group of series, a "Group Collections
Account." Each such account is a segregated trust account established with the
Trustee or a "Qualified Institution," defined as a depository institution
organized under the laws of the United States or any one of the states thereof
that at all times has a short-term certificate of deposit rating of A-1/P-1 or
better from the Rating Agencies and whose deposits are insured by the FDIC.
Funds on deposit in the Collections Account or any Group Collections Account are
invested in Permitted Investments pursuant to the Pooling and Servicing
Agreement. The Master Servicer has the revocable power to instruct the Trustee
to make withdrawals from the Collections Account and each Group Collections
Account for the purpose of carrying out its duties under the Pooling and
Servicing Agreement and any Series Supplement.
Greenwood as Servicer deposits from Collections for any day an amount equal
to the sum of its Required Daily Deposits for each series then outstanding
directly into the Collections Account within two Business Days following the
Date of Processing of such Collections. Any Collections with respect to
Greenwood Discover Card Accounts not deposited into the Collections Account are
used by Greenwood for its own benefit until the Distribution Date on which those
Collections are to be allocated to certificateholders. Greenwood may cease to
deposit Collections into the Collections Account, and instead use all
Collections with respect to Greenwood Discover Card Accounts received in each
Due Period until the Distribution Date on which those Collections are to be
allocated to certificateholders, if and when such use will not result in the
lowering or withdrawal of the rating of any class of any series of investor
certificates then outstanding by the Rating Agencies. In the event that there
are additional Servicers, each such additional Servicer also will deposit from
Collections for any day an amount equal to the sum of its required daily
deposits for each series then outstanding directly into the Collections Account
within two Business Days following the Date of Processing of such Collections,
unless the use by such Servicer of Collections received by it for its own
account prior to the applicable Distribution Date will not result in the
lowering or withdrawal of the rating of any class of any series then outstanding
by the Rating Agencies.
On or before each Distribution Date with respect to each Group, Greenwood
as Master Servicer directs the Trustee, first, to withdraw that portion of the
amount of Collections allocable to the Seller Interest with respect to that
Distribution Date from the Collections Account and pay such amount to the Holder
of the Seller Certificate and second, to withdraw all remaining Collections from
the Collections Account and deposit such Collections in each Group Collections
Account, on or before the Distribution Date with respect to that Group, in an
amount equal to the sum of (x) the sum of the Series Finance Charge Collections
for each series that is a member of that Group and (y) the sum of the Series
Principal Collections for each series that is a member of that Group. However,
allocations to Investor Accounts may be deemed to be made and payments to the
Holder of the Seller Certificate or to the Master Servicer may be made, prior to
a Distribution Date, on the date the Master Servicer delivers the monthly master
servicer statement and the information required to be included in the monthly
investor certificateholders' statement with respect to each series then
outstanding to the Trustee. With respect to each Group, Collections in the Group
Collections Account for such Group will be allocated, deposited or paid on or
prior to each Distribution Date with
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respect to such Group according to the terms of each Series Supplement relating
to the outstanding series in such Group.
Any earnings (net of losses and investment expenses) on funds on deposit in
the Collections Account or any Group Collections Account will be paid to the
Holder of the Seller Certificate.
CLASS PERCENTAGES AND SELLER PERCENTAGE
Pursuant to the Pooling and Servicing Agreement and all Series Supplements
for series then outstanding, the Master Servicer will allocate among the Class
Investor Interests for each class of each series then outstanding, the Seller
Interest, and any other interests in the Receivables (such as, under certain
circumstances, the CCA Investor Interest with respect to certain outstanding
series), all Finance Charge Collections, all Principal Collections and the
Charged-Off Amount. The Master Servicer will make each allocation by multiplying
the amount of Finance Charge Collections, Principal Collections and the
Charged-Off Amount by the applicable Class Percentage, Seller Percentage or
other percentage.
For convenience, this Prospectus refers to the Class Percentage for each
class (and certain other percentages with respect to outstanding series) with
respect to Finance Charge Collections, Principal Collections and the Charged-Off
Amount as if those percentages will not in each case vary. The Class Percentages
(and certain other percentages), however, may vary in each case as detailed in
the "Glossary of Terms" contained in the related Prospectus Supplement. The
method of calculating Class Percentages and other percentages with respect to
each series of investor certificates will be set forth in the applicable Series
Supplement. The Seller Percentage, in all cases, will equal 100% minus the sum
of the Series Percentages for each series then outstanding.
ALLOCATIONS, REALLOCATIONS AND SUBORDINATION OF COLLECTIONS
Allocations Among Series and to Sellers. On or before each Distribution
Date, the Master Servicer will deposit into the Collections Account that portion
of Collections with respect to the related Due Period that are to be allocated
on that Distribution Date and that have not previously been deposited into the
Collections Account and direct the Trustee to withdraw from the Collections
Account and pay to Greenwood that portion of the sum of (x) the total amount of
Finance Charge Collections for the related Due Period less the sum of the amount
of Series Finance Charge Collections for each series then outstanding for the
related Due Period and (y) the total amount of Principal Collections for the
related Due Period less the sum of the amount of Series Principal Collections
for each series then outstanding for the related Due Period that is to be
allocated to the Holder of the Seller Certificate for that Distribution Date.
The Master Servicer will direct the Trustee to withdraw from the Collections
Account and pay to each Group Collections Account, on or before the Distribution
Date with respect to that Group, the sum of (x) the Series Finance Charge
Collections for each series that is a member of that Group and (y) the Series
Principal Collections for each series that is a member of that Group.
Allocations of Collections to the series within each Group will be as set forth
in the Series Supplements for each series within such Group. With respect to
each Group, Collections in the Group Collections Account for such Group will be
allocated, deposited or paid on or prior to each Distribution Date with respect
to such Group according to the terms of each Series Supplement relating to the
outstanding series of such Group.
Subordinate Series. The Pooling and Servicing Agreement permits the
issuance of series of investor certificates that are subordinate in right of
payment, in whole or in part, to one or more other series (any such subordinate
series, a "Subordinate Series"). Unless otherwise specified in the related
Prospectus Supplement, a series will not be subordinate to any other series.
Unless otherwise specified in the related Prospectus Supplement, the Series
Supplement for each series, however, will provide for the possibility that a
Subordinate Series with respect to such series may be issued in the future. The
Seller may, but is under no obligation to, issue a series that is subordinate to
one or more series at any time. The extent to which such Subordinate Series, if
issued, will be
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subordinated to one or more series will be set forth in the Series Supplement
with respect to such Subordinate Series.
Subordination of Class B Certificates. Unless otherwise specified in the
related Prospectus Supplement, in the case of a series of investor certificates
issued with two classes, the Class B Certificates will be subordinated to the
Class A Certificates. Certain amounts originally allocable to the Class B
Certificates may be reallocated to the extent necessary to fund certain amounts
with respect to the Class A Certificates. If these reallocations are not
reimbursed, the Investor Interest with respect to the Class B Certificates will
be reduced. If applicable, see "Description of the Investor Certificates --
Allocations, Reallocations and Subordination of Collections -- Subordination of
Class B Certificates" in the related Prospectus Supplement.
ADJUSTMENTS TO RECEIVABLES
The aggregate amount of Receivables will increase or decrease, as the case
may be, to the extent any Receivable is adjusted without payment by or on behalf
of a cardmember. Such adjustments include, but are not limited to, any
Receivable that was created as a result of a fraudulent or counterfeit charge
that the Servicer with respect to such Receivable adjusts, increases, reduces,
modifies or cancels in accordance with its Credit Guidelines, or any Receivable
that was created in respect of merchandise returned by the cardmember. If the
exclusion of the amount of an adjustment from the calculation of the Seller
Interest would cause the Seller Interest to be an amount less than zero,
Greenwood is obligated to make, no later than the business day following the
last day of the Due Period during which the adjustment is made, a deposit into
the Collections Account in immediately available funds in an amount equal to the
amount by which the adjustment exceeds the Seller Interest.
In addition, under certain limited circumstances, a credit account that is
not an Account may be combined with an Account. Such a combination may result in
an increase or decrease in the amount of Receivables, depending on whether the
Account is the account surviving the combination. Greenwood has no reason to
believe that such account combinations will have a material effect on the
aggregate amount of Receivables in the Trust.
DISTRIBUTIONS OF COLLECTIONS AND APPLICATION OF COLLECTIONS AND CERTAIN OTHER
AMOUNTS
Distribution Among Series. On or before each Distribution Date, Greenwood
as Master Servicer will direct the Trustee to withdraw from the Collections
Account and pay to each Group Collections Account, on or before the Distribution
Date with respect to that Group, an amount equal to the sum of (x) the sum of
the Series Finance Charge Collections for each series that is a member of that
Group and (y) the sum of the Series Principal Collections for each series that
is a member of that Group. On or before each Distribution Date with respect to
each Group, amounts on deposit in the Group Collections Account with respect to
that Group will be distributed in accordance with the terms of the Series
Supplements for each series in that Group. With respect to each Group,
Collections in the Group Collections Account for such Group will be allocated,
deposited or paid on or prior to each Distribution Date with respect to the
series in such Group according to the terms of each Series Supplement relating
to the outstanding series in such Group.
Net Payments. All payments made pursuant to the Pooling and Servicing
Agreement or any Series Supplement on any Trust Distribution Date or
Distribution Date on which Greenwood is the Master Servicer, between the Master
Servicer or the Holder of the Seller Certificate and the Investor Accounts, may
be aggregated for such Trust Distribution Date or Distribution Date. Therefore,
Greenwood, acting as Master Servicer and as agent of the Holder of the Seller
Certificate, may make only one payment to each account in satisfaction of all
payments of the Holder of the Seller Certificate and the Master Servicer
pursuant to the Pooling and Servicing Agreement or any Series Supplement, to the
extent that all payment obligations of the Master Servicer and of the Holder of
the Seller Certificate to each account on each Trust Distribution Date or
Distribution Date exceed all
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amounts to be paid out of that account to the Master Servicer and the Holder of
the Seller Certificate on such Trust Distribution Date or Distribution Date.
ADDITIONAL FUNDS
The Pooling and Servicing Agreement provides that Greenwood may, from time
to time, elect to add certain funds to the Trust ("Additional Funds") by
delivering a written notice of the election to the Trustee, the Master Servicer
and the Rating Agencies, which notice will specify the method of calculating the
amount of such funds to be added to the Trust as of any Distribution Date and
the source of those funds. No election will become effective until Standard &
Poor's has advised the Master Servicer and Greenwood that the election will not
cause the rating of any class of any series then outstanding to be lowered or
withdrawn. During any time that Additional Funds are being added to the Trust,
with respect to each series then outstanding, on or before the Distribution Date
with respect to each such series, the Master Servicer will cause an amount equal
to the product of (i) a fraction the numerator of which will be the Series
Investor Interest and the denominator of which will be the Aggregate Investor
Interest and (ii) the amount of Additional Funds for the preceding Due Period,
to be deposited into the Series Collections Account for each series. The amount
of Additional Funds allocated to each series will be further allocated in
accordance with the provisions of each Series Supplement. Unless otherwise
specified in the related Prospectus Supplement, the Series Supplement for each
series will specify that any Additional Funds allocated to such series will be
further allocated between the classes of such series based on the Class Investor
Interest of each class as of the relevant Distribution Date (the "Class
Additional Funds" for each class). Unless otherwise specified in the related
Prospectus Supplement, no Additional Funds have been added to the Trust as of
any Series Closing Date, and Greenwood is under no obligation to add Additional
Funds to the Trust at any time in the future.
FINAL PAYMENT OF PRINCIPAL; TERMINATION OF SERIES
The final payment of principal and interest on investor certificates of a
series will be due and payable no later than the Series Termination Date
specified in the related Prospectus Supplement.
The final payment of principal of and interest on any investor certificate
will be made only upon presentation and surrender of such investor certificate
at the office or agency specified in the notice from the Trustee to the investor
certificateholders regarding the final distribution. The Trustee will provide
such notice to the investor certificateholders not later than the tenth day of
the month of the final distribution.
Each series will terminate on the earlier of (i) the Series Termination
Date with respect to such series and (ii) the day following the Distribution
Date on which the final payment of principal is made to the investor
certificateholders of such series.
If, as of the Distribution Date in the month preceding the Series
Termination Date with respect to a series (after giving effect to all transfers,
withdrawals and deposits to occur on such Distribution Date), the Series
Investor Interest with respect to such series would be greater than zero,
Receivables (or interests therein) in an amount sufficient to yield proceeds
equal to the Series Investor Interest plus any accrued but unpaid Certificate
Interest will be sold; provided, however, that the amount of Receivables to be
sold will not exceed the product of (i) the aggregate amount of Receivables in
the Trust and (ii) a fraction, the numerator of which is the Series Investor
Interest and the denominator of which is the Aggregate Investor Interest, in
each case on the Distribution Date in the month preceding the Series Termination
Date; and provided, further, that the Receivables selected to be sold will not
be materially different from the Receivables remaining in the Trust as of that
Distribution Date. The proceeds from this sale will be deposited into the Series
Distribution Account and paid to the investor certificateholders of such series
on the Distribution Date immediately following the deposit. The payment will be
deemed to be the final distribution with respect to the investor certificates of
such series.
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CREDIT ENHANCEMENT
The Credit Enhancement with respect to a series may include a cash
collateral account, a letter of credit, a surety bond, an insurance policy or
any other form of credit enhancement described in the related Prospectus
Supplement. Credit Enhancement also may be provided to a series or class of a
series by subordination provisions that require distributions of principal
and/or interest be made with respect to the investor certificates of such series
or class before distributions are made to one or more other series or other
classes of such series.
A description of any Credit Enhancement provided with respect to a series
will be set forth in the related Prospectus Supplement. The description will
include such information as (a) the amount payable under the Credit Enhancement,
(b) any conditions to such payment, (c) the circumstances under which the Credit
Enhancement will be available, (d) the class or classes of the series that will
receive the direct benefit of the Credit Enhancement, (e) the conditions (if
any) under which the amount payable under the Credit Enhancement may be
terminated, reduced or replaced and (f) other material provisions of the related
Credit Enhancement Agreement.
REPURCHASE OF TRUST PORTFOLIO
A Trust Portfolio Repurchase Event will occur upon discovery that as of the
Initial Closing Date or, with respect to any Additional Accounts, as of any date
on which there is an assignment of the Receivables in such Additional Accounts
to the Trust, (a) the Pooling and Servicing Agreement or appropriate assignment,
as the case may be, does not constitute a valid and binding obligation of each
Seller, subject to usual and customary exceptions relating to bankruptcy,
insolvency and general equity principles, (b) the Pooling and Servicing
Agreement or appropriate assignment, as the case may be, does not constitute (1)
a valid transfer and assignment to the Trust of all right, title and interest of
each Seller in and to the Receivables, whether then existing or thereafter
created, and the proceeds thereof, or (2) the grant of a perfected security
interest of first priority under the UCC as in effect in the Applicable State
with respect to each Seller in such Receivables and proceeds thereof effective
as to each Receivable upon the creation thereof, (c) any Seller or a Person
claiming through or under any Seller has any claim to or interest in any
Investor Account, other than the interests of the investor certificateholders or
the interest of any Seller as a debtor for purposes of the UCC as in effect in
the Applicable State with respect to each Seller, or (d) certain representations
and warranties of any Seller regarding (1) its corporate status, authority with
regard to the assignment of Receivables and performance of such Seller's
obligations under the Pooling and Servicing Agreement and any Series Supplement
and (2) the accuracy of information furnished by such Seller to the Trustee, are
not true and the breach is not cured within a specified time period.
Upon the occurrence of a Trust Portfolio Repurchase Event, either the
Trustee or holders of investor certificates evidencing undivided interests in
the Trust aggregating not less than 51% of the Aggregate Invested Amount may
direct Greenwood to purchase Receivables transferred to the Trust on or before
the Distribution Date with respect to each series then outstanding within 60
days of such notice; provided, however, that if an assignment of Additional
Accounts results in a Trust Portfolio Repurchase Event, only the Receivables in
those Additional Accounts will be repurchased. Greenwood will not be required to
make such a purchase, however, if, on any day during the applicable period, the
Trust Portfolio Repurchase Event does not adversely affect in any material
respect the interests of the investor certificateholders as a whole. The
determination of materiality referred to above will be made by an officer of the
Master Servicer in his sole reasonable judgment.
The price for any such purchase with respect to each series then
outstanding will be equal to the sum of the Series Investor Interest and all
accrued but unpaid Certificate Interest with respect to the series; provided,
however, that if an assignment of Additional Accounts results in a Trust
Portfolio Repurchase Event, only the Receivables in those Additional Accounts
shall be repurchased at a price with respect to each series equal to the product
of (i) the Series Investor Percentage with
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respect to Principal Collections for the next following Distribution Date with
respect to the series and (ii) the amount of Receivables attributable to the
Additional Accounts, and the purchase price shall be applied as Collections in
respect of those Receivables in accordance with each applicable Series
Supplement and deposited in the Group Collections Account relating to that
series. In the event that the obligation of Greenwood to repurchase the Trust
portfolio is at any time the subject of concurrent obligations of one or more
other parties to the Seller Certificate Ownership Agreement then Greenwood's
obligation to repurchase the Trust portfolio will be conditioned on Greenwood's
ability to enforce those concurrent obligations against one or more other
parties to the Seller Certificate Ownership Agreement.
REPURCHASE OF SPECIFIED RECEIVABLES
A Receivable Repurchase Event will occur in the event that each Receivable
that is transferred to the Trust is not, as of the time of such transfer, an
Eligible Receivable and such event has a material adverse effect on the investor
certificateholders' interest in the Receivables as a whole and is not cured
within 60 days of the earlier of (i) actual knowledge of the breach by the
relevant Seller or (ii) receipt by such Seller of written notice of any such
event given by the Trustee. The determination of materiality referred to above
will be made by an officer of the Master Servicer in his sole reasonable
judgment. "Eligible Receivable" means each Receivable (a) that is payable in
United States dollars, (b) that was created in compliance, in all material
respects, with all Requirements of Law applicable to the Seller and the Servicer
with respect to the Receivable and pursuant to a Credit Agreement that complies,
in all material respects, with all Requirements of Law applicable to the Seller
and Servicer, (c) as to which, if the Receivable was created before the Initial
Closing Date or the relevant Addition Date, as applicable, (i) at the time of
the creation of the Receivable, the applicable Seller had good and marketable
title thereto free and clear of all liens ("Liens") arising under or through the
Seller and (ii) at the time of the conveyance of such Receivable to the Trust,
the Seller had, or the Trust will have, good and marketable title thereto free
and clear of all Liens arising under or through the Seller, (d) as to which, if
the Receivable was created on or after the Initial Closing Date, at the time of
the creation of the Receivable, the Trust will have good and marketable title
thereto free and clear of all Liens arising under or through the Seller and (e)
which constitutes, or would have constituted, an "account" or "general
intangible" under and as defined in Article 9 of the UCC as then in effect in
the Applicable State with respect to the Receivable. Greenwood will purchase all
the Receivables in each Account in which there is any Receivable to which the
Receivable Repurchase Event relates ("Ineligible Receivables") on the terms and
conditions set forth below.
Greenwood will purchase the Receivables in those Accounts by directing the
Master Servicer to deduct the amount of the Receivables that are Principal
Receivables from the aggregate amount of Principal Receivables in the Trust. In
the event that the exclusion of those Receivables from the calculation of the
Seller Interest would cause the Seller Interest to be an amount less than zero,
on the following Trust Distribution Date, Greenwood will deposit into the
Collections Account in immediately available funds an amount equal to the amount
by which the Seller Interest would be reduced below zero. The deposit will be
considered a repayment in full of the Receivables, and will be treated as
Collections in respect of Principal Receivables for such Due Period. See
"Description of the Investor Certificates -- Distributions of Collections and
Application of Collections and Certain Other Amounts" herein and in the related
Prospectus Supplement. In the event that the obligation of Greenwood to
repurchase Receivables is at any time the subject of concurrent obligations of
one or more other parties to the Seller Certificate Ownership Agreement, then
Greenwood's obligation to repurchase Receivables will be conditioned on
Greenwood's ability to enforce those concurrent obligations against one or more
other parties to the Seller Certificate Ownership Agreement.
REPURCHASE OF A SERIES
A Series Repurchase Event with respect to a series will occur upon
discovery that as of the Series Closing Date, the applicable Series Supplement
does not constitute a legal, valid and binding
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obligation of each Seller enforceable against each Seller in accordance with its
terms, subject to usual and customary exceptions relating to bankruptcy,
insolvency and general equity principles.
Upon the occurrence of a Series Repurchase Event with respect to a series,
either the Trustee or holders of investor certificates of such series evidencing
undivided interests in the Trust aggregating not less than 51% of the Series
Invested Amount with respect to such series may direct Greenwood to purchase the
investor certificates of such series within 60 days after Greenwood receives a
direction to purchase the investor certificates. Greenwood will not be required
to make the purchase, however, if, on any day during the 60-day period, the
Series Repurchase Event does not adversely affect in any material respect the
interests of the investor certificateholders of such series as a whole.
On the Distribution Date set for the purchase, Greenwood will deposit into
the Series Distribution Account with respect to such series an amount equal to
the sum of the Series Investor Interest and all accrued but unpaid Certificate
Interest. The amount on deposit in the Series Distribution Account will be paid
to the investor certificateholders of such series upon presentation and
surrender of their investor certificates.
REPURCHASE OF INVESTOR CERTIFICATES
The Pooling and Servicing Agreement provides that Sellers may become
holders of investor certificates and that Greenwood may cancel any investor
certificates owned by a Seller by providing notice of such cancellation to the
Trustee; provided, however, that Class B Certificates of any series may not be
cancelled unless Greenwood has been advised by the Rating Agencies that such
cancellation will not cause the ratings of any investor certificates then
outstanding to be lowered or withdrawn. Simultaneously with any cancellation of
investor certificates of a series, the Class Invested Amount of the applicable
class of such series and the Series Invested Amount with respect to such series
will be reduced, and the Seller Interest will be increased, by the aggregate
Class Invested Amount represented by the cancelled investor certificates of such
series. No reduction of Class Invested Amount as described in the preceding
sentence will result in a decrease in any Class Percentage with respect to the
affected class if a Fixed Principal Allocation Event with respect to such series
has previously occurred.
SALE OF SELLER INTEREST
The Seller Certificate was issued to Greenwood. Any Additional Sellers also
will become holders of the Seller Certificate, as tenants-in-common with
Greenwood, and will enter into a Seller Certificate Ownership Agreement with
Greenwood. In such event, all references to actions taken by Greenwood as Holder
of the Seller Certificate shall be deemed to be taken by Greenwood on behalf of
the Holders of the Seller Certificate. Pursuant to the Pooling and Servicing
Agreement, neither Greenwood nor any Additional Seller (if any) may transfer,
assign, sell or otherwise convey, pledge or hypothecate or otherwise grant a
security interest in any portion of the Seller Interest represented by the
Seller Certificate, except for the transfer of all or part of any Seller's
interest in the Seller Certificate to an affiliate of Greenwood that is included
in the same "affiliated group" as Greenwood for United States federal income tax
purposes; provided, however, that any Seller may transfer a portion of the
Seller Interest on terms substantially similar to the terms of the Pooling and
Servicing Agreement so long as the agreements and other documentation relating
thereto are consistent with, and subject to, the terms of the Pooling and
Servicing Agreement and any Series Supplement and do not require any action
prohibited or prohibit any action that is either required on the part of the
Master Servicer, any Seller, the Trustee or any Servicer by the terms of the
Pooling and Servicing Agreement and any Series Supplement or necessary to
protect the interests of the investor certificateholders; and provided, further,
that the Seller is advised by the Rating Agencies that the rating of any class
of any series then outstanding would not be lowered or withdrawn as a result of
such transfer. Notwithstanding the above, no such advice from the Rating
Agencies is required if the transfer is made to comply with certain regulatory
requirements.
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REALLOCATION OF SERIES AMONG GROUPS
The Pooling and Servicing Agreement provides that the Master Servicer may
elect, at any time, subject to certain conditions, to move any series from the
Group of which it is then a member to any other Group, including without
limitation to a new Group established at such time of which the series to be
moved is the only series. A series may be moved from one Group to another only
if the following conditions are satisfied: (i) the Group from which the series
is moved and the Group to which the series is moved have the same Distribution
Date; (ii) the Master Servicer shall have certified to the Trustee that the
Master Servicer reasonably believes that the movement of the applicable series
would not (a) result in any delay in the payment of principal to the investor
certificateholders of any series then outstanding, or (b) cause an Amortization
Event to occur with respect to any series then outstanding; and (iii) the Rating
Agencies shall have advised the Master Servicer and Greenwood that the movement
of the applicable series would not cause the rating of any class of any series
then outstanding to be lowered or withdrawn.
AMENDMENTS
The Pooling and Servicing Agreement and any Series Supplement may be
amended from time to time by the Master Servicer, the Sellers, the Trustee and
the Servicers, without the consent of the investor certificateholders of any
outstanding series, for any of the following purposes: (i) to add to the
covenants and agreements contained therein or to surrender any right or power
therein reserved to or conferred upon the Sellers, the Master Servicer or any
Servicer; provided, however, that such action will not adversely affect in any
material respect the interests of the holders of any class of any series then
outstanding; (ii) to add provisions to or change or eliminate any of the
provisions of the Pooling and Servicing Agreement or any Series Supplement;
provided, however, that any such addition, change or elimination will not
adversely affect in any material respect the interests of the holders of any
class of any series then outstanding; (iii) to add provisions to or change any
of the provisions of the Pooling and Servicing Agreement or any Series
Supplement for the purpose of accommodating the addition of Participation
Interests to the Trust; or (iv) to cure any ambiguity or to correct or
supplement any defective or inconsistent provision contained in the Pooling and
Servicing Agreement, in any Series Supplement or in any amendment to the Pooling
and Servicing Agreement or any Series Supplement.
The Pooling and Servicing Agreement and the Series Supplement for any
series also may be amended from time to time by the Master Servicer, the
Sellers, the Trustee and the Servicers with the consent of the holders of
investor certificates evidencing Fractional Undivided Interests aggregating not
less than 66 2/3% of the Class Invested Amount of each class of such series
adversely affected 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 or the applicable Series Supplement, or of modifying in any manner the
rights of the investor certificateholders of such series; provided, however,
that the Trustee will have been advised by each Rating Agency that such
amendment will not result in the withdrawal or lowering of the ratings assigned
to the investor certificates of such series by that Rating Agency; and,
provided, further, that no such amendment will materially and adversely affect
the interests of the investor certificateholders of any class of such series by
reducing in any manner the amount of, or delaying the timing of, distributions
that are required to be made to any investor certificate without the consent of
the affected investor certificateholders, or by reducing the aforesaid
percentage required to consent to any such amendment, without the consent of
each investor certificateholder of each affected class. For purposes of
calculating whether a 66 2/3% consent has been achieved, the applicable Class
Invested Amount or Series Invested Amount will be calculated without taking into
account the Class Invested Amount represented by any investor certificates
beneficially owned by any Seller or any affiliate of any Seller, and no Seller
or affiliate of a Seller will be entitled to vote on any amendment described in
this paragraph. If any such amendment to the Pooling and Servicing Agreement
would adversely affect the interests of any class of any other series of
investor certificates then outstanding the
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consent of the investor certificateholders of each class adversely affected by
such amendment to the Pooling and Servicing Agreement also will be required.
Promptly after the execution of any amendment or consent described in this
paragraph, the Trustee will notify the investor certificateholders of the
substance of the amendment.
None of the execution and delivery of any Series Supplement, the addition
of Receivables to the Trust, the removal of Receivables from the Trust, the
addition or removal of any Seller or Servicer in connection with an addition to
or removal from the Trust of Receivables, or the replacement of any Servicer,
Master Servicer or Trustee will constitute an amendment to the Pooling and
Servicing Agreement or any Series Supplement for the purposes of the preceding
two paragraphs, provided that any such action described in this sentence is
completed in accordance with the provisions of the Pooling and Servicing
Agreement and/or any applicable Series Supplement, as applicable.
LIST OF INVESTOR CERTIFICATEHOLDERS
In the event that Definitive Certificates are issued with respect to the
investor certificates of any series, upon written request of three or more
investor certificateholders of record of any class of such series representing
Fractional Undivided Interests in the Trust aggregating not less than 5% of the
Class Invested Amount, after having been adequately indemnified by those
investor certificateholders for its costs and expenses, the Trustee will afford
those investor certificateholders access during business hours to the current
list of investor certificateholders of such series for purposes of communicating
with other investor certificateholders of such series with respect to their
rights under the Pooling and Servicing Agreement and the applicable Series
Supplement. See "-- Definitive Certificates."
MEETINGS
The Pooling and Servicing Agreement does not provide for any annual or
other meetings of investor certificateholders of any series.
BOOK-ENTRY REGISTRATION
The information in this section concerning DTC, Cedel Bank, societe anonyme
("Cedel") and Euroclear and their book-entry systems and procedures has been
obtained from sources that Greenwood and the Trust believe to be reliable, but
Greenwood and the Trust take no responsibility for the accuracy of the
information in this section.
Certificate Owners may hold their investor certificates through DTC (in the
United States) or Cedel or Euroclear (in Europe). The investor certificates will
be registered in the name of the nominee of DTC. Cedel and Euroclear will hold
omnibus positions on behalf of the Cedel Participants and the Euroclear
Participants, respectively, through customers' securities accounts in Cedel's
and Euroclear's names on the books of their respective depositaries
(collectively, the "Depositaries") which in turn will hold such positions in
customers' securities accounts in the Depositaries' names on the books of DTC.
Greenwood has been informed by DTC that DTC's nominee will be Cede & Co.
("Cede"). Accordingly, Cede is expected to be the holder of record of the
investor certificates. The investor certificates will be available for purchase
in book-entry form in minimum denominations of $1,000 and integral multiples
thereof. No person acquiring an interest in the investor certificates (each, a
"Certificate Owner") will be entitled to receive a certificate representing that
person's interest in the investor certificates. Unless and until Definitive
Certificates are issued under the limited circumstances described herein, all
references herein to actions by investor certificateholders will refer to
actions taken by DTC upon instructions from its Participants, as hereinafter
defined, and all references herein to distributions and notices to investor
certificateholders will refer to distributions and notices to DTC or Cede, as
the registered holder of the investor certificates, for distribution to
Certificate Owners in accordance with DTC procedures. See "-- Definitive
Certificates."
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DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC was created to hold securities for its participating
organizations ("Participants") and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movements of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations, and may include
certain other organizations. Indirect access to the DTC system also is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other hand, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. Cedel
Participants and Euroclear Participants may not deliver instructions directly to
the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant Cedel
Participant or Euroclear Participant on such business day. Cash received in
Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following settlement
in DTC. For additional information regarding clearance and settlement procedures
for the investor certificates, see Annex I, hereto, and for information with
respect to tax documentation procedures relating to the investor certificates,
see Annex I, hereto and "Certain Federal Income Tax Consequences -- Non-United
States Investor Certificateholders."
Certificate Owners that are not Participants or Indirect Participants may
purchase, sell or otherwise transfer ownership of, or other interests in, the
investor certificates only through Participants and Indirect Participants. In
addition, Certificate Owners will receive all distributions of principal and
Certificate Interest from the Trustee through the Participants. Under a
book-entry format, Certificate Owners may experience some delay in their receipt
of payments, since the payments will be forwarded by the Trustee to Cede, as
nominee for DTC. DTC will forward the payments to its Participants, which
thereafter will forward them to Indirect Participants or Certificate Owners. It
is anticipated that the only investor certificateholder will be Cede, as nominee
of DTC. Certificate Owners will not be recognized by the Trustee as investor
certificateholders, as that term is used in the Pooling and Servicing Agreement,
and Certificate Owners only will be permitted to exercise the rights of investor
certificateholders indirectly through the Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers among
Participants on whose behalf it acts
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with respect to the investor certificates and is required to receive and
transmit distributions of the principal of and interest on the investor
certificates. Participants and Indirect Participants with which Certificate
Owners have accounts with respect to the investor certificates similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Certificate Owners.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Certificate
Owner to pledge investor certificates to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of those
investor certificates, may be limited due to the lack of a physical certificate
for those investor certificates.
DTC has advised Greenwood that it will take any action permitted to be
taken by an investor certificateholder under the Pooling and Servicing Agreement
or any applicable Series Supplement only at the direction of one or more
Participants to whose account with DTC the investor certificates are credited.
DTC may take conflicting action with respect to other undivided interests in the
investor certificates to the extent that those actions are taken on behalf of
Participants whose holdings include those undivided interests.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations or
customers ("Cedel Participants") and facilitates the clearance and settlement of
securities transactions between Cedel Participants through electronic book-entry
changes in accounts of Cedel Participants, thereby eliminating the need for
physical movement of certificates. Transactions may now be settled in Cedel in
any of 28 currencies, including United States dollars. Cedel provides to its
Cedel Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedel interfaces with domestic markets in
several countries. As a professional depository, Cedel is subject to regulation
by the Luxembourg Monetary Institute. Cedel Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the Underwriters. Indirect access to Cedel
is also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedel
Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in any of 33
currencies, including United States dollars. The Euroclear System includes
various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. The Euroclear
System is operated by Morgan Guaranty Trust Company of New York, Brussels,
Belgium office (the "Euroclear Operator" or "Euroclear"), under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear System on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to the Euroclear System is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of
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Governors of the Federal Reserve System and the New York State Banking
Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to investor certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations. See "Certain Federal Income Tax Consequences." Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by an investor certificateholder under the Pooling and Servicing
Agreement or any applicable Series Supplement on behalf of a Cedel Participant
or Euroclear Participant only in accordance with its relevant rules and
procedures and subject to its Depositary's ability to effect such actions on its
behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of investor certificates among participants of
DTC, Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
DEFINITIVE CERTIFICATES
A class of investor certificates will be issued in fully registered,
certificated form to Certificate Owners or their nominees ("Definitive
Certificates"), rather than to DTC or its nominees, only if (i) the Master
Servicer advises the Trustee in writing that DTC is no longer willing or able to
discharge properly its responsibilities as Depository with respect to such
class, and the Trustee or the Master Servicer is unable to locate a qualified
successor, (ii) the Master Servicer, at its option, elects to terminate the
book-entry system through DTC, or (iii) after the occurrence of a Master
Servicer Termination Event, Certificate Owners representing in the aggregate not
less than 51% of the respective Class Invested Amount advise the Trustee and DTC
through Participants in writing that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in the best interest of the
Certificate Owners of such class.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates of such class affected by
the event. Upon surrender by DTC of the applicable definitive certificates and
upon the issuance of instructions for re-registration, the Trustee will issue
the applicable investor certificates as Definitive Certificates. Thereafter the
Trustee will recognize the registered holders of such Definitive Certificates as
investor certificateholders under the Pooling and Servicing Agreement and the
applicable Series Supplement.
The Trustee will distribute principal and interest on the investor
certificates directly to Holders of Definitive Certificates in accordance with
the procedures set forth in the Pooling and Servicing Agreement and the
applicable Series Supplement. Distributions on each Distribution Date will be
made to Holders in whose names the Definitive Certificates were registered at
the close of business on the related Record Date by check mailed to the address
of such Holder as it appears on the register maintained by the Trustee. The
final payment on any investor certificate (whether Definitive Certificates or
one of the investor certificates registered in the name of Cede representing the
investor certificates), however, will be made only upon presentation and
surrender of the investor
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certificate at the office or agency specified in the notice of final
distribution to investor certificateholders. The Trustee will provide the notice
to registered investor certificateholders not later than the tenth day of the
month of such final payment.
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee, or at such other office as Greenwood designates. No
service charge will be imposed for any registration of transfer or exchange, but
the Transfer Agent may require payment of a sum sufficient to cover any tax or
other governmental charge imposed in connection therewith.
SERVICING
MASTER SERVICER AND SERVICER
Greenwood acts as Master Servicer with respect to the Trust. In addition to
the Master Servicer, there also may be one or more Servicers, each of which will
be a "Servicer" for purposes of the Trust with respect to the Accounts which
that Servicer services. Currently, Greenwood, as Servicer with respect to the
Greenwood Discover Card Accounts, is the only Servicer. Additional Servicers may
be added to the Trust at a later date if receivables in accounts other than
credit accounts originated by Greenwood are added to the Trust. Each Servicer
will perform servicing functions with respect to the Accounts for which it is
the Servicer. The Master Servicer, in its role as Master Servicer, will
coordinate the activities of the various Servicers with respect to the Trust.
The duties of the Master Servicer include aggregating Collections from the
Servicers and distributing such Collections to the various Investor Accounts,
directing the investment of funds on deposit in the Investor Accounts and the
Credit Enhancement Accounts in Permitted Investments, receiving the Monthly
Servicing Fee and allocating it among the Servicers, preparing reports for
investor certificateholders and making any filings on behalf of the Trust with
the Securities and Exchange Commission or other governmental agencies. The
Master Servicer has no duty to pay any amount in lieu of Collections from its
own funds in the event of a failure on the part of any Servicer to transfer
Collections to the Master Servicer or to the Trust, at the direction of the
Master Servicer. Upon the appointment of any additional Servicer, Greenwood as
Master Servicer and Servicer and the additional Servicer will enter into a
Master Servicing Agreement, which will govern the relationship among the Master
Servicer and the Servicers.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicer is paid a monthly servicing fee, on behalf of the
investor certificateholders of each series then outstanding and the Sellers, in
respect of each Due Period in an amount equal to no less than 2% per annum
(calculated on the basis of a 360-day year of twelve 30-day months) of the
amount of Principal Receivables in the Trust on the first day of such Due Period
(the "Monthly Servicing Fee"), as compensation for its activities as Master
Servicer and reimbursement for its expenses. In the event that there is more
than one Servicer, the Master Servicer's expenses will include the payment of a
servicing fee to each Servicer, pursuant to the terms of a Master Servicing
Agreement to be entered into by Greenwood as Master Servicer and Servicer and
any other Servicer. The Monthly Servicing Fee is allocated among the Seller
Interest and each series then outstanding. The share of each Monthly Servicing
Fee allocable to the Holder of the Seller Certificate (the "Seller Servicing
Fee") on any Trust Distribution Date is equal to the product of (i) the product
of (x) the Investor Servicing Fee Percentage and (y) and the amount of Principal
Receivables in the Trust as of the first day of the Due Period related to that
Trust Distribution Date and (ii) a fraction the numerator of which is the amount
of the Seller Interest and the denominator of which is the greater of (a) the
amount of Principal Receivables in the Trust and (b) the Aggregate Investor
Interest, and is paid to the Master Servicer by the Holder of the Seller
Certificate on or before each Trust Distribution Date. Unless otherwise
specified in the related Prospectus Supplement, the portion of the fee allocated
to the Class Investor Interest for each class of each series (the
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"Class Monthly Servicing Fee") is equal to the product of the amount of the
Investor Servicing Fee for a given Due Period and a fraction the numerator of
which is the Class Investor Interest and the denominator of which is the Series
Investor Interest, in each case on the first day of that Due Period. The
Investor Servicing Fee for any given Due Period with respect to each Series will
be equal to the product of the Investor Servicing Fee Percentage and the Series
Investor Interest on the first day of the Due Period (or in the case of the
first Distribution Date, on the Series Cut-Off Date). The Class Monthly
Servicing Fee for each class will be funded from Class Finance Charge
Collections and may be funded from certain other sources as described in
"Description of the Investor Certificates -- Distributions of Collections and
Application of Collections and Certain Other Amounts" in the related Prospectus
Supplement. The remainder of the Monthly Servicing Fee will be allocated to each
other outstanding series. Neither the Trustee nor the investor
certificateholders of any series will have any obligation to pay that portion of
the Monthly Servicing Fee that is payable by any class of any other series
issued by the Trust or that is payable by the Sellers.
The Master Servicer pays from its servicing compensation the servicing fees
for each Servicer and certain other expenses incurred in connection with
servicing the Receivables. These include, without limitation, payment of the
fees and disbursements of the Trustee and independent accountants and other fees
and expenses of the Trust not expressly stated in the Pooling and Servicing
Agreement or any Series Supplement to be for the account of the
certificateholders; provided that neither the Master Servicer nor any Servicer
will be liable for any federal, state or local income or franchise tax, or any
interest or penalties with respect thereto, assessed on the Trust, the Trustee
or the certificateholders.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE SERVICERS
Pursuant to the Pooling and Servicing Agreement, neither the Master
Servicer nor any Servicer may resign from its obligations and duties as Master
Servicer or Servicer under the Pooling and Servicing Agreement or any Series
Supplement, except upon determination that such duties are no longer permissible
under applicable law and under certain other limited circumstances. No such
resignation will become effective until the Trustee or a successor to the Master
Servicer or Servicer, as applicable, has assumed such Master Servicer's or
Servicer's responsibilities and obligations under the Pooling and Servicing
Agreement and such Series Supplements.
The Master Servicer or any Servicer may delegate any of its duties under
the Pooling and Servicing Agreement or any Series Supplement; provided, however,
that the delegation of any duties will not relieve the Master Servicer or such
Servicer of its liabilities and responsibilities with respect to such duties and
will not constitute a resignation under the Pooling and Servicing Agreement.
Any corporation into which, in accordance with the Pooling and Servicing
Agreement, the Master Servicer or any Servicer may be merged or consolidated, or
any corporation resulting from any merger or consolidation to which the Master
Servicer or any Servicer is a party, or any corporation succeeding to the
business of the Master Servicer or any Servicer will be, upon execution of a
supplement to the Pooling and Servicing Agreement and each Series Supplement
then outstanding, the successor to the Master Servicer or that Servicer, as
applicable, under the Pooling and Servicing Agreement and those Series
Supplements.
MASTER SERVICER TERMINATION EVENTS
If any Master Servicer Termination Event occurs, either the Trustee or
investor certificateholders evidencing Fractional Undivided Interests
aggregating not less than 51% of the Class Invested Amount for any class of any
series then outstanding that is materially adversely affected thereby, by
written notice to Greenwood as Master Servicer (and to the Trustee if given by
the investor certificateholders), may terminate all of the rights and
obligations of Greenwood as Master Servicer under the Pooling and Servicing
Agreement and any Series Supplement then outstanding. The Trustee will appoint a
successor Master Servicer as promptly as possible. If the Trustee has not
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appointed a successor Master Servicer who has accepted the appointment by the
time Greenwood ceases to act as Master Servicer, all authority, power and
obligations of Greenwood as Master Servicer under the Pooling and Servicing
Agreement and any Series Supplement then outstanding will pass to and be vested
in the Trustee.
A "Master Servicer Termination Event" refers to any of the following
events:
(a) failure by the Master Servicer to make any payment, transfer or
deposit, or to give instructions to the Trustee to make any withdrawal, on
the date it is required to do so under the Pooling and Servicing Agreement,
any Series Supplement or the Master Servicing Agreement (or within the five
business days thereafter);
(b) failure on the part of the Master Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Master Servicer set forth in the Pooling and Servicing Agreement, any
Series Supplement or the Master Servicing Agreement that continues
unremedied for a period of 60 days after written notice of the failure
requiring the same to be remedied has been given to the Master Servicer by
the Trustee or to the Master Servicer and the Trustee by holders of
investor certificates evidencing Fractional Undivided Interests aggregating
not less than 25% of the Class Invested Amount for any class of any series
materially adversely affected thereby;
(c) any representation, warranty or certification made by the Master
Servicer in the Pooling and Servicing Agreement, any Series Supplement, the
Master Servicing Agreement or in any certificate delivered pursuant to the
Pooling and Servicing Agreement, any Series Supplement or the Master
Servicing Agreement proves to have been incorrect when made, which has a
material adverse effect on the rights of the investor certificateholders of
any class of any series then outstanding, and which continues to be
incorrect in any material respect for a period of 60 days after written
notice of such failure requiring the same to be remedied has been given to
the Master Servicer by the Trustee or to the Master Servicer and the
Trustee by holders of investor certificates evidencing Fractional Undivided
Interests aggregating not less than 25% of the Class Invested Amount for
any class of any series materially adversely affected thereby; or
(d) the occurrence of certain events of bankruptcy, insolvency or
receivership of the Master Servicer. However, the FDIC may have the power
to prevent the Trustee or investor certificateholders from effecting a
transfer of servicing if the relevant Master Servicer Termination Event
relates only to the appointment of a conservator or receiver or the
insolvency of Greenwood, or any other FDIC-insured depository institution,
as Master Servicer. Similarly, if a Master Servicer Termination Event
occurs with respect to a Master Servicer subject to Title 11 of the United
States Code, and no Master Servicer Termination Event exists other than the
filing of a bankruptcy petition by or against such Master Servicer, the
Trustee or investor certificateholders may be prevented from effecting a
transfer of servicing.
SERVICER TERMINATION EVENTS
If any Servicer Termination Event occurs with respect to any Servicer,
either the Trustee or investor certificateholders evidencing Fractional
Undivided Interests aggregating not less than 51% of the Class Invested Amount
for any class of any series then outstanding that is materially adversely
affected thereby, by written notice to Greenwood as Master Servicer and to the
Servicer to which any such Servicer Termination Event relates (and to the
Trustee if given by the investor certificateholders), may terminate all of the
rights and obligations of that Servicer under the Pooling and Servicing
Agreement, any Series Supplement then outstanding and the Master Servicing
Agreement. The Trustee will appoint a successor Servicer with respect to the
Servicer as promptly as possible. If the Trustee has not appointed a successor
Servicer who has accepted the appointment by the time the Servicer ceases to act
as a Servicer, all authority, power and
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obligations of that Servicer under the Pooling and Servicing Agreement, any
Series Supplement then outstanding and the Master Servicing Agreement will pass
to and be vested in the Trustee.
A "Servicer Termination Event," with respect to any Servicer, refers to any
of the following events:
(a) failure by the Servicer to make any payment, transfer or deposit
on the date it is required to do so under the Pooling and Servicing
Agreement, any Series Supplement or the Master Servicing Agreement (or
within the five business days thereafter);
(b) failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set
forth in the Pooling and Servicing Agreement, any Series Supplement or the
Master Servicing Agreement which continues unremedied for a period of 60
days after written notice of the failure requiring the same to be remedied
has been given to that Servicer by the Trustee or to the Servicer and the
Trustee by holders of investor certificates evidencing Fractional Undivided
Interests aggregating not less than 25% of the Class Invested Amount for
any class of any series materially adversely affected thereby;
(c) any representation, warranty or certification made by the Servicer
in the Pooling and Servicing Agreement, any Series Supplement, the Master
Servicing Agreement or in any certificate delivered pursuant to the Pooling
and Servicing Agreement, any Series Supplement or the Master Servicing
Agreement proves to have been incorrect when made, which has a material
adverse effect on the rights of the investor certificateholders of any
class of any series then outstanding, and which continues to be incorrect
in any material respect for a period of 60 days after written notice of the
failure requiring the same to be remedied has been given to that Servicer
by the Trustee or to the Servicer and the Trustee by holders of investor
certificates evidencing Fractional Undivided Interests aggregating not less
than 25% of the Class Invested Amount for any class of any series
materially adversely affected thereby; or
(d) the occurrence of certain events of bankruptcy, insolvency or
receivership of the Servicer. However, the FDIC may have the power to
prevent the Trustee or investor certificateholders from effecting a
transfer of servicing if the relevant Servicer Termination Event relates
only to the appointment of a conservator or receiver or the insolvency of
that Servicer, or any other FDIC-insured depository institution, as
Servicer. Similarly, if a Servicer Termination Event occurs with respect to
a Servicer subject to Title 11 of the United States Code, and no Servicer
Termination Event exists other than the filing of a bankruptcy petition by
or against that Servicer, the Trustee or investor certificateholders may be
prevented from effecting a transfer of servicing.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or about April 15 of
each calendar year the Master Servicer will cause a firm of nationally
recognized independent public accountants to furnish a report to the Trustee,
the Master Servicer and each Servicer (i) to the effect that those accountants
are of the opinion that the system of internal accounting controls in effect on
the date of such report relating to the servicing procedures performed by the
Master Servicer and each Servicer under the Pooling and Servicing Agreement and
any Series Supplement were sufficient for the prevention of errors and
irregularities that would be material to the assets of the Trust and that
nothing has come to the accountants' attention that would cause them to believe
such servicing has not been conducted in compliance with the Pooling and
Servicing Agreement and any Series Supplement, except for such exceptions as the
accountants believe to be immaterial and such other exceptions as will be set
forth in such report and (ii) to the effect that those accountants have compared
the mathematical calculations of the amounts set forth in the Master Servicer's
monthly certificates delivered during the preceding calendar year covered by
such report with the computer reports of the Master Servicer and each Servicer
that generated those amounts, confirming that
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those amounts are in agreement, except for such exceptions as the accountants
believe to be immaterial and such other exceptions as will be set forth in the
report. The procedures to be followed by those accountants will not constitute
an audit conducted in accordance with generally accepted auditing standards.
The Pooling and Servicing Agreement provides for delivery to the Trustee,
Greenwood on behalf of the Holder of the Seller Certificate and the Rating
Agencies on or before April 15 of each calendar year of an annual statement
signed by an officer of the Master Servicer to the effect that (a) in the course
of the officer's duties as an officer of the Master Servicer, the officer would
normally obtain knowledge of any Master Servicer Termination Event, and (b)
whether or not the officer has obtained knowledge of any such Master Servicer
Termination Event and, if so, specifying each Master Servicer Termination Event
of which the signing officer has knowledge and the nature of such Master
Servicer Termination Event. The Pooling and Servicing Agreement also provides
for delivery of a similar annual statement by each Servicer with respect to
Servicer Termination Events.
THE SELLER
GREENWOOD
Greenwood is a wholly owned subsidiary of NOVUS and an indirect subsidiary
of DWDC. Greenwood was acquired by NOVUS in January 1985. Greenwood was
chartered as a banking corporation under the laws of the State of Delaware in
1911, and its deposits are insured by the FDIC. Greenwood is not a member of the
Federal Reserve System. The executive office of Greenwood is located at 12
Read's Way, New Castle, Delaware 19720. In addition to the experience obtained
by Greenwood in the bank card business since 1985, a majority of the senior
management of the credit, operations and data processing functions for the
Discover Card at Greenwood and NOVUS Services, Inc. ("NSI") has had extensive
experience in the credit operations of other credit card issuers. NSI performs
sales and marketing activities, provides operational support for the Discover
Card program and maintains merchant relationships.
By virtue of the enactment of CEBA, there are certain limitations placed on
Greenwood, including a requirement that Greenwood not engage in activities in
which it was not engaged as of March 5, 1987. Since its acquisition by NOVUS, as
a result of these and earlier limitations, Greenwood has not engaged in the
business of making commercial loans. See "Risk Factors -- Legislation."
Greenwood believes that in light of the programs it has in place, the
limitations of CEBA will not have a material impact on the level of the
Receivables or on Greenwood's ability to service the Receivables.
INSOLVENCY-RELATED MATTERS
It is possible that a receiver or conservator of Greenwood may argue that
the transaction between Greenwood and the Trust, whereby Greenwood has
transferred to the Trust all of its right, title and interest in and to the
Receivables, whether existing on the Cut-Off Date or thereafter arising, is a
pledge of the Receivables rather than an absolute transfer. Accordingly,
Greenwood has granted to the Trustee, on behalf of the Trust, a security
interest in the Receivables. To the extent that this security interest is
validly perfected prior to an insolvency of Greenwood and not taken in
contemplation of such insolvency or with the intent to hinder, delay or defraud
Greenwood or its creditors, this security interest should not be subject to
avoidance by a receiver or conservator of Greenwood, and payments made in
respect of the Receivables (other than payments made to Greenwood by the Trust
with respect to Greenwood's interest in the Seller Certificate) should not be
subject to recovery by a receiver or conservator of Greenwood. If, however, a
receiver or conservator of Greenwood were to assert a contrary position or were
to require the Trust to establish its right to cash Collections in the
possession of Greenwood as Servicer or otherwise by submitting a claim and
completing the administrative claims procedure established under the
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Federal Deposit Insurance Act, as amended, delays in payments on the
Certificates and possible reductions in the amount of those payments could
occur. In addition, the Federal Deposit Insurance Corporation, if appointed as
conservator or receiver for Greenwood, has the power under the Federal Deposit
Insurance Act, as amended, to repudiate contracts, including contracts of
Greenwood such as the Pooling and Servicing Agreement. The Federal Deposit
Insurance Act, as amended, provides that a claim for damages arising from the
repudiation of a contract is limited to "actual direct compensatory damages." In
the event the Federal Deposit Insurance Corporation were to be appointed as
conservator or receiver of Greenwood and were to repudiate the Pooling and
Servicing Agreement, then the amount payable out of available collateral to the
Certificateholders could be lower than the outstanding principal and accrued
interest on the Certificates. In a 1993 case involving the repudiation by the
Resolution Trust Corporation, which has ceased to exist as of December 31, 1995
(the Federal Deposit Insurance Corporation has taken over its responsibilities),
of certain secured zero-coupon bonds issued by a savings association, a United
States federal district court held that "actual direct compensatory damages" in
the case of a marketable security meant the market value of the repudiated bonds
as of the date of repudiation.
Unless otherwise specified in the related Prospectus Supplement, Greenwood
will receive, on each Series Closing Date, an opinion of Latham & Watkins,
counsel to Greenwood, concluding on a reasoned basis (although there is no
precedent based on directly similar facts) that subject to certain facts,
assumptions and qualifications specified therein (including matters set forth
under "Certain Legal Matters Relating to the Receivables -- Transfer of
Receivables" and "-- Certain UCC Matters"), (i) under New York law, the
perfection and the effect of perfection or nonperfection of a security interest
in the Receivables are governed by the law of the jurisdiction in which the
debtor is located, (ii) if the transfer of the Receivables to the Trust by
Greenwood constitutes an absolute transfer, then the transfer is a transfer of
all right, title and interest of Greenwood in and to those Receivables to the
Trust and (iii) if the transfer is deemed not to be an absolute transfer, it
would be treated as a security interest created by the Pooling and Servicing
Agreement in favor of the Trust in Greenwood's right, title and interest in and
to the Receivables. Unless otherwise specified in the related Prospectus
Supplement, Greenwood also will receive, on each Series Closing Date, an opinion
of Young, Conaway, Stargatt & Taylor, Delaware counsel to Greenwood, concluding
on a reasoned basis that, subject to certain facts, assumptions and
qualifications specified therein (including matters set forth under "Certain
Legal Matters Relating to the Receivables -- Transfer of Receivables" and "--
Certain UCC Matters"), (i) to the extent Delaware law applies, the security
interest created by the Pooling and Servicing Agreement in favor of the Trust is
a valid security interest in all right, title and interest of Greenwood in and
to the Receivables, (ii) the security interest is a perfected security interest
and (iii) the security interest is a first priority security interest.
The above descriptions are qualified in their entirety by reference to the
forms of opinions filed as exhibits to the Registration Statement of which this
Prospectus is a part.
CERTAIN LEGAL MATTERS RELATING TO THE RECEIVABLES
TRANSFER OF RECEIVABLES
Upon formation of the Trust, Greenwood conveyed to the Trust without
recourse, all Receivables existing under the Accounts as of the Cut-Off Date. In
addition, Greenwood conveyed to the Trust all Receivables existing under
Additional Accounts as of the applicable Additional Account Cut-Off Date, and
may do so again in the future. Greenwood also transfers additional Receivables
generated in the Accounts to the Trust on an ongoing basis. In exchange,
Greenwood received the Seller Certificate and the right to direct the issuance
of, and receive the proceeds from the sale of, new series of investor
certificates. Greenwood has agreed to repurchase Receivables if either the sale
of the Receivables is not a valid transfer of all right, title and interest of
Greenwood or any Additional Seller in and to the Receivables or, if the transfer
of Receivables by Greenwood or any
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Additional Seller to the Trust is deemed to be a pledge of Receivables, the
Trust does not have a first priority perfected security interest in the
Receivables. In the event that the obligation of Greenwood to repurchase
Receivables is at any time the subject of concurrent obligations of one or more
other parties to the Seller Certificate Ownership Agreement, then Greenwood's
obligation to repurchase Receivables will be conditioned on Greenwood's ability
to enforce those concurrent obligations against one or more parties to the
Seller Certificate Ownership Agreement. A tax or statutory lien on property of
Greenwood arising before Receivables came into existence may have priority over
the Trust's interest in those Receivables. In addition, subject to certain
conditions, each Servicer will be permitted to use all or a portion of the cash
Collections received by it during any given Due Period until the applicable
Distribution Date and, in the event of the receivership, custodianship or
bankruptcy of any such Servicer, the Trust may not have a perfected interest in
such Collections. See "Description of the Investor Certificates -- Repurchase of
the Trust Portfolio."
The Receivables are "accounts" or "general intangibles" as defined in
Article 9 of the UCC as in effect in the Applicable State with respect to each
Receivable. To the extent the Receivables constitute accounts, both the absolute
transfer of such Receivables and the transfer of such Receivables as security
for an obligation are treated under Article 9 of the UCC as creating a security
interest therein and are subject to its provisions, including the filing of
financing statements to perfect the Trust's security interest. To the extent
Receivables constitute general intangibles and the transfer of such Receivables
is deemed to be a transfer as security for an obligation, Article 9 of the UCC
is applicable to the same extent as it is applicable to Receivables constituting
accounts. A financing statement has been filed, and continuation statements
covering the Receivables will be filed, under the UCC as in effect in Delaware
to protect the Trust in the event the transfer of Receivables to the Trust by
Greenwood is subject to Article 9 of the UCC. If a transfer of Receivables
constituting general intangibles is deemed to be an absolute transfer, then the
UCC is not applicable, and no further action is required to perfect the Trust's
interest in such Receivables from third-party claims. However, if the FDIC were
appointed as receiver of Greenwood, certain administrative expenses of the
receiver might have priority over the interest of the Trust in Receivables
originated by Greenwood, whether such Receivables are accounts or general
intangibles.
CERTAIN UCC MATTERS
Unless continuation statements are filed within the time specified in the
UCC in respect of the security interest of the Sellers or the Trust in the
Receivables, the perfection of the security interest will lapse.
There are also certain limited circumstances under the UCC under which
Receivables could be subject to an interest that has priority over the interest
of the Sellers or the Trust. Under the Pooling and Servicing Agreement, however,
Greenwood has agreed to repurchase the Receivables in any Account containing a
Receivable that has been transferred to the Trust and that is not free and clear
of the lien of any third party, if the existence of such liens has a material
adverse effect on the certificateholders' interest in the Receivables as a
whole. In the event that the obligation of Greenwood to repurchase Receivables
is at any time the subject of concurrent obligations of one or more other
parties to the Seller Certificate Ownership Agreement, then Greenwood's
obligation to repurchase Receivables will be conditioned on Greenwood's ability
to enforce those concurrent obligations against one or more parties to the
Seller Certificate Ownership Agreement. See "Description of the Investor
Certificates -- Repurchase of Specified Receivables." Each Seller also will
covenant that it will not sell, pledge, assign, transfer or grant any lien on
any of the Receivables transferred by it (or any interest therein) other than to
the Trust. A tax or other statutory lien on property of a transferor also may
have priority over the interest of the Sellers or the Trust in the Receivables.
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Because the Trust's interest in the Receivables is dependent upon the
relevant Seller's interest in the Receivables, any adverse change in the
priority or perfection of a Seller's security interest would correspondingly
affect the Trust's interest in the affected Receivables.
As set forth under "Risk Factors -- Certain Legal Aspects," under certain
circumstances all or a portion of the cash Collections of Receivables received
by each Servicer will be made available for use by such Servicer prior to each
Distribution Date. In the event of the insolvency or receivership of any such
Servicer or, in certain circumstances, the lapse of certain time periods, the
Trust may not have a perfected interest in those cash Collections.
CONSUMER PROTECTION LAWS AND DEBTOR RELIEF LAWS APPLICABLE TO THE RECEIVABLES
The relationships among credit cardmembers, credit card issuers and sellers
of merchandise and services in transactions financed by the extension of credit
under credit accounts are extensively regulated by federal and state consumer
protection laws and regulations. Such laws and regulations include the Federal
Truth-in-Lending Act and Fair Credit Billing Act (and the provisions of the
Federal Reserve Board's Regulation Z issued under each of them), Equal Credit
Opportunity Act (and the provisions of the Federal Reserve Board's Regulation B
issued thereunder), Fair Credit Reporting Act and Fair Debt Collection Practices
Act. These statutes and regulations require credit disclosures on credit card
applications and solicitations, on an initial disclosure statement required to
be provided when a credit card account is first opened, and with each monthly
billing statement. They also prohibit certain discriminatory practices in
extending credit, impose certain limitations on the charges that may be imposed
and regulate practices utilized in collections. In addition, cardmembers are
entitled, under these laws and regulations, to have payments and credits
promptly applied on credit accounts and to require billing errors to be promptly
resolved. A cardmember may be entitled to assert violations of certain of these
consumer protection laws and, in certain cases, claims against the lender or
seller, by way of set-off against his obligation to pay amounts owing on his
account. For example, under the Federal Truth-in-Lending Act, a credit card
issuer is subject to all claims (other than tort claims) and defenses arising
out of transactions in which a credit card is used to purchase merchandise or
services, if certain conditions are met. These conditions include requirements
that the cardmember make a good faith attempt to obtain satisfactory resolution
of the dispute from the person honoring the credit card and meet certain
jurisdictional requirements. Where the seller of the goods or services is the
same party as the card issuer, or controls or is controlled by the card issuer
directly or indirectly, these jurisdictional requirements are not applicable.
These statutes further provide that in certain cases a cardmember's liability
may not exceed $50 with respect to charges to the credit card account that
resulted from unauthorized use of the credit card. The application of federal
and state consumer protection, bankruptcy and debtor relief laws would affect
the interests of the investor certificate-holders if those laws result in any
Receivables being charged off as uncollectible. Greenwood has agreed in the
Pooling and Servicing Agreement that if a Receivable was not created in
compliance in all material respects with all Requirements of Law with respect to
such Receivable, and if such noncompliance continues beyond a specified cure
period and has a material adverse effect on the interest of the Trust in all the
Receivables, Greenwood will repurchase all Receivables in the Accounts
containing the Receivable affected by such noncompliance. Greenwood also has
agreed in the Pooling and Servicing Agreement to indemnify the Trust, among
other things, for any liability arising from such violations. For a discussion
of the Trust's rights arising from the breach of these warranties, see "The
Trust -- Indemnification of Trust and Trustee." See also "Risk Factors --
Consumer Protection Laws and Regulations; Litigation."
CLAIMS AND DEFENSES OF CARDMEMBERS AGAINST THE TRUST
The UCC provides that (a) unless an obligor has made an enforceable
agreement not to assert defenses or claims arising out of a sale, the rights of
the Trust, as assignee, are subject to all the terms of the contract between
Greenwood and the obligor and any defense or claim arising
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therefrom and to any other defense or claim of the obligor against Greenwood
that accrues before the obligor receives notification of the assignment and (b)
any obligor is authorized to continue to pay Greenwood until (i) the obligor
receives notification, reasonably identifying the rights assigned, that the
amount due or to become due has been assigned and that payment is to be made to
the Trustee and (ii) if requested by the obligor, the Trustee has furnished
reasonable proof of the assignment.
USE OF PROCEEDS
The net proceeds from the sale of each series of the investor certificates
will be paid to Greenwood. Unless otherwise specified in the related Prospectus
Supplement, Greenwood will add the proceeds received by it to its general funds
and initially will use the proceeds to effect a reduction of short-term
borrowings.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following summary of certain anticipated federal income tax
consequences of the purchase, ownership and disposition of investor certificates
of a series is based on the advice of Latham & Watkins ("Tax Counsel") as
counsel to Greenwood. The summary is based on current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), currently applicable Treasury
Regulations and judicial and administrative rulings and decisions ("Current
Law"). There can be no assurance that the Internal Revenue Service (the "IRS")
will not take a contrary view, and no ruling from the IRS has been or will be
sought. Legislative, judicial or administrative changes may be forthcoming that
could alter or modify the statements and conclusions set forth herein. Any
legislative, judicial or administrative changes or interpretations may or may
not be retroactive and could affect tax consequences to investor
certificateholders of one or more series.
The summary does not purport to deal with all aspects of federal income
taxation that may affect particular investor certificateholders in light of
their individual circumstances, and, except for certain limited discussions of
particular topics, is not intended for investor certificateholders subject to
special treatment under the federal income tax laws (e.g., life insurance
companies, tax-exempt organizations, financial institutions, broker-dealers and
investors that have a functional currency other than the United States dollar or
hold their investor certificates as part of a hedge, straddle or conversion
transaction). PROSPECTIVE INVESTOR CERTIFICATEHOLDERS SHOULD CONSULT THEIR OWN
TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF INVESTOR
CERTIFICATES.
The discussion assumes that an investor certificate (i) is issued in
registered form, (ii) has all payments denominated in United States dollars and
not determined by reference to the value of any other currency, and (iii) has a
term that exceeds one year. Moreover, the discussion assumes that, unless
Section 1272(a)(6) applies to the investor certificate, the interest formula for
the investor certificate meets the requirements for "qualified stated interest"
under Treasury regulations relating to original issue discount ("OID"), and that
any OID on the investor certificate arising from any excess of the principal
amount of the investor certificate over its issue price is de minimis (i.e., is
less than 1/4% of its principal amount multiplied by the number of full years
until its maturity date). If these conditions are not satisfied, additional tax
considerations will be disclosed in the applicable Prospectus Supplement.
TAX TREATMENT OF THE INVESTOR CERTIFICATES AS INDEBTEDNESS
Unless otherwise specified in the related Prospectus Supplement, Tax
Counsel will advise Greenwood that, in their opinion, although the matter is not
free from doubt, under Current Law the
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investor certificates of a series will be treated as indebtedness of Greenwood
for federal income tax purposes. There can be no assurance, however, that the
IRS or the courts will agree with the conclusions of Tax Counsel. In that
regard, the Pooling and Servicing Agreement and the Series Supplement of a
series generally refer to the transfer of the Receivables as a "sale," and
Greenwood has informed Tax Counsel (i) that different criteria are used in
determining the non-tax accounting treatment of the transaction and (ii) that,
for regulatory and financial accounting purposes, Greenwood will treat the
transfer of the Receivables under the Pooling and Servicing Agreement and the
Series Supplement with respect to such series as a transfer of an ownership
interest in the Receivables and not as the creation of a debt obligation.
Notwithstanding the foregoing, Greenwood will treat the investor certificates as
indebtedness for federal, state and local income and franchise tax purposes and
the investor certificateholders, by acceptance of the investor certificates,
agree to treat such investor certificates of a series as indebtedness of
Greenwood for federal, state and local income and franchise tax purposes. Except
for the discussion in "-- Possible Characterization of the Investor
Certificates," the following discussion of federal income tax consequences
assumes that the investor certificates of a series will be treated as
indebtedness of Greenwood for federal income tax purposes.
UNITED STATES INVESTOR CERTIFICATEHOLDERS
The rules set forth below apply to investor certificateholders who are
"United States Persons." A "United States Person" is (i) a citizen or resident
of the United States, (ii) a corporation or partnership created or organized in
the United States or under the laws of the United States or of any state, (iii)
an estate the income of which is subject to United States federal income
taxation regardless of its source, or (iv) for tax years beginning on or before
December 31, 1996, a trust the income of which is subject to United States
federal income taxation regardless of its source; and for tax years beginning
after December 31, 1996 (and, if a trustee so elects, for tax years ending after
August 20, 1996), a trust if a court within the United States is able to
exercise primary supervision over the administration of the trust, and one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust.
Stated Interest on Investor Certificates. Subject to the discussion below,
interest paid on the investor certificates will be taxable as ordinary income
when received or accrued by investor certificateholders in accordance with their
method of accounting. Generally, interest received on the investor certificates
will constitute "investment income" for purposes of certain limitations of the
Code concerning the deductibility of investment interest expense.
Original Issue Discount. In general, the excess of the stated redemption
price at maturity of the investor certificates of a series over their issue
price will constitute OID, unless such excess is within a statutorily-defined de
minimis exception.
If the investor certificates of a series are issued with OID, investor
certificateholders generally will be required to include OID in income for each
accrual period in advance of receipt of the cash representing such OID. A holder
of a debt instrument issued with OID is required to recognize as ordinary income
the amount of OID on the debt instrument as such discount accrues, in accordance
with a constant yield method. Under Section 1272(a)(6) of the Code, special
provisions apply to debt instruments on which payments may be accelerated due to
prepayments of other obligations securing those debt instruments. Under these
provisions, the computation of OID (and market discount, see "-- Market
Discount") on such debt instruments must be determined by taking into account
both the prepayment assumptions used in pricing the debt instrument and the
actual prepayment experience. As a result, the amount of OID on such debt
instruments that will accrue in any given accrual period may either increase or
decrease depending upon the actual prepayment rate. Because no Treasury
Regulations have been issued interpreting Section 1272(a)(6), investor
certificateholders should consult their own tax advisors regarding the impact of
the OID rules in the event the investor certificates of a series are issued with
OID.
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Market Discount. Investor certificateholders should be aware that the
resale of an investor certificate may be affected by the market discount
provisions of the Code. These rules generally provide that, subject to a
statutorily-defined de minimis exception, if an investor certificateholder
acquires an investor certificate at a market discount (i.e., at a price below
its stated redemption price at maturity or its revised issue price if it was
issued with OID) and thereafter recognizes gain upon a disposition of the
investor certificate (or disposes of it in certain non-recognition transactions
such as a gift), the lesser of such gain (or appreciation, in the case of an
applicable non-recognition transaction) or the portion of the market discount
that accrued while the investor certificate was held by such investor
certificateholder will be treated as ordinary interest income at the time of the
disposition. The market discount rules also provide that an investor
certificateholder who acquires an investor certificate at a market discount may
be required to defer a portion of any interest expense that otherwise may be
deductible on any indebtedness incurred or maintained to purchase or carry the
investor certificate until the investor certificateholder disposes of the
investor certificate in a taxable transaction.
Principal payments on the investor certificates of a series will be made
monthly, semi-annually or at other regular intervals as specified in the
Prospectus Supplement. An investor certificateholder who acquired an investor
certificate at a market discount would be required to treat as ordinary interest
income the portion of any principal payment attributable to accrued market
discount on such investor certificate.
An investor certificateholder who acquired an investor certificate at a
market discount may elect to include market discount in income as the discount
accrues, either on a ratable basis or, if elected, on a constant interest rate
basis. The current inclusion election, once made, applies to all market discount
obligations acquired on or after the first day of the first taxable year to
which the election applies, and may not be revoked without the consent of the
IRS. If an investor certificateholder elects to include market discount in
income in accordance with the preceding sentence, the foregoing rules with
respect to the recognition of ordinary income on sales, principal payments and
certain other dispositions of the investor certificates and the deferral of
interest deductions on indebtedness related to the investor certificates will
not apply.
Amortizable Bond Premium. Generally, if the price or tax basis of an
investor certificate held as a capital asset exceeds the sum of all amounts
payable on the investor certificate after the acquisition date (other than
payments of qualified stated interest), such excess may constitute amortizable
bond premium that the investor certificateholder may elect to amortize under the
constant interest rate method over the period from the investor
certificateholder's acquisition date to the investor certificate's maturity
date. Recently proposed Treasury regulations, which are not yet effective,
exclude debt instruments subject to Section 1272(a)(6) of the Code from the
amortizable bond premium rules contained in such regulations. See discussion of
Section 1272(a)(6) in "-- Original Issue Discount." Amortizable bond premium
generally will be treated as an offset to interest income on the investor
certificate, rather than as a separate interest deduction item subject to the
investment interest limitations of the Code. An investor certificateholder that
elects to amortize bond premium must reduce the tax basis in the related
investor certificate by the amount of bond premium used to offset interest
income. If an investor certificate purchased at a premium is redeemed in full
prior to its maturity, an investor certificateholder who has elected to amortize
bond premium should be entitled to a deduction for any remaining unamortized
bond premium in the taxable year of redemption.
Sales of Investor Certificates. In general, an investor certificateholder
will recognize gain or loss upon the sale, exchange, redemption or other taxable
disposition of an investor certificate measured by the difference between (i)
the amount of cash and the fair market value of any property received (other
than the amount attributable to, and taxable as, accrued but unpaid interest)
and (ii) the investor certificateholder's tax basis in the investor certificate
(as increased by any OID or market discount previously included in income by the
investor certificateholder and decreased by any
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deductions previously allowed for amortizable bond premium and by any payments
reflecting principal or OID received with respect to such investor certificate).
Subject to the OID and market discount rules discussed above and to the
one-year holding period requirement for long-term capital gain treatment, any
such gain or loss generally will be long-term capital gain or loss, provided the
investor certificate was held as a capital asset. The maximum federal income tax
rate applicable to capital gains and ordinary income for corporations is 35%.
Moreover, capital losses generally may be used only to offset capital gains. The
ordinary federal income tax rate for individuals, estates and trusts is 36% (for
married individuals filing joint returns with taxable income in excess of
$147,700 ($121,300 for unmarried individuals)) whereas the long-term capital
gains rate for such taxpayers is 28%. A further 10% surtax will be imposed on
ordinary income of individuals with taxable incomes in excess of $263,750 (for
married individuals filing joint returns and for unmarried individuals) and
estates and trusts with taxable incomes in excess of $7,900 (thereby creating a
maximum federal income tax rate to such taxpayers of 39.6%).
FOREIGN INVESTOR CERTIFICATEHOLDERS
Set forth below is a general discussion of the United States federal income
and estate tax consequences of the purchase, ownership, sale or other
disposition of an investor certificate by an investor certificateholder that,
for United States federal income tax purposes, is (i) a foreign corporation,
(ii) a non-resident alien individual, (iii) a foreign estate or trust or (iv) a
foreign partnership, as such terms are defined in the Code (a "non-U.S.
Holder"). Some non-U.S. Holders (including certain residents of certain United
States possessions or territories) may be subject to special rules not discussed
herein.
Interest (including OID, if any) paid to a non-U.S. Holder of investor
certificates will not be subject to a required withholding of United States
federal income tax, provided that (i) such interest payments are effectively
connected with the conduct of a trade or business of the non-U.S. Holder within
the United States and such non-U.S. Holder provides an appropriate statement to
such effect, or (ii)(a) the holder is not (1) a "10 percent shareholder" of
Greenwood or (2) a "controlled foreign corporation" with respect to which
Greenwood is a "related person" within the meaning of the Code and (b) the
beneficial owner (and, if relevant, a financial institution on the beneficial
owner's behalf) provides an appropriate statement, signed under penalties of
perjury, certifying that the beneficial owner of such investor certificate is
not a United States Person and providing the beneficial owner's name and
address. The statement generally must be provided in the year a payment occurs
or in either of the two preceding years. For years after 1997, recently released
Proposed Treasury Regulations specify that the statement must be provided prior
to payment.
A non-U.S. Holder generally will not be subject to United States federal
income tax on gain realized on the disposition of an investor certificate (other
than gain attributable to accrued interest or OID, which is addressed in the
preceding paragraph); provided that (i) the gain is not effectively connected
with the conduct of a trade or business within the United States by the non-U.S.
Holder and (ii) in the case of an individual holder, (A) the non-U.S. Holder is
not present in the United States for 183 days or more in the taxable year of the
sale, exchange or redemption or (B) (1) the non-U.S. Holder does not have a "tax
home" in the United States and (2) the gain is not attributable to an office or
other fixed place of business maintained in the United States by the non-U.S.
Holder.
If the interest or gain on an investor certificate held by a non-U.S.
Holder is effectively connected with the conduct of a trade or business within
the United States by the non-U.S. Holder, then the non-U.S. Holder (although
exempt from the withholding of tax previously discussed if the non-U.S. Holder
provides an appropriate statement) generally will be subject to United States
federal income tax on the interest (including OID, if any), or gain at regular
federal income tax rates in a similar fashion to a United States Person. See "--
United States Investor Certificateholders." In addition, if the non-U.S. Holder
is a foreign corporation, it may be subject to a branch profits tax equal to 30%
of its "effectively connected earnings and profits" within the meaning of the
Code for
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the taxable year, as adjusted for certain items, unless it qualifies for a lower
rate under an applicable tax treaty.
An investor certificate held by an individual who at the time of death is a
non-U.S. Holder will not be subject to United States federal estate tax as a
result of such individual's death if, immediately before death, (i) the
individual was not a "10 percent shareholder" of Greenwood and (ii) interest on
such investor certificate was not effectively connected with the conduct of a
trade or business within the United States by the individual.
THE FOREGOING DESCRIPTION OF THE POTENTIAL UNITED STATES FEDERAL INCOME AND
ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS IS NECESSARILY INCOMPLETE. NON-U.S.
HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
APPLICATION OF THE FOREGOING MATTERS TO THEM.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting requirements apply to certain payments of principal
of and interest on (and the amount of OID, if any, accrued on) an obligation,
and to proceeds of certain sales of an obligation before maturity, to certain
nonexempt investor certificateholders who are United States Persons. In
addition, a backup withholding tax also may apply with respect to such amounts
if such investor certificateholders fail to provide correct taxpayer
identification numbers and other information. The backup withholding tax rate is
31%. Greenwood, or a paying agent or a broker, as the case may be, will be
required to withhold from any payment that is subject to backup withholding
unless the investor certificateholder furnishes its taxpayer identification
number in the manner prescribed in applicable Treasury Regulations and certain
other conditions are met.
In the case of payments of principal of and interest on (and the amount of
OID, if any, accrued on) investor certificates by Greenwood or its paying agents
to non-U.S. Holders, Temporary Treasury Regulations provide that backup
withholding and information reporting will not apply to payments with respect to
which either requisite certification has been received or an exemption has
otherwise been established (provided that neither Greenwood nor its paying
agents has actual knowledge that the holder is a United States Person or that
the conditions of any other exemption are not in fact satisfied). Payments of
the proceeds of the sale of an investor certificate to or through a foreign
office of a United States broker or foreign brokers with certain types of
relationships to the United States, however, are subject to certain information
reporting requirements, unless the payee is an exempt recipient or such broker
has evidence in its records that the payee is not a United States Person and no
actual knowledge that such evidence is false and certain other conditions are
met. Temporary Treasury Regulations indicate that such payments are not
currently subject to backup withholding. Under current Treasury Regulations,
payments of the proceeds of a sale to or through the United States office of a
broker will be subject to information reporting and backup withholding unless
the payee certifies under penalties of perjury as to his status as a non-United
States Person and certain other qualifications (and no agent of the broker who
is responsible for receiving or reviewing such statement has actual knowledge
that it is incorrect) and provides his name and address or the payee otherwise
establishes an exemption.
Temporary Treasury Regulations indicate that the United States Treasury
Department is studying the possible application of backup withholding to
payments made by foreign offices of certain United States and United States
related intermediaries, including brokers, as well as the standard of evidence
required to prove foreign status for information reporting purposes.
Any amounts withheld under the backup withholding rules from a payment to
an investor certificateholder will be allowed as a refund or a credit against
such investor certificateholder's United States federal income tax.
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POSSIBLE CHARACTERIZATION OF THE INVESTOR CERTIFICATES
The foregoing discussion assumes that the investor certificates of a series
will be treated as indebtedness of Greenwood for federal income tax purposes.
However, although Tax Counsel will opine to such effect with respect to each
series of investor certificates, the matter is not free from doubt, and there
can be no assurance that the IRS or the courts will agree with Tax Counsel's
opinion. If the IRS were to contend successfully that the investor certificates
of a series are not indebtedness of Greenwood for federal income tax purposes,
it could find that the arrangement created by the Pooling and Servicing
Agreement and the Series Supplement with respect to such series constitutes a
partnership or an association (or a "publicly traded partnership") taxable as a
corporation.
If the investor certificates of a series were treated as interests in a
partnership, the partnership in all likelihood would be treated as a "publicly
traded partnership." If the partnership were nevertheless not taxable as a
corporation (for example, because of an exception for an entity whose income is
interest that is not derived in the conduct of a financial business), such
partnership would not be subject to federal income tax. Rather, the investor
certificateholders of such series would be required to include in income their
share of the income and deductions generated by the assets of the Trust, as
determined under partnership tax accounting rules. In such event, the amount,
timing and character of the income required to be recognized by an investor
certificateholder could differ materially from the amount, timing and character
thereof if the investor certificates were characterized as indebtedness of
Greenwood. It also is possible that such a partnership could be subject to tax
in certain states where the partnership is considered to be engaged in business,
and that the investor certificateholders, as partners in such a partnership,
could be taxed on their share of the partnership's income in such states.
In addition, if such a partnership is considered to be engaged in a trade
or business within the United States, the partnership would be subject to a
withholding tax on distributions to (or, at its election, income allocable to)
non-U.S. Holders, and each such non-U.S. Holder would be credited for such
non-U.S. Holder's share of the withholding tax paid by the partnership.
Moreover, the non-U.S. Holder generally would be subject to United States
federal income tax at regular federal income tax rates, and possibly a branch
profits tax (in the case of a corporate non-U.S. Holder), as previously
described. See "-- Foreign Investor Certificateholders." Further, even if the
partnership is not considered to be engaged in a trade or business within the
United States, it appears that partnership withholding will be required in the
case of any such non-U.S. Holder that is engaged in a trade or business within
the United States to which the investor certificate income is effectively
connected.
Alternatively, although there may be arguments to the contrary, it appears
that if such a partnership is not considered to be engaged in a trade or
business within the United States and if income with respect to an investor
certificate is not otherwise effectively connected with the conduct of a trade
or business within the United States by a non-U.S. Holder, the non-U.S. Holder
would be subject to United States federal income tax and withholding at a rate
of 30% (unless reduced by an applicable treaty) on such non-U.S. Holder's
distributive share of the partnership's interest income.
If the investor certificates of a series were treated as interests in an
association (or a "publicly traded partnership") taxable as a corporation, the
income from the assets of the Trust would be subject to federal income tax and
tax imposed by certain states where the entity would be considered to have
operations at corporate rates, which would reduce the amounts available for
distribution to the investor certificateholders. See "Certain State Tax
Consequences." Under such circumstances, the investor certificates may be
treated as debt of an entity taxable as a corporation or, alternatively, as
equity of such an entity in which latter case interest payments to investor
certificateholders could be treated as dividends and, if made to non-U.S.
Holders, could be subject to United States federal income tax and withholding at
a rate of 30% (unless reduced by an applicable tax treaty).
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Finally, with respect to a series having a class of subordinated
certificates, the IRS might contend that even though the Class A certificates
are properly classified as debt obligations of Greenwood for federal income tax
purposes, the Class B certificates are not properly classified as such. Under
this approach, the Class B certificates might be viewed as equity interests in
an entity (such as Greenwood or a joint venture consisting of Greenwood and the
Class B certificateholders), with the Class A certificates treated as debt
obligations of such entity. If such an entity were characterized as a
partnership not taxable as a corporation, the entity would not be subject to
federal income tax, although the Class B certificateholders would be subject to
the tax consequences previously described with respect to interests in a
partnership that is not taxable as a corporation. Alternatively, if such an
entity were characterized as an association (or a "publicly traded partnership")
taxable as a corporation, the tax liability on the income of the entity might,
in certain circumstances, reduce distributions on both the Class A certificates
and the Class B certificates, and the Class B certificateholders would be
subject to the tax consequences previously described with respect to interests
in an association (or a "publicly traded partnership") taxable as a corporation.
In addition, any non-U.S. Holder of a Class A certificate who is the actual or
constructive owner of 10% or more of the outstanding principal amount of the
Class B certificates may be treated as a "10 percent shareholder." See "--
Foreign Investor Certificateholders."
Based on Tax Counsel's advice as to the likely treatment of the investor
certificates for federal income tax purposes, Greenwood and the Trust will not
attempt to cause the arrangement created by the Pooling and Servicing Agreement
and the Series Supplement with respect to a series to comply with the federal or
state income tax reporting requirements applicable to partnerships or
corporations. If such arrangement were later held to constitute a partnership or
corporation, the manner of bringing it into compliance with such requirements is
unclear.
Prospective investor certificateholders should consult their own tax
advisors as to the risk that the investor certificates will not be treated as
indebtedness of Greenwood, and the possible tax consequences of potential
alternative treatments.
CERTAIN STATE INCOME TAX CONSEQUENCES
The following summary of certain anticipated state tax consequences with
respect to the investor certificates of a series is based on the advice of Tax
Counsel as counsel to Greenwood. The summary is based upon currently applicable
statutes, regulations and judicial and administrative rulings and decisions of
certain states. There can be no assurance that the taxing authorities of such
states will not take a contrary view, and no ruling therefrom has been or will
be sought. Legislative, judicial or administrative changes may be forthcoming
that could alter or modify the statements and conclusions set forth herein. Any
such changes or interpretations may or may not be retroactive and could affect
the tax consequences to investor certificateholders of such series. Except as
set forth below, this discussion of state tax consequences assumes that the
investor certificates of a series will be treated as indebtedness of Greenwood
for federal tax purposes.
State tax consequences to each investor certificateholder will depend upon
the provisions of the state tax laws to which the investor certificateholder is
subject. Most states modify or adjust the taxpayer's federal taxable income to
arrive at the amount of income potentially subject to state tax. Resident
individuals usually pay state tax on 100% of such state-modified income, while
corporations and other taxpayers generally pay state tax only on that portion of
state-modified income assigned to the taxing state under the state's own
apportionment and allocation rules. Because each state's tax laws vary, it is
impossible to predict the tax consequences to the investor certificateholders in
all of the state taxing jurisdictions in which they are already subject to tax.
Delaware is the location of Greenwood's headquarters, where Greenwood
originates and owns the Accounts and services the Receivables pursuant to the
Pooling and Servicing Agreement. Unless otherwise specified in the related
Prospectus Supplement, Tax Counsel will advise Greenwood with respect to a
series, that, in their opinion, although the matter is not free from doubt,
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the investor certificates of such series will be treated as indebtedness of
Greenwood for purposes of the Delaware income tax. Accordingly, although the
matter is not free from doubt, if the investor certificates of a series are
treated as indebtedness of Greenwood in Delaware, investor certificateholders
not otherwise subject to taxation in Delaware will not become subject to the
Delaware income tax solely because of their ownership of the investor
certificates.
Generally, an investor certificateholder is required to pay, in states in
which such investor certificateholder already is subject to state tax,
additional state tax as a result of interest earned on such holder's investment
in investor certificates. Moreover, a state could claim that the Trust has
undertaken activities therein and is subject to taxation by that state. Were any
state to make and sustain that claim, the treatment of the investor certificates
for purposes of such state's tax laws would be determined thereunder, and there
can be no assurance that the investor certificates would be treated as
indebtedness of Greenwood for purposes of such state taxation.
If such investor certificates of a series were treated as interests in a
partnership or an association (or a "publicly traded partnership") taxable as a
corporation, the state tax consequences to the investor certificateholders of
such series could be materially different, especially in states which may be
considered to have a business connection with the Receivables. See "Certain
Federal Income Tax Consequences -- Possible Characterization of the Investor
Certificates."
THE FOREGOING DESCRIPTION OF THE POTENTIAL STATE TAX CONSEQUENCES IS
INCOMPLETE. INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE APPLICATION OF THE FOREGOING MATTERS TO THEM.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on those employee benefit plans,
including Individual Retirement Accounts and Individual Retirement Annuities
(collectively "IRAs"), to which they apply ("Plans") and on those persons who
are fiduciaries with respect to such Plans. In accordance with ERISA's general
fiduciary standards, before investing in investor certificates, a Plan fiduciary
should determine whether such an investment is permitted under the governing
Plan instruments and is appropriate for the Plan in view of its overall
investment policy and the composition and diversification of its portfolio.
Other provisions of ERISA and the Code prohibit certain transactions involving
the assets of a Plan and persons who have certain specified relationships to the
Plan ("parties in interest" within the meaning of ERISA or "disqualified
persons" within the meaning of the Code). Prohibited transactions may generate
excise taxes and other liabilities; prohibited transactions involving IRAs may
result in the disqualification of the IRAs. Thus, a Plan fiduciary considering
an investment in investor certificates should also consider whether such an
investment might constitute or give rise to a prohibited transaction under ERISA
or the Code.
Certain transactions involved in the operation of the Trust might be deemed
to constitute prohibited transactions under ERISA and the Code, if assets of the
Trust were deemed to be assets of an investing Plan. ERISA and the Code do not
define "plan assets." The U.S. Department of Labor (the "DOL") has published a
regulation (the "Regulation"), which took effect March 13, 1987, concerning
whether or not a Plan's assets will be deemed to include an interest in the
underlying assets of an entity (such as the Trust) for purposes of the reporting
and disclosure and fiduciary responsibility provisions of ERISA and of the
excise tax provisions related to prohibited transactions in the Code if the Plan
acquires an "equity interest" in that entity. The Regulation only applies to the
purchase by a Plan of an "equity interest" in an entity. An equity interest is
defined in the Regulation as an interest in an entity other than an instrument
that is treated as debt under applicable local law and that has no substantial
equity features. Unless otherwise specified in the related Prospectus
Supplement, Tax Counsel will advise Greenwood that investors will be taxed as if
the investor certificates are debt of Greenwood for federal income tax purposes.
If under ERISA the investor certificates are deemed to be debt and are not
deemed to have substantial equity
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features, the Trust's assets would not be treated as Plan assets solely as a
result of the purchase of the investor certificates by a Plan.
Assuming that either the investor certificates are equity interests under
applicable local law or are deemed to have substantial equity features, the
Regulation contains an exception that provides that if a Plan acquires a
"publicly-offered security," the issuer of the security is not deemed to hold
Plan assets. A publicly-offered security is a security that is (i) freely
transferable, (ii) part of a class of securities that is owned by 100 or more
investors independent of the issuer and of one another by the conclusion of the
offering and (iii) either is (A) part of a class of securities registered under
section 12(b) or 12(g) of the Securities Exchange Act of 1934, or (B) sold to
the Plan as part of an offering of securities to the public pursuant to an
effective registration statement under the Securities Act of 1933 and the class
of securities of which such security is a part is registered under the
Securities Exchange Act of 1934 within 120 days (or such later time as may be
allowed by the Securities and Exchange Commission) after the end of the fiscal
year of the issuer during which the offering of the securities to the public
occurred.
Whether the investor certificates of a series meet the criteria of
publicly-offered securities will be set forth in the related Prospectus
Supplement.
If the investor certificates were deemed to be an extension of credit for
ERISA purposes, the purchase of the investor certificates by a Plan with respect
to which Greenwood or one of its affiliates is a "party in interest" or
"disqualified person" might be considered a prohibited extension of credit under
Section 406 of ERISA and Section 4975 of the Code unless an exemption is
applicable. There are at least three prohibited transaction class exemptions
issued by the DOL that might apply, depending in part on who decided to acquire
the investor certificates for the Plan: DOL Prohibited Transaction Exemption
("PTE") 84-14 (Class Exemption for Plan Asset Transactions determined by
Independent Qualified Professional Asset Managers); PTE 91-38 (Class Exemption
for Certain Transactions Involving Bank Collective Investment Funds); and PTE
90-1 (Class Exemption for Certain Transactions Involving Insurance Company
Pooled Separate Accounts).
Moreover, whether the investor certificates are debt or equity for ERISA
purposes, a possible violation of the prohibited transaction rules could occur
if the investor certificates were purchased during the offering with assets of a
Plan if Greenwood, the Trustee, any Underwriter or any of their affiliates were
a fiduciary with respect to such Plan. Under ERISA and the Code, a person is a
"fiduciary" with respect to a Plan to the extent (i) he exercises any
discretionary authority or discretionary control respecting management of such
Plan or exercises any authority or control respecting management or disposition
of its assets, (ii) he renders investment advice for a fee or other
compensation, direct or indirect, with respect to any moneys or other property
of such Plan, or has any authority or responsibility to do so or (iii) he has
any discretionary authority or discretionary responsibility in the
administration of such Plan. Accordingly, the fiduciaries of any Plan should not
purchase the investor certificates during the offering with assets of any Plan
if Greenwood, the Trustee, the Underwriters or any of their affiliates is a
fiduciary with respect to the Plan.
In light of the foregoing, fiduciaries of Plans considering the purchase of
the investor certificates should consult their own tax or other appropriate
counsel regarding the application of ERISA and the Code to their purchase of the
investor certificates.
In particular, insurance companies considering the purchase of investor
certificates should consult their own benefits counsel or other appropriate
counsel with respect to the United States Supreme Court's decision in John
Hancock Mutual Life Insurance Co. v. Harris Trust & Savings Bank, 114 S. Ct. 517
(1993) ("John Hancock") and DOL PTE 95-60 (Class Exemption for Certain
Transactions Involving Insurance Company General Accounts), which was issued by
the DOL on July 12, 1995. In John Hancock, the Supreme Court held that the
assets held in an insurance company's general account may be deemed to be "plan
assets" under certain circumstances; subject to numerous conditions and
limitations, PTE 95-60 effectively reverses this portion of the
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holding in John Hancock. Accordingly, investors should analyze whether John
Hancock and PTE 95-60 may have an impact with respect to their purchase of
investor certificates.
PLAN OF DISTRIBUTION
Greenwood may sell investor certificates (i) through underwriters or
dealers; (ii) directly to one or more purchasers; or (iii) through agents. Any
such underwriters, dealers or agents in the United States may include Dean
Witter Reynolds Inc. The related Prospectus Supplement will set forth the terms
of the offering of such investor certificates, including the name or names of
any underwriters, the purchase price of such investor certificates and the
proceeds to Greenwood from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial offering price, any
discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which such investor certificates may be listed. Only
underwriters so named in the related Prospectus Supplement shall be deemed to be
underwriters in connection with the investor certificates offered thereby.
If underwriters are used in the sale, the investor certificates will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed price or at varying prices determined at the time of sale or at negotiated
prices. Such investor certificates may be offered to the public either through
underwriting syndicates represented by managing underwriters or by underwriters
without a syndicate. The obligations of the underwriters to purchase such
investor certificates will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all the investor certificates of the
series offered by the related Prospectus Supplement if any of such investor
certificates are purchased. Any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers may be changed from time
to time.
Investor certificates may also be sold directly by the Company or through
agents designated by Greenwood from time to time. Any agent involved in the
offering and sale of the investor certificates will be named, and any
commissions payable by Greenwood to such agent will be set forth, in the related
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, any such agent is acting solely as an agent for the period of its
appointment.
If so indicated in the related Prospectus Supplement, Greenwood will
authorize agents, underwriters or dealers to solicit offers by certain
institutional investors to purchase investor certificates providing for payment
and delivery on a future date specified in the related Prospectus Supplement.
There may be limitations on the minimum amount which may be purchased by any
such institutional investor or on the portion of the aggregate principal amount
of the particular investor certificates which may be sold pursuant to such
arrangements. Institutional investors to which such offers may be made, when
authorized, include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and such
other institutions as may be approved by Greenwood. Unless otherwise specified
in the related Prospectus Supplement, the obligations of any such purchasers
pursuant to such delayed delivery and payment arrangements will not be subject
to any conditions except (i) the purchase by an institution of the particular
investor certificates shall not at the time of delivery be prohibited under the
laws of any jurisdiction of the United States to which such institution is
subject, and (ii) if the particular investor certificates are being sold to
underwriters, Greenwood shall have sold to such underwriters the total principal
amount of such investor certificates less the principal amount thereof covered
by such arrangements. Underwriters will not have any responsibility in respect
of the validity of such arrangements or the performance of Greenwood or such
institutional investors thereunder.
Underwriters, dealers and agents that participate in the distribution of
the investor certificates may be deemed to be underwriters, and any discounts or
commissions received by them from Greenwood and any profit on the resale of the
investor certificates by them may be deemed to be underwriting discounts and
commissions, under the Securities Act of 1933. Under arrangements
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which may be entered into by Greenwood, underwriters, dealers and agents that
participate in the distribution of investor certificates may be entitled to
indemnification by Greenwood against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribution with respect to
payments that the underwriters, dealers or agents may be required to make with
respect thereto. Underwriters, dealers and agents may engage in transactions
with, or perform services for, Greenwood in the ordinary course of their
respective businesses.
The investor certificates may or may not be listed on a national securities
exchange. There is no assurance that a secondary market will develop for the
investor certificates or, if it does develop, that it will continue.
The distribution of investor certificates will conform to the requirements
set forth in the applicable sections of Schedule E to the By-Laws of the
National Association of Securities Dealers, Inc.
LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement, the
legality of the investor certificates and certain legal matters relating to the
tax consequences of the issuance of the investor certificates will be passed
upon for Greenwood by Latham & Watkins and certain matters concerning creditors'
rights will be passed upon for Greenwood by Latham & Watkins and Young, Conaway,
Stargatt & Taylor. Unless otherwise specified in the related Prospectus
Supplement, the legality of the investor certificates will be passed upon for
any Underwriters by Cadwalader, Wickersham & Taft.
AVAILABLE INFORMATION
Greenwood, as originator of the Trust, has filed a Registration Statement
under the Securities Act of 1933 with the Securities and Exchange Commission
(the "Commission") on behalf of the Trust with respect to the investor
certificates offered pursuant to this Prospectus and the related Prospectus
Supplement. For further information, reference is made to the Registration
Statement and amendments thereof and exhibits thereto and the reports and other
documents incorporated herein by reference as described previously under
"Incorporation of Certain Documents by Reference," which are available for
inspection without charge at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549; 7 World
Trade Center, Suite 1300, New York, New York 10048; and the Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Such
reports and other documents may also be obtained from the web site that the
Commission maintains at http://www.sec.gov. The Trust is subject to the
informational requirements of the Securities Exchange Act of 1934 and in
accordance therewith, Greenwood, on behalf of the Trust, will file reports and
other information with the Commission. Copies of the Registration Statement and
amendments thereof and exhibits thereto, as well as such materials relating to
the Trust, may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
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GLOSSARY OF TERMS
Investor certificates will be issued pursuant to the Pooling and Servicing
Agreement and a Series Supplement. The following Glossary of Terms does not
purport to be complete and, with respect to any series of investor certificates
issued by the Trust, is subject to, and is qualified in its entirety by
reference to, the Pooling and Servicing Agreement and the related Series
Supplement. A copy of the Pooling and Servicing Agreement is filed as an exhibit
to the Registration Statement of which this Prospectus is a part. Certain
definitions contained in this Glossary of Terms are applicable only to certain
series of investor certificates offered pursuant to the related Prospectus
Supplement and are not necessarily applicable to other series of investor
certificates that may be issued by the Trust. On written request to the Trustee
at its corporate trust office, the Trustee will provide to investor
certificateholders without charge a copy of the Pooling and Servicing Agreement
(without exhibits and schedules) and a related Series Supplement (without
exhibits). Unless the context requires otherwise, capitalized terms used in this
Prospectus and Glossary of Terms relate separately to individual series of
investor certificates issued by the Trust.
"Account" will mean (i) a Discover Card account established pursuant to a
Credit Agreement between Greenwood and any Person, receivables under which are
transferred to the Trust pursuant to the Pooling and Servicing Agreement or
pursuant to an Assignment of Additional Accounts (a "Greenwood Discover Card
Account"); (ii) a Discover Card account established pursuant to a Credit
Agreement between an Additional Seller and any Person, receivables under which
are transferred to the Trust pursuant to an Assignment of Additional Accounts;
and (iii) a credit account (that is not a Discover Card account) established
pursuant to a Credit Agreement between Greenwood or an Additional Seller and any
Person, receivables under which are transferred to the Trust pursuant to an
Assignment of Additional Accounts. No Account will be a Charged-Off Account as
of (i) the Account Selection Date, with respect to Accounts the Receivables in
which are transferred to the Trust on the Initial Closing Date or (ii) the date
an Account is selected for addition to the Trust, with respect to Accounts the
Receivables in which are transferred to the Trust pursuant to an Assignment of
Additional Accounts. The definition of an Account will include a surviving
credit account (a "Surviving Account") in the event that (i) an Account or
another credit account is combined with an Account pursuant to the Credit
Guidelines for such Account (an "Account Combination") and (ii) the surviving
Account of such Account Combination was an Account prior to such combination.
The term "Account" will be deemed to refer to an Additional Account only from
and after the Addition Date with respect thereto. The definition of Account will
not include any Account removed from the Trust after it has been reassigned to
the Holder of the Seller Certificate.
"Account Selection Date" will mean, for any Account transferred to the
Trust on the Initial Closing Date, January 22, 1993, July 14, 1993 or September
22, 1993 and, for any Additional Account, the date such account was selected to
be transferred to the Trust.
"Accumulation Period," if applicable, will mean the period, unless an
Amortization Event has occurred during the Revolving Period, from the Principal
Commencement Date until the earliest of (i) the payment in full of the Series
Invested Amount, (ii) the Amortization Commencement Date and (iii) the Series
Termination Date.
"Addition Date" will mean each date as of which Additional Accounts will be
included as Accounts or as of which Participation Interests will be conveyed to
the Trust.
"Additional Account Cut-Off Date" will mean, for any Additional Account,
the date specified as such in the Assignment of Additional Accounts for such
Additional Account.
"Additional Accounts" will mean credit accounts originated by Greenwood or
affiliates of Greenwood, receivables under which are added to the Trust after
the Initial Closing Date.
"Additional Funds" will have the meaning set forth in "Description of the
Investor Certificates -- Additional Funds." The initial amount of Additional
Funds, if any, will be as set forth in the related Prospectus Supplement.
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"Additional Seller" will mean an affiliate of Greenwood that is included in
the same "affiliated group" as Greenwood for United States federal income tax
purposes and that transfers Receivables in Additional Accounts to the Trust.
"Aggregate Invested Amount" will mean at any time the sum of the Series
Invested Amounts of all series of investor certificates then issued and
outstanding.
"Aggregate Investor Interest" will mean at any time the sum of the Series
Investor Interests of all series of investor certificates then issued and
outstanding.
"Aggregate Investor Percentage" will mean at any time the sum of the Series
Percentages of all series of investor certificates then issued and outstanding.
"Amortization Commencement Date" will mean the date on which an
Amortization Event is deemed to occur.
"Amortization Event" will mean any event specified as such in the Pooling
and Servicing Agreement or the applicable Series Supplement. See "Description of
the Investor Certificates -- Amortization Events" in the related Prospectus
Supplement.
"Amortization Period" will mean the period from, and including, the
Amortization Commencement Date to, and including, the earlier of (i) the date of
the payment in full of the Series Invested Amount and (ii) the Series
Termination Date. The first Distribution Date of the Amortization Period will be
the Distribution Date in the calendar month following the Amortization
Commencement Date.
"Applicable State" will mean, with respect to any Receivable, the state in
which the chief executive office of the Seller with respect to such Receivable
is located and with respect to any Seller, the state in which the chief
executive office of such Seller is located.
"Book-Entry Certificates" will mean certificates evidencing a beneficial
interest in the investor certificates, ownership and transfers of which will be
made through book entries by a Clearing Agency; provided, that after the
occurrence of a condition whereupon book-entry registration and transfer are no
longer permitted and Definitive Certificates are to be issued to the certificate
owners, the investor certificates will no longer be "Book-Entry Certificates."
"Business Day" will mean any day other than a Saturday, a Sunday or a day
on which banking institutions in (i) New York, New York, (ii) the County of New
Castle, Delaware, (iii) the city in which the Corporate Trust Office is located,
(iv) the city in which the principal executive offices of any Additional Seller
is located or (v) the city in which the principal banking or executive offices
of any Credit Enhancement Provider is located, are authorized or obligated by
law or executive order to be closed.
"CCA Investor Interest," if applicable, shall have the meaning set forth in
the applicable Series Supplement.
"Certificate" will mean the Seller Certificate or any investor certificate
of any series of investor certificates then issued and outstanding.
"Certificate Interest" will be as specified in the related Prospectus
Supplement.
"Certificate Owner" will mean, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"Certificate Principal" will mean, with respect to each class of any
series, the principal payable in respect of such class.
"Certificate Rate," will mean, with respect to any class, the certificate
rate set forth in the related Prospectus Supplement with respect to the series
to which such class belongs.
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"Certificate Register" will mean the register maintained pursuant to the
Pooling and Servicing Agreement providing for the registration of Investor
Certificates in fully registered form and transfers and exchanges thereof.
"Certificateholder" or "Holder" will mean an investor certificateholder or
a Person in whose name a Certificate is registered in the Certificate Register.
"Charged-Off Account" will mean each Account with respect to which the
Servicer has charged off the Receivables in such Account as uncollectible.
"Charged-Off Amount" will mean, with respect to any Trust Distribution
Date, the aggregate amount of Receivables in Accounts that become Charged-Off
Accounts in the related Due Period, less (i) the cumulative, uncollected amount
previously billed by the Servicers to Accounts that became Charged-Off Accounts
during the related Due Period with respect to finance charges, cash advance
fees, annual membership fees, fees for transactions that exceed the credit limit
on the Account, late payment charges and any other type of charges that the
Servicer has designated as "Finance Charge Receivables" with respect to Accounts
that are not Charged-Off Accounts and (ii) the full amount of any such
Receivables that have been repurchased by Greenwood.
"Class" will mean all the investor certificates designated by the same
letter of the alphabet, pursuant to the Series Supplement for the series.
"Class Finance Charge Collections" will be as specified in the related
Prospectus Supplement.
"Class Initial Investor Interest" will be as specified in the related
Prospectus Supplement.
"Class Invested Amount" will be as specified in the related Prospectus
Supplement.
"Class Investor Interest" will be as specified in the related Prospectus
Supplement.
"Class Monthly Servicing Fee" will mean, for any Distribution Date, an
amount equal to the product of (i) a fraction the numerator of which is the
Class Investor Interest and the denominator of which is the Series Investor
Interest, in each case on the first day of the related Due Period and (ii) the
amount of the Investor Servicing Fee for the related Due Period.
"Class Percentage" will be as specified in the related Prospectus
Supplement.
"Clearing Agency" will mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934.
"Collections" will mean (i) all payments by or on behalf of an Obligor
received by a Servicer in respect of Receivables in the form of cash, checks,
wire transfers or other forms of payment in accordance with the relevant Credit
Agreement in effect from time to time and (ii) amounts treated as Collections
pursuant to the terms of the Pooling and Servicing Agreement or the applicable
Series Supplement. A Collection will be deemed to have been received at the end
of the day on the Date of Processing of such Collection.
"Collections Account" will mean the non-interest bearing segregated trust
account established and maintained by the Trustee with an office or branch of
the Trustee or a Qualified Institution for the benefit of the
certificateholders.
"Controlled Liquidation Period," if applicable, will mean, unless an
Amortization Event has occurred during the Revolving Period, the period from the
Principal Commencement Date until the earliest of (i) the payment in full of the
Series Invested Amount, (ii) the Amortization Commencement Date and (iii) the
Series Termination Date.
"Corporate Trust Office" will mean the principal office of the Trustee at
which at any particular time its corporate trust business will be administered,
which office currently is located at 410 North Michigan Avenue, Suite 370,
Chicago, Illinois 60611 Attention: Corporate Trust Department.
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"Credit Agreement" will mean, with respect to an Account, the contract
governing such Account.
"Credit Enhancement" will mean any credit enhancement obtained by the
Master Servicer in accordance with the applicable Series Supplement.
"Credit Enhancement Account" will mean any non-interest bearing segregated
trust account established and maintained by the Trustee with an office or branch
of the Trustee or a Qualified Institution with respect to the Credit
Enhancement.
"Credit Enhancement Agreement" will mean any Agreement among the Sellers,
the Master Servicer, the Trustee and a Credit Enhancement Provider with respect
to any Credit Enhancement.
"Credit Enhancement Provider" will mean, unless otherwise specified in the
related Prospectus Supplement, collectively, the one or more lenders that will
make a loan in order to provide the initial funds on deposit in the Credit
Enhancement Account.
"Credit Guidelines" will mean, with respect to any Account, the policies
and procedures relating to the operation of such Account and similar accounts
administered by the Servicer of such Account, including, without limitation, the
written policies and procedures and the exercise of judgment by employees of the
Servicer with respect to such accounts in accordance with such Servicer's normal
practice for determining the creditworthiness of customers holding such
accounts, the extension of credit to customers, and relating to the maintenance
of such accounts and the collection of receivables with respect to such
accounts, as such policies and procedures may be amended from time to time by
the Servicer of such accounts, and as such policies and procedures may be
implemented by any Person to whom such Servicer has delegated any of its duties.
"Cut-Off Date" will mean October 1, 1993.
"Date of Processing" with respect to any transaction will mean the date on
which such transaction is first recorded on the cardmember master file of the
accounts maintained by or on behalf of the relevant Servicer (without regard to
the effective date of such recordation).
"Deficit Accumulation Amount," if applicable, will be as specified in the
related Prospectus Supplement.
"Deficit Liquidation Amount," if applicable, will be as specified in the
related Prospectus Supplement.
"Discover Card," when used to modify the term "account," will mean that
access to such account is afforded by, among other means, a card bearing on its
face the DISCOVER service mark or, if the use of such service mark is suspended
and another service mark is substituted therefor, a card bearing such substitute
service mark.
"Distribution Date" will be as specified in the related Prospectus
Supplement.
"Due Period" will mean, with respect to any Trust Distribution Date or
Distribution Date, the calendar month next preceding the calendar month in which
such Trust Distribution Date or Distribution Date occurs.
"Eligible Receivable" will mean each Receivable: (i) which is payable in
United States dollars; (ii) which was created in compliance, in all material
respects, with all Requirements of Law applicable to the Seller and the Servicer
with respect to such Receivable, and pursuant to a Credit Agreement that
complies, in all material respects, with all Requirements of Law applicable to
such Seller and Servicer; (iii) as to which, if such Receivable was created
before the Initial Closing Date or the relevant Addition Date, as applicable,
(a) at the time of the creation of such Receivable, the Seller with respect to
such Receivable had good and marketable title thereto free and clear of all
Liens arising under or through such Seller, and (b) at the time of the
conveyance of such Receivable to the Trust, such Seller had, or the Trust will
have, good and marketable title free and
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clear of all Liens arising under or through such Seller; (iv) as to which, if
such Receivable was created on or after the Initial Closing Date or the relevant
Addition Date, as applicable, at the time of the creation of such Receivable,
the Trust will have good and marketable title thereto free and clear of all
Liens arising under or through the Seller with respect to such Receivable; and
(v) which constitutes an "account" or "general intangible" under and as defined
in Article 9 of the UCC as then in effect in the Applicable State with respect
to such Receivable.
"Expected Final Payment Date" will be as specified in the related
Prospectus Supplement.
"FDIC" will mean the Federal Deposit Insurance Corporation acting through
either the Savings Association Insurance Fund or the Bank Insurance Fund.
"Final Trust Termination Date" will mean October 16, 2014.
"Finance Charge Collections" with respect to any Due Period will mean the
sum of (i) the lesser of the aggregate amount of Finance Charge Receivables for
the preceding Due Period and Collections actually received in such Due Period
and (ii) all Recovered Amounts received during such Due Period. If there is more
than one Seller, the obligation of Greenwood to deposit certain cash advance
fees and late payment fees into the Collections Account will be conditioned on
Greenwood's ability to enforce concurrent obligations against one or more other
parties to the Seller Certificate Ownership Agreement.
"Finance Charge Receivables" will mean, with respect to any Account for any
Due Period, the net amount billed by the Servicer during such Due Period as
periodic finance charges on such Account and cash advance fees, annual
membership fees, fees for transactions that exceed the credit limit on such
Account, late payment charges billed during such Due Period to such Account and
any other charges that the Servicer may designate as "Finance Charge
Receivables" from time to time (provided that the Servicer shall not designate
amounts owing for the payment of goods and services or cash advances as "Finance
Charge Receivables"), less, in the event that such Account becomes a Charged-Off
Account during such Due Period, the cumulative, uncollected amount previously
billed by the Servicer to such Account as periodic finance charges, cash advance
fees, annual membership fees, if any, fees for transactions that exceed the
credit limit on such Account, late payment charges and any other type of charges
that the Servicer has designated as "Finance Charge Receivables" with respect to
Accounts that are not Charged-Off Accounts; provided, however, that in the event
any Account that is included in the Accounts as of the Cut-Off Date is not
selected before the beginning of the Due Period preceding the Due Period related
to the first Trust Distribution Date, the Servicer may utilize a reasonable
method of estimation to determine the amount of the Finance Charge Receivables
with respect to such Account for the period beginning on the first day of such
preceding Due Period and ending on the date on which such Account is selected.
"Fixed Principal Allocation Event" will be as specified in the related
Prospectus Supplement.
"Fractional Undivided Interest" will mean the fractional undivided interest
in the Trust evidenced by an investor certificate and expressed as a portion of
the Aggregate Invested Amount.
"Governmental Authority" will mean the United States of America, any state
or other political subdivision thereof.
"Greenwood" will mean Greenwood Trust Company, a Delaware banking
corporation, and its successors and assigns.
"Group" will mean, collectively, at any time, the one or more series of
investor certificates designated as part of the same Group at that time, whether
by the Series Supplements establishing such series or as a result of the
movement of a series from one Group to another pursuant to the provisions of the
Pooling and Servicing Agreement.
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"Group Collections Account" will mean the non-interest bearing segregated
trust account for Collections allocated to each Group established and maintained
by the Trustee with an office or branch of the Trustee or a Qualified
Institution for the benefit of the investor certificateholders of each series
that is a member of such Group.
"Holder of the Seller Certificate" will mean, at any specified time, the
holder or holders of the Seller Certificate, each of which, if there is more
than one holder, will be a party to the Seller Certificate Ownership Agreement,
with the respective interests granted to each of such parties pursuant to the
Seller Certificate Ownership Agreement. The initial Holder of the Seller
Certificate will be Greenwood.
"Ineligible Receivable" will mean any Receivable that was not, at the time
of its transfer, an Eligible Receivable and the transfer of which to the Trust
had a material adverse effect on the certificateholders' interest in the
Receivables as a whole that was not cured within 60 days of the earlier of (i)
actual knowledge of such event by the relevant Seller and (ii) receipt by such
Seller of written notice of any such event given by the Trustee.
"Initial Closing Date" will mean October 27, 1993.
"Interest Payment Dates" will be as specified in the related Prospectus
Supplement.
"Internal Revenue Code" will mean the United States Internal Revenue Code
of 1986, as amended from time to time.
"Investor Accounts" will mean, in addition to Investor Accounts established
pursuant to the Pooling and Servicing Agreement, any other segregated trust
accounts specified as Investor Accounts in any Series Supplement. See
"Description of the Investor Certificates -- Other Investor Accounts" in the
related Prospectus Supplement.
"Investor Certificateholder" will mean the Person in whose name an investor
certificate is registered in the Certificate Register.
"Investor Certificates" will mean the investor certificates offered in
connection with the related Prospectus Supplement.
"Investor Servicing Fee" will mean, with respect to each series and any
Distribution Date, an amount equal to the product of the Investor Servicing Fee
Percentage and the Series Investor Interest on the first day of the Due Period
related to such Distribution Date (or in the case of the first Distribution Date
for the series, the Series Initial Investor Interest).
"Investor Servicing Fee Percentage" will be as specified in the related
Prospectus Supplement.
"Lien" will mean any mortgage, deed of trust, pledge, hypothecation,
encumbrance, lien or other security agreement, including, without limitation,
any conditional sale or other title retention agreement, and any financing lease
having substantially the same economic effect as any of the foregoing.
"Master Servicer" will mean initially Greenwood and thereafter any Person
appointed as the successor Master Servicer as herein provided.
"Master Servicing Agreement," if applicable, will mean the agreement
entered into by Greenwood as Master Servicer and Servicer and any additional or
successor Servicer or Servicers, as such agreement may be amended or
supplemented from time to time.
"Minimum Principal Receivables Balance" will mean, on any date of
determination, an amount equal to the sum of the Series Minimum Principal
Receivables Balance for each series then outstanding.
"Moody's" will mean Moody's Investors Service Inc.
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"New Issuance" will mean the issuance of an additional series of investor
certificates from the Trust.
"Obligor" will mean with respect to any Account, the Person or Persons
obligated to make payments with respect to such Account, including any guarantor
thereof.
"Opinion of Counsel" will mean a written opinion of counsel, who may be
counsel for or an employee of any Seller or Greenwood or any of their
affiliates.
"Participation Interests" will mean participations representing undivided
interests in a pool of assets primarily consisting of receivables in revolving
credit card accounts and collections thereon.
"Payment Date" will mean any Interest Payment Date, any Principal Payment
Date, if applicable, and any Special Payment Date.
"Permitted Investments" will mean:
(i) negotiable instruments or securities represented by instruments in
bearer or registered form which evidence: (a) obligations issued or fully
guaranteed, as to timely payment, by the United States of America or any
instrumentality or agency thereof when such obligations are backed by the
full faith and credit of the United States of America; (b) time deposits
in, or bankers' acceptances issued by, any depository institution or trust
company incorporated under the laws of the United States of America or any
state thereof (or any domestic branch of a foreign bank) and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided, however, that at the time of the Trust's
investment or contractual commitment to invest therein, the short-term
deposits or commercial paper or, in the absence of a rating on the
short-term deposits or commercial paper of such depository institution or
trust company, the long-term unsecured debt obligations of such depository
institution or trust company will have the Highest Rating; (c) commercial
paper or other short-term obligations having, at the time of the Trust's
investment or contractual commitment to invest therein, the Highest Rating;
or (d) investments in money market funds having the Highest Rating;
(ii) demand deposits in the name of the Trust or the Trustee in any
depository institution or trust company referred to in clause (i) (b)
above;
(iii) securities not represented by an instrument, which are
registered in the name of the Trustee upon books maintained for that
purpose by or on behalf of the issuer thereof and identified on books
maintained for that purpose by the Trustee as held for the benefit of the
Trust or the Certificateholders, and consisting of shares of an open end
diversified investment company which is registered under the Investment
Company Act of 1940, as amended, and which (a) invests its assets
exclusively in obligations of or guaranteed by the United States of America
or any instrumentality or agency thereof having in each instance a final
maturity date of less than one year from their date of purchase or other
Permitted Investments, (b) seeks to maintain a constant net asset value per
share and (c) has aggregate net assets of not less than $100,000,000 on the
date of purchase of such shares, and which will not result in a reduction
or withdrawal of the rating of any class of any series then outstanding as
confirmed in writing by the Rating Agencies;
(iv) a guaranteed investment contract (guaranteed as to timely
payment), the terms of which meet the criteria of the Rating Agencies and
with an entity whose credit standards meet the criteria of the Rating
Agencies necessary to preserve the rating of each class of each series then
outstanding; and
(v) repurchase agreements transacted with either
(a) an entity subject to the United States federal bankruptcy code,
provided that (1) the term of the repurchase agreement is consistent
with the requirements set forth in
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Section 4.02(c) of the Pooling and Servicing Agreement with regard to
the maturity of Permitted Investments or is due on demand, (2) the
Trustee or a third party acting solely as agent for the Trustee has
possession of the collateral, (3) as evidenced by a certificate of a
Servicing Officer of the Master Servicer delivered to the Trustee, the
Trustee on behalf of the Trust has a perfected first priority security
interest in the collateral, (4) the market value of the collateral is
maintained at the requisite collateral percentage of the obligation in
accordance with the standards of the Rating Agencies, (5) the failure to
maintain the requisite collateral level will obligate the Trustee to
liquidate the collateral immediately, (6) the securities subject to the
repurchase agreement are either obligations of, or fully guaranteed as
to principal and interest by, the United States of America or an agency
thereof, certificates of deposit or bankers acceptances and (7) as
evidenced by a certificate of a Servicing Officer of the Master Servicer
delivered to the Trustee, the securities subject to the repurchase
agreement are free and clear of any third party lien or claim; or
(b) a financial institution insured by the FDIC, or any
broker-dealer with "retail customers" that is under the jurisdiction of
the Securities Investors Protection Corp. ("SIPC"), provided that (1)
the market value of the collateral is maintained at the requisite
collateral percentage of the obligation in accordance with the standards
of the Rating Agencies, (2) the Trustee or a third party acting solely
as agent for the Trustee has possession of the collateral, (3) as
evidenced by a certificate of a Servicing Officer of the Master Servicer
delivered to the Trustee, the Trustee on behalf of the Trust has a
perfected first priority security interest in the collateral, (4) as
evidenced by a certificate of a Servicing Officer of the Master Servicer
delivered to the Trustee, the collateral is free and clear of third
party liens; and, in the case of an SIPC broker, was not acquired
pursuant to a repurchase or reverse repurchase agreement and (5) failure
to maintain the requisite collateral percentage will obligate the
Trustee to liquidate the collateral;
provided, however, that at the time of the Trust's investment or
contractual commitment to invest in any such repurchase agreement, the
short-term deposits or commercial paper rating or, in the absence of a
rating on the short-term deposits or commercial paper of such entity or
institution, the long-term unsecured debt obligations of such entity or
institution will have a credit rating not lower than the Highest Rating.
Permitted Investments will include, without limitation, securities of
Greenwood or any of its affiliates which otherwise qualify as a Permitted
Investment under clause (i), (ii), (iii), (iv) or (v) above. For purposes
of this definition of Permitted Investments, "Highest Rating" will mean,
with respect to Moody's, P-1 or Aaa, and, with respect to Standard &
Poor's, A-1+ or AAA, or with respect to either Standard & Poor's or
Moody's, any rating category which will not cause a reduction in or
withdrawal of the rating of any class of any series then outstanding, as
confirmed in writing by the applicable Rating Agency.
"Person" will mean an individual, a partnership or a Corporation. The term
"Corporation" for the purposes of the preceding sentence only will mean a
corporation, joint stock company, business trust or other similar association.
"Pooling and Servicing Agreement" will mean that certain Pooling and
Servicing Agreement dated as of October 1, 1993, by and between Greenwood Trust
Company, as Master Servicer, Servicer and Seller, and First Bank National
Association (successor trustee to Bank of America Illinois, formerly Continental
Bank, National Association), as Trustee, as such agreement may be amended or
supplemented from time to time.
"Principal Collections" will mean, with respect to any Due Period, all
Collections other than Finance Charge Collections.
"Principal Commencement Date" will be as specified in the related
Prospectus Supplement.
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"Principal Receivable" will mean each Receivable other than Finance Charge
Receivables.
"Qualified Institution" will mean a depository institution organized under
the laws of the United States of America or any one of the states thereof that
at all times has a short-term certificate of deposit rating of A-1 or better by
Standard & Poor's and P-1 or better by Moody's and whose deposits are insured by
the FDIC.
"Rating Agency" will mean Moody's or Standard & Poor's, and "Rating
Agencies" will mean Moody's and Standard & Poor's.
"Receivable" will mean any amounts owing by the Obligor under an Account
from time to time, including, without limitation, amounts owing for the payment
of goods and services, cash advances, finance charges and other charges, if any.
A Receivable will be deemed to have been created at the end of the day on the
Date of Processing of such Receivable. A Receivable will not include any amount
owing under a Charged-Off Account or an Account the Receivables in which have
been repurchased pursuant to the Pooling and Servicing Agreement.
"Record Date" will mean, for any Distribution Date, the last day of the
preceding calendar month.
"Recovered Amounts" will mean all amounts received with respect to
Receivables that have previously been charged-off as uncollectible.
"Removed Accounts" will mean Accounts, the Receivables in which have been
designated for deletion and removal from the Trust.
"Required Daily Deposit" will be as specified in the related Prospectus
Supplement.
"Requirements of Law" for any Person will mean the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any requirement of any law, rule or regulation or Governmental
Authority, in each case applicable to or binding upon such Person or to which
such Person is subject, whether federal, state or local (including, without
limitation, usury laws, the Federal Truth in Lending Act and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve System); provided,
however, that any such requirement will not be deemed a Requirement of Law if
the enforcement of such requirement would not have a material adverse effect
upon the collectibility of the Receivables taken as a whole.
"Revolving Period" will mean, with respect to each series, the period from,
and including, the Series Cut-Off Date to, but not including, the earlier to
occur of (i) the Principal Commencement Date and (ii) the Amortization
Commencement Date with respect to such series.
"Seller," when used with reference to specific Receivables, will mean the
Person or Persons conveying such Receivables to the Trust.
"Seller Certificate" will mean the certificate executed by Greenwood and
authenticated by the Trustee representing a residual interest in the assets of
the Trust not represented by the investor certificates of any series.
"Seller Certificate Ownership Agreement" will mean, if applicable, the
agreement entered into by Greenwood, as Seller, and any Additional Seller, as
such agreement may be amended or supplemented from time to time.
"Seller Interest" will mean, with respect to any Trust Distribution Date or
Distribution Date, the aggregate amount of Principal Receivables in the Trust at
the end of the related Due Period minus the Aggregate Investor Interest at the
end of such day; provided, however, that the Seller Interest will in no event be
less than zero.
"Seller Percentage" will mean, on any date of determination, with respect
to any specified category, an amount equal to 100% of such category minus the
applicable Aggregate Investor Percentage.
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"Seller Servicing Fee" will mean, for any Trust Distribution Date, an
amount equal to the product of (i) the product of 2.0% per annum calculated on
the basis of a 360-day year of twelve 30-day months and the amount of Principal
Receivables in the Trust as of the first day of the Due Period related to such
Trust Distribution Date (or in the case of the first Trust Distribution Date,
the amount of Principal Receivables in the Trust on the Cut-Off Date) and (ii) a
fraction the numerator of which is the amount of the Seller Interest and the
denominator of which is the greater of the amount of Principal Receivables in
the Trust or the Aggregate Investor Interest.
"Sellers" will mean Greenwood and any Additional Sellers.
"Series" will mean the series of investor certificates offered in
connection with the related Prospectus Supplement.
"Series Closing Date" will mean the day the investor certificates of the
series are initially issued.
"Series Collections Account" will be as specified in the related Prospectus
Supplement.
"Series Cut-Off Date" will be as specified in the related Prospectus
Supplement.
"Series Distribution Account" will be as specified in the related
Prospectus Supplement.
"Series Finance Charge Collections" will be as specified in the related
Prospectus Supplement.
"Series Initial Investor Interest" will be as specified in the related
Prospectus Supplement.
"Series Interest Funding Account" will be as specified in the related
Prospectus Supplement.
"Series Invested Amount" will be as specified in the related Prospectus
Supplement.
"Series Investor Interest" will be as specified in the related Prospectus
Supplement.
"Series Minimum Principal Receivables Balance" will be as specified in the
related Prospectus Supplement.
"Series Percentage" will be as specified in the related Prospectus
Supplement.
"Series Principal Collections" will be as specified in the related
Prospectus Supplement.
"Series Supplement" will mean the applicable supplement to the Pooling and
Servicing Agreement that establishes each series of investor certificates.
"Series Termination Date" will be as specified in the related Prospectus
Supplement.
"Series Yield Collections" will be as specified in the related Prospectus
Supplement.
"Servicer" will mean initially (i) with respect to Greenwood Discover Card
Accounts, Greenwood and (ii) with respect to any other Accounts, the Person who
is designated as the Servicer with respect to such Accounts in the Assignment of
Additional Accounts relating to such Accounts; and thereafter any Person
appointed as a successor Servicer to any such Servicer. The term "Servicer,"
when used to refer to actions to be taken with respect to any Accounts, will
refer to one or more Servicers, as applicable, and to any particular Servicer
only with respect to Accounts serviced by such Servicer.
"Servicing Officer" will mean any employee of the Master Servicer or of any
Servicer, as applicable, involved in, or responsible for, the administration and
servicing of the Receivables whose name appears on a list of servicing officers
furnished to the Trustee by the Master Servicer and each Servicer, as such lists
may from time to time be amended.
"Standard & Poor's" will mean Standard & Poor's Ratings Services.
"Subordinate Series" will mean any series that is subordinated in right of
payment, in whole or in part, pursuant to the Series Supplement with respect to
such series, to one or more series.
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"Trust" will mean the trust created by the Pooling and Servicing Agreement,
the corpus of which consists of the Receivables existing as of the Cut-Off Date
or thereafter created and all monies due or to become due with respect thereto,
all proceeds (as defined in Section 9-306 of the UCC as in effect in the
Applicable State with respect to each such Receivable) of the Receivables, such
funds as from time to time are deposited in the Investor Accounts and the
benefits of any Credit Enhancement with respect to any series then outstanding.
"Trust Distribution Date" will mean November 10, 1993 and the tenth day of
each calendar month thereafter, or, if such tenth day is not a Business Day, the
next succeeding Business Day.
"Trustee" will mean First Bank National Association (successor trustee to
Bank of America Illinois, formerly Continental Bank, National Association), the
institution executing the Pooling and Servicing Agreement and Series Supplement
as Trustee, or its successor in interest, or any successor trustee appointed as
provided in the Pooling and Servicing Agreement.
"UCC" will mean the Uniform Commercial Code, as amended from time to time,
as in effect in any specified jurisdiction.
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered investor
certificates (collectively, the "Global Securities") will be available only in
book-entry form. Investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), Cedel or
Euroclear. The Global Securities will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice.
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding investor certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of Cedel and
Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to prior Discover Card Trust issues.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled in same-day funds using the procedures applicable
to prior Discover Card Trust issues.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel
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Participant or Euroclear Participant at least one business day prior to
settlement. Cedel or Euroclear will instruct the respective Depositary, as the
case may be, to receive the Global Securities against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date, on the basis of actual
days elapsed and a 360 day year. Payment will then be made by the respective
Depositary to the DTC Participant's account against delivery of the Global
Securities. After settlement has been completed, the Global Securities will be
credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The Global Securities credit will appear the next day
(European time) and the cash debit will be back-valued to, and the interest on
the Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Cedel or
Euroclear cash debit will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon to finance the settlement.
Under this procedure, Cedel Participants or Euroclear Participants purchasing
Global Securities would incur overdraft charges for one day, assuming they
cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on each Cedel
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date on the basis of actual days elapsed and a
360 day year. The payment will then be reflected in the account of the Cedel
Participant or Euroclear Participant the following day, and receipt of the cash
proceeds in the Cedel Participant's or Euroclear Participant's account would be
back-valued to the value date (which would be the preceding day, when settlement
occurred in New York). Should the Cedel Participant or Euroclear Participant
have a line of credit with its respective clearing system and elect to be in
debit in anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred over that one-day
period. If settlement is not completed on the intended value date (i.e., the
trade fails), receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.
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Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the Cedel Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Holders (Form W-8). Beneficial owners of investor
certificates that are non-U.S. Holders can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the beneficial owner becomes a United States citizen or resident during the
period to which the statement relates, or certain other changes in circumstances
occur, such change must be communicated to the appropriate party within 30 days
thereof. Form W-8 is generally effective for three calendar years, but a new
certificate may be required to be filed by the recipient each time a payment it
made.
Exemption for non-U.S. Holders with effectively connected income (Form
4224). A non-U.S. Holder, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected With the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Holders resident in treaty countries
(Form 1001). Non-U.S. Holders that are Certificate Owners residing in a country
that has a tax treaty with the United States can obtain an exemption or reduced
tax rate (depending on the treaty terms) by filing Form 1001 (Ownership,
Exemption, or Reduced Rate Certificate). If the treaty provides only for a
reduced rate, withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the Certificate Owner or
his agent.
Exemption for U.S. Holders (Form W-9). U.S. Holders can obtain a complete
exemption from the withholding tax by filing Form W-9 (Request for Taxpayer
Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency) an investor certificate. Form 1001 is effective for three
calendar years and Form 4224 is effective for one calendar year. Recently
proposed (nonbinding) regulations which
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would be applicable to payments made after 1997, provide for the unification and
simplification of certain current certification procedures.
The term "U.S. Holder" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any state, (iii) an estate the income of which is includible in
gross income for United States tax purposes, regardless of its source, or (iv)
for tax years beginning on or before December 31, 1996, a trust the income of
which is subject to United States federal income taxation regardless of its
source; and for tax years beginning after December 31, 1996, (and, if a trustee
so elects, for tax years ending after August 20, 1996), a trust if a court
within the Unites States is able to exercise primary supervision over the
administration of the trust, and one or more United States fiduciaries have the
authority to control all substantial decisions of the trust.
This summary does not deal with all aspects of U.S. federal income tax
withholding that may be relevant to non-U.S. Holders of the Global Securities.
Investors are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Global Securities.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration Fee............................................................. $1,515,151.52
Printing and Engraving*...................................................... 600,000.00
Trustee's Fees*.............................................................. 140,000.00
Legal Fees and Expenses*..................................................... 900,000.00
Blue Sky Fees and Expenses*.................................................. 65,000.00
Accountants' Fees and Expenses*.............................................. 500,000.00
Rating Agency Fees*.......................................................... 2,700,000.00
Miscellaneous Fees*.......................................................... 179,848.48
-------------
Total*.................................................................. $6,600,000.00
=============
</TABLE>
- ---------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Greenwood is a Delaware banking corporation and its affiliates Dean Witter,
Discover & Co. ("DWDC") and Dean Witter Reynolds Inc. ("DWR") are Delaware
corporations. One of Greenwood's officers and two of Greenwood's directors are
directors and/or officers of DWDC and/or DWR. Section 145 of the General
Corporation Law of the State of Delaware ("GCL") provides that a Delaware
corporation has the power to indemnify its officers and directors in certain
circumstances.
Subsection (a) of Section 145 of the GCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with such action,
suit or proceeding provided that such director or officer acted in good faith in
a manner reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding,
provided that such director or officer had no reasonable cause to believe his or
her conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth
above, against expenses actually and reasonably incurred in connection with the
defense or settlement of such action or suit provided that such director or
officer acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the corporation, except that no indemnification
may be made in respect of any claim, issue or matter as to which such director
or officer shall have been adjudged to be liable for negligence or misconduct in
the performance of his or her duty to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action was brought
shall determine that despite the adjudication of liability such director or
officer is fairly and reasonably entitled to indemnity for such expenses which
the court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by him or her in connection
therewith; that indemnification provided for by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and empowers the corporation to purchase and
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maintain insurance on behalf of a director or officer of the corporation against
any liability asserted against him or her or incurred by him or her in any such
capacity or arising out of his or her status as such whether or not the
corporation would have the power to indemnify him or her against such
liabilities under Section 145.
Article IV of Greenwood's by-laws provides that Greenwood shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or proceeding, whether civil or
criminal, and whether judicial, legislative, or administrative (other than an
action by or in the right of Greenwood) by reason of the fact that such person
is or was a director, officer or employee (or is or was serving at the request
of Greenwood as a director, officer, and/or employee of or in a similar capacity
in another corporation, partnership, joint venture, trust or other enterprise)
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such proceeding if such person acted in good faith and in a manner not clearly
opposed to any written policy of Greenwood, or which such person reasonably
believed to be in the best interests of Greenwood, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. Indemnification in connection with an action or proceeding
by or in the right of Greenwood to procure a judgment in its favor is limited to
payment of amounts paid in settlement and expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
such action or proceeding. No indemnification in connection with an action or
proceeding by or in the right of Greenwood to procure a judgment in Greenwood's
favor may be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable for negligence or misconduct in the
performance of such person's duty to Greenwood unless and only to the extent
that the court in which such action or suit is brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Article VIII of the by-laws of DWDC and Article V of the by-laws of DWR
provide that each such corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director or officer of such corporation,
or is or was serving at the request of such corporation as a director, officer
or member of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of such
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Indemnification in
connection with an action or suit by or in the right of such corporation to
procure a judgment in its favor is limited to payment of expenses (including
attorneys' fees) actually and reasonably incurred in connection with the defense
or settlement of such an action or suit. No indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the indemnifying corporation unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine that, despite the adjudication of liability but in
consideration of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper.
DWDC, the direct or indirect parent of Greenwood and DWR, has in effect
insurance policies in the amount of $75 million covering all of Greenwood's
directors and officers in certain instances where by law they may not be
indemnified by Greenwood or DWR.
II-2
<PAGE> 70
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ----------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement.
4.1 Pooling and Servicing Agreement between Greenwood Trust Company as Master
Servicer, Servicer and Seller and Continental Bank, National Association, as
Trustee, dated as of October 1, 1993, incorporated by reference to Registrant's
Registration Statement on Form S-1 (Registration No. 33-71502).
4.2 First Amendment to Pooling and Servicing Agreement, dated as of August 15, 1994,
between Greenwood Trust Company as Master Servicer, Servicer and Seller and Bank
of America Illinois (formerly, Continental Bank, National Association) as Trustee,
incorporated by reference to Registrant's Current Report on Form 8-K, dated August
1, 1995.
4.3 Second Amendment to Pooling and Servicing Agreement, dated as of February 29,
1996, between Greenwood Trust Company as Master Servicer, Servicer and Seller and
First Bank National Association (successor trustee to Bank of America Illinois,
formerly Continental Bank, National Association) as Trustee, incorporated by
reference to Registrant's Current Report on Form 8-K, dated April 30, 1996.
4.4 Form of Series Supplement between Greenwood Trust Company as Master Servicer,
Servicer and Seller and First Bank National Association (successor trustee to Bank
of America Illinois, formerly Continental Bank, National Association), as Trustee,
including form of Class A Certificate and form of Class B Certificate.
4.5 Form of Agreement among Greenwood Trust Company, Bank of America Illinois
(formerly, Continental Bank, National Association), as Trustee and The Depository
Trust Company, with respect to Discover Card Master Trust I.
5.1 Opinion of Latham & Watkins.
5.2 Form of opinion of Latham & Watkins as to certain creditors' rights matters
relating to Greenwood Trust Company.
5.3 Form of opinion of Young, Conaway, Stargatt & Taylor as to certain creditors'
rights matters relating to Greenwood Trust Company.
8.1 Opinion of Latham & Watkins as to certain federal tax matters concerning the
Investor Certificates.
23.1 Consent of Latham & Watkins (included in Exhibit 5.1).
23.2 Consent of Young, Conaway, Stargatt & Taylor.
24.1 Powers of Attorney of the directors and officers of the Registrant.
</TABLE>
II-3
<PAGE> 71
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes as follows:
(a) The undersigned registrant hereby undertakes 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.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised 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 on such issue.
(c) 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 Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be a part
of this Registration Statement as of the time it was declared effective.
(d) 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.
(e) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of 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 and 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 paragraphs (e)(1)(i) and (e)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in
II-4
<PAGE> 72
periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-5
<PAGE> 73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New Castle, County of New Castle, State of Delaware,
on November 13, 1996.
GREENWOOD TRUST COMPANY,
as originator of the Trust
(Registrant)
By JOHN J. COANE*
------------------------------------
Vice President, Director of
Accounting,
Treasurer and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------------------------------------- ------------------
<S> <C> <C>
THOMAS R. BUTLER* Chairman of the Board,
Investment Officer and Loan
Officer and Director
(Principal Executive Officer)
JOHN J. COANE* Vice President, Director of
Accounting, Treasurer and
Assistant Secretary (Principal
Financial Officer and Principal
Accounting Officer)
J. NATHAN HILL* President, Chief Operating November 13, 1996
Officer, Loan Officer,
Assistant Secretary and
Director
CHRISTINE A. EDWARDS* Director
RAYMOND A. KENNEDY* Director
BIRENDRA KUMAR* Director
FRANK K. REILLY* Director
JOSEPH A. YOB* Director
*By /s/ BIRENDRA KUMAR , individually and as
-------------------------------- Attorney-in-fact
Birendra Kumar
</TABLE>
II-6
<PAGE> 74
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
- ------- -------------------------------------------------------------------------- ----------
<S> <C> <C>
1.1 Form of Underwriting Agreement. ..........................................
4.1 Pooling and Servicing Agreement between Greenwood Trust Company as Master
Servicer, Servicer and Seller and Continental Bank, National Association,
as Trustee, dated as of October 1, 1993 incorporated by reference to
Registrant's Registration Statement on Form S-1 (Registration No.
33-71502). ............................................................... --
4.2 First Amendment to Pooling and Servicing Agreement, dated as of August 15,
1994, between Greenwood Trust Company as Master Servicer, Servicer and
Seller and Bank of America Illinois (formerly, Continental Bank, National
Association) as Trustee, incorporated by reference to Registrant's Current
Report on Form 8-K dated August 1, 1995. ................................. --
4.3 Second Amendment to Pooling and Servicing Agreement, dated as of February
29, 1996, between Greenwood Trust Company as Master Servicer, Servicer and
Seller and First Bank National Association (successor trustee to Bank of
America Illinois, formerly Continental Bank, National Association) as
Trustee, incorporated by reference to Registrant's Current Report on Form
8-K, dated April 30, 1996. ............................................... --
4.4 Form of Series Supplement between Greenwood Trust Company as Master
Servicer, Servicer and Seller and First Bank National Association
(successor trustee to Bank of America Illinois, formerly Continental Bank,
National Association), as Trustee, including form of Class A Certificate
and form of Class B Certificate. .........................................
4.5 Form of Agreement among Greenwood Trust Company, Bank of America Illinois
(formerly, Continental Bank, National Association), as Trustee and The
Depository Trust Company, with respect to Discover Card Master Trust I....
5.1 Opinion of Latham & Watkins. .............................................
5.2 Form of opinion of Latham & Watkins as to certain creditors' rights
matters relating to Greenwood Trust Company. .............................
5.3 Form of opinion of Young, Conaway, Stargatt & Taylor as to certain
creditors' rights matters relating to Greenwood Trust Company. ...........
8.1 Opinion of Latham & Watkins as to certain federal tax matters concerning
the Investor Certificates. ...............................................
23.1 Consent of Latham & Watkins (included in Exhibit 5.1). ................... --
23.2 Consent of Young, Conaway, Stargatt & Taylor. ............................
24.1 Powers of Attorney of the directors and officers of the Registrant. ......
</TABLE>
<PAGE> 1
Exhibit 1.1
# 0052394.04 --
DISCOVER CARD MASTER TRUST I
Credit Card Pass-Through Certificates
__________________________________
Underwriting Agreement
(Standard Terms)
, 199
DEAN WITTER REYNOLDS INC.
c/o Dean Witter Reynolds Inc.
Two World Trade Center
New York, New York 10048
<PAGE> 2
Ladies and Gentlemen:
Greenwood Trust Company ("Greenwood"), as originator of Discover Card
Master Trust I (the "Trust"), proposes, subject to the terms and conditions
stated herein, to cause to be issued and sold from time to time Credit Card
Pass-Through Certificates (the "Certificates") in one or more series (each, a
"Series"). The Certificates of each Series will consist of one or more Classes
(each, a "Class") of Certificates of such Series. Each Certificate will
evidence a fractional, undivided percentage interest or beneficial interest in
the Trust. The Certificates will be issued by the Trust pursuant to a Pooling
and Servicing Agreement, dated as of October 1, 1993, as amended, and as
supplemented by a Series Supplement relating to the specific Series of
Certificates issued thereunder (the Pooling and Servicing Agreement, as so
supplemented, the "Pooling and Servicing Agreement"), between Greenwood as
Master Servicer, Servicer and Seller and First Bank National Association
(successor trustee to Bank of America Illinois, formerly Continental Bank,
National Association), as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Pooling and Servicing Agreement.
Each offering of each Class of each Series of Certificates to which this
Agreement applies (the "Securities") made pursuant to the Registration
Statement (as defined herein) will be made through you or through you and other
underwriters for whom you are acting as representatives or through an
underwriting syndicate managed by you. Whenever Greenwood determines to make
such an offering of Securities to which this Agreement shall apply, Greenwood
and one or more Underwriters (as defined herein) will enter into an agreement
(the "Terms Agreement") providing for the sale of the Securities to, and the
purchase and offering thereof by, (i) you, (ii) you and such other underwriters
who execute the Terms Agreement and agree thereby to become obligated to
purchase the Securities from Greenwood, or (iii) you and such other
underwriters, if any, selected by you as have authorized you to enter into such
Terms Agreement on their behalf (in each case, the "Underwriters"). Such Terms
Agreement shall specify the initial principal amount of the Securities to be
issued and their terms not otherwise specified in this Agreement, the price at
which such Securities are to be purchased by the Underwriters from Greenwood,
the aggregate amount of Securities to be purchased by you and any other
Underwriter that is a party to such Terms Agreement and the initial public
offering price or the method by which the price at which such Securities are to
be sold will be determined. The Terms Agreement ("Terms Agreement"), which
shall be substantially in the form attached hereto, may take the form of an
exchange of any standard form of written communication between or among the
Underwriters and Greenwood. Each such offering of the Securities for which a
Terms Agreement is entered into will be governed by this Agreement, as
supplemented by the applicable Terms Agreement, and this Agreement and such
Terms Agreement shall inure to the
<PAGE> 3
benefit of and be binding upon the Underwriters participating in the offering
of such Securities.
1. Greenwood represents and warrants to, and agrees with you, as of the
date hereof, and to each Underwriter named in the Terms Agreement as of the
date thereof, that:
(a) A registration statement on Form S-3 (Registration Statement No.
33- ) including a prospectus and such amendments thereto as may have been
required to the date hereof, relating to the Certificates and the offering
thereof from time to time in accordance with Rule 415 under the Securities Act
of 1933, as amended (the "Act"), in the form heretofore delivered to you has
been filed with the Securities and Exchange Commission (the "Commission")
(which may have included one or more preliminary prospectuses and prospectus
supplements (each, a "Preliminary Prospectus") meeting the requirements of Rule
430 of the Act) and such registration statement, as amended, has become
effective; such registration statement, as amended, and the prospectus and
prospectus supplement relating to the sale of the Securities offered thereby
constituting a part thereof, as from time to time amended or supplemented
(including any prospectus and prospectus supplement filed with the Commission
pursuant to Rule 424(b) of the Act) are respectively referred to herein as the
"Registration Statement," the "Basic Prospectus" and the "Prospectus
Supplement" and the Basic Prospectus together with the Prospectus Supplement
relating to the Securities is hereinafter referred to as the "Prospectus"; the
conditions of Rule 415 under the Act have been satisfied with respect to the
Registration Statement; and no other amendment to the Registration Statement
will be filed which shall be reasonably disapproved by you promptly after
reasonable notice thereof.
(b) There is no request by the Commission for any further amendment
of the Registration Statement or the Prospectus or for any additional
information; the Commission has not issued any stop order suspending the
effectiveness of the Registration Statement and Greenwood is not aware of any
proceeding for that purpose having been instituted or threatened; and there has
been no notification with respect to the suspension of the qualification for
sale of the Certificates for sale in any jurisdiction or any proceeding for
such purpose having been instituted or threatened.
(c) As of the date of the Terms Agreement, when the Registration
Statement became effective, when the Prospectus Supplement is first filed
pursuant to Rule 424(b) under the Act, when any other amendment to the
Registration Statement becomes effective, and when any supplement to the
Prospectus Supplement is filed with the Commission, and at the Time of Delivery
(as defined in Section 4), the Registration Statement and the Prospectus (i)
conformed, and any amendments or supplements thereto will conform, in all
material respects to the requirements of the Act and the rules and regulations
of the Commission thereunder and (ii) will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the
<PAGE> 4
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to Greenwood by an
Underwriter through you expressly for use therein.
(d) Upon payment therefor as provided herein and in the Terms
Agreement, the Securities will have been duly and validly authorized and
(assuming their due authentication by the Trustee) will have been duly and
validly issued and will conform in all material respects to the description
thereof in the Prospectus and will be entitled to the benefits of the Pooling
and Servicing Agreement.
(e) The issue and sale of the Securities and the compliance by
Greenwood with all of the provisions of the Securities, the Pooling and
Servicing Agreement, this Agreement and the Terms Agreement have been or will
have been duly authorized by Greenwood by all necessary corporate action; and
will not conflict with or result in any breach which would constitute a
material default under, or, except as contemplated by the Pooling and Servicing
Agreement, result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of Greenwood or any affiliate
thereof, material to Greenwood and its affiliates (whether or not
consolidated) considered as a whole, pursuant to the terms of, any indenture,
loan agreement or other agreement or instrument for borrowed money to which
Greenwood, NOVUS Credit Services Inc. ("NOVUS") or Dean Witter, Discover & Co.
("DWDC") is a party or by which Greenwood, NOVUS or DWDC may be bound or to
which any of the property or assets of Greenwood, NOVUS or DWDC, material to
Greenwood and its affiliates (whether or not consolidated) considered as a
whole, is subject, nor will such action result in any material violation of the
provisions of the Certificate of Incorporation or By-Laws of Greenwood or, to
the best of Greenwood's knowledge, any statute or any order, rule or regulation
applicable to Greenwood of any court or any Federal, State or other regulatory
authority or other governmental body having jurisdiction over Greenwood, and no
consent, approval, authorization or other order of, or filing with, any court
or any such regulatory authority or other governmental body is required for the
issue and sale of the Securities except as may be required under the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
securities laws of the various states and other jurisdictions which are
applicable to the issue and sale of the Securities and except for the filing of
any financing or continuation statement required to perfect or continue the
Trust's interest in the Receivables.
(f) The Principal Receivables conveyed by Greenwood to the Trust
under the Pooling and Servicing Agreement had an aggregate outstanding balance
determined as of the date stated in the Terms Agreement of not less than the
amount set forth in the Terms Agreement; and
(g) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939,
<PAGE> 5
as amended (the "Trust Indenture Act"), and the Trust is not required to be
registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act").
2. Subject to the terms and conditions herein set forth, Greenwood
agrees to cause to be issued and sold to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from Greenwood,
at the purchase price specified in the Terms Agreement, the principal amount
of Securities set forth in the Terms Agreement.
3. (a) From time to time, after the Registration Statement becomes
effective, the several Underwriters propose to offer the Securities for sale
upon the terms and conditions set forth in the Prospectus.
(b) Each Underwriter severally represents and agrees that it will
not offer or sell or deliver any of the Securities in any jurisdiction except
under circumstances that will result in compliance with the applicable laws
thereof, and without limiting the foregoing, each Underwriter severally
represents and agrees that (i) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom; (ii) 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 Securities to a person who is of a kind
described in Article II(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or who is a person to whom the document
may otherwise lawfully be issued or passed on; (iii) if it is an authorized
person under Chapter III of 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 1995) to
any person in the United Kingdom the scheme described in the 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) Regulation 1995; and (iv) it is a person of
a kind described in Article II(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995.
(c) Each Underwriter, severally, represents that it will not, at any
time that such Underwriter is acting as an "underwriter" (as defined in Section
2(11) of the Act) with respect to the Securities, transfer, deposit or
otherwise convey any Securities into a trust or other type of special purpose
vehicle that issues securities or other instruments backed in whole or in part
by, or that represents interests in, such Securities without the prior written
consent of Greenwood.
4. Securities to be purchased by each Underwriter hereunder and under
the Terms Agreement shall be delivered by or on behalf of Greenwood to you for
the account of such Underwriter, against payment by such Underwriter or on its
behalf of the purchase price thereof in immediately available funds. Unless
otherwise specified in the Terms Agreement, such
<PAGE> 6
delivery shall occur at the office of Latham & Watkins, Chicago, Illinois or
such other place as you and Greenwood may agree upon in writing. The time and
date of such delivery shall be set forth in the Terms Agreement or at such
other time and date as you and Greenwood may agree upon in writing, such time
and date being herein called the "Time of Delivery." Unless otherwise specified
in the Terms Agreement, the Securities shall be represented by definitive
certificates, registered in the name of Cede & Co., as nominee for The
Depository Trust Company. Such definitive certificates will be made available
for inspection at least twenty-four hours prior to the Time of Delivery at the
office of the Trustee, 410 N. Michigan Avenue, Suite 370, Chicago, Illinois
60611.
5. Greenwood agrees with each of the Underwriters:
(a) Immediately following the execution of each Terms Agreement,
Greenwood will prepare a Prospectus Supplement setting forth the amount of
Securities covered thereby and the terms thereof not otherwise specified in the
Basic Prospectus, the price at which such Securities are to be purchased by the
Underwriters from Greenwood, either the initial public offering price or the
method by which the price at which such Securities are to be sold will be
determined, the selling concessions and allowances, if any, and such other
information as Greenwood deems appropriate in connection with the offering of
such Securities, and Greenwood will not make any further amendment or any
supplement to the Registration Statement or Prospectus without first having
furnished you with a copy of the proposed form thereof and given you a
reasonable opportunity to review the same; to advise you promptly after it
receives notice of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies thereof; to
advise you, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of
the Prospectus, of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; and in the event of the issuance of any such stop order
or of any such order preventing or suspending the use of such Prospectus or
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as you may reasonably request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Securities, provided that in connection therewith Greenwood
shall not be required to qualify as a foreign corporation or to file a general
consent
<PAGE> 7
to service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus in
such quantities as you may from time to time reasonably request, and if at any
time the delivery of a Prospectus is required by law in connection with the
offering or sale of the Securities, and if at such time any event shall have
occurred as a result of which the Prospectus would include an untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or, if for any other reason it shall be necessary
during such same period to amend or supplement the Prospectus in order to
comply with the Act, to notify you and to prepare and furnish without charge to
each Underwriter and to any dealer in the Securities as many copies as you may
from time to time reasonably request of an amended Prospectus or a supplement
to the Prospectus which will correct such statement or omission or effect such
compliance and in case any Underwriter is required to deliver a Prospectus in
connection with sales of any Securities at any time nine months or more after
the effective date of the Registration Statement, upon your request but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as many
copies as you may reasonably request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;
(d) To cause the Trust to make generally available to holders of the
Securities, in accordance with Rule 158 under the Act or otherwise, as soon as
practicable, but in any event not later than forty-five days after the end of
the fourth full fiscal quarter (ninety days in the case of the last fiscal
quarter in any fiscal year) following the fiscal quarter ending after the
effective date of the Registration Statement, an earning statement of the Trust
(which need not be audited) complying with Section 11(a) of the Act and
covering a period of at least twelve consecutive months beginning after the
effective date of such Registration Statement;
(e) To pay or cause to be paid all expenses incident to the
performance of its obligations hereunder, including the cost of all
qualifications of the Securities under state securities laws (including
reasonable fees of counsel to the Underwriters in connection with such
qualifications and in connection with legal investment surveys) and the cost of
printing this Agreement and any blue sky and legal investment memoranda.
Greenwood agrees with each of the Underwriters during the period beginning
from the date of the Terms Agreement and continuing to and including the
earlier of (i) the termination of trading restrictions on the Securities, of
which termination you agree to give Greenwood prompt notice confirmed in
writing, and (ii) the Time of Delivery, not to offer, sell, contract to sell or
otherwise dispose of any securities of Greenwood or any other affiliate thereof
or any other trust for which Greenwood or any other affiliate thereof is
depositor, which represent participation interests in Discover Card
receivables, without
<PAGE> 8
your prior written consent, which consent shall not be unreasonably withheld.
6. The obligations of the several Underwriters hereunder shall be
subject, in their discretion, to the condition that all representations and
warranties and other statements of Greenwood herein are, at and as of the Time
of Delivery, true and correct, the condition that Greenwood shall have
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) All actions required to be taken and all filings required to be
made by Greenwood under the Act prior to the Time of Delivery for the
Securities shall have been duly taken or made; and prior to the applicable Time
of Delivery, no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to the Commission's satisfaction.
(b) All corporate proceedings and related matters in connection with
the organization of Greenwood, the validity of the Pooling and Servicing
Agreement and the registration, authorization, issue, sale and delivery of the
Securities shall have been satisfactory to counsel to the Underwriters, and
such counsel shall have been furnished with such papers and information as they
may reasonably have requested to enable them to pass upon the matters referred
to in this subdivision (b).
(c) Counsel to Greenwood (which for purposes of the opinions
described in clauses (i)-(iii) and the opinions as to the due authorization,
execution and delivery of the Pooling and Servicing Agreement and the due
authorization, execution, issuance and delivery of the Securities in clause
(iv) may be in-house counsel to Greenwood) shall have furnished to you their
written opinion, dated the Time of Delivery, in form and substance satisfactory
to you in your reasonable judgment, to the effect that:
(i) Greenwood is validly existing as a banking corporation in good
standing under the laws of the State of Delaware;
(ii) This Agreement and the Terms Agreement have been duly authorized,
executed and delivered on the part of Greenwood;
(iii) The compliance by Greenwood with all of the provisions of this
Agreement, the Terms Agreement and the Pooling and Servicing Agreement will not
conflict with or result in any breach which would constitute a material default
under, or, except to the extent contemplated in the Pooling and Servicing
Agreement, result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of Greenwood or any affiliates
thereof, material to Greenwood and its affiliates (whether or not consolidated)
considered as a whole, pursuant to the terms of, any indenture, loan
<PAGE> 9
agreement or other agreement or instrument for borrowed money known to such
counsel to which Greenwood, NOVUS or DWDC is a party or by which Greenwood,
NOVUS or DWDC may be bound or to which any of the property or assets of
Greenwood, NOVUS or DWDC, material to Greenwood and its affiliates (whether or
not consolidated) considered as a whole, is subject, nor will such action
result in any material violation of the provisions of the Certificate of
Incorporation or the By-Laws of Greenwood, or to the best knowledge of such
counsel, any statute or any order, rule or regulation applicable to Greenwood
of any court or any Federal, State or other regulatory authority or other
governmental body having jurisdiction over Greenwood other than the Act, the
Exchange Act, the Trust Indenture Act and the Investment Company Act and the
rules and regulations under each of such acts and other than the securities
laws of the various states or other jurisdictions which are applicable to the
issue and sale of the Securities and other state laws relating to the
perfection of security interests; and, to the best knowledge of such counsel,
no consent, approval, authorization or other order of, or filing with, any
court or any such regulatory authority or other governmental body is required
for the issue and sale of the Securities except as may be required under the
Act, the Exchange Act, the Trust Indenture Act and the Investment Company Act
and securities laws of the various states or other jurisdictions which are
applicable to the issue and sale of the Securities and except for the filing of
any financing or continuation statement required to perfect or continue the
Trust's interest in the Receivables;
(iv) The Pooling and Servicing Agreement has been duly authorized,
executed and delivered on the part of Greenwood and as to Greenwood is a valid
and binding instrument enforceable in accordance with its terms except as the
foregoing may be limited by insolvency, bankruptcy, reorganization, moratorium
or other laws relating to or affecting the enforcement of creditors' rights or
by general equity principles; the Pooling and Servicing Agreement is not
required to be qualified under the Trust Indenture Act; the Trust is not
required to be registered under the Investment Company Act; and the Securities
have been duly authorized and (assuming their due authentication by the
Trustee) have been duly executed, issued and delivered and constitute valid and
binding obligations of the Trust in accordance with their terms, entitled to
the benefits of the Pooling and Servicing Agreement, except as the foregoing
may be limited by insolvency, bankruptcy, reorganization or other laws relating
to or affecting the enforcement of creditors' rights or by general equity
principles; and
(v) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by Greenwood prior to the Time of
Delivery (other than
<PAGE> 10
financial, statistical and accounting data therein as to which such counsel
need express no opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder.
In rendering such opinion, counsel may rely to the extent they deem
appropriate upon certificates of officers or other executives of Greenwood and
their affiliates and of public officials as to factual matters and upon
opinions of other counsel. Such counsel shall also state that nothing has come
to their attention which has caused them to believe that the Registration
Statement as of its effective date or the Prospectus as of the date thereof and
as of the applicable Time of Delivery (other than financial, statistical and
accounting data therein, as to which such counsel need express no belief)
contains an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading.
(d) At the Time of Delivery, Deloitte & Touche shall have furnished
to you a letter or letters, dated the respective date of delivery thereof, in
form and substance satisfactory to you;
(e) (i) Greenwood and its affiliates (whether or not consolidated)
considered as a whole, shall not have sustained, since the date of the latest
audited financial statement previously delivered to you, any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree and (ii) since the date of the Terms
Agreement there shall not have been any material change in the capital stock
accounts or long-term debt of Greenwood or any material adverse change in the
general affairs, financial position, shareholders' equity or results of
operations of Greenwood and its affiliates (whether or not consolidated)
considered as a whole, the effect of which in any such case described in clause
(i) or (ii), in your judgment renders it inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in the manner
contemplated in the Prospectus as amended or supplemented;
(f) Subsequent to the date of the Terms Agreement none of (i) the
United States shall have become engaged in the outbreak or escalation of
hostilities involving the United States or there has been a declaration by the
United States of a national emergency or a declaration of war, (ii) a banking
moratorium shall have been declared by either Federal or New York State
authorities, or (iii) trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or minimum prices shall have been
established by such Exchange, any of which events, in your judgment, renders it
inadvisable to proceed with the public offering or the delivery of the
Securities;
(g) At or prior to the Time of Delivery, the Certificates shall be
assigned the ratings by Moody's Investors
<PAGE> 11
Service, Inc. ("Moody's") and by Standard & Poor's Ratings Services, a division
of McGraw Hill Inc. ("Standard & Poor's") set forth in the Terms Agreement;
(h) Greenwood shall have furnished or caused to be furnished to you
at the Time of Delivery certificates satisfactory to you as to the accuracy at
and as of such Time of Delivery of the representations and warranties of
Greenwood herein and as to the performance by Greenwood of all its obligations
hereunder to be performed at or prior to the Time of Delivery and Greenwood
shall have also furnished you similar certificates satisfactory to you as to
the matters set forth in subdivision (a) of this Section 6.
(i) The Underwriters shall be entitled to rely on the opinions of an
outside counsel acceptable to the Underwriters as special counsel to Greenwood
as delivered to Moody's and Standard & Poor's in connection with the rating of
the Securities.
7. (a) Greenwood will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto furnished
by Greenwood, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or (in
the case of the Registration Statement or the Prospectus, or any amendment or
supplement thereto) necessary to make the statements therein not misleading or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim; provided,
however, that Greenwood shall not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to Greenwood by any Underwriter
through you expressly for use therein; and provided, further, that Greenwood
shall not be liable to any Underwriter or any person controlling such
Underwriter under the indemnity agreement in this subdivision (a) with respect
to the Preliminary Prospectus or the Prospectus, as the case may be, to the
extent that any such loss, claim, damage or liability of such Underwriter or
controlling person results solely from the fact that such Underwriter sold
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the Prospectus or of the
Prospectus as then
<PAGE> 12
amended or supplemented if Greenwood had previously furnished copies thereof to
such Underwriter.
(b) Each Underwriter will indemnify and hold harmless Greenwood
against any losses, claims, damages or liabilities to which Greenwood may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or (in the case of the Registration Statement or
the Prospectus, or any amendment or supplement thereto) necessary to make the
statements therein not misleading or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement, or the Prospectus, or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to Greenwood by such Underwriter through you expressly
for use therein; and will reimburse Greenwood for any legal or other expenses
reasonably incurred by Greenwood in connection with investigating or defending
any such action or claim.
(c) Within a reasonable period after receipt by an indemnified party
under subdivision (a) or (b) above of notice of the commencement of any action
with respect to which indemnification is sought under such subdivision or
contribution may be sought under subdivision (d) below, such indemnified party
shall notify the indemnifying party in writing of the commencement thereof. In
case any such action shall be brought against any indemnified party, the
indemnifying party shall be entitled to participate therein, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under subdivision (a) or (b) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by
<PAGE> 13
Greenwood on the one hand and the Underwriters on the other from the offering
of the Securities and also the relative fault of Greenwood on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by Greenwood on the one hand and such Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by Greenwood
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth on the cover page of the Prospectus
Supplement. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by Greenwood on the one hand and the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission of Greenwood on
the one hand and the Underwriters, directly or through you, on the other hand.
With respect to any Underwriter, such relative fault shall also be determined
by reference to the extent (if any) to which such losses, claims, damages or
liabilities (or actions in respect thereof) with respect to any Preliminary
Prospectus result from the fact that such Underwriter sold the Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus or of the Prospectus as
then amended or supplemented if Greenwood had previously furnished copies
thereof to such Underwriter. Greenwood and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this subdivision
(d) were determined by per capita allocation among the indemnifying parties
(even if the Underwriters were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the equitable
considerations referred to above in this subdivision (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subdivision (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subdivision (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The
<PAGE> 14
obligations of the Underwriters in this subdivision (d) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
(e) The obligations of Greenwood under this Section 7 shall be in
addition to any liability which Greenwood may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 7 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of Greenwood and to each
person, if any, who controls Greenwood within the meaning of the Act.
8. (a) If any Underwriter shall default in its obligation to purchase
the Securities which it has agreed to purchase hereunder and under the Terms
Agreement, you may in your discretion arrange for yourselves or another party
or other parties to purchase such Securities on the terms contained herein. If
within thirty-six hours after such default by any Underwriter you do not
arrange for the purchase of such Securities, then Greenwood shall be entitled
to a further period of thirty-six hours within which to procure another party
or other parties to purchase such Securities on such terms. In the event that,
within the respective prescribed periods, you notify Greenwood that you have so
arranged for the purchase of such Securities, or Greenwood notifies you that it
has so arranged for the purchase of such Securities, you or Greenwood shall
have the right to postpone the Time of Delivery for such Securities for a
period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus as
amended or supplemented, or in any other documents or arrangements, and
Greenwood agrees to file promptly any amendments or supplements to the
Registration Statement or the Prospectus which may thereby be made necessary.
The term "Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by you and Greenwood
as provided in subdivision (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then Greenwood shall have the
right to require each non-defaulting Underwriter to purchase the principal
amount of Securities which such Underwriter agreed to purchase hereunder and
under the Terms Agreement and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the principal amount of
the Securities which such Underwriter agreed to purchase hereunder and under
the Terms
<PAGE> 15
Agreement) of the Securities of such defaulting Underwriter or Underwriters for
which such arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by you and Greenwood
as provided in subdivision (a) above, the aggregate principal amount of
Securities which remains unpurchased exceeds one-eleventh of the aggregate
principal amount of all the Securities, as referred to in subdivision (b)
above, or if Greenwood shall not exercise the right described in subdivision
(b) above to require non-defaulting Underwriters to purchase Securities of a
defaulting Underwriter or Underwriters, then the Terms Agreement relating to
the Securities shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or Greenwood, except for the expenses to be borne by
Greenwood as provided in Section 5(e) hereof and the indemnity and contribution
agreements in Section 7 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
9. The respective indemnities, agreements, represen- tations, warranties
and other statements of Greenwood and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or Greenwood
or any officer or director or controlling person of Greenwood, and shall
survive delivery of and payment for the Securities. Anything herein to the
contrary notwithstanding, the indemnity agreement of Greenwood in subdivisions
(a) and (e) of Section 7 hereof, the representations and warranties in
subdivisions (b) and (c) of Section 1 hereof and any representation or warranty
as to the accuracy of the Registration Statement or the Prospectus as amended
or supplemented contained in any certificate furnished by Greenwood pursuant to
subdivision (i) of Section 6 hereof, insofar as they may constitute a basis for
indemnification for liabilities (other than payment by Greenwood of expenses
incurred or paid in the successful defense of any action, suit or proceeding)
arising under the Act, shall not extend to the extent of any interest therein
of an Underwriter or a controlling person of an Underwriter if a director,
officer or controlling person of Greenwood when the Registration Statement
becomes effective or a person who, with his consent, is named in the
Registration Statement as being about to become a director of Greenwood, is a
controlling person of such Underwriter, except in each case to the extent that
an interest of such character shall have been determined by a court of
appropriate jurisdiction as not against public policy as expressed in the Act.
Unless in the opinion of counsel for Greenwood the matter has been settled by
controlling precedent, Greenwood will, if a claim for such indemnification is
asserted, submit to a court of appropriate jurisdiction the
<PAGE> 16
question whether such interest is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
10. If the Terms Agreement shall be terminated pursuant to Section 8
hereof, Greenwood shall not then be under any liability to any Underwriter with
respect to the Securities subject to such Terms Agreement except as provided in
Section 5(e) and Section 7 hereof; but, if for any other reason the Securities
are not delivered by or on behalf of Greenwood as provided herein, Greenwood
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Securities, but Greenwood shall not then be
under any further liability to any Underwriter with respect to the Securities
except as provided in Section 5(e) and Section 7 hereof.
11. In all dealings hereunder, you shall act on behalf of each of the
Underwriters and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you, or by Dean Witter Reynolds Inc. on behalf of you.
All statements, requests, notices and agreements hereunder shall be in
writing or by telegram if promptly confirmed in writing and if to the
Underwriters shall be sufficient in all respects, if delivered or sent by
registered mail to you jointly in care of Dean Witter Reynolds Inc., Two World
Trade Center, New York, New York 10048, Attention: Registration Department and
if to Greenwood shall be sufficient in all respects if delivered or sent by
registered mail to Greenwood at 12 Read's Way, New Castle, Delaware 19720,
Attention: Secretary.
12. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, Greenwood and, to the extent provided in Section 7 and
Section 9 hereof, the officers and directors of Greenwood and each person who
controls Greenwood or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of
the Securities from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
13. Time shall be of the essence of this Agreement.
14. This Agreement shall be construed in accordance with the laws of the
State of New York. "Business day" as used herein shall mean any day when the
Commission's office in Washington, D.C. is normally open for business.
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one
and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return two counterparts hereof and
<PAGE> 17
upon the acceptance hereof by you, on behalf of each of the Underwriters, this
letter and such acceptance hereof shall constitute a binding agreement
between each of the Underwriters and Greenwood.
Very truly yours,
GREENWOOD TRUST COMPANY
By:___________________________
Accepted as of the date hereof:
DEAN WITTER REYNOLDS INC.
By:_____________________________
<PAGE> 18
DISCOVER CARD MASTER TRUST I
CREDIT CARD PASS-THROUGH CERTIFICATES
TERMS AGREEMENT
Dated: ____________, 199___
To: Greenwood Trust Company, as Seller under the Pooling and Servicing
Agreement, as amended, dated as of October 1, 1993.
Re: Underwriting Agreement ______________, 199___
Title: Discover Card Master Trust I, Series 199__-__, Credit Card
Pass-Through Certificates, Class A and Class B.
Initial Principal Amount of Certificates: $______________
Series and Class Designation Schedule: Discover Card Master Trust I, Series
199__-__ $____________ [Floating Rate] [____%] Class A Credit Card Pass-Through
Certificates
Discover Card Master Trust I, Series 199__-__ $ [Floating Rate] [____%] Class B
Credit Card Pass-Through Certificates
Series Cut-Off Date: _______________, 199___
<TABLE>
<S> <C> <C>
Certificate Rating: Moody's Investors Standard & Poor's
Service, Inc. Ratings Services
Class A Aaa AAA
Class B [___] [___]
</TABLE>
Aggregate outstanding balance of Principal Receivables as of _________, 199__:
$_________.
Date of Series Supplement: _______________, 199__.
Certificate Rate: Class A: ___________ per annum; and Class B:
___________ per annum
Terms of Sale: The purchase price for the Certificates
to the Underwriters will be _______% of the aggregate principal amount of the
Class A Certificates and ________% of the aggregate
<PAGE> 19
principal amount of the Class B Certificates as of_____________________, 199__.
Time of Delivery: 9:00 A.M., Chicago, Illinois Time, on_____________, 199__, or
at such other time as may be agreed upon in writing.
Notwithstanding anything in the Agreement or in this Terms
Agreement to the contrary, the Agreement and this Terms Agreement constitute
the entire agreement and understanding among the parties hereto with respect
to the purchase and sale of the Series 199__ - __ Certificates. This Terms
Agreement may be amended only by written agreement of the parties hereto.
Very truly yours,
DEAN WITTER REYNOLDS INC.
By: Dean Witter Reynolds Inc.
By:__________________________
Accepted:
GREENWOOD TRUST COMPANY
By:__________________________
-2-
<PAGE> 1
Exhibit 4.4
GREENWOOD TRUST COMPANY
Master Servicer, Servicer and Seller
and
FIRST BANK NATIONAL ASSOCIATION
Trustee
on behalf of the Certificateholders
---------
SERIES SUPPLEMENT
Dated as of ________, 199_
to
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1993
---------
$ Class A Certificates
$ Class B Certificates
DISCOVER CARD MASTER TRUST I
SERIES 199 - CERTIFICATES
<PAGE> 2
TABLE OF CONTENTS
Page
<TABLE>
<S> <C>
SERIES TERM SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ANNEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Subordination . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3. Representations and Warranties of the Sellers . . . . . . . . 23
SECTION 4. Representations and Warranties of Greenwood as Master Servicer
and Servicer . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5. Representations and Warranties of Other Servicers . . . . . . 24
SECTION 6. Representations and Warranties of the Trustee . . . . . . . . 24
SECTION 7. Authentication of Certificates . . . . . . . . . . . . . . . . 25
SECTION 8. Establishment and Administration of Investor Accounts and the
Credit Enhancement Account . . . . . . . . . . . . . . . . . . 25
SECTION 9. Allocations of Collections . . . . . . . . . . . . . . . . . . 29
SECTION 10. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 11. Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 12. Alternative Credit Support Election . . . . . . . . . . . . . 47
SECTION 13. Calculation of Investor Losses . . . . . . . . . . . . . . . . 48
SECTION 14. Servicing Compensation . . . . . . . . . . . . . . . . . . . . 49
SECTION 15. Class Interest Rate Caps . . . . . . . . . . . . . . . . . . . 49
SECTION 16. Class Currency Swaps . . . . . . . . . . . . . . . . . . . . . 50
SECTION 17. Investor Certificateholders' Monthly Statement . . . . . . . . 52
SECTION 18. Master Servicer's Monthly Certificate . . . . . . . . . . . . 52
SECTION 19. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 20. Additional Amortization Events . . . . . . . . . . . . . . . . 52
SECTION 21. Purchase of Investor Certificates and Series Termination . . . 54
SECTION 22. Variable Accumulation Period . . . . . . . . . . . . . . . . . 55
SECTION 23. Series Yield Factor . . . . . . . . . . . . . . . . . . . . . 56
SECTION 24. Ratification of Pooling and Servicing Agreement . . . . . . . 56
SECTION 25. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 26. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
<PAGE> 3
EXHIBITS
<TABLE>
<S> <C>
EXHIBIT A: Form of Investors Certificates
EXHIBIT B: Form of Certificateholders' Monthly Statement
EXHIBIT C: Form of Master Servicer's Monthly Certificate
</TABLE>
<PAGE> 4
DISCOVER CARD MASTER TRUST I
SERIES 199 - CERTIFICATES
This Series of Master Trust Certificates is established pursuant to Section
6.06 of that certain Pooling and Servicing Agreement, dated as of October 1,
1993, as amended, by and between GREENWOOD TRUST COMPANY, a Delaware banking
corporation ("Greenwood"), as Master Servicer, Servicer and Seller and
FIRST BANK NATIONAL ASSOCIATION (successor trustee to Bank of America
Illinois, formerly Continental Bank, National Association) (the "Trustee"), as
Trustee (the "Pooling and Servicing Agreement"). This SERIES TERM SHEET and
the ANNEX attached hereto, by and among the Master Servicer, the Servicers,
the Sellers and the Trustee, constitute the SERIES SUPPLEMENT (the "Series
Supplement"). The Pooling and Servicing Agreement and this Series Supplement
together establish the Series of Master Trust Certificates to be known as
the DISCOVER CARD MASTER TRUST I, SERIES 199 - CERTIFICATES.
SERIES TERM SHEET
<TABLE>
<S> <C>
Date of Series Term Sheet , 199 .
Group One.
Series Initial Investor $ .
Interest
Class Initial Investor Class A - $ .
Interest of each Class of Class B - $ .
Investor Certificates
Class Initial Foreign Currency Class A - Not applicable.
Investor Interest of each Class B - Not applicable.
Class of Investor Certificates
Class A Expected Final Payment The Class A Interest Payment
Date Date in .
Class B Expected Final Payment The Class B Interest Payment
Date Date in .
Type of Structure Bullet Maturity.
</TABLE>
1
<PAGE> 5
<TABLE>
<S> <C>
Certificate Rates Class A - LIBOR plus %,
per annum, calculated on the
basis of the actual number of
days elapsed and a 360-day
year.
Class B - LIBOR plus %,
per annum, calculated on the
basis of the actual number of
days elapsed and a 360-day
year.
Foreign Currency Certificate Class A - Not applicable.
Rates
Class B - Not applicable.
Class Cap Rate Not applicable.
Class Maximum Rate Not applicable.
Class Currency Swap Class A - Not applicable.
Class B - Not applicable.
Currency Swap Counterparty Not applicable.
Currency Swap Downgrade Trigger Not applicable.
Minimum Investor Certificate Class A - Not applicable.
Ratings
Class B - Not applicable.
Currency Swap Dollar Escrow Not applicable.
Account
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
Class Foreign Currency Not applicable.
Distribution Account
Foreign Depository Not applicable.
Foreign Currency Not applicable.
Foreign Business Day Not applicable.
Escrow Agent Not applicable.
Escrow Agreement Not applicable.
Initial Exchange Date Not applicable.
Second Exchange Date Not applicable.
LIBOR Determination Date The second LIBOR Business Day
immediately preceding the
commencement of an Interest
Accrual Period.
Series Yield Factor Initially zero, but may be
increased pursuant to Section
23.
Series Cut-Off Date , 199 .
Series Closing Date , 199 .
</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C>
Date from which Interest for Series Closing Date.
First Interest Payment Date
Shall Accrue
Distribution Dates and the 15th
day of each calendar month
thereafter, or if such day is
not a Business Day, the next
succeeding Business Day).
Interest Payment Dates The 15th day of each month
(or, if such day is not a
Business Day, the next
succeeding Business Day),
commencing in .
Statement Dates Each Distribution Date,
commencing in .
Principal Payment Date Not applicable.
Interest Calculation Dates Not applicable.
Principal Commencement Date The first day of the Due
Period related to the
Distribution
Date (or such later
Distribution Date as the
Master Servicer shall elect in
accordance with Section 22).
Revolving Period From the Series Cut-Off Date
to, but not including, the
earlier to occur of (i) the
Principal Commencement Date
and (ii) the Amortization
Commencement Date.
Accumulation Period Unless an Amortization Event
shall have occurred prior
thereto, the period commencing
on the Principal Commencement
Date and ending upon the
earliest to occur of (x) the
payment in full of the Series
Invested Amount, (y) the
Amortization Commencement Date
and (z) the Series Termination
Date.
</TABLE>
4
<PAGE> 8
<TABLE>
<S> <C>
Accumulation Amount (a) Through the Class A
Expected Final Payment Date,
the greater of (i) $
and (ii) if the Master
Servicer elects to delay the
commencement of the
Accumulation Period in
accordance with Section 22,
the Class A Initial Investor
Interest divided by the number
of Distribution Dates from the
commencement of the
Accumulation Period through
and including the Class A
Expected Final Payment Date,
and (b) thereafter,
$ .
Type of Credit Enhancement Cash collateral account.
Stated Shared Credit There shall be no Shared
Enhancement Amount Credit Enhancement.
Stated Class B Credit $ .
Enhancement Amount
Credit Enhancement Provider Collectively, the one or more
lenders making a loan in order
to provide the initial funds
on deposit in the Credit
Enhancement Account, or any
successor provider of the
Credit Enhancement.
Maximum Shared Credit There shall be no Shared Credit
Enhancement Amount Enhancement.
Maximum Class B Credit On any Distribution Date (a) prior
Enhancement Amount to the making of an Effective
Alternative Credit Support
Election, the greater of (i)
$ and (ii)(x) if a
Supplemental Credit Enhancement
Event has not occurred, an amount
equal to % of the Series
Investor Interest as of the last
day of the related Due Period or
(y) if a Supplemental Credit
Enhancement Event has occurred, an
amount equal to % of the Series
Investor Interest as of the last
day of the related Due Period or
(b) subsequent to the making of an
Effective Alternative Credit
Support Election, the greater of
(i) $ and (ii) an amount
equal to % of the Series
Investor Interest as of the last
</TABLE>
5
<PAGE> 9
<TABLE>
<S> <C>
day of the related Due Period;
provided, however, that if an
Amortization Event with respect to
the Series established hereby
occurs, the Maximum Class B Credit
Enhancement Amount for each
Distribution Date thereafter shall
equal the Maximum Class B Credit
Enhancement Amount for the
Distribution Date immediately
preceding the occurrence of the
Amortization Event; and provided,
further, that if a Credit
Enhancement Drawing has been made,
until such time as the Available
Class B Credit Enhancement Amount
has been reinstated in an amount at
least equal to the amount of such
Credit Enhancement Drawing, the
Maximum Class B Credit Enhancement
Amount shall be the Maximum Class B
Credit Enhancement Amount as of the
date of such Credit Enhancement
Drawing.
Total Maximum Credit On any Distribution Date, the
Enhancement Amount Maximum Class B Credit
Enhancement Amount for such
Distribution Date.
Additional Credit Support The lesser of (x)(i)
Amount $ prior to the
occurrence of a Supplemental
Credit Enhancement Event or
(ii) $ following the
occurrence of a Supplemental
Credit Enhancement Event and
(y) the difference between the
Maximum Class B Credit
Enhancement Amount (after
giving effect to an
Alternative Credit Support
Election) and the Available
Class B Credit Enhancement
Amount (immediately before
giving effect to the
Alternative Credit Support
Election).
Supplemental Credit The lesser of (x)(i) $
Enhancement Amount prior to the occurrence of
an Alternative Credit Support
Election or (ii) zero
following the occurrence of an
Alternative Credit Support
Election and (y) the
difference between the Maximum
Class B Credit Enhancement
Amount (after giving effect to
the occurrence of a
Supplemental Credit
Enhancement Event) and the
Available Class B Credit
Enhancement Amount
(immediately before giving
effect to the occurrence of a
Supplemental Credit
Enhancement Event).
</TABLE>
6
<PAGE> 10
<TABLE>
<S> <C>
Initial Subordinated Amount $ .
Additional Subordinated Amount $ prior to the
occurrence of a Supplemental
Credit Enhancement Event and
$ following the
occurrence of a Supplemental
Credit Enhancement Event.
Supplemental Subordinated $ prior to the
Amount effectiveness of an
Alternative Credit Support
Election and zero following
the effectiveness of an
Alternative Credit Support
Election.
Series Buffer Amount Zero.
Group Buffer Amount Zero.
Investor Servicing Fee 2.0% per annum calculated on
Percentage the basis of a 360-day year of
twelve 30-day months.
Supplemental Servicing Fee Zero.
Percentage
Amount of Additional Funds Initially, zero.
Eligible for Reallocations to Yes.
and from Other Series in Group
Series Termination Date The first Business Day
following the Distribution
Date in .
</TABLE>
-7-
<PAGE> 11
<TABLE>
<S> <C>
Estimated Investment Shortfall On any date of determination,
the positive difference, if
any, between (i) the
Certificate Rate for the Class
for whose benefit the amounts
on deposit in the Series
Principal Funding Account are
held as of such date of
determination and (ii) the
weighted average yield
(expressed as a Money Market
Yield) on the investments in
the Series Principal Funding
Account as of such date of
determination.
Estimated Yield On any date of determination,
the Portfolio Yield for the
immediately preceding Due
Period less 2.00%.
Classes, if any, subject to Not applicable.
Regulation S restrictions
Classes, if any, subject to Class B.
ERISA restrictions
Bearer Certificates Not applicable.
Registered Certificates Class A and Class B
Certificates.
Class A Certificate Each certificate executed by
the Sellers and authenticated
by or on behalf of the
Trustee, substantially in the
form of Exhibit A-1.
Class B Certificate Each certificate executed by
the Sellers and authenticated
by or on behalf of the
Trustee, substantially in the
form of Exhibit A-2.
Temporary Global Certificate Not applicable.
Permanent Global Certificate Not applicable.
</TABLE>
-8-
<PAGE> 12
<TABLE>
<S> <C> <C>
Technical Global Certificate Not applicable.
Class A Coupon Not applicable.
Technical Global Coupon Not applicable.
Special Certificate Not applicable.
Monthly Payment Coupon Not applicable.
Notices Not applicable.
Representative of the Managers Not applicable.
Listing Agent Not applicable.
Principal Paying Agent Class A - Not applicable.
Class B - Not applicable.
Paying Agents Class A and Class B - the
Corporate Trust Office of the
Trustee.
</TABLE>
-9-
<PAGE> 13
IN WITNESS WHEREOF, the Sellers, the Master Servicer, the Servicers and
the Trustee have caused this Series Supplement to be duly executed by their
respective officers thereunto duly authorized as of the date and year first
above written.
GREENWOOD TRUST COMPANY,
as Seller, Master Servicer and Servicer
--------------------------------------------
John J. Coane
Vice President, Director of Accounting
and Treasurer
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
--------------------------------------------
G. M. Carroll
Vice President
<PAGE> 14
ANNEX
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties and for the benefit of
the Certificateholders:
SECTION 1. Definitions.
(a) Capitalized terms not otherwise defined in this Series Supplement
(including the Series Term Sheet) shall have the meanings ascribed to them in
the Pooling and Servicing Agreement. Capitalized terms that refer to a Series
or a Class refer to the Series established hereby or a Class of the Series
established hereby, as applicable, unless the context otherwise clearly
requires.
(b) The following terms have the definitions set forth below with respect
to the Series established hereby, unless the context otherwise clearly
requires:
"Accumulation Amount," if applicable, shall have the meaning set forth in
the Series Term Sheet; provided, however, that such amount may be adjusted
pursuant to Section 22.
"Accumulation Period," if applicable, shall have the meaning set forth in
the Series Term Sheet.
"Additional Credit Support Amount" shall have the meaning set forth in the
Series Term Sheet.
"Additional Subordinated Amount" shall have the meaning set forth in the
Series Term Sheet.
"Alternative Credit Support Election" shall mean an election made by the
Sellers pursuant to Section 12.
"Amortization Commencement Date" shall mean the earlier of the date on
which an Amortization Event is deemed to occur pursuant to Section 9.01 of the
Pooling and Servicing Agreement or Section 20 hereof.
"Amortization Event" shall mean any event specified in Section 9.01 of the
Pooling and Servicing Agreement or Section 20 hereof.
"Amortization Period" shall mean the period from, and including, the
Amortization Commencement Date to, and including, the earlier of (i) the date
of the final distribution to Investor Certificateholders of the Series
established hereby and (ii) the Series Termination Date. The first
Distribution Date of the Amortization Period shall be the Distribution Date in
the calendar month following the Amortization Commencement Date.
"Available Class B Credit Enhancement Amount" shall mean, with respect to
the first Distribution Date, the Stated Class B Credit Enhancement Amount, and,
thereafter, shall mean the amount available to be drawn under the Credit
Enhancement with respect to the Available Class B Credit Enhancement Amount
from time to time, which on any date of determination shall be equal to the
Available Class B Credit Enhancement Amount for the immediately preceding
Distribution Date minus the amount of all Credit Enhancement Drawings with
respect to the Available Class B Credit Enhancement Amount on or since such
immediately preceding Distribution Date, plus the amount of
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<PAGE> 15
all payments made to the Trustee as administrator of the Credit Enhancement
with respect to the Available Class B Credit Enhancement Amount pursuant to
Section 9 plus, following an Effective Alternative Credit Support Election, the
Additional Credit Support Amount and, plus, following a Supplemental Credit
Enhancement Event, the Supplemental Credit Enhancement Amount.
"Available Shared Credit Enhancement Amount," if applicable, shall mean,
with respect to the first Distribution Date, the Stated Shared Credit
Enhancement Amount, and, thereafter, shall mean the amount available to be
drawn under the Credit Enhancement with respect to the Available Shared Credit
Enhancement Amount from time to time, which on any date of determination shall
be equal to the Available Shared Credit Enhancement Amount for the immediately
preceding Distribution Date minus the amount of all Credit Enhancement Drawings
with respect to the Available Shared Credit Enhancement Amount on or since such
immediately preceding Distribution Date, and plus the amounts of all payments
made to the Trustee as administrator of the Credit Enhancement with respect to
the Available Shared Credit Enhancement Amount pursuant to Section 9.
"Available Subordinated Amount," if there is a Subordinate Class with
respect to Class A, shall mean, on a Distribution Date, the sum of
(a) (i) with respect to the first Distribution Date, the
Initial Subordinated Amount or (ii) with respect to any other
Distribution Date, the Available Subordinated Amount after giving
effect to all adjustments on the prior Distribution Date; and
(b) the amount of Series Excess Servicing,
as such amount may be reduced pursuant to the provisions of Section 9 to take
into account (i) the amount of Class A and Class B Excess Servicing used to
reimburse the Class A Cumulative Investor Charged-Off Amount, (ii) the amount
of Class B Excess Servicing used to reduce the Class A Required Amount
Shortfall, (iii) the amount of the Class B Subordinated Payment and (iv) the
amount of any reduction in the Class B Investor Interest resulting from the
reimbursement of the Class A Cumulative Investor Charged-Off Amount, in each
case for such Distribution Date.
Upon the occurrence of a Supplemental Credit Enhancement Event, the Available
Subordinated Amount will be increased by the Supplemental Subordinated Amount.
In addition, on the first Distribution Date following an Effective Alternative
Credit Support Election, the Available Subordinated Amount shall be increased
by the Additional Subordinated Amount. In no event, however, shall the
Available Subordinated Amount exceed (i) through the last Distribution Date
preceding an Effective Alternative Credit Support Election, the Initial
Subordinated Amount plus the Supplemental Subordinated Amount and (ii)
thereafter, the sum of the Initial Subordinated Amount, the Supplemental
Subordinated Amount and the Additional Subordinated Amount.
"Calculation Period," if applicable, shall have the meaning specified in
the applicable interest rate cap agreement.
"Cedel" shall mean Cedel Bank, societe anonyme.
"Certificate Interest" shall mean, for any Class for any Interest Payment
Date, the product of (a) the Class Invested Amount for such Class for such
Interest Payment Date and (b) a fraction the numerator of which is (1) with
respect to each Class that has no Subclasses, the Certificate Rate for such
Class or (2) with respect to each Class that has two or more Subclasses, the
Class Weighted Average Certificate Rate, and the denominator of which is (x) if
the relevant Certificate Rate is to be calculated on the basis of the actual
number of days elapsed and a 360 day year, 360 divided by the actual number of
days from and including the immediately preceding Interest Payment Date (or, in
the case of the first Interest Payment Date, from and including the Series
Closing Date) to but excluding the current Interest Payment Date or (y) if the
relevant Certificate Rate is to be
2
<PAGE> 16
calculated on the basis of a 360 day year of twelve 30-day months, twelve
divided by the number of Distribution Dates from and including the preceding
Interest Payment Date to but excluding the current Interest Payment Date (or,
in the case of the first Interest Payment Date, 360 divided by the number of
days from and including the Series Closing Date to but excluding the current
Interest Payment Date, assuming 30-day months).
"Certificate Principal" shall mean, with respect to each Class, the
principal payable in respect of such Class of Investor Certificates.
"Certificate Rate," with respect to any Class or Subclass, shall mean the
certificate rate set forth in the Series Term Sheet with respect to such Class
or Subclass, as such rate may be adjusted as of the beginning of each Interest
Accrual Period, if applicable; provided, however, that the Certificate Rate for
any Class or Subclass that does not have a fixed Certificate Rate shall not
exceed the Class Cap Rate or Class Maximum Rate, as applicable, for such Class
or Subclass; and provided, further, that any interest on the Investor
Certificates (including any interest accrued with respect to any Class
Deficiency Amount) shall be payable or distributed (i) with respect to a Class
that is subject to a Class Currency Swap, to the Currency Swap Counterparty
(or, in the event of a Currency Swap Termination, converted into Foreign
Currency by the Trustee as described in Section 10) or (ii) with respect to a
Class that is not subject to a Class Currency Swap, to the Investor
Certificateholders, in each case, only to the extent permitted by applicable
law.
"Class Additional Funds," if applicable, shall mean, with respect to any
Class for any Distribution Date, an amount equal to the product of (i) a
fraction the numerator of which is the Class Investor Interest and the
denominator of which is the sum of the Class Investor Interests for each Class
of the Series established hereby and (ii) the amount of Series Additional
Investor Funds, in each case for such Distribution Date.
"Class Alternative Deficiency Amount" shall mean, with respect to each
Class, on any Payment Date, the Class Deficiency Amount that would have been
calculated for such Class on such Payment Date if the aggregate unreimbursed
Investor Losses on such Payment Date equalled zero.
"Class B Available Collections" shall mean, if there is a Subordinated
Class with respect to Class A, with respect to any Distribution Date, an amount
equal to the sum of (i) Class B Available Finance Charge Collections for such
Distribution Date and (ii) Class B Principal Collections for such Distribution
Date.
"Class B Available Finance Charge Collections" shall mean, if there is a
Subordinate Class with respect to Class A, with respect to any Distribution
Date, an amount equal to the sum of Class B Finance Charge Collections, Class B
Yield Collections, if any, Class B Investment Income, if any, for the related
Due Period and Class B Additional Funds for such Distribution Date (less Class
B Excess Servicing).
"Class Cap Rate," if applicable, shall mean, with respect to a Class or
Subclass that does not have a fixed or maximum Certificate Rate, the rate that
is specified as such in the Series Term Sheet and in the Class Interest Rate
Cap with respect to such Class or Subclass.
3
<PAGE> 17
"Class Charge-Off Reimbursement Amount" shall mean, with respect to any
Class with respect to any Distribution Date, the total amount by which the
Class Cumulative Investor Charged-Off Amount for such Class is reduced on such
Distribution Date pursuant to Section 9.
"Class Cumulative Investor Charged-Off Amount" with respect to each Class
for any Distribution Date, shall mean the sum of the Class Investor Charged-Off
Amounts for such Class for all preceding Due Periods that have not been
reimbursed pursuant to Section 9 prior to such Distribution Date, plus the
Class Investor Charged-Off Amount for such Class for the Due Period related to
such Distribution Date, as adjusted pursuant to Section 9 on such Distribution
Date. The Class Cumulative Investor Charged-Off Amount with respect to each
Class initially shall be zero.
"Class Currency Swap," if any, shall mean, with respect to a Class or
Subclass, the currency swap agreement or other currency protection agreement
for the benefit of the Investor Certificateholders of such Class or Subclass,
dated on or before the Series Closing Date, between the Trustee, acting on
behalf of the Trust, and the Currency Swap Counterparty, or any Replacement
Class Currency Swap or Qualified Substitute Class Currency Swap.
"Class Currency Swap Termination Account," if any, shall have the meaning
set forth in Section 8.
"Class Deficiency Amount" shall mean, with respect to each Class, on any
Payment Date, the amount, if any, by which (a) the sum of (i) Certificate
Interest for such Class accrued since the immediately preceding Payment Date,
(ii) if, since the immediately preceding Payment Date and prior to the current
Payment Date, a Reimbursed Loss Event has occurred, the sum of (A) the
Reimbursed Loss Interest for each previous Distribution Date since the last
Distribution Date on which Investor Losses for such Class equalled zero and (B)
the Reimbursed Loss Interest Gross-up Amount for each previous Distribution
Date since the last Distribution Date on which the aggregate amount of
unreimbursed Investor Losses for such Class equalled zero, (iii) the Class
Deficiency Amount on the immediately preceding Payment Date, and (iv) the Class
Deficiency Amount on the immediately preceding Payment Date multiplied by the
product of (A) a fraction the numerator of which is the weighted average of the
Certificate Rates or of the Class Weighted Average Certificate Rates, as
applicable, for such Class for the relevant Due Periods and the denominator of
which is (x) if the relevant Certificate Rate is to be calculated on the basis
of the actual number of days elapsed and a 360-day year, 360 divided by the
actual number of days from and including the immediately preceding Distribution
Date to but excluding the current Distribution Date or (y) if the relevant
Certificate Rate is to be calculated on the basis of a 360-day year of twelve
30-day months, twelve and (B) the number of Distribution Dates from and
including the preceding Payment Date to but excluding the current Payment Date
exceeds (b) the amount deposited since the immediately preceding Payment Date
into the Series Interest Funding Account pursuant to Section 10(a)(2)(A).
"Class Excess Servicing" shall mean, with respect to each Class, on any
Distribution Date, the positive difference, if any, between (i) the sum of
Class Finance Charge Collections for the related Due Period, Class Yield
Collections for the related Due Period, if any, Class Investment Income for the
related Due Period, if any, and Class Additional Funds for such Distribution
Date, if any, and (ii) the Class Required Amount.
"Class Expected Final Payment Date" with respect to each Class, if
applicable, shall mean the date designated as such in the Series Term Sheet.
4
<PAGE> 18
"Class Final Maturity Date" with respect to each Class, if applicable,
shall mean the date designated as such in the Series Term Sheet.
"Class Finance Charge Collections" shall mean, with respect to any Class,
with respect to any day or any Distribution Date or Trust Distribution Date, as
applicable, an amount equal to the product of (x) the Class Percentage with
respect to Finance Charge Collections for the related Distribution Date and (y)
the amount of Finance Charge Collections for such day or for the related Due
Period, as applicable; provided, however, that Class Finance Charge Collections
for each Class shall be increased by the lesser of (i) the amount of Class
Investment Shortfall for such Class and (ii) an amount equal to the product of
the total amount of Finance Charge Collections otherwise allocable to Greenwood
on behalf of the Holder of the Seller Certificate for the related Due Period
and a fraction the numerator of which is the Class Invested Amount for such
Class and the denominator of which is the Aggregate Invested Amount; and
provided, further, that notwithstanding the foregoing, Class Finance Charge
Collections for each Class shall not, with respect to any such day,
Distribution Date or Trust Distribution Date during the Accumulation Period, as
applicable, exceed the amount that would be available if the Class Percentage
with respect thereto were the percentage equivalent of a fraction the numerator
of which is the amount of the Class Investor Interest on the last day of the
Due Period prior to the commencement of the Accumulation Period, and the
denominator of which is the greater of (i) the amount of Principal Receivables
in the Trust on the first day of the related Due Period and (ii) the sum of the
numerators used in calculating the components of the Series Percentage with
respect to Finance Charge Collections for each Series then outstanding
(including the Series established hereby) as of such day, Distribution Date or
Trust Distribution Date, as applicable.
"Class Foreign Currency Certificate Interest," if applicable, shall mean,
with respect to a Class that is subject to a Class Currency Swap, for any
Interest Payment Date, the product of (x) the Class Foreign Currency Invested
Amount with respect to the Distribution Date immediately preceding such
Interest Payment Date and (y) a fraction the numerator of which is the Class
Foreign Currency Certificate Rate and the denominator of which is (i) if the
relevant Certificate Rate is to be calculated on the basis of the actual number
of days elapsed and a 360-day year, 360 divided by the actual number of days
from and including the immediately preceding Interest Payment Date with respect
to such Class (or, in the case of the first Interest Payment Date, from and
including the Series Closing Date) to but excluding the current Interest
Payment Date with respect to such Class or (ii) if the relevant Certificate
Rate is to be calculated on the basis of a 360-day year of twelve 30-day
months, twelve divided by the number of Distribution Dates from and including
the preceding Interest Payment Date to but excluding the current Interest
Payment Date (or, in the case of the first Interest Payment Date, 360 divided
by the number of days from and including the Series Closing Date to but
excluding the current Interest Payment Date, assuming 30-day months).
"Class Foreign Currency Certificate Rate," if applicable, shall have the
meaning set forth in the Series Term Sheet.
"Class Foreign Currency Distribution Account," if any, shall have the
meaning set forth in Section 8 and shall be established at the bank specified
in the Series Term Sheet.
"Class Foreign Currency Interest Shortfall," if applicable, shall have the
meaning set forth in Section 10.
"Class Foreign Currency Invested Amount," if applicable, shall mean, with
respect to a Class for any Distribution Date, an amount equal to the Class
Foreign Currency Initial Investor Interest minus the sum of (a) the aggregate
amount of principal payments in Foreign Currency paid to the
5
<PAGE> 19
Certificateholders of such Class prior to such Distribution Date, (b) the
aggregate amount of Investor Losses of such Class not reimbursed prior to such
Distribution Date, converted into Foreign Currency at the Currency Swap
Exchange Rate (or, following a Currency Swap Termination, multiplied by a
fraction, the numerator of which is the Class Foreign Currency Invested Amount
on the immediately preceding Distribution Date minus the aggregate amount of
principal payments in Foreign Currency paid to the Certificateholders of such
Class subsequent to such Distribution Date and the denominator of which is the
Class Invested Amount) and (c) the aggregate amount of losses of principal on
investments of funds on deposit for the benefit of such Class in the Series
Principal Funding Account, if applicable, converted into Foreign Currency at
the Currency Swap Exchange Rate (or, following a Currency Swap Termination,
multiplied by a fraction, the numerator of which is the Class Foreign Currency
Invested Amount on the immediately preceding Distribution Date minus the
aggregate amount of principal payments in Foreign Currency paid to the
Certificateholders of such Class subsequent to such Distribution Date and the
denominator of which is the Class Invested Amount).
"Class Foreign Currency Modified Required Amount," if applicable, shall
mean (i) on any Distribution Date prior to a Currency Swap Termination, the
product of (a) the Class Modified Required Amount with respect to such
Distribution Date, (b) the Currency Swap Exchange Rate and (c) a fraction the
numerator of which is the Class Foreign Currency Certificate Rate and the
denominator of which is the Class Certificate Rate and (ii) on any Distribution
Date following a Currency Swap Termination, the product of (a) the Class
Modified Required Amount with respect to such Distribution Date, (b) a
fraction, the numerator of which is the Class Foreign Currency Invested Amount
for such Class for such Distribution Date and the denominator of which is the
Class Invested Amount for such Class for such Distribution Date and (c) a
fraction, the numerator of which is the Class Foreign Currency Certificate Rate
and the denominator of which is the Class Certificate Rate.
"Class Initial Investor Interest" shall mean, with respect to each Class,
the aggregate face amount of Investor Certificates of such Class as specified
in the Series Term Sheet.
"Class Interest Rate Cap," if applicable, shall mean, with respect to a
Class or Subclass that does not have a fixed or maximum Certificate Rate, the
interest rate cap agreement or other interest rate protection for the benefit
of the Investor Certificateholders of such Class or Subclass, dated on or
before the Series Closing Date, between the Trustee, acting on behalf of the
Trust, and the Interest Rate Cap Provider, or any Replacement Interest Rate Cap
or Qualified Substitute Cap Arrangement.
"Class Interest Rate Cap Payment" shall mean, with respect to a Class or
Subclass that does not have a fixed or maximum Certificate Rate, with respect
to any Interest Payment Date, any payment required to be made on such Interest
Payment Date by the Interest Rate Cap Provider with respect to the Class
Interest Rate Cap for such Class or Subclass.
"Class Invested Amount" shall mean, with respect to any Class for any
Distribution Date, an amount equal to the Class Initial Investor Interest minus
the sum of (a)(i) with respect to a Class that is subject to a Class Currency
Swap, the aggregate amount of payments of Certificate Principal (in Dollars)
deposited into the Currency Swap Dollar Escrow Account for payment to the
Currency Swap Counterparty for the benefit of such Class, or, in the event of a
Currency Swap Termination, converted into Foreign Currency by the Trustee at
the then prevailing spot exchange rate in New York for payment to the Investor
Certificateholders of such Class or (ii) with respect to a Class that is not
subject to a Class Currency Swap, the aggregate amount of payments of
Certificate Principal paid to such Class of Investor Certificateholders, in
each case prior to such Distribution Date, (b) the aggregate amount of Investor
Losses of such Class not reimbursed prior to such Distribution Date and
6
<PAGE> 20
(c) the aggregate amount of losses of principal on investments of funds on
deposit for the benefit of such Class in the Series Principal Funding Account,
if applicable.
"Class Investment Income" shall mean, with respect to any Class, income
from the investment of funds on deposit in the Series Principal Funding Account
for the benefit of such Class less Excess Income.
"Class Investment Shortfall" with respect to each Class with respect to
any Distribution Date during the Accumulation Period, if applicable, shall mean
an amount equal to the positive difference, if any, between (i) one-twelfth of
the product of (a) (x) with respect to each Class that has no Subclasses, the
Certificate Rate, or (y) with respect to each Class that has two or more
Subclasses, the Class Weighted Average Certificate Rate, in each case for the
related Due Period, and (b) the amount on deposit in the Series Principal
Funding Account for the benefit of such Class as of the end of the previous
Distribution Date and (ii) Class Investment Income for the related Due Period.
"Class Investor Charged-Off Amount" shall mean, with respect to each Class
for any Distribution Date, an amount equal to the sum of (i) the product of (a)
the Charged-Off Amount for such Distribution Date and (b) the Class Percentage
with respect to the Charged-Off Amount and (ii) if there is a Subordinate Class
with respect to Class A, with respect to Class B only, the sum of (a) the
positive difference, if any, between (x) the Class B Subordinated Payment and
(y) the amount of Class B Available Finance Charge Collections for the related
Due Period and (b) the amount by which the Class A Cumulative Investor
Charged-Off Amount is reduced by way of a reallocation of Class B Investor
Interest pursuant to Section 9.
"Class Investor Interest" shall mean, with respect to any Class for any
Distribution Date, an amount equal to the Class Invested Amount for such Class
for such Distribution Date minus, if applicable, the aggregate amount on
deposit in the Series Principal Funding Account for the benefit of such Class
in respect of Principal Collections.
"Class Maximum Rate," if applicable, shall have the meaning set forth in
the Series Term Sheet with respect to any Class or Subclass.
"Class Modified Required Amount" with respect to any Class on any
Distribution Date, shall mean the Class Required Amount for such Distribution
Date minus the sum of all accrued but unpaid Class Monthly Servicing Fees.
"Class Monthly Deficiency Amount" with respect to any Class on any
Distribution Date, shall have the meaning set forth in Section 10. The Class
Monthly Deficiency Amount for each Class initially shall be zero.
"Class Monthly Servicing Fee" with respect to any Class for any
Distribution Date, shall mean an amount equal to the product of (x) a fraction
the numerator of which shall be the Class Investor Interest and the denominator
of which shall be the Series Investor Interest, in each case on the first day
of the related Due Period and (y) the amount of the Investor Servicing Fee for
the related Due Period.
7
<PAGE> 21
"Class Percentage" shall mean, with respect to any Class with respect to
any Distribution Date or any Trust Distribution Date, as applicable:
(a) when used with respect to the Charged-Off Amount, the percentage
equivalent of a fraction the numerator of which shall be the amount of the
Class Investor Interest and the denominator of which shall be the greater
of (i) the amount of Principal Receivables in the Trust and (ii) the
Aggregate Investor Interest, in each case on the first day of the related
Due Period; or
(b) when used with respect to Principal Collections prior to the
occurrence of a Fixed Principal Allocation Event, the percentage
equivalent of a fraction the numerator of which shall be the amount of the
Class Investor Interest on the first day of the related Due Period and the
denominator of which shall be the greater of (i) the amount of Principal
Receivables in the Trust on the first day of the related Due Period and
(ii) the sum of the numerators used in calculating the components of the
Series Percentage with respect to Principal Collections for each Series
then outstanding (including the Series established hereby) as of such
Distribution Date or Trust Distribution Date, as applicable; or
(c) when used with respect to Principal Collections on and after the
occurrence of a Fixed Principal Allocation Event, the percentage
equivalent of a fraction, the numerator of which shall be the amount of
the Class Investor Interest on the last day of the Due Period prior to the
occurrence of a Fixed Principal Allocation Event and the denominator of
which shall be the greater of (i) the amount of Principal Receivables in
the Trust on the first day of the related Due Period and (ii) the sum of
the numerators used in calculating the components of the Series Percentage
with respect to Principal Collections for each Series then outstanding
(including the Series established hereby) as of such Distribution Date or
Trust Distribution Date, as applicable; or
(d) when used with respect to Finance Charge Collections during the
Revolving Period and the Accumulation Period or Controlled Liquidation
Period, as applicable, and provided that an Effective Alternative Credit
Support Election has been made, during the Amortization Period, the
percentage equivalent of a fraction the numerator of which shall be the
amount of the Class Investor Interest on the first day of the related Due
Period and the denominator of which shall be the greater of (i) the amount
of Principal Receivables in the Trust on the first day of the related Due
Period and (ii) the sum of the numerators used in calculating the
components of the Series Percentage with respect to Finance Charge
Collections for each Series then outstanding (including the Series
established hereby) as of such Distribution Date or Trust Distribution
Date, as applicable; or
(e) when used with respect to Finance Charge Collections during the
Amortization Period, provided that an Effective Alternative Credit Support
Election has not been made, the percentage equivalent of a fraction the
numerator of which shall be the amount of the Class Investor Interest on
the last day of the Due Period prior to the occurrence of an Amortization
Event, and the denominator of which shall be the greater of (i) the amount
of Principal Receivables in the Trust on the first day of the related Due
Period and (ii) the sum of the numerators used in calculating the
components of the Series Percentage with respect to Finance Charge
Collections for each Series then outstanding (including the Series
established hereby) as of such Distribution Date or Trust Distribution
Date, as applicable.
8
<PAGE> 22
"Class Principal Collections" shall mean, with respect to any Class with
respect to any day or any Distribution Date or Trust Distribution Date, as
applicable, an amount equal to the product of (x) the Class Percentage with
respect to Principal Collections for the related Distribution Date and (y) the
amount of Principal Collections for such day or for the related Due Period, as
applicable.
"Class Required Amount" with respect to any Class on any Distribution
Date, shall mean the sum of (i) the product of (a) the Class Invested Amount
with respect to such Class for such Distribution Date and (b) a fraction, the
numerator of which is the Certificate Rate for such Class, and the denominator
of which is (x) if the relevant Certificate Rate is to be calculated on the
basis of the actual number of days elapsed and a 360-day year, (A) if each
Interest Payment Date is also a Distribution Date, 360 divided by the actual
number of days from and including the immediately preceding Distribution Date
(or in the case of the first Distribution Date, from and including the Series
Closing Date) to but excluding the current Distribution Date or (B) if each
Interest Payment Date is not also a Distribution Date, 360 divided by the
actual number of days from and including the immediately preceding Interest
Calculation Date (or in the case of the first Distribution Date, from and
including the Series Closing Date) to but excluding the Interest Calculation
Date following the current Distribution Date or (y) if the relevant Certificate
Rate is to be calculated on the basis of a 360-day year of twelve 30-day
months, twelve (or in the case of the first Distribution Date, 360 divided by
the number of days from and including the Series Closing Date to but excluding
the current Distribution Date (if each Interest Payment Date is also a
Distribution Date) or the Interest Calculation Date following the current
Distribution Date (if each Interest Payment Date is not also a Distribution
Date), assuming each month has 30 days), (ii) the Class Monthly Deficiency
Amount on the immediately preceding Distribution Date, (iii) the Class
Deficiency Amount on the immediately preceding Payment Date multiplied by a
fraction the numerator of which is the weighted average of the Certificate
Rates or of the Class Weighted Average Certificate Rates, as applicable, for
such Class for each Due Period subsequent to the immediately preceding Payment
Date plus 2.00% per annum and the denominator of which is (x) if the relevant
Certificate Rate is to be calculated on the basis of the actual number of days
elapsed and a 360-day year, 360 divided by the actual number of days from and
including the immediately preceding Distribution Date to but excluding the
current Distribution Date or (y) if the relevant Certificate Rate is to be
calculated on the basis of a 360-day year of twelve 30-day months, twelve, (iv)
if on the immediately preceding Distribution Date a Reimbursed Loss Event
occurred, the sum of (A) the Reimbursed Loss Interest for each previous
Distribution Date since the last Distribution Date on which the aggregate
amount of unreimbursed Investor Losses for such Class equalled zero, (B) the
Reimbursed Loss Interest Gross- up Amount for each previous Distribution Date
since the last Distribution Date on which the aggregate amount of unreimbursed
Investor Losses for such Class equalled zero and (C) for any Distribution Date
following the Distribution Date immediately following the Reimbursed Loss Event
to and including the next Payment Date, the Reimbursed Loss Interest Gross-up
Amount for such Distribution Date and (v) the sum of all accrued but unpaid
Class Monthly Servicing Fees.
"Class Required Amount Shortfall" with respect to any Class on any
Distribution Date, shall have the meaning set forth in Section 9.
"Class Subordinated Payment" shall mean, if there is a Subordinate Class
with respect to Class A, with respect to any Distribution Date, the amount, if
any, withheld from Class B Available Collections and paid to or for the benefit
of the Class A Certificateholders pursuant to Section 9 on such Distribution
Date.
9
<PAGE> 23
"Class Weighted Average Certificate Rate," if applicable, shall mean, for
any Class composed of two or more Subclasses, for any Distribution Date, the
percentage equivalent of a fraction the numerator of which is the sum of, for
each Subclass of such Class, the product of the Class Invested Amount for such
Subclass and the Certificate Rate for such Subclass for such Distribution Date,
and the denominator of which is the Class Invested Amount for such Class.
"Class Yield Collections" shall mean, with respect to any Class, with
respect to any day or any Distribution Date, as applicable, an amount equal to
the product of the Class Yield Percentage for such Class and the amount of
Series Yield Collections for such day or the related Due Period, as applicable.
"Class Yield Percentage" shall mean, with respect to any Class on any
Distribution Date (i) during the Revolving Period and the Accumulation Period
or Controlled Liquidation Period, as applicable, and, provided that an
Effective Alternative Credit Support Election has been made, during the
Amortization Period, the percentage equivalent of a fraction the numerator of
which shall be the Class Investor Interest for such Class and the denominator
of which shall be the Series Investor Interest, in each case as of the first
day of the related Due Period; or (ii) during the Amortization Period, provided
that an Effective Alternative Credit Support Election has not been made, the
percentage equivalent of a fraction the numerator of which shall be the amount
of the Class Investor Interest on the last day of the Due Period prior to the
occurrence of an Amortization Event and the denominator of which shall be the
sum of the Class Yield Percentages for each Class of the Series established
hereby as of such Distribution Date.
"Commercial Paper Determination Date," if applicable, shall have the
meaning set forth in the Series Term Sheet.
"Commercial Paper Rate," if applicable, shall mean, with respect to any
Commercial Paper Determination Date, the rate equal to the Money Market Yield
on such Commercial Paper Determination Date of the rate for commercial paper
having a maturity of 30 days as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15 (519), Selected Interest
Rates," or any successor publication, under the heading "Commercial Paper." In
the event that such rate is not published on such date, then the Commercial
Paper Rate will be the Money Market Yield on such date of the rate for
Commercial Paper having a maturity of 30 days as published by the Federal
Reserve Bank of New York in the daily statistical release "Composite 3:30 p.m.
Quotations for U.S. Government Securities" ("Composite Quotations") under the
heading "Commercial Paper." If on such date the rate for commercial paper is
not yet published in either H.15 (519) or Composite Quotations, the Commercial
Paper Rate for such date shall be calculated by the Trustee and shall be the
Money Market Yield of the arithmetic mean (rounded to the nearest one-hundredth
of a percent, with five hundred one-thousandths of a percent rounded upward) of
the offered rates, as of 11:00 a.m., New York City time, of three leading
dealers of commercial paper in New York City selected by the Trustee on such
date, for commercial paper having a maturity of 30 days placed for an
industrial issuer whose bond rating is "AA" or the equivalent, from either
Rating Agency. In the event that such rates are not available on such date,
then the Commercial Paper Rate shall be the Money Market Yield of the rate for
commercial paper so provided in a comparable source. The Commercial Paper Rate
shall be determined by the Trustee.
"Controlled Accumulation Amount" with respect to any Distribution Date
related to the Accumulation Period shall mean, if applicable, an amount equal
to the sum of the Accumulation Amount and any existing Deficit Accumulation
Amount; provided, however, that the Controlled Accumulation Amount shall not be
less than zero and shall not exceed an amount equal to, through
10
<PAGE> 24
the Class Expected Final Payment Date or Class Final Maturity Date, as
applicable, with respect to each Class in turn, beginning with Class A, the
Class Investor Interest for such Class.
"Controlled Liquidation Amount" with respect to any Distribution Date
related to the Controlled Liquidation Period shall mean, if applicable, an
amount equal to the sum of the Liquidation Amount and any existing Deficit
Liquidation Amount; provided, however, that the Controlled Liquidation Amount
shall not be less than zero and shall not exceed an amount equal to, with
respect to each Class in turn, beginning with Class A, until the applicable
Distribution Date set forth in the definition of "Liquidation Amount" with
respect to such Class, the Class Invested Amount for such Class.
"Controlled Liquidation Period," if applicable, shall have the meaning set
forth in the Series Term Sheet.
"Counterparty Currency Swap Default," if applicable, shall mean, in the
absence of a Trust Swap Default, the failure of the Currency Swap Counterparty
to deposit into the Class Foreign Currency Distribution Account on behalf of
the Certificateholders of a Class that is subject to a Class Currency Swap on
the Foreign Business Day immediately preceding any Payment Date with respect to
such Class (or within any applicable grace period specified in the Class
Currency Swap) the sum of (a) the sum of the Class Foreign Currency Modified
Required Amounts for each Distribution Date of the Interest Accrual Period and
(b) if applicable, the product of (x) the amount of principal deposited into
the Currency Swap Dollar Escrow Account and (y) the Currency Swap Exchange Rate
(if such failure constitutes a default under the terms of the Class Currency
Swap).
"Credit Enhancement" shall mean any credit enhancement obtained by the
Master Servicer in accordance with Section 11.
"Credit Enhancement Account," if applicable, shall have the meaning set
forth in Section 8.
"Credit Enhancement Agreement" shall mean the Agreement among the Sellers,
the Master Servicer, the Trustee and the Credit Enhancement Provider with
respect to the Credit Enhancement.
"Credit Enhancement Drawing" shall mean any drawing made under the Credit
Enhancement.
"Credit Enhancement Fee" shall mean, on any Distribution Date, the sum of
all fees and interest payable to the Credit Enhancement Provider or the Trustee
as administrator of the Credit Enhancement for the related Due Period pursuant
to the Credit Enhancement Agreement.
"Credit Enhancement Provider" shall have the meaning set forth in the
Series Term Sheet.
"Currency Swap Counterparty," if any, shall have the meaning set forth in
the Series Term Sheet.
"Currency Swap Dollar Escrow Account," if any, shall have the meaning set
forth in Section 8 and shall be maintained at the Escrow Agent specified in the
Series Term Sheet.
"Currency Swap Downgrade Trigger," if any, shall have the meaning set
forth in the Series Term Sheet.
11
<PAGE> 25
"Currency Swap Exchange Rate," if applicable, shall mean the fixed Foreign
Currency-to-Dollar exchange rate specified in the Class Currency Swap.
"Currency Swap Termination," if applicable, shall mean the termination of
the Class Currency Swap (without the replacement thereof by a Replacement Class
Currency Swap or a Qualified Substitute Class Currency Swap Arrangement) prior
to the payment in full of the Class Foreign Currency Invested Amount.
"Deficit Accumulation Amount" shall mean, with respect to the first
Distribution Date of the Accumulation Period, zero, and with respect to any
other Distribution Date of the Accumulation Period, the amount, if any, by
which the amount deposited into the Series Principal Funding Account on the
preceding Distribution Date is less than the Controlled Accumulation Amount for
such preceding Distribution Date.
"Deficit Liquidation Amount" shall mean, with respect to the first
Distribution Date of the Controlled Liquidation Period, zero, and with respect
to any other Distribution Date of the Controlled Liquidation Period, the
amount, if any, by which the amount of Certificate Principal paid to the
Investor Certificateholders on the preceding Distribution Date is less than the
Controlled Liquidation Amount for such preceding Distribution Date.
"Dollars" or "U.S.$" or "$" shall mean the lawful currency of the United
States of America.
"Drawing Date" shall mean the first Business Day preceding each
Distribution Date.
"Effective Alternative Credit Support Election" shall have the meaning
specified in Section 12.
"Escrow Agent," if applicable, shall have the meaning set forth in the
Series Term Sheet.
"Escrow Agreement," if applicable, shall have the meaning set forth in the
Series Term Sheet.
"Estimated Investment Shortfall," if applicable, shall have the meaning
set forth in the Series Term Sheet.
"Estimated Yield," if applicable, shall have the meaning specified in the
Series Term Sheet.
"Excess Income" on any Distribution Date shall mean an amount equal to the
excess, if any, of (a) interest and other income (net of investment expenses)
on such Distribution Date with respect to the funds on deposit in the Series
Principal Funding Account during the related Interest Period over (b) the
amount on deposit in the Series Principal Funding Account in respect of
Certificate Principal during such Interest Period multiplied by a fraction, the
numerator of which is the Certificate Rate or the Class Weighted Average
Certificate Rate, as applicable, for the Class for whose benefit the amounts on
deposit in the Series Principal Funding Account are held during such Interest
Period and the denominator of which is (x) if the relevant Certificate Rate is
to be calculated on the basis of the actual number of days elapsed and a
360-day year, 360 divided by the actual number of days from and including the
immediately preceding Distribution Date to but excluding the current
Distribution Date or (y) if the relevant Certificate Rate is to be calculated
on the basis of a 360-day year of twelve 30-day months, twelve.
"Fixed Principal Allocation Event" shall mean the earliest of (a) the
beginning of the Due Period immediately following the Due Period related to the
first Distribution Date during the
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<PAGE> 26
Controlled Liquidation Period or the Accumulation Period, as applicable, with
respect to the Series established hereby on which the Series Available
Principal Amount is less than zero; (b) the date on which an Amortization Event
with respect to the Series established hereby occurs; and (c) a date selected
by the Master Servicer, if any. If the Master Servicer establishes a date for
a Fixed Principal Allocation Event pursuant to clause (c) of the preceding
sentence, the Master Servicer shall provide notification of such date to
Greenwood on behalf of the Holder of the Seller Certificate, the Trustee, the
Credit Enhancement Provider and the Rating Agencies no later than two Business
Days prior to such date.
"Foreign Business Day," if applicable, shall have the meaning set forth in
the Series Term Sheet.
"Foreign Currency," if applicable, shall have the meaning set forth in the
Series Term Sheet.
"Foreign Currency LIBOR," if applicable, shall mean, with respect to any
LIBOR Determination Date, the rate for deposits in Foreign Currency with a
duration comparable to the relevant Interest Accrual Period which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such day. If such rate
does not appear on Telerate Page 3750, the rate will be determined by the
Trustee on the basis of the rates at which deposits in Foreign Currency are
offered by major banks in the London interbank market, selected by the Trustee,
at approximately 11:00 a.m., London time, on such day to prime banks in the
London interbank market with a duration comparable to the relevant Interest
Accrual Period commencing on that day. The Trustee will request the principal
London office of at least four banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the
rate for that day will be the arithmetic mean of the rates quoted by four major
banks in Frankfurt am Main, selected by the Trustee, at approximately 11:00
a.m., Frankfurt am Main time, on that day for loans in Foreign Currency to
leading European banks with a duration comparable to the relevant Interest
Accrual Period commencing on that day.
"Funded Credit Enhancement" shall mean any Credit Enhancement that
consists of funds on deposit in one or more segregated trust accounts in the
corporate trust department of an office or branch of the Trustee or a Qualified
Institution for the benefit of the Investor Certificateholders of the Series
established hereby, including, without limitation, a reserve account or a cash
collateral account.
"Group Available Principal Amount" shall mean, with respect to each
Distribution Date, the amount remaining on deposit in the Group Principal
Collections Reallocation Account on such Distribution Date after all
withdrawals have been made from such account for the benefit of any Series in
the same Group as the Series established hereby (including the Series
established hereby), but before such amount is withdrawn from the Group
Principal Collections Reallocation Account and deposited into the Collections
Account pursuant to Section 9(b)(32)).
"Group Buffer Amount," if applicable, shall have the meaning set forth in
the Series Term Sheet.
"Group Excess Spread" shall mean, for any Distribution Date, the sum of
the Series Excess Spreads for each Series (including the Series established
hereby) that is a member of the same Group as the Series established hereby, in
each case for such Distribution Date.
"Group Finance Charge Collections Reallocation Account" shall have the
meaning specified in Section 8.
13
<PAGE> 27
"Group Principal Allocation Event" shall mean the first Distribution Date,
if any, on which (i) the sum of the amount of Series Principal Collections less
the amount of Series Yield Collections for each Series that is a member of the
same Group as the Series established hereby (including the Series established
hereby) that is not in its Amortization Period is less than (ii) the Group
Required Principal Amount for such Distribution Date.
"Group Principal Collections Reallocation Account" shall have the meaning
specified in Section 8.
"Group Required Principal Amount" shall mean, with respect to the Group of
which the Series established hereby is a member, for any Distribution Date, the
sum of the Series Required Principal Amounts for such Distribution Date for
each Series that is a member of such Group and that is in its Controlled
Liquidation Period or Accumulation Period, as applicable.
"Initial Credit Enhancement" shall mean the Credit Enhancement first
obtained by the Master Servicer pursuant to Section 11.
"Initial Subordinated Amount," if applicable, shall have the meaning set
forth in the Series Term Sheet.
"Interest Accrual Period" shall mean, with respect to any Interest Payment
Date, the period from and including the Interest Payment Date immediately
preceding such Interest Payment Date (or, in the case of the first Interest
Payment Date, from and including the Series Closing Date) to but excluding such
Interest Payment Date.
"Interest Calculation Date," if applicable, shall have the meaning set
forth in the Series Term Sheet.
"Interest Payment Date" shall mean each date designated as such in the
Series Term Sheet.
"Interest Period" shall mean each period from and including a given
Distribution Date to but excluding the next following Distribution Date
commencing with the first Distribution Date of the Accumulation Period.
"Interest Rate Cap Provider," if any, shall mean the entity listed as the
Interest Rate Cap Provider in the Series Term Sheet, in its capacity as obligor
under the Class Interest Rate Caps, or if any Replacement Class Interest Rate
Caps or Qualified Substitute Cap Arrangements are obtained pursuant to Section
15, the obligor with respect to such Replacement Class Interest Rate Caps or
Qualified Substitute Cap Arrangements.
"Investor Accounts" shall mean, in addition to Investor Accounts
established pursuant to the Pooling and Servicing Agreement, the Series
Collections Account, the Series Principal Collections Account, the Series
Principal Funding Account, the Series Interest Funding Account, the Series
Distribution Account, the Group Finance Charge Collections Reallocation Account
and the Group Principal Collections Reallocation Account and, if applicable,
the Class Foreign Currency Distribution Account, the Currency Swap Dollar
Escrow Account and the Class Currency Swap Termination Account.
"Investor Loss" with respect to each Class, shall mean the amount of any
reduction in the Class Invested Amount with respect to such Class pursuant to
Section 13(b) and, in the event the
14
<PAGE> 28
Receivables are sold pursuant to Section 12.01(b) of the Pooling and Servicing
Agreement, the amount, if any, by which the Class Investor Interest (determined
immediately prior to such sale) exceeds the product of (x) a fraction, the
numerator of which is the Class Investor Interest and the denominator of which
is the Aggregate Investor Interest and (y) the net proceeds of such sale.
"Investor Servicing Fee" shall mean, with respect to any Distribution
Date, an amount equal to the product of the Investor Servicing Fee Percentage
and the Series Investor Interest on the first day of the Due Period related to
such Distribution Date (or in the case of the first Distribution Date for the
Series established hereby, the Series Initial Investor Interest).
"Investor Servicing Fee Percentage" shall mean the percentage identified
as such in the Series Term Sheet.
"LIBOR," if applicable, shall mean, with respect to any LIBOR
Determination Date, the rate for deposits in United States dollars with a
duration comparable to the relevant Interest Accrual Period which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such day. If such rate
does not appear on Telerate Page 3750, the rate will be determined by the
Trustee on the basis of the rates at which deposits in United States dollars
are offered by major banks in the London interbank market, selected by the
Trustee, at approximately 11:00 a.m., London time, on such day to prime banks
in the London interbank market with a duration comparable to the relevant
Interest Accrual Period commencing on that day. The Trustee will request the
principal London office of at least four banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate will be the
arithmetic mean of the quotations. If fewer than two quotations are provided
as requested, the rate for that day will be the arithmetic mean of the rates
quoted by four major banks in New York City, selected by the Trustee, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks with a duration comparable to the
relevant Interest Accrual Period commencing on that day.
"LIBOR Business Day," if applicable, shall mean a day other than a
Saturday or a Sunday on which banking institutions in the City of London,
England and in New York, New York are not required or authorized by law to be
closed.
"LIBOR Determination Date," if applicable, shall have the meaning set
forth in the Series Term Sheet.
"Liquidation Amount," if applicable, shall have the meaning set forth in
the Series Term Sheet.
"Maximum Class B Credit Enhancement Amount" shall have the meaning set
forth in the Series Term Sheet.
"Maximum Shared Credit Enhancement Amount," if applicable, shall have the
meaning set forth in the Series Term Sheet.
"Money Market Yield" shall mean a yield (expressed as a percentage rounded
to the nearest one-hundredth of a percent, with five hundred one-thousandths of
a percent rounded upwards) calculated in accordance with the following formula:
<TABLE>
<S> <C><C> <C>
Money Market Yield = D x 360 x 100
-------------
360 - (D x M)
</TABLE>
15
<PAGE> 29
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal, and "M" refers to the actual number
of days in the related Interest Accrual Period.
"Non-U.S. Holder," shall mean any person who, as to the United States, is
a non-resident alien individual, a foreign corporation, a foreign estate, a
foreign trust or a foreign partnership, as such terms are defined in the
Internal Revenue Code of 1986, as amended.
"Payment Date" shall mean any Interest Payment Date and any Class Expected
Final Payment Date.
"Portfolio Yield" shall mean, with respect to any Due Period, the
annualized percentage equivalent of a fraction, the numerator of which shall be
the sum of (i) the amount of Finance Charge Collections received during such
Due Period, (ii) the amount of Series Yield Collections for each Series then
outstanding for such Due Period and (iii) the amount of Series Additional Funds
for each Series then outstanding for such Due Period, and the denominator of
which shall be the total amount of Principal Receivables in the Trust as of the
first day of such Due Period.
"Principal Commencement Date" shall mean the date designated as such in
the Series Term Sheet.
"Principal Distribution Amount" shall mean, with respect to any
Distribution Date occurring in (i) the Accumulation Period, the Controlled
Accumulation Amount, (ii) in the Controlled Liquidation Period, the Controlled
Liquidation Amount, or (iii) in the Amortization Period, the Series Investor
Interest.
"Principal Distribution Amount Shortfall" with respect to any Distribution
Date in the Accumulation Period, the Controlled Liquidation Period or the
Amortization Period, as applicable, shall have the meaning set forth in Section
9.
"Principal Payment Date" shall mean, if applicable, each date designated
as such in the Series Term Sheet.
"Qualified Credit Enhancement Provider" shall mean, (i) if the Credit
Enhancement is not Funded Credit Enhancement, an institution that meets the
Qualified Credit Enhancement Provider Rating Requirements established by each
Rating Agency, which requirements are set forth in the Series Term Sheet if the
Initial Credit Enhancement is not Funded Credit Enhancement, or (ii) if the
Initial Credit Enhancement is Funded Credit Enhancement, an institution that
meets the Qualified Credit Enhancement Provider Rating Requirements established
by each Rating Agency, which requirements will be established by the Rating
Agencies at the time, if any, that the Master Servicer elects to replace the
Initial Credit Enhancement with Credit Enhancement that is not Funded Credit
Enhancement (or, in either case, such lesser requirements as the applicable
Rating Agency shall allow); provided, however, that in the event the Master
Servicer elects to obtain Credit Enhancement that is not Funded Credit
Enhancement and is unable after the exercise of its best efforts to obtain from
a Qualified Credit Enhancement Provider as so defined such Credit Enhancement
with respect to which the representations set forth in Section 11(a) shall be
true, the term "Qualified Credit Enhancement Provider" shall mean a Person who
satisfies such requirements except that its long-term unsecured debt rating by
any nationally recognized rating agency may be lower than that set forth in
such requirements, but shall not be lower than the highest credit rating of any
Person who
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otherwise satisfies said requirements and from whom the Master Servicer is able
to obtain such a Credit Enhancement.
"Qualified Substitute Cap Arrangement," if any, shall have the meaning
specified in Section 15.
"Qualified Substitute Currency Swap Counterparty," if any, shall mean an
institution substituted in place of the then- current Currency Swap
Counterparty under a Class Currency Swap, and that otherwise satisfies the
conditions set forth in Section 16.
"Qualified Substitute Class Currency Swap Arrangement," if any, shall have
the meaning specified in Section 16.
"Reimbursed Loss Event" shall mean, with respect to each Class for any
Distribution Date, the occurrence of the reimbursement of Investor Losses
pursuant to Section 13(c) with respect to such Class on such Distribution Date
such that the aggregate amount of unreimbursed Investor Losses for such Class
is reduced to zero.
"Reimbursed Loss Interest" shall mean, for any Class for any Distribution
Date, an amount equal to the product of (i) the aggregate amount of Investor
Losses that have not been reimbursed pursuant to Section 13(c) prior to the
commencement of the related Due Period and (ii) a fraction the numerator of
which is the Certificate Rate or the Class Weighted Average Certificate Rate,
as applicable, for such Class for the related Due Period and the denominator of
which is (x) if the relevant Certificate Rate is to be calculated on the basis
of the actual number of days elapsed and a 360-day year, (A) if each Interest
Payment Date is also a Distribution Date, 360 divided by the actual number of
days from and including the immediately preceding Distribution Date to but
excluding the current Distribution Date or (B) if each Interest Payment Date is
not also a Distribution Date, 360 divided by the actual number of days from and
including the Interest Calculation Date in the preceding calendar month to but
excluding the Interest Calculation Date following the current Distribution Date
or (y) if the relevant Certificate Rate is to be calculated on the basis of a
360-day year of twelve 30-day months, twelve.
"Reimbursed Loss Interest Gross-up Amount" shall mean, for any Class for
any Distribution Date, an amount equal to the product of (i) the positive
difference, if any, between the Class Alternative Deficiency Amount for the
immediately preceding Payment Date and the actual Class Deficiency Amount for
the immediately preceding Payment Date and (ii) a fraction the numerator of
which is the Certificate Rate or the Class Weighted Average Certificate Rate,
as applicable, for such Class for the related Due Period and the denominator of
which is (x) if the relevant Certificate Rate is to be calculated on the basis
of the actual number of days elapsed and a 360-day year, (A) if each Interest
Payment Date is also a Distribution Date, 360 divided by the actual number of
days from and including the immediately preceding Distribution Date to but
excluding the current Distribution Date or (B) if each Interest Payment Date is
not also a Distribution Date, 360 divided by the actual number of days from and
including the Interest Calculation Date in the preceding calendar month to but
excluding the Interest Calculation Date following the current Distribution Date
or (y) if the relevant Certificate Rate is to be calculated on the basis of a
360-day year of twelve 30-day months, twelve.
"Replacement Class Interest Rate Cap," if any, shall mean an interest rate
cap agreement or other interest rate protection having substantially the same
terms and conditions as the Class Interest Rate Cap that it replaces, and
otherwise satisfying the conditions set forth in Section 15.
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<PAGE> 31
"Replacement Class Currency Swap," if any, shall mean a currency swap
agreement or other currency swap protection having substantially the same terms
and conditions as the Class Currency Swap that it replaces, and otherwise
satisfying the conditions set forth in Section 16.
"Replacement Class Currency Swap Counterparty," if any, shall mean an
institution that succeeds to the interest of or otherwise replaces the
then-current Currency Swap Counterparty under a Class Currency Swap, and
otherwise satisfies the conditions set forth in Section 16.
"Representative of the Managers," if any, shall have the meaning set forth
in the Series Term Sheet.
"Required Daily Deposit" shall mean, if applicable, with respect to each
Servicer, an amount equal to:
(a) during the Revolving Period and the Accumulation
Period or the Controlled Liquidation Period, as applicable, the
sum of
(x)(1) during the Revolving Period, an amount equal
to the sum of (i) the sum of the Class Finance Charge
Collections and the Class Yield Collections for each Class for
such day and (ii) the amount of Class B Principal Collections
for such day; minus the sum of the Class B Yield Collections for
such day and all accrued but unfunded Class A Monthly Servicing
Fees; or
(2) during the Accumulation Period or the Controlled
Liquidation Period, as applicable, an amount equal to the sum of
(i) the amount set forth in clause (1) above and (ii)(A) until
the aggregate amount deposited during such Due Period pursuant
to this clause (ii) equals the Controlled Accumulation Amount or
the Controlled Liquidation Amount, as applicable, for the
related Distribution Date, the amount of Class A Principal
Collections for such day less the amount of Class A Yield
Collections for such day and (B) thereafter, zero; plus
(y) the positive difference, if any, between
(1) the product of the Class A Percentage for the
related Distribution Date with respect to Principal Collections
and the amount of Principal Collections received during the Due
Period through and including such day, less the product of the
Class A Yield Percentage and the amount of Series Yield
Collections received during the Due Period through and including
such day, and less any amounts deposited into the Collections
Account during the Due Period through and including such day
pursuant to clause (x)(2)(ii)(A) above or previously deposited
during such Due Period pursuant to this clause (y) and
(2) the positive difference, if any, between (i)
an amount equal to (A) the aggregate amount of Principal
Receivables in the Trust as of such day multiplied by a fraction
the numerator of which shall be the Series Initial Investor
Interest and the denominator of which shall be sum of the Series
Initial Investor Interest for each Series then outstanding minus
(B) the Series Investor Interest as of the end of the
immediately preceding Due Period (after giving
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<PAGE> 32
effect to payments of principal made or to be made on the
related Distribution Date) and (ii) an amount equal to the
positive difference between the Series Minimum Principal
Receivables Balance and the Series Investor Interest; provided,
however, that any calculation under this paragraph (y) that
results in a number less than zero shall be treated as zero; or
(b) during the Amortization Period, an amount equal to the
sum of the Series Finance Charge Collections and the Series
Principal Collections for the Series established hereby for such
day minus all accrued but unfunded Class A Monthly Servicing
Fees; and
multiplied, in each case, by a fraction the numerator of which shall be the
aggregate amount of Principal Receivables in the Trust that are serviced by
such Servicer and the denominator of which shall be the aggregate amount of
Principal Receivables in the Trust; provided, however, that if any Servicer is
unable to make the calculations set forth above on any day, the Required Daily
Deposit for such Servicer for such day shall be equal to all the Collections
received by such Servicer on such day.
Notwithstanding the foregoing, (i) upon the occurrence of any
circumstance described in Section 10.02(d), (e) or (f) of the Pooling and
Servicing Agreement with respect to any Servicer, the Required Daily Deposit
for any Series then outstanding shall equal the amount described in paragraph
(b) above for such Servicer and (ii) a Servicer may use Collections received by
it for its own account prior to the applicable Distribution Date as permitted
by Sections 3.03(b) and 4.03(b) of the Pooling and Servicing Agreement.
"Revolving Period" shall have the meaning set forth in the Series Term
Sheet.
"Series Additional Funds," if applicable, shall mean, for any Distribution
Date, the Additional Funds deposited into the Series Collections Account for
the Series established hereby on such Distribution Date.
"Series Additional Investor Funds," if applicable, shall mean, for any
Distribution Date, the Series Additional Funds, if any, that are not applied to
payment of the Supplemental Servicing Fee pursuant to Section 14.
"Series Available Principal Amount" shall mean, for any Distribution Date,
if a Group Principal Allocation Event has occurred, for each Series that is a
member of the same Group as the Series established hereby (including the Series
established hereby) that is in its Controlled Liquidation Period or
Accumulation Period, as applicable, an amount calculated as follows: For each
such Series, seriatim, beginning with the Series with the largest Series
Investor Interest for such Distribution Date (and if more than one Series has
the same Series Investor Interest on such Distribution Date, beginning with
whichever of such Series has the longest time remaining in its Controlled
Liquidation Period or Accumulation Period, as applicable (assuming that no
Amortization Event occurs with respect to such Series)), an amount equal to (x)
the Group Available Principal Amount less (y) the difference between the Series
Required Principal Amount and the amount of such Series' Controlled Liquidation
Amount or Controlled Accumulation Amount, as applicable, that was funded on
such Distribution Date (including any portion of such amount that was funded by
amounts withdrawn from the Group Principal Collections Reallocation Account
pursuant to Section 9(b)(31)). For purposes of calculating the Series
Available Principal Amount for each other such Series, the Group Available
Principal Amount shall be reduced by the Series Available Principal Amount for
the prior Series for which the Series Available Principal Amount was
calculated.
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"Series Buffer Amount," if applicable, shall have the meaning set forth in
the Series Term Sheet.
"Series Closing Date" shall mean the date designated as such in the Series
Term Sheet.
"Series Collections Account" shall have the meaning specified in Section
8.
"Series Cut-Off Date" shall mean the date designated as such in the Series
Term Sheet.
"Series Distribution Account" shall have the meaning specified in Section
8.
"Series Excess Servicing" shall mean, as of any Distribution Date, the sum
of the amounts of Class Excess Servicing for each Class of the Series
established hereby, as such amount is modified pursuant to Section 9.
"Series Excess Spread" shall mean, for any Distribution Date, an amount
equal to (a) the sum of Series Finance Charge Collections, Series Yield
Collections, Series Additional Investor Funds and any Class Investment Income
for any Class of the Series established hereby minus (b) the sum of (i) with
respect to each Class, the product of (A) the Class Invested Amount for such
Class for such Distribution Date and (B) a fraction, the numerator of which is
the Certificate Rate for that Class, and the denominator of which is (x) if the
relevant Certificate Rate is to be calculated on the basis of the actual number
of days elapsed and a 360-day year, (A) if each Interest Payment Date is also a
Distribution Date, 360 divided by the actual number of days from and including
the immediately preceding Distribution Date (or in the case of the first
Distribution Date, from and including the Series Closing Date) to but excluding
the current Distribution Date or (B) if each Interest Payment Date is not also
a Distribution Date, 360 divided by the actual number of days from and
including the immediately preceding Interest Calculation Date (or, in the case
of the first Distribution Date, from and including the Series Closing Date) to
but excluding the Interest Calculation Date following the current Distribution
Date or (y) if the relevant Certificate Rate is to be calculated on the basis
of a 360-day year of twelve 30-day months, twelve (or in the case of the first
Distribution Date, 360 divided by the number of days from and including the
Series Closing Date to but excluding the current Distribution Date (if each
Interest Payment Date is also a Distribution Date) or the Interest Calculation
Date following the current Distribution Date (if each Interest Payment Date is
not also a Distribution Date), assuming 30-day months), (ii) the Investor
Servicing Fee, (iii) the product of the Series Percentage with respect to the
Charged-Off Amount and the Charged-Off Amount, and (iv) the Credit Enhancement
Fee, in each case for such Distribution Date.
"Series Finance Charge Collections" shall mean, with respect to any day or
any Distribution Date or Trust Distribution Date, as applicable, the sum of the
amount of Class Finance Charge Collections for each Class for such day or for
the related Due Period, as applicable.
"Series Initial Investor Interest" shall mean the aggregate face amount of
Investor Certificates initially authenticated and delivered pursuant to Section
7, as specified in the Series Term Sheet.
"Series Interest Funding Account" shall have the meaning specified in
Section 8.
"Series Invested Amount" with respect to any Distribution Date, shall mean
the sum of the Class Invested Amounts for each Class of the Series established
hereby on such Distribution Date.
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<PAGE> 34
"Series Investor Interest" with respect to any Distribution Date, shall
mean the sum of the Class Investor Interests for each Class of the Series
established hereby on such Distribution Date.
"Series Minimum Principal Receivables Balance" shall mean, with respect to
the Series established hereby, on any date of determination the sum of (A) (i)
if a Fixed Principal Allocation Event has not occurred, the Series Investor
Interest on such date of determination, divided by 0.93 or (ii) if a Fixed
Principal Allocation Event has occurred, the Series Investor Interest as of the
date of the occurrence of the Fixed Principal Allocation Event, divided by
0.93, and (B) (x) the product of (i) the sum of (1) the amount on deposit in
the Series Principal Funding Account on such date of determination and (2) for
any date of determination during the Accumulation Period, if any, the
Controlled Accumulation Amount for the next Distribution Date, and (ii) a
fraction the numerator of which is the Estimated Investment Shortfall and the
denominator of which is the Estimated Yield, in each case on such date of
determination, divided by (y) 0.93; provided, however, that Greenwood on behalf
of the Holder of the Seller Certificate may, upon 30 days prior notice to the
Trustee, the Rating Agencies and the Credit Enhancement Provider, reduce the
Series Minimum Principal Receivables Balance by increasing the divisors set
forth above, subject to the condition that Greenwood on behalf of the Holder of
the Seller Certificate shall have been notified by the Rating Agencies that
such reduction would not result in the lowering or withdrawal of the rating of
any Class of any Series then outstanding, and provided, further, that the
divisors set forth above may not be increased to more than 0.98.
"Series Percentage" shall mean, with respect to any specified category,
with respect to any Distribution Date or Trust Distribution Date, as
applicable, the sum of the Class Percentages with respect to such category for
each Class of the Series established hereby on such Distribution Date or Trust
Distribution Date, as applicable.
"Series Principal Collections" shall mean, with respect to any day or any
Distribution Date or Trust Distribution Date, as applicable, the sum of the
amount of Class Principal Collections for each Class for such day or for the
related Due Period, as applicable.
"Series Principal Collections Account" shall have the meaning specified in
Section 8.
"Series Principal Funding Account" shall mean the Series Principal Funding
Account established pursuant to Section 8. Amounts "on deposit in" the Series
Principal Funding Account shall be deemed to be on deposit for the benefit of
(i) the Class A Certificateholders for the period up to and including the Class
A Expected Final Payment Date or Class A Final Maturity Date, as applicable,
and (ii) if there is a Subordinate Class with respect to Class A, the Class B
Certificateholders for the period beginning immediately after the Class A
Expected Final Payment Date or Class A Final Maturity Date, as applicable, and
ending on the Class B Expected Final Payment Date or Class B Final Maturity
Date, as applicable. Amounts "on deposit in" the Series Principal Funding
Account shall be deemed to include amounts invested in Permitted Investments
pursuant to Section 8 unless the context clearly requires otherwise.
"Series Required Principal Amount" shall mean, with respect to each
Distribution Date, with respect to each Series that is a member of the same
Group as the Series established hereby (including the Series established
hereby) that is in its Controlled Liquidation Period or Accumulation Period, as
applicable, the product of (x) (i) if the related Due Period does not occur in
February, 1.25 or (ii) if the related Due Period occurs in February, 1.05, and
(y) the Controlled Liquidation Amount or the Controlled Accumulation Amount, as
applicable, for such Series for such Distribution Date.
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<PAGE> 35
"Series Term Sheet" shall mean the Series Term Sheet setting forth the
terms of the Series of Investor Certificates issued hereby, to which this Annex
is attached.
"Series Termination Date" shall mean the date designated as such in the
Series Term Sheet.
"Series Yield Collections" shall mean, with respect to any day or any
Distribution Date, as applicable, an amount equal to the product of the Series
Yield Factor and the amount of Series Principal Collections for such day or the
related Due Period, as applicable.
"Series Yield Factor" shall mean the number identified as such in the
Series Term Sheet, as such number may be changed from time to time pursuant to
Section 23.
"Shared Credit Enhancement" shall mean Credit Enhancement available for
the benefit of both the Class A Investor Certificates and the Class B Investor
Certificates.
"Special Payment Date" shall mean each Distribution Date with respect to
the Amortization Period and the Distribution Date related to each Class
Expected Final Payment Date or Class Final Maturity Date, as applicable.
"Stated Class B Credit Enhancement Amount" shall mean the "stated amount"
with respect to the Credit Enhancement that is available solely for the benefit
of the Class B Investor Certificates, as set forth in the Series Term Sheet.
"Stated Shared Credit Enhancement Amount," if applicable, shall mean the
"stated amount" with respect to the shared portion of the Credit Enhancement,
as set forth in the Series Term Sheet.
"Statement Date" shall mean each date designated as such in the Series
Term Sheet.
"Subclass" with respect to any Class shall mean, if applicable, each
portion of such Class that has a different Certificate Rate or method of
calculating its Certificate Rate.
"Subordinate Class" shall mean, with respect to any Class, the Class, if
any, identified by the letter of the alphabet next succeeding the letter
designating such Class (e.g., the Subordinate Class with respect to Class A is
Class B).
"Subordinate Series" shall mean any Series which is subordinated in right
of payment, in whole or in part, pursuant to the Series Supplement with respect
to such Series, to the Series established hereby.
"Supplemental Credit Enhancement Amount," if applicable, shall have the
meaning set forth in the Series Term Sheet.
"Supplemental Credit Enhancement Event" shall occur the first time the
long-term debt or deposit rating of Greenwood or any Additional Seller is
withdrawn or reduced below BBB- by Standard & Poor's.
"Supplemental Servicing Fee" shall mean, if applicable, with respect to
any Distribution Date, an amount equal to the product of the Supplemental
Servicing Fee Percentage and the Series Investor Interest on the first day of
the Due Period related to such Distribution Date (or in the case of the first
Distribution
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<PAGE> 36
Date for the Series established hereby, the Series Investor Interest on the
Series Cut-Off Date).
"Supplemental Servicing Fee Percentage," if applicable, shall mean the
percentage identified as such in the Series Term Sheet.
"Supplemental Subordinated Amount," if applicable, shall have the meaning
set forth in the Series Term Sheet.
"Telerate Page 3750," if applicable, shall mean the display page so
designated on the Dow Jones Telerate Service (or such other rate as may replace
that page on that service for the purpose of displaying comparable rates or
prices).
"Total Available Credit Enhancement Amount" shall mean, with respect to
the first Distribution Date, the Stated Class B Credit Enhancement Amount plus,
if applicable, the Stated Shared Credit Enhancement Amount, and, on each
Distribution Date thereafter, shall mean the Available Class B Credit
Enhancement Amount plus, if applicable, the Available Shared Credit Enhancement
Amount, in each case after all adjustments thereto on the immediately preceding
Distribution Date, and, in each case, as adjusted pursuant to Section 9 on such
Distribution Date.
"Total Maximum Credit Enhancement Amount" shall have the meaning set forth
in the Series Term Sheet.
"Trust Swap Default," if applicable, shall mean, with respect to a Class
that is subject to a Class Currency Swap, the failure of the Trustee, on behalf
of the Trust, to deposit into the Currency Swap Dollar Escrow Account on the
Distribution Date immediately preceding the Interest Payment Date (or within
any applicable grace period specified in the Class Currency Swap) for payment
to the Currency Swap Counterparty for such Class a Dollar amount equal to the
sum of the Class Modified Required Amounts for such Class for each Distribution
Date of the Interest Accrual Period (or any other amounts required to be
deposited pursuant to the Series Supplement).
"United States" or "U.S." shall mean the United States of America, its
territories and possessions, any State of the United States and the District of
Columbia.
SECTION 2. Subordination.
(a) Subordination of Certain Classes. If there is a Subordinate Class
with respect to Class A, the Holders of each Class B Investor Certificate, by
their acceptance of such Investor Certificate, hereby subordinate, for the
benefit of the Holders of Class A Investor Certificates, to the extent and in
the manner set forth in Section 9, all of such Investor Certificateholders'
right, title and interest in and to future distributions due on such Holders'
Investor Certificates, but only to the extent of the Available Subordinated
Amount.
(b) No Subordination of Series. The Investor Certificates of the Series
established hereby shall not be subordinated in right of payment to any other
Series, whether currently outstanding or to be issued in the future. One or
more other Series, however, may be subordinated in right of payment to the
Series established hereby, although the Sellers shall have no obligation to
issue such a Subordinate Series. If any Subordinate Series is issued, such
Subordinate Series shall be subordinate in right of payment to the Series
established hereby only to the extent set forth in the Series Supplement with
respect to such Subordinate Series.
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<PAGE> 37
SECTION 3. Representations and Warranties of the Sellers. The
representations and warranties of the Sellers contained in Section 2.04 of the
Pooling and Servicing Agreement and the corresponding sections of any
Assignment are true on and as of the date hereof and/or the date set forth in
the Pooling and Servicing Agreement, as applicable. Each Seller also
represents and warrants to the Trust as of the date hereof that the execution,
delivery and performance of this Series Supplement by such Seller have been
duly authorized by all necessary corporate action, do not require any approval
or consent of any governmental agency or authority, do not and will not
conflict with any material provision of the Certificate of Incorporation or
By-Laws of such Seller, do not and will not conflict with, or result in a
breach which would constitute a material default under, any agreement for
borrowed money binding upon or applicable to it or such of its property which
is material to it, or, to the best of such Seller's knowledge, any law or
governmental regulation or court decree applicable to it or such material
property, and this Series Supplement is the valid, binding and enforceable
obligation of such Seller, except as the same may be limited by receivership,
insolvency, reorganization, moratorium or other laws relating to the
enforcement of creditors' rights generally or by general equity principles.
SECTION 4. Representations and Warranties of Greenwood as Master Servicer
and Servicer. The representations and warranties of Greenwood as the Master
Servicer and as a Servicer contained in Section 3.04 of the Pooling and
Servicing Agreement are true on and as of the date hereof. Greenwood as Master
Servicer and Servicer also represents and warrants to the Trust as of the date
hereof that the execution, delivery and performance of this Series Supplement
by Greenwood have been duly authorized by all necessary corporate action, do
not require any approval or consent of any governmental agency or authority, do
not and will not conflict with any material provision of the Certificate of
Incorporation or By-Laws of Greenwood, do not and will not conflict with, or
result in a breach which would constitute a material default under, any
agreement for borrowed money binding upon or applicable to it or such of its
property which is material to it, or, to the best of Greenwood's knowledge, any
law or governmental regulation or court decree applicable to it or such
material property, and this Series Supplement is the valid, binding and
enforceable obligation of Greenwood, except as the same may be limited by
receivership, insolvency, reorganization, moratorium or other laws relating to
the enforcement of creditors' rights generally or by general equity principles.
SECTION 5. Representations and Warranties of Other Servicers. The
representations and warranties of each Servicer (other than Greenwood), if any,
contained in Section 3.05 of the Pooling and Servicing Agreement are true and
correct on and as of the date hereof. Each such Servicer also represents and
warrants to the Trust as of the date hereof that the execution, delivery and
performance of this Series Supplement by such Servicer have been duly
authorized by all necessary corporate action, do not require any approval or
consent of any governmental agency or authority, do not and will not conflict
with any material provision of the Certificate of Incorporation or By-Laws of
such Servicer, do not and will not conflict with, or result in a breach which
would constitute a material default under, any agreement for borrowed money
binding upon or applicable to it or such of its property which is material to
it, or, to the best of such Servicer's knowledge, any law or governmental
regulation or court decree applicable to it or such material property, and this
Series Supplement is the valid, binding and enforceable obligation of such
Servicer, except as the same may be limited by receivership, insolvency,
reorganization, moratorium or other laws relating to the enforcement of
creditors' rights generally or by general equity principles.
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<PAGE> 38
SECTION 6. Representations and Warranties of the Trustee. The
representations and warranties of the Trustee contained in Section 11.16 of the
Pooling and Servicing Agreement are true on and as of the date hereof. The
Trustee also represents and warrants as of the date hereof that the Trustee has
full power, authority and right to execute, deliver and perform this Series
Supplement, and has taken all necessary action to authorize the execution,
delivery and performance by it of this Series Supplement, and this Series
Supplement has been duly executed and delivered by the Trustee.
SECTION 7. Authentication of Certificates. Pursuant to the request of
the Sellers, the Trustee shall cause Investor Certificates in authorized
denominations evidencing the Series established hereby to be duly authenticated
and delivered as of the Series Closing Date to or upon the order of the Sellers
pursuant to Section 6.06 of the Pooling and Servicing Agreement.
SECTION 8. Establishment and Administration of Investor Accounts and the
Credit Enhancement Account.
(a) The Series Distribution Account, Series Collections Account and
Series Principal Collections Account. The Trustee, for the benefit of the
Certificateholders, shall cause to be established and maintained in the name of
the Trust, with the corporate trust department of an office or branch of either
the Trustee or a Qualified Institution, three non-interest bearing segregated
demand deposit accounts (the "Series Distribution Account," the "Series
Collections Account" and the "Series Principal Collections Account") bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders. The Trust shall possess all right,
title and interest in all funds on deposit in the Series Distribution Account,
the Series Collections Account and the Series Principal Collections Account;
provided, however, that all interest and earnings (less investment expenses) on
funds on deposit in any such account shall be paid to the Holder of the Seller
Certificate in accordance with Section 4.02(c) of the Pooling and Servicing
Agreement. Pursuant to authority granted to it pursuant to Section 3.01(b) of
the Pooling and Servicing Agreement, the Master Servicer shall have the
revocable power to instruct the Trustee to withdraw funds from the Series
Distribution Account, the Series Collections Account and the Series Principal
Collections Account for the purpose of carrying out the duties of the Master
Servicer hereunder. The Master Servicer at all times shall maintain accurate
records reflecting each transaction in the Series Distribution Account, the
Series Collections Account and the Series Principal Collections Account. The
Paying Agent also shall have the revocable authority to make withdrawals from
the Series Distribution Account.
(b) Reallocation Accounts. The Trustee, for the benefit of the
Certificateholders, shall cause to be established and maintained in the name of
the Trust, with the corporate trust department of an office or branch of either
the Trustee or a Qualified Institution, two non-interest bearing segregated
trust accounts for the Group of which the Series established hereby is a member
(the "Group Finance Charge Collections Reallocation Account" and the "Group
Principal Collections Reallocation Account") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders. The Trust shall possess all right, title and interest in
all funds on deposit from time to time in the Group Finance Charge Collections
Reallocation Account and the Group Principal Collections Reallocation Account
and in all proceeds thereof. Pursuant to authority granted to it pursuant to
Section 3.01(b) of the Pooling and Servicing Agreement, the Master Servicer
shall have the revocable power to instruct the Trustee to withdraw funds from
the Group Finance Charge Collections Reallocation Account and the Group
Principal Collections Reallocation Account for the purpose of carrying out the
duties of the Master Servicer hereunder. The Master Servicer at all times
shall maintain accurate records reflecting each transaction in the Group
Finance Charge Collections Reallocation Account and in the Group Principal
Collections Reallocation Account.
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<PAGE> 39
(c) The Series Principal Funding Account. The Trustee, for the benefit
of the Certificateholders, shall establish and maintain or cause to be
established and maintained in the name of the Trust, with the corporate trust
department of an office or branch of either the Trustee or a Qualified
Institution, a non- interest bearing segregated trust account (the "Series
Principal Funding Account") bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Certificateholders.
The Trust shall possess all right, title and interest in all funds on deposit
from time to time in the Series Principal Funding Account and in all proceeds
thereof. The Series Principal Funding Account shall be under the sole dominion
and control of the Trustee for the benefit of the Certificateholders. Pursuant
to authority granted to it pursuant to Section 3.01(b) of the Pooling and
Servicing Agreement, the Master Servicer shall have the revocable power to
withdraw funds from the Series Principal Funding Account for the purpose of
carrying out the duties of the Master Servicer hereunder. The Master Servicer
at all times shall maintain accurate records reflecting each transaction in the
Series Principal Funding Account. The Paying Agent also shall have the
revocable authority to make withdrawals from the Series Principal Funding
Account.
Funds on deposit in the Series Principal Funding Account shall be invested
in Permitted Investments by the Trustee (or, at the direction of the Trustee,
by the Master Servicer on behalf of the Trustee) at the direction of Greenwood
on behalf of the Holder of the Seller Certificate, as set forth below. Any
Permitted Investment with a stated maturity shall mature on or prior to the
following Distribution Date. On or before the occurrence of the first
Distribution Date with respect to the Accumulation Period or Controlled
Liquidation Period, as applicable (and on or before any subsequent Distribution
Date in which the notice previously given is no longer correct or valid), the
Master Servicer shall notify the Trustee of the amount of Series Principal
Collections to be deposited into the Series Principal Funding Account on such
Distribution Date, and Greenwood on behalf of the Holder of the Seller
Certificate shall direct the Trustee in writing to invest the funds that will
be on deposit in the Series Principal Funding Account on such Distribution Date
(including any funds previously invested in Permitted Investments that will be
available for reinvestment on such Distribution Date) in Permitted Investments.
Greenwood's notice to the Trustee shall specifically identify each such
Permitted Investment (including its principal amount and maturity). In
addition, Greenwood on behalf of the Holder of the Seller Certificate shall
from time to time provide written notice to the Trustee directing the Trustee
to reinvest funds representing principal, interest or other investment income
received by it with respect to such Permitted Investments (whether upon
maturity or otherwise) in additional Permitted Investments. In the event that
Greenwood on behalf of the Holder of the Seller Certificate fails to direct the
Trustee to invest or reinvest any funds that are deposited in the Series
Principal Funding Account or that are received by it with respect to Permitted
Investments by 2:00 p.m. on the date such funds are available for investment,
the Trustee shall use reasonable efforts to invest such funds overnight in
securities represented by instruments in bearer or registered form which
evidence obligations issued or fully guaranteed, as to timely payment, by the
United States of America or any instrumentality or agency thereof when such
obligations are backed by the full faith and credit of the United States of
America until such time as the Trustee receives the required notice from
Greenwood; provided, however, that the Trustee shall have no liability for the
failure to invest such funds if the Trustee has employed reasonable efforts to
make such investment.
(d) The Series Interest Funding Account. The Trustee, for the benefit of
the Certificateholders, shall establish and maintain or cause to be established
and maintained in the name of the Trust, in the corporate trust department of
an office or branch of either the Trustee or a Qualified Institution, a non-
interest bearing segregated trust account (the "Series Interest Funding
Account") bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholders. The Trust shall
possess all right, title and interest in all funds on deposit from time to time
in the Series Interest Funding Account and in all proceeds thereof. Pursuant
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to authority granted to it pursuant to Section 3.01(b) of the Pooling and
Servicing Agreement, the Master Servicer shall have the revocable power to
instruct the Trustee to withdraw funds from the Series Interest Funding Account
for the purpose of carrying out the duties of the Master Servicer hereunder.
Any funds on deposit in the Series Interest Funding Account for more than one
Business Day shall be invested in Permitted Investments pursuant to Section
4.02(c) of the Pooling and Servicing Agreement. The Master Servicer at all
times shall maintain accurate records reflecting each transaction in the Series
Interest Funding Account. The Paying Agent shall also have the revocable
authority to make withdrawals from the Series Interest Funding Account.
(e) The Credit Enhancement Account. If the Credit Enhancement is Funded
Credit Enhancement, the Master Servicer, for the benefit of the
Certificateholders and the Credit Enhancement Provider, shall establish and
maintain or cause to be established and maintained in the name of the Trust,
with the corporate trust department of an office or branch of either the
Trustee or a Qualified Institution, a non-interest bearing segregated trust
account (the "Credit Enhancement Account") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders and the Credit Enhancement Provider. The Trust shall
possess all right, title and interest in all funds on deposit from time to time
in the Credit Enhancement Account and in all proceeds thereof. The Credit
Enhancement Account shall be under the sole dominion and control of the Trustee
as the administrator of the Credit Enhancement for the benefit of the
Certificateholders and the Credit Enhancement Provider; provided, however, the
Master Servicer may make Credit Enhancement Drawings pursuant to, and for the
purposes set forth in, Section 9. The interest of the Credit Enhancement
Provider in the Credit Enhancement Account shall be subordinated to the
interests of the Certificateholders to the extent provided herein and in the
Credit Enhancement Agreement. The Trustee, at the direction of the Master
Servicer, shall (i) on the Series Closing Date, deposit into the Credit
Enhancement Account an amount equal to the sum of the Stated Shared Credit
Enhancement Amount and the Stated Class B Credit Enhancement Amount (such
amounts to be funded by the Credit Enhancement Provider pursuant to the Credit
Enhancement Agreement) and (ii) make withdrawals from, and deposits to, the
Credit Enhancement Account from time to time in the amounts and for the
purposes set forth in this Series Supplement. The Credit Enhancement Provider
shall not be entitled to reimbursement from the assets of the Trust for any
withdrawals from the Credit Enhancement Account except as specifically provided
in this Series Supplement. The Master Servicer at all times shall maintain
accurate records reflecting each transaction in the Credit Enhancement Account.
Funds on deposit in the Credit Enhancement Account shall be invested in
Permitted Investments by the Trustee as administrator of the Credit Enhancement
at the direction of the Master Servicer, as set forth below. Any Permitted
Investment with a stated maturity shall mature on or prior to the following
Distribution Date or such longer period as will not result in the lowering or
withdrawal of the rating of any Class of any Series then outstanding by the
Rating Agencies and any funds received with respect to the maturity of a
Permitted Investment shall be available in sufficient time to allow for any
payments to be made to the Investor Certificateholders on such Distribution
Date. The Master Servicer's notice to the Trustee shall specifically identify
each such Permitted Investment (including its principal amount and maturity).
In addition, the Master Servicer shall from time to time provide written notice
to the Trustee directing the Trustee to reinvest funds representing principal,
interest or other investment income received by it with respect to such
Permitted Investments (whether upon maturity or otherwise) in additional
Permitted Investments. In the event that the Master Servicer fails to direct
the Trustee to invest or reinvest any funds that are deposited in the Credit
Enhancement Account or that are received by it with respect to Permitted
Investments by 2:00 p.m. on the date such funds are available for investment,
the Trustee shall use reasonable efforts to invest such funds overnight in
securities represented by instruments in bearer or registered form which
evidence obligations issued or fully
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<PAGE> 41
guaranteed, as to timely payment, by the United States of America or any
instrumentality or agency thereof when such obligations are backed by the full
faith and credit of the United States of America until such time as the Trustee
receives the required notice from the Master Servicer; provided, however, that
the Trustee shall have no liability for the failure to invest such funds if the
Trustee has employed reasonable efforts to make such investment.
On each Distribution Date, all interest and earnings (net of losses and
investment expenses) accrued since the preceding Distribution Date on funds on
deposit in the Credit Enhancement Account shall be paid to the Trustee as
administrator of the Credit Enhancement for application in accordance with the
provisions of the Credit Enhancement Agreement. For purposes of determining
the availability of funds or the balances in the Credit Enhancement Account,
all investment earnings on such funds shall be deemed not to be available or on
deposit. If, on any Distribution Date, after giving effect to all other
deposits to and withdrawals from the Credit Enhancement Account as of such
Distribution Date, the amount on deposit in the Credit Enhancement Account is
greater than the Total Maximum Credit Enhancement Amount, then the excess of
the amount on deposit over the Total Maximum Credit Enhancement Amount shall be
withdrawn from the Credit Enhancement Account and paid to the Trustee as
administrator of the Credit Enhancement for application in accordance with the
provisions of the Credit Enhancement Agreement.
Upon the earliest to occur of (i) the termination of the Trust, (ii) the
Series Termination Date and (iii) the day on which the Class Invested Amount
for each Class of the Series established hereby is paid in full, and after
payment of all amounts to be paid on such day from the Credit Enhancement
Account to or for the benefit of Investor Certificateholders of the Series
established hereby, all amounts remaining on deposit in the Credit Enhancement
Account shall be withdrawn from such account and paid to the Trustee as
administrator of the Credit Enhancement for application in accordance with the
provisions of the Credit Enhancement Agreement.
(f) The Class Foreign Currency Distribution Account. In the event that
any Class is subject to a Class Currency Swap, the Trustee, for the benefit of
the Certificateholders of such Class, shall cause to be established and
maintained in the name of the Paying Agent, an account outside the United
States (the "Class Foreign Currency Distribution Account") bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders of such Class. Pursuant to the authority
granted to it pursuant to Section 3.01(b) of the Pooling and Servicing
Agreement, the Master Servicer shall have the revocable power to instruct the
Trustee to withdraw funds from the Class Foreign Currency Distribution Account
for the purpose of carrying out the duties of the Master Servicer hereunder.
The Trust shall possess all right, title and interest in all funds on deposit
from time to time in the Class Foreign Currency Distribution Account and in all
proceeds thereof and each Paying Agent with respect to such Class (as specified
in the Series Term Sheet) shall have the revocable authority to make
withdrawals from the Class Foreign Currency Distribution Account.
Notwithstanding Section 6.08(b) of the Pooling and Servicing Agreement, the
Class Foreign Currency Distribution Account shall not be a segregated trust
account and the Principal Paying Agent shall make no certification with respect
thereto.
(g) The Currency Swap Dollar Escrow Account. In the event that any Class
is subject to a Class Currency Swap, the Trustee, for the benefit of the
Certificateholders of such Class and the Currency Swap Counterparty, shall
cause to be established and maintained in the name of the Trust, with the
Escrow Agent identified in the Series Term Sheet, a non-interest bearing escrow
account (the "Currency Swap Dollar Escrow Account") bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Certificateholders of such Class. The Trust shall possess all right, title
and interest in all funds on deposit from time to time in the Currency Swap
Dollar Escrow Account and in all proceeds thereof.
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Any funds on deposit in the Currency Swap Dollar Escrow Account for more than
one Business Day shall be invested in Permitted Investments specified in clause
(a)(iii) of the definition of Permitted Investments in accordance with the
terms of the Escrow Agreement. The Escrow Agent at all times shall maintain
accurate records reflecting each transaction in the Currency Swap Dollar Escrow
Account. All funds deposited into the Currency Swap Dollar Escrow Account
shall be either released by the Escrow Agent to the Currency Swap Counterparty
or returned to the Trustee as provided in the Escrow Agreement for conversion
into Foreign Currency by the Trustee at the then prevailing exchange rate in
New York.
(h) The Class Currency Swap Termination Account. In the event that any
Class is subject to a Class Currency Swap, the Trustee, for the benefit of the
Certificateholders of such Class, shall cause to be established and maintained
in the name of the Trust, with the corporate trust department of an office or
branch of either the Trustee or a Qualified Institution, a non-interest bearing
segregated trust account (the "Class Currency Swap Termination Account")
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Certificateholders of such Class. The Trustee, at
the direction of the Master Servicer, shall deposit into the Class Currency
Swap Termination Account any funds (in Dollars) received by the Trustee from
the Currency Swap Counterparty with respect to an Event of Default (as defined
in the Class Currency Swap) on the date such funds are received. Pursuant to
the authority granted to it pursuant to Section 3.01(b) of the Pooling and
Servicing Agreement, the Master Servicer shall have the revocable power to
instruct the Trustee to withdraw funds from the Class Foreign Currency
Distribution Account for the purpose of carrying out the duties of the Master
Servicer hereunder. The Master Servicer at all times shall maintain accurate
records reflecting each transaction in the Class Currency Swap Termination
Account.
Funds on deposit in the Class Currency Swap Termination Account shall be
invested in Permitted Investments by the Trustee at the direction of the Master
Servicer, as set forth below. Any Permitted Investment with a stated maturity
shall mature on or prior to the following Distribution Date or such longer
period as will not result in the lowering or withdrawal of the rating of any
Class of any Series then outstanding by the Rating Agencies and any funds
received with respect to the maturity of a Permitted Investment shall be
available in sufficient time to allow for any payments to be made to the
Investor Certificateholders on the applicable Interest Payment Date with
respect to such Class. The Master Servicer's notice to the Trustee shall
specifically identify each such Permitted Investment (including its principal
amount and maturity). In addition, the Master Servicer shall from time to time
provide written notice to the Trustee directing the Trustee to reinvest funds
representing principal, interest or other investment income received by it with
respect to such Permitted Investments (whether upon maturity or otherwise) in
additional Permitted Investments. In the event that the Master Servicer fails
to direct the Trustee to invest or reinvest any funds that are deposited in the
Class Currency Swap Termination Account or that are received by it with respect
to Permitted Investments by 2:00 p.m. on the date such funds are available for
investment, the Trustee shall use reasonable efforts to invest such funds
overnight in securities represented by instruments in bearer or registered form
which evidence obligations issued or fully guaranteed, as to timely payment, by
the United States of America or any instrumentality or agency thereof when such
obligations are backed by the full faith and credit of the United States of
America until such time as the Trustee receives the required notice from the
Master Servicer; provided, however, that the Trustee shall have no liability
for the failure to invest such funds if the Trustee has employed reasonable
efforts to make such investment.
(i) Transfer of Investor Accounts. If at any time any of the Investor
Accounts established in Sections 8(a) through 8(e) or 8(h) is not being held by
the Trustee and the institution
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holding such Investor Account ceases to be a Qualified Institution, the Master
Servicer shall within 10 Business Days establish a new Investor Account
(meeting any conditions specified in this Series Supplement with respect to
such Investor Account) with a Qualified Institution and transfer any cash
and/or any investments to such new Investor Account.
SECTION 9. Allocations of Collections.
(a) Deposits to Series Collections Account. On or before each
Distribution Date, the Master Servicer shall direct the Trustee in writing to
withdraw from the Group Collections Account and deposit into the Series
Collections Account an amount equal to the sum of the Series Finance Charge
Collections and the Series Principal Collections for the related Due Period.
On or before each Distribution Date, the Class Additional Funds for each Class
of the Series established hereby shall also have been deposited into the Series
Collections Account pursuant to Section 4.03(e) of the Pooling and Servicing
Agreement.
(b) Deposits During the Revolving Period, Accumulation Period, Controlled
Liquidation Period or Amortization Period, as Applicable. The Master Servicer
shall, on or before each Distribution Date during the Revolving Period, the
Accumulation Period, the Controlled Liquidation Period or any Amortization
Period, as applicable, direct the Trustee in writing that funds be paid or
deposited in the following amounts, to the extent such funds are available and
in the order of priority specified, to the account or Person indicated, in each
case as set forth below; provided, however, that if the Credit Enhancement is
not Funded Credit Enhancement, then no amounts (other than any Credit
Enhancement Fees or any amounts paid to the Trustee as Administrator of the
Credit Enhancement in respect of the Total Available Credit Enhancement Amount)
that are measured or determined by reference to Class Excess Servicing for any
Class, Series Excess Servicing or the amount on deposit at any time in the
Group Finance Charge Collections Reallocation Account shall be paid or
deposited if, on the related Drawing Date, the Credit Enhancement Provider is
unable to pay its debts as they become due.
(1) During the Accumulation Period or on the first Distribution Date of the
Amortization Period, if applicable, an amount equal to the amount of Class
Investment Income for the related Due Period for any Class shall be withdrawn
from the Series Principal Funding Account and deposited into the Series
Collections Account.
(2) With respect to Class A, an amount equal to the lesser of
(x) the Class A Required Amount and
(y) the sum of (1) Class A Finance Charge Collections, (2)
Class A Yield Collections, (3) Class A Investment Income, if
applicable, and (4) Class A Additional Funds
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The amount by which the Class A Required Amount
exceeds the amount of such deposit shall be the "Class A Required Amount
Shortfall."
(3) With respect to Class A, an amount equal to the lesser of
(x) the Class A Required Amount Shortfall and
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(y) funds, if any, available to pay such Class A Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class A Required
Amount Shortfall shall be reduced by the amount of such deposit.
(4) With respect to Class A, an amount equal to the lesser of
(x) the Class A Cumulative Investor Charged-Off Amount and
(y) Class A Excess Servicing
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class A Cumulative Investor
Charged-Off Amount, Series Excess Servicing and the Available Subordinated
Amount shall be reduced by the amount of such deposit.
(5) An amount equal to the lesser of
(x) the Class A Cumulative Investor Charged-Off Amount and
(y) funds, if any, available to pay such Class A Cumulative
Investor Charged-Off Amount from funds initially allocated to any
Subordinate Series
shall be deposited into the Series Principal Collections Account. The Class A
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(6) If there is a Subordinate Class with respect to Class A, an amount
equal to the least of
(x) the Class A Required Amount Shortfall,
(y) the Available Subordinated Amount, and
(z) Class B Available Collections
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class B Subordinated Payment shall be
increased by, and the Class A Required Amount Shortfall, the Available
Subordinated Amount and Class B Available Collections shall be decreased by,
the amount of such deposit.
(7) If there is a Subordinate Class with respect to Class A, an amount
equal to the least of
(x) the Class A Cumulative Investor Charged-Off Amount,
(y) the Available Subordinated Amount, and
(z) Class B Available Collections
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class B Subordinated Payment shall
be increased by, and the Class A
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Cumulative Investor Charged-Off Amount, the Available Subordinated Amount and
Class B Available Collections shall be reduced by, the amount of such deposit.
(8) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of
(x) the Class B Required Amount and
(y) the positive difference, if any, between
(1) the amount of Class B Available Finance Charge
Collections, and
(2) the Class B Subordinated Payment
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The amount by which the Class B Required Amount
exceeds the amount of such deposit shall be the "Class B Required Amount
Shortfall."
(9) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of
(x) the Class B Required Amount Shortfall and
(y) funds, if any, available to pay such Class B Required
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Distribution Account. The Class B Required
Amount Shortfall shall be reduced by the amount of such deposit.
(10) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of
(x) the Class B Cumulative Investor Charged-Off Amount and
(y) funds, if any, available to pay such Class B Cumulative
Investor Charged-Off Amount from funds initially allocated to any
Subordinate Series
shall be deposited into the Series Principal Collections Account. The Class B
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
(11) If there is a Subordinate Class with respect to Class A, an amount
equal to the least of
(x) the Class A Required Amount Shortfall,
(y) the Available Subordinated Amount, and
(z) Series Excess Servicing
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class A Required Amount Shortfall, the
Available Subordinated Amount and the amount of Series Excess Servicing shall
be reduced by the amount of such deposit.
(12) If there is a Subordinate Class with respect to Class A, an amount
equal to the least of
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(x) the Class A Cumulative Investor Charged-Off Amount,
(y) the Available Subordinated Amount, and
(z) Series Excess Servicing
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class A Cumulative Investor
Charged-Off Amount, the Available Subordinated Amount and the amount of Series
Excess Servicing shall be reduced by the amount of such deposit. If the Class
A Cumulative Investor Charged-Off Amount is greater than zero after such
reduction, the Class A Cumulative Investor Charged-Off Amount shall be further
reduced by an amount equal to the least of
(x) the Class A Cumulative Investor Charged-Off Amount,
(y) the Available Subordinated Amount, and
(z) the Class B Investor Interest.
The Class A Cumulative Investor Charged-Off Amount, the Available Subordinated
Amount and the Class B Investor Interest shall each be reduced by such least
amount, and the Class B Cumulative Investor Charged-Off Amount shall be
increased by such amount.
(13) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of
(x) the Class B Required Amount Shortfall and
(y) Series Excess Servicing
shall be withdrawn from the Series Collections Account and deposited into the
Series Distribution Account. The Class B Required Amount Shortfall and the
amount of Series Excess Servicing shall be reduced by the amount of such
deposit.
(14) If there is a Subordinate Class with respect to Class A, an amount
equal to the lesser of
(x) the Class B Cumulative Investor Charged-Off Amount and
(y) Series Excess Servicing
shall be withdrawn from the Series Collections Account and deposited into the
Series Principal Collections Account. The Class B Cumulative Investor
Charged-Off Amount and the amount of Series Excess Servicing shall be reduced
by the amount of such deposit.
(15) An amount equal to the lesser of
(x) the amount by which the Total Available Credit Enhancement
Amount is less than the Total Maximum Credit Enhancement Amount and
(y) Series Excess Servicing
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shall be withdrawn from the Series Collections Account and paid to the Trustee
as administrator of the Credit Enhancement for application in accordance with
the provisions of the Credit Enhancement Agreement. If there is Shared Credit
Enhancement, such deposit shall increase the Available Shared Credit
Enhancement Amount until the Available Shared Credit Enhancement Amount equals
the Maximum Shared Credit Enhancement Amount. If there is a Subordinate Class
with respect to Class A, any remaining portion of such deposit shall increase
the Available Class B Credit Enhancement Amount until the Available Class B
Credit Enhancement Amount equals the Maximum Class B Credit Enhancement Amount.
The Total Available Credit Enhancement Amount shall be increased by, and the
amount of Series Excess Servicing shall be decreased by, the amount of such
deposit.
(16) If there is Shared Credit Enhancement, and if the Class A Required
Amount Shortfall is greater than zero, the Master Servicer, on the related
Drawing Date, shall make a Credit Enhancement Drawing in an amount equal to the
lesser of
(x) the Class A Required Amount Shortfall and
(y) the Available Shared Credit Enhancement Amount
and such amount shall be deposited into the Series Distribution Account. The
Class A Required Amount Shortfall and the Available Shared Credit Enhancement
Amount shall be reduced by the amount of such deposit.
(17) If there is Shared Credit Enhancement, and if the Class A Cumulative
Investor Charged-Off Amount is greater than zero, the Master Servicer, on the
related Drawing Date, shall make a Credit Enhancement Drawing in an amount
equal to the lesser of
(x) the Class A Cumulative Investor Charged-Off Amount and
(y) the Available Shared Credit Enhancement Amount
and such amount shall be deposited into the Series Principal Collections
Account. The Class A Cumulative Investor Charged-Off Amount and the Available
Shared Credit Enhancement Amount shall be reduced by the amount of such
deposit.
(18) If there is Shared Credit Enhancement, and if there is a Subordinate
Class with respect to Class A, and if the Class B Required Amount Shortfall is
greater than zero, the Master Servicer, on the related Drawing Date, shall make
a Credit Enhancement Drawing in an amount equal to the lesser of
(x) the Class B Required Amount Shortfall and
(y) the Available Shared Credit Enhancement Amount
and such amount shall be deposited into the Series Distribution Account. The
Class B Required Amount Shortfall and the Available Shared Credit Enhancement
Amount shall be reduced by the amount of such deposit.
(19) If there is Shared Credit Enhancement, and if there is a Subordinate
Class with respect to Class A, and if the Class B Cumulative Investor
Charged-Off Amount is greater than zero, the
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Master Servicer, on the related Drawing Date, shall make a Credit Enhancement
Drawing in an amount equal to the lesser of
(x) the Class B Cumulative Investor Charged-Off Amount and
(y) the Available Shared Credit Enhancement Amount
and such amount shall be deposited into the Series Principal Collections
Account. The Class B Cumulative Investor Charged-Off Amount and the Available
Shared Credit Enhancement Amount shall be reduced by the amount of such
deposit.
(20) If there is Subordinate Class with respect to Class A, and if the
Class B Required Amount Shortfall is greater than zero, the Master Servicer,
on the related Drawing Date, shall make a Credit Enhancement Drawing in an
amount equal to the lesser of
(x) the Class B Required Amount Shortfall and
(y) the Available Class B Credit Enhancement Amount
and such amount shall be deposited into the Series Distribution Account. The
Class B Required Amount Shortfall and the Available Class B Credit Enhancement
Amount shall be reduced by the amount of such deposit.
(21) If there is a Subordinate Class with respect to Class A, and if the
Class B Cumulative Investor Charged-Off Amount is greater than zero, the Master
Servicer, on the related Drawing Date, shall make a Credit Enhancement Drawing
in an amount equal to the lesser of
(x) the Class B Cumulative Investor Charged-Off Amount and
(y) the Available Class B Credit Enhancement Amount
and such amount shall be deposited into the Series Principal Collections
Account. The Class B Cumulative Investor Charged-Off Amount and the Available
Class B Credit Enhancement Amount shall be reduced by the amount of such
deposit.
(22) An amount equal to the lesser of
(x) the Credit Enhancement Fee and
(y) Series Excess Servicing
shall be withdrawn from the Series Collections Account and paid to the Trustee
as the administrator of the Credit Enhancement for application in accordance
with the provisions of the Credit Enhancement Agreement. The amount of Series
Excess Servicing shall be reduced by the amount of such payment.
(23) An amount equal to the amount of Series Excess Servicing shall be
withdrawn from the Series Collections Account and deposited into the Group
Finance Charge Collections Reallocation Account.
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(24) The allocations set forth in clauses (24)(A) and (24)(B) shall be made,
first, with respect to Class A, and then, if there is a Subordinate Class with
respect to Class A, the allocations set forth in clauses (24)(A) and (24)(B)
shall be made with respect to Class B, to the extent that funds are available
pursuant to this clause (24):
(A) An amount equal to the lesser of
(x) the Class Required Amount Shortfall and
(y) the product of
(1) a fraction the numerator of which is the Class Required
Amount Shortfall and the denominator of which is the sum of
the Class Required Amount Shortfalls for all Classes
designated by the same letter of the alphabet of all Series
in the Group to which the Series established hereby belongs
(after giving effect to provisions in the applicable Series
Supplements substantially similar to the clauses preceding
this clause (24)) and
(2) the amount on deposit in the Group Finance Charge
Collections Reallocation Account before any withdrawals
therefrom with respect to any other Series pursuant to a
comparable clause in the applicable Series Supplements,
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Distribution Account. The Class Required
Amount Shortfall shall be reduced by the amount of such deposit.
(B) An amount equal to the lesser of
(x) the Class Cumulative Investor Charged-Off Amount and
(y) the product of
(1) a fraction the numerator of which is the Class
Cumulative Investor Charged-Off Amount and the denominator
of which is the sum of the Class Cumulative Investor
Charged-Off Amounts for all Classes designated by the same
letter of the alphabet of all Series in the Group to which
the Series established hereby belongs (after giving effect
to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause
(24)) and
(2) the amount on deposit in the Group Finance Charge
Collections Reallocation Account before any withdrawals
therefrom with respect to any other Series pursuant to a
comparable clause in the applicable Series Supplements,
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and deposited into the Series Principal Collections Account. The Class
Cumulative Investor Charged-Off Amount shall be reduced by the amount of such
deposit.
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(25) The allocations set forth in clauses (25)(A) and (25)(B) shall be made,
to the extent that funds are available pursuant to this clause (25):
(A) If there is Shared Credit Enhancement, an amount equal to the
lesser of
(x) the amount by which the Available Shared Credit
Enhancement Amount is less than the Maximum Shared Credit
Enhancement Amount and
(y) the product of
(1) a fraction, the numerator of which is the amount by
which the Available Shared Credit Enhancement Amount is less
than the Maximum Shared Credit Enhancement Amount and the
denominator of which is the sum of, for each Series in the
Group of which the Series established hereby is a member,
the amount by which the Available Shared Credit Enhancement
Amount for such Series is less than the Maximum Shared
Credit Enhancement Amount for such Series (after giving
effect to provisions in the applicable Series Supplements
substantially similar to the clauses preceding this clause
(25)) and
(2) the amount on deposit in the Group Finance Charge
Collections Reallocation Account before any withdrawals
therefrom with respect to any other Series pursuant to a
comparable clause in the applicable Series Supplements,
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and paid to the Trustee as administrator of the Credit Enhancement for
application in accordance with the provisions of the Credit Enhancement
Agreement. Such deposit shall increase the Available Shared Credit Enhancement
Amount.
(B) If there is a Subordinate Class with respect to Class A, an
amount equal to the lesser of
(x) the amount by which the Available Class B Credit
Enhancement Amount is less than the Maximum Class B Credit
Enhancement Amount and
(y) the product of
(1) a fraction, the numerator of which is the amount by
which the Available Class B Credit Enhancement Amount is
less than the Maximum Class B Credit Enhancement Amount and
the denominator of which is the sum of, for each Series in
the Group of which the Series established hereby is a
member, the amount by which the Available Class B Credit
Enhancement Amount for such Series is less than the Maximum
Class B Credit Enhancement Amount for such Series (after
giving effect to provisions in the applicable Series
Supplements substantially similar to the clauses preceding
this clause (25)) and
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(2) the amount on deposit in the Group Finance Charge
Collections Reallocation Account before any withdrawals
therefrom with respect to any other Series pursuant to a
comparable clause in the applicable Series Supplements,
shall be withdrawn from the Group Finance Charge Collections Reallocation
Account and paid to the Trustee as administrator of the Credit Enhancement for
application in accordance with the provisions of the Credit Enhancement
Agreement. Such deposit shall increase the Available Class B Credit
Enhancement Amount.
(26) After all allocations from the Group Finance Charge Collections
Reallocation Account to be made pursuant to any other Series Supplement for any
Series that is a member of the same Group of which the Series established
hereby is a member have been made, an amount equal to the product of (x) a
fraction the numerator of which shall be the Series Investor Interest and the
denominator of which shall be the sum of the Series Investor Interests for each
Series that is a member of the same Group as the Series established hereby
(including the Series established hereby) and (y) the amount remaining on
deposit in the Group Finance Charge Collections Reallocation Account shall be
withdrawn from the Group Finance Charge Collections Reallocation Account and
paid to the Trustee as administrator of the Credit Enhancement for application
in accordance with the provisions of the Credit Enhancement Agreement. Amounts
remaining on deposit in the Group Finance Charge Collections Reallocation
Account shall be withdrawn from such account and allocated pursuant to the
provisions of the Series Supplements for each other Series that is a member of
the same Group as the Series established hereby.
(27) Any amounts remaining on deposit in the Series Collections Account shall
be withdrawn from the Series Collections Account and deposited into the Series
Principal Collections Account.
(28) Unless the Distribution Date is a Distribution Date in the Revolving
Period, the lesser of
(x) the Principal Distribution Amount and
(y) the amount on deposit in the Series Principal Collections
Account
shall be withdrawn from the Series Principal Collections Account and deposited
into the Series Principal Funding Account. The amount by which the Principal
Distribution Amount exceeds the amount of such deposit shall be the "Principal
Distribution Amount Shortfall."
(29) Unless the Distribution Date is a Distribution Date in the Revolving
Period, the lesser of
(x) the Principal Distribution Amount Shortfall and
(y) funds, if any, available to pay such Principal Distribution
Amount Shortfall from funds initially allocated to any Subordinate
Series
shall be deposited into the Series Principal Funding Account. The Principal
Distribution Amount Shortfall shall be reduced by the amount of such deposit.
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(30) Any amounts remaining on deposit in the Series Principal Collections
Account shall be withdrawn from the Series Principal Collections Account and be
deposited into the Group Principal Collections Reallocation Account.
(31) During the Accumulation Period or the Controlled Liquidation Period, as
applicable, the allocation set forth below shall be made with respect to each
Class, beginning with Class A and continuing, seriatim, for each Class, to the
extent that funds are available pursuant to this clause (31):
An amount equal to the lesser of
(x) the portion of the Principal Distribution Amount Shortfall
that is allocable to such Class and
(y) the product of
(1) a fraction the numerator of which is the portion of the
Principal Distribution Amount Shortfall that is allocable to
such Class and the denominator of which is the sum of the
portions of the Principal Distribution Amount Shortfalls
allocable to all Classes designated by the same letter of
the alphabet of all Series in the Group to which the Series
established hereby belongs that are in their Accumulation
Periods or Controlled Liquidation Periods, as applicable
(after giving effect to provisions in the applicable Series
Supplements substantially similar to the clauses preceding
this clause (31)) and
(2) the amount on deposit in the Group Principal
Collections Reallocation Account before any withdrawals
therefrom with respect to any other Series
shall be withdrawn from the Group Principal Collections Reallocation Account
and deposited into the Series Principal Funding Account. The Principal
Distribution Amount Shortfall shall be reduced by the amount of such deposit.
(32) After all allocations from the Group Principal Collections Reallocation
Account to be made pursuant to any other Series Supplement for any Series that
is a member of the same Group of which the Series established hereby is a
member have been made, the amount remaining on deposit in the Group Principal
Collections Reallocation Account shall be withdrawn from the Group Principal
Collections Reallocation Account and deposited into the Collections Account.
(33) After all other allocations have been provided for with respect to each
Series then outstanding (whether or not such Series is a member of the same
Group as the Series established hereby), the lesser of
(x) the amount of the Seller Interest and
(y) the amount on deposit in the Collections Account
shall be paid to the Holder of the Seller Certificate. If, after such payment,
any amounts remain on deposit in the Collections Account, such amounts shall
remain in the Collections Account for allocation as Principal Collections on
the next Trust Distribution Date.
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SECTION 10. Payments.
(a) Payments.
(1) On each Distribution Date related to a Due Period in the Accumulation
Period, and on the first Distribution Date of the Amortization Period, the
Master Servicer shall direct the Trustee in writing to withdraw the amount of
Excess Income, if any, on deposit in the Series Principal Funding Account from
the Series Principal Funding Account and pay such amount to the Holder of the
Seller Certificate.
(2) On each Distribution Date, after giving effect to payments made
pursuant to Section 9 and the calculation of Investor Losses and adjustment of
the Class Investor Interest and Class Invested Amount with respect to each
Class pursuant to Section 13, the Master Servicer shall direct the Trustee in
writing to withdraw and cause the Paying Agent to pay funds from the applicable
Investor Account to or for the benefit of each Class of Investor
Certificateholders, seriatim, with respect to each Class, beginning with Class
A, until such payments have been made with respect to each Class, as set forth
below:
(A) First, an amount equal to the lesser of
(x) the Class Modified Required Amount and
(y) the amount deposited into the Series Distribution Account
with respect to such Class on such Distribution Date pursuant to
Section 9
shall be withdrawn from the Series Distribution Account and deposited into the
Series Interest Funding Account. The amount by which the Class Modified
Required Amount exceeds the amount so deposited into the Series Interest
Funding Account shall be the Class Monthly Deficiency Amount with respect to
such Distribution Date.
(B) Second, an amount equal to the lesser of
(x) the sum of the Class Monthly Servicing Fee for such
Distribution Date and all accrued but unpaid Class Monthly
Servicing Fees from prior months and
(y) the amount deposited into the Series Distribution Account
with respect to such Class on such Distribution Date pursuant to
Section 9 less the amount deposited into the Series Interest
Funding Account with respect to such Class pursuant to clause
(A) above
shall be withdrawn from the Series Distribution Account and paid to the Master
Servicer.
(3) On each Interest Payment Date (or, if such Interest Payment Date is
not also a Distribution Date, on the Distribution Date occurring in the same
calendar month as each Interest Payment Date), the Master Servicer shall direct
the Trustee in writing to deposit into the Series Interest Funding Account any
Class Interest Rate Cap Payment made by any Interest Rate Cap Provider for any
Class or Subclass pursuant to the Class Interest Rate Cap for such Class or
Subclass.
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(4) On each Interest Payment Date (or, if such Interest Payment Date is
not also a Distribution Date, on the Distribution Date occurring in the same
calendar month as each Interest Payment Date), after giving effect to the
payments described above on such day, the Master Servicer shall direct the
Trustee in writing to withdraw the amount deposited into the Series Interest
Funding Account with respect to each Class or Subclass since the preceding
Interest Payment Date. Such amount shall be paid, or converted into Foreign
Currency, as follows:
(a) With respect to any Class or Subclass that is not subject to a
Class Currency Swap, the Master Servicer shall cause the Paying Agent
to pay such amount on each Interest Payment Date to the Investor
Certificateholders of such Class or Subclass in accordance with
Section 5.01 of the Pooling and Servicing Agreement;
(b) With respect to any Class or Subclass that is subject to a Class
Currency Swap, assuming no Currency Swap Termination has occurred,
the Master Servicer shall direct the Trustee in writing to deposit
such amount into the Currency Swap Dollar Escrow Account; and
(c) With respect to any Class or Subclass that is subject to a Class
Currency Swap, and following a Currency Swap Termination, the Master
Servicer shall direct the Trustee in writing to convert such amount
into Foreign Currency at the then prevailing spot exchange rate in
New York; provided, however, that the Trustee shall not convert any
dollars into Foreign Currency in excess of the amount of dollars
that, when so converted, would equal the sum of the Class Foreign
Currency Modified Required Amounts for each Distribution Date of the
Interest Accrual Period relating to such Interest Payment Date. The
positive difference, if any, between (i) the sum of the Class Foreign
Currency Modified Required Amounts for each Distribution Date of the
Interest Accrual Period and (ii) the amount of Foreign Currency so
obtained, shall be the "Class Foreign Currency Interest Shortfall."
Any amounts withdrawn from the Series Interest Funding Account pursuant to this
clause (4) and not paid or converted into Foreign Currency shall be redeposited
into the Series Interest Funding Account and shall be deemed, on the next
Interest Payment Date, to be amounts deposited since the preceding Interest
Payment Date.
(5) The Master Servicer shall direct the Trustee in writing to withdraw
from the Class Currency Swap Termination Account and convert into Foreign
Currency at the then prevailing spot exchange rate in New York the lesser of
(x) the amount of dollars that, when converted into Foreign
Currency, will equal the Class Foreign Currency Interest Shortfall
and
(y) the amount on deposit in the Class Currency Swap
Termination Account.
(6) On each Foreign Business Day immediately preceding each Interest
Payment Date with respect to any Class or Subclass that is subject to a Class
Currency Swap, the Master Servicer shall direct the Trustee in writing (i) to
deposit into the Class Foreign Currency Distribution Account all
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amounts received from the Currency Swap Counterparty with respect to the sum
of the Class Foreign Currency Modified Required Amounts for each Distribution
Date of the Interest Accrual Period relating to such Interest Payment Date,
(ii) to deposit into the Class Foreign Currency Distribution Account all
Foreign Currency obtained by the Trustee by converting dollars pursuant to
Sections 10(a)(4) and 10(a)(5) (x) on deposit in the Series Interest Funding
Account and (y) on deposit in the Class Currency Swap Termination Account
(up to the amount necessary to obtain the Class Foreign Currency Interest
Shortfall) into Foreign Currency at the then prevailing spot exchange rate
in New York and (iii) to cause the Paying Agent to pay such amount to the
Investor Certificateholders of such Class in accordance with subsection (c)
of this Section 10.
(7) On each Principal Payment Date (or, if such Principal Payment Date is
not also a Distribution Date, on each Distribution Date occurring in the same
calendar month as each Principal Payment Date) or on each Special Payment Date,
as applicable, after giving effect to the payments described above on such day,
an amount equal to the lesser of
(x) the Principal Distribution Amount and
(y) the amount deposited into the Series Principal Funding Account on
such Distribution Date pursuant to Section 9
shall be withdrawn from the Series Principal Funding Account. Such amount
shall be paid or converted into Foreign Currency as follows:
(a) With respect to any Class or Subclass that is not subject to a
Class Currency Swap, the Master Servicer shall cause the Paying Agent
to pay such amount to the Investor Certificateholders of such Class or
Subclass in accordance with Section 5.01 of the Pooling and Servicing
Agreement;
(b) With respect to any Class or Subclass that is subject to a Class
Currency Swap, assuming no Currency Swap Termination has occurred, the
Master Servicer shall direct the Trustee in writing to deposit such
amount into the Currency Swap Dollar Escrow Account; and
(c) With respect to any Class or Subclass that is subject to a Class
Currency Swap, and following a Currency Swap Termination, the Master
Servicer shall direct the Trustee in writing to convert such amount
into Foreign Currency at the then prevailing spot exchange rate in New
York; provided, however, that the Trustee shall not convert any
dollars into Foreign Currency in excess of the amount of dollars that,
when so converted, would equal the Class Foreign Currency Invested
Amount on such Principal Payment Date or Special Payment Date, as
applicable.
Except as set forth in the following sentence, all such amounts shall be paid
to or with respect to the Class A Investor Certificateholders until the Class A
Invested Amount is reduced to zero; and, thereafter, if there is a Subordinate
Class with respect to Class A, such amounts shall be paid to or with respect to
the Class B Investor Certificateholders until the Class B Invested Amount is
reduced to zero, unless the Series Termination Date occurs prior to such date.
In no event shall any amounts be paid with respect to any Class of Investor
Certificates pursuant to this clause (7) in excess of the
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Class Invested Amount
for such Class, nor shall any amounts be paid in excess of the Class Foreign
Currency Invested Amount, if applicable. Any amounts remaining on deposit in
the Series Principal Funding Account after the Class Invested Amount or the
Class Foreign Currency Invested Amount, as applicable, for each Class has been
reduced to zero shall be paid to the Holder of the Seller Certificate. Any
amounts withdrawn from the Series Principal Funding Account pursuant to this
clause (7) and not paid or converted into Foreign Currency shall be paid to the
Holder of the Seller Certificate.
(8) On the first Distribution Date of the Amortization Period, if any,
after giving effect to the payments and withdrawals and conversions described
above on such day, an amount equal to the lesser of
(x) the Series Invested Amount and
(y) the amount on deposit in the Series Principal Funding Account
shall be withdrawn from the Series Principal Funding Account.
Such amount shall be paid or converted into Foreign Currency as
follows:
(a) With respect to any Class or Subclass that is not subject to a
Class Currency Swap, the Master Servicer shall cause the Paying Agent
to pay such amount to the Investor Certificateholders of such Class or
Subclass in accordance with Section 5.01 of the Pooling and Servicing
Agreement;
(b) With respect to any Class or Subclass that is subject to a Class
Currency Swap, assuming no Currency Swap Termination has occurred, the
Master Servicer shall direct the Trustee in writing to deposit such
amount into the Currency Swap Dollar Escrow Account; and
(c) With respect to any Class or Subclass that is subject to a Class
Currency Swap, and following a Currency Swap Termination, the Master
Servicer shall direct the Trustee in writing to convert such amount
into Foreign Currency at the then prevailing spot exchange rate in New
York; provided, however, that the Trustee shall not convert any
dollars into Foreign Currency in excess of the amount of dollars that,
when so converted, would equal the Class Foreign Currency Invested
Amount on such Special Payment Date.
Except as set forth in the following sentence, all such amounts shall be paid
to or with respect to the Class A Investor Certificateholders until the Class A
Invested Amount is reduced to zero; and, thereafter, if there is a Subordinate
Class with respect to Class A, such amounts shall be paid to or with respect to
the Class B Investor Certificateholders until the Class B Invested Amount is
reduced to zero, unless the Series Termination Date occurs prior to such date.
In no event shall any amounts be paid with respect to any Class of Investor
Certificates pursuant to this clause (8) in excess of the Class Invested Amount
for such Class, nor shall any amounts be paid in excess of the Class Foreign
Currency Invested Amount, if applicable. Any amounts remaining on deposit in
the Series Principal Funding Account after the Class Invested Amount or the
Class Foreign Currency Invested Amount, as applicable, for each Class has been
reduced to zero shall be paid to the Holder of the Seller Certificate. Any
amounts withdrawn from the Series Principal Funding Account
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pursuant to this clause (8) and not paid or converted into Foreign Currency
shall be paid to the Holder of the Seller Certificate.
(9) On each Special Payment Date, after giving effect to the payments,
withdrawals and conversions described above on such day, the Master Servicer
shall direct the Trustee in writing to withdraw from the Class Currency Swap
Termination Account and convert into Foreign Currency at the then prevailing
spot exchange rate in New York, an amount equal to the lesser of
(x) the amount of dollars that, when converted into Foreign
Currency, will equal the positive difference, if any, between (i) the
product of (A) the amounts withdrawn from the Series Principal
Funding Account with respect to any Class that is subject to a Class
Currency Swap and (B) the Currency Swap Exchange Rate and (ii) the
amount of Foreign Currency obtained by the Trustee by converting
dollars on deposit in the Series Principal Funding Account into
Foreign Currency at the then prevailing spot exchange rate in New
York and
(y) the amount on deposit in the Class Currency Swap Termination
Account.
Any amount remaining on deposit in the Class Currency Swap Termination Account
following the earliest of (1) the payment in full of the Class Foreign Currency
Invested Amount, (2) the payment in full of the Series Invested Amount or (3)
the Series Termination Date, shall be withdrawn from the Class Currency Swap
Termination Account and paid to the Holder of the Seller Certificate.
(10) With respect to any Class or Subclass that is subject to a Class
Currency Swap, on each Principal Payment Date or on the Foreign Business Day
following each Special Payment Date, if applicable, the Master Servicer shall
direct the Trustee in writing (i) to deposit into the Class Foreign Currency
Distribution Account all amounts received from the Currency Swap Counterparty
with respect to the Class Foreign Currency Invested Amount, (ii) to deposit
into the Class Foreign Currency Distribution Account all Foreign Currency
obtained by the Trustee by converting dollars on deposit in the Series
Principal Funding Account and the Class Currency Swap Termination Account into
Foreign Currency at the then prevailing spot exchange rate in New York pursuant
to Section 10(a)(9) and (iii) to cause the Paying Agent to pay such amount to
the Investor Certificateholders of such Class in accordance with subsection (c)
of this Section 10.
(11) On the Class Expected Final Payment Date or the Class Final Maturity
Date, if applicable (or, if such Class Expected Final Payment Date or Class
Final Maturity Date is not also a Distribution Date, on the Distribution Date
occurring in the same calendar month as the Class Expected Final Payment Date
or the Class Final Maturity Date, if applicable), the Master Servicer shall
direct the Trustee in writing to withdraw the amount on deposit in the Series
Principal Funding Account with respect to each Class; provided that (i) such
amount shall be no greater than the Class Invested Amount and (ii) funds, if
any, remaining on deposit in the Series Principal Funding Account after the
payment in full of the Class Invested Amount with respect to each Class shall
be withdrawn and paid to the Holder of the Seller Certificate. Such amount
shall be paid or converted into Foreign Currency as follows:
(a) With respect to any Class or Subclass that is not subject to a
Class Currency Swap, the Master Servicer shall cause the Paying Agent
to pay such amount to the Investor Certificateholders of such Class or
Subclass in accordance with Section 5.01 of the Pooling and Servicing
Agreement;
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(b) With respect to any Class or Subclass that is subject to a Class
Currency Swap, assuming no Currency Swap Termination has occurred, the
Master Servicer shall direct the Trustee in writing to deposit such
amount into the Currency Swap Dollar Escrow Account; and
(c) With respect to any Class or Subclass that is subject to a Class
Currency Swap, and following a Currency Swap Termination, the Master
Servicer shall direct the Trustee in writing to convert such amount
into Foreign Currency at the then prevailing spot exchange rate in New
York; provided, however, that the Trustee shall not convert any
dollars into Foreign Currency in excess of the amount of dollars that,
when so converted, would equal the Class Foreign Currency Invested
Amount on such Class Expected Final Payment Date or Class Final
Maturity Date, if applicable.
Any amounts withdrawn from the Series Principal Funding Account pursuant to
this clause (11) and not paid or converted into Foreign Currency shall be paid
to the Holder of the Seller Certificate.
(12) With respect to any Class or Subclass that is subject to a Class
Currency Swap, on the Foreign Business Day immediately preceding the Class
Expected Final Payment Date or the Class Final Maturity Date, if applicable,
the Master Servicer shall direct the Trustee in writing (i) to deposit into the
Class Foreign Currency Distribution Account all amounts received from the
Currency Swap Counterparty with respect to Class Foreign Currency Invested
Amount, (ii) to deposit into the Class Foreign Currency Distribution Account
all Foreign Currency obtained by the Trustee by converting dollars on deposit
in the Series Principal Funding Account into Foreign Currency at the then
prevailing spot exchange rate in New York pursuant to Section 10(a)(11) and
(iii) to cause the Paying Agent to pay such amount to the Investor
Certificateholders of such Class in accordance with subsection (c) of this
Section 10.
(b) Payments to the Sellers and/or the Master Servicer.
Notwithstanding the other provisions in Section 9 and this Section 10, any
amounts payable to Greenwood on behalf of the Holder of the Seller Certificate
or to the Master Servicer on any Distribution Date pursuant to Section 9 and
this Section 10 may be paid prior to such Distribution Date pursuant to Section
4.03(d) of the Pooling and Servicing Agreement.
(c) Payments to Holders of Investor Certificates in Bearer Form. On
each Payment Date, with respect to any outstanding Class of Investor
Certificates issued in bearer form and denominated in a Foreign Currency, the
principal and interest on the Bearer Certificates will be payable in Foreign
Currency only against surrender of the Bearer Certificates or Coupons, as the
case may be, and subject to applicable laws and regulations at the offices of
any Paying Agent outside the United States. Payments of principal and interest
on the Bearer Certificates will be made by Foreign Currency check or Foreign
Currency bank draft drawn on a bank account which, at the Paying Agent's
discretion, shall be in Frankfurt or London, or by transfer in same day funds
to a Foreign Currency account maintained by the payee, subject in each case to
all applicable laws and regulations. To the extent necessary under the tax
laws of the United States, or any official application or interpretation of the
tax laws of the United States or its possessions, no such bank draft shall be
mailed by any of the Paying Agents to any address in the United States or its
possessions and no transfer of funds shall be made to an account maintained by
the payee in the United States or its possessions. Payments of principal and
interest on the Permanent Global Certificate, if any, will be made in
immediately available funds by wire transfer to such account as the Foreign
Depository with respect to such Permanent
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Global Certificate shall direct in writing; provided, however, that in no event
shall any payments be made to an account maintained by the payee in the United
States or its possessions. The Trustee will, so long as any of the Bearer
Certificates remain outstanding, maintain a paying agency in a city outside of
the United States which is recognized as an international financial center (and
at least one of which is located in each city in which a paying agency must be
maintained pursuant to the requirements of the exchange(s) on which the Bearer
Certificates are listed). Notice of any termination of appointment and of any
changes in the specified offices of any Paying Agent will be given to the
Holders of Bearer Certificates in accordance with Section 19 hereof.
Upon the date fixed for the final payment of any Bearer Certificates, if
funds for the payment of the Bearer Certificates and Coupons (if any) shall
have been available at the offices of the Paying Agents, except as otherwise
provided in this paragraph, unmatured Coupons (if any) relating to such Bearer
Certificates (whether or not attached) shall become void and no payment made in
respect thereof and the only right of such Holders of Bearer Certificates shall
be to receive payment of the principal thereof together with accrued interest
to the payment date as provided herein.
SECTION 11. Credit Enhancement.
(a) Initial Credit Enhancement. The Master Servicer hereby represents
with respect to the Initial Credit Enhancement and shall be deemed to represent
with respect to any successor Credit Enhancement that (i) the Master Servicer
has provided for the Credit Enhancement for the account of the Trustee and for
the benefit of the Investor Certificateholders, (ii) the Master Servicer has
entered into a Credit Enhancement Agreement, (iii) the Credit Enhancement
permits the Trustee or the Master Servicer, acting as the Trustee's
attorney-in-fact or otherwise, to make Credit Enhancement Drawings from time to
time in an amount up to the Total Available Credit Enhancement Amount at such
time, for the purposes set forth in this Agreement and (iv) the Credit
Enhancement and the respective Credit Enhancement Agreement may be terminated
by the Trustee without penalty if (x) the Master Servicer elects to obtain a
successor Credit Enhancement and such successor Credit Enhancement does not
cause the ratings of the Investor Certificates of the Series established hereby
to be withdrawn or lowered by either of the Rating Agencies from the respective
ratings of such Investor Certificates immediately prior to such election or (y)
if the Credit Enhancement is not Funded Credit Enhancement, the Credit
Enhancement Provider ceases to be a Qualified Credit Enhancement Provider.
(b) Successor Credit Enhancement.
(i) If the Credit Enhancement is not Funded Credit Enhancement and
if, at any time, the provider of such Credit Enhancement ceases to be a
Qualified Credit Enhancement Provider, the Master Servicer shall obtain a
successor Credit Enhancement within 30 days or such longer period as will not
result in the lowering or withdrawal of the rating of any Class of any Series
then outstanding by the Rating Agencies (a) which, if such successor Credit
Enhancement is not to be Funded Credit Enhancement, will be issued by a
Qualified Credit Enhancement Provider and (b) with respect to which the
representations set forth in Section 11(a) will be satisfied; provided,
however, that the Master Servicer shall not be required to continue efforts to
obtain a successor Credit Enhancement if the then existing Credit Enhancement
Provider again becomes a Qualified Credit Enhancement Provider and remains
such; and, provided, further, that unless otherwise agreed to by the Rating
Agencies, the Credit Enhancement and Credit Enhancement Agreement will not be
terminated and no successor Credit Enhancement Provider shall be selected if
the successor Credit Enhancement, the successor Credit Enhancement Agreement,
or the selection of such successor Credit Enhancement Provider would cause the
ratings of the Investor Certificates of the Series established hereby to be
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withdrawn or lowered by either Rating Agency from the respective ratings of
such Investor Certificates immediately prior to such selection. The Master
Servicer, the Trustee and the Sellers shall promptly enter into any such
successor Credit Enhancement Agreement, and the Master Servicer shall use its
best efforts to secure the signature of any other required party to such
agreement.
(ii) Regardless of whether the Credit Enhancement is Funded Credit
Enhancement, the Master Servicer may elect, at any time, to obtain a successor
Credit Enhancement, provided that such successor Credit Enhancement does not
cause the ratings of the Investor Certificates of the Series established hereby
to be withdrawn or lowered by either of the Rating Agencies from the respective
ratings of such Investor Certificates immediately prior to such election.
(iii) In any case, subject to the foregoing, any successor Credit
Enhancement obtained by the Master Servicer need not consist of the same type
of Credit Enhancement as the Initial Credit Enhancement, but may consist of a
different type of facility, including, but not limited to, a reserve account, a
cash collateral account, an irrevocable standby letter of credit, a surety bond
or a combination of any of the above. Upon issuance of, or other provision
for, any such successor Credit Enhancement, the Trustee shall terminate the
prior Credit Enhancement and Credit Enhancement Agreement.
(c) Supplemental Credit Enhancement Event. Upon the occurrence of a
Supplemental Credit Enhancement Event, Greenwood as Servicer shall, within 60
days of notice from Standard & Poor's of the withdrawal or downgrade (or such
longer period as may be agreed to by Standard & Poor's), arrange for the
payment of the Supplemental Credit Enhancement Amount, if any, by a Person
other than Greenwood (or from Series Excess Servicing) to the Trustee as
administrator of the Credit Enhancement for application in accordance with the
provisions of the Credit Enhancement Agreement. Both the form and the provider
of the Supplemental Credit Enhancement Amount, if any, shall be determined at
the time it is to be paid; provided, that the Master Servicer shall have
received confirmation from Standard & Poor's that the arrangements with respect
to the Supplemental Credit Enhancement Amount, if any, will not result in the
rating of the Investor Certificates of the Series established hereby being
withdrawn or lowered. In addition to the foregoing, the Master Servicer shall
notify Moody's of the occurrence of a Supplemental Credit Enhancement Event as
soon as practicable after such occurrence, and shall notify Moody's in advance
of its implementation of the form and provider of the Supplemental Credit
Enhancement Amount, if any.
SECTION 12. Alternative Credit Support Election.
(a) The Sellers may elect to effect a change in the calculation of the
Class Percentage with respect to Finance Charge Collections during the
Amortization Period, as set forth in the definition of "Class Percentage," and
increase the Available Class B Credit Enhancement Amount, by making an
Alternative Credit Support Election. An Alternative Credit Support Election
may be made as follows:
(i) at any time during the Revolving Period, Greenwood on behalf of
the Holder of the Seller Certificate shall deliver written notice of such
Alternative Credit Support Election to the Rating Agencies, the Trustee
and the Credit Enhancement Provider;
(ii) prior to the last day of the Revolving Period, the Additional
Credit Support Amount shall be paid to the Trustee as administrator of the
Credit Enhancement for application in accordance with the provisions of
the Credit Enhancement Agreement; provided, however, that following an
Amortization Event, the Additional Credit Support Amount may
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be paid to the Trustee as administrator of the Credit Enhancement at any
time on or prior to the last day of the Due Period in which the
Amortization Event occurs;
(iii) prior to the last day of the Revolving Period (or, following
an Amortization Event during the Revolving Period, on or prior to the last
day of the Due Period in which the Amortization Event occurs), the Rating
Agencies shall have confirmed that the Alternative Credit Support Election
shall not cause a reduction in or withdrawal of the rating of any Class of
Investor Certificates of the Series established hereby; and
(iv) prior to the last day of the Revolving Period (or, following an
Amortization Event during the Revolving Period, on or prior to the last
day of the Due Period in which the Amortization Event occurs), Greenwood
on behalf of the Holder of the Seller Certificate shall have delivered to
the Rating Agencies written confirmation that the conclusions reached in
the legal opinions delivered on the Initial Closing Date regarding the
absolute transfer of the Receivables and the security interest of the
Trust in the Receivables are not affected by the Alternative Credit
Support Election.
(b) If each of the actions set forth in Section 12(a) above has been
taken or satisfied as required, the Alternative Credit Support Election shall
become effective on the last day of the Due Period in which the Additional
Credit Support Amount has been paid to the Trustee as administrator of the
Credit Enhancement (an "Effective Alternative Credit Support Election").
(c) At any time until the Alternative Credit Support Election becomes
effective, such Alternative Credit Support Election may be cancelled upon
notice to the Rating Agencies, the Trustee and the Credit Enhancement Provider.
Thereafter, the Additional Credit Support Amount, if any, shall be returned by
the Trustee as administrator of the Credit Enhancement in accordance with the
Credit Enhancement Agreement.
SECTION 13. Calculation of Investor Losses.
(a) For each Distribution Date, the Master Servicer shall calculate the
Class Investor Charged-Off Amount and the Class Cumulative Investor Charged-Off
Amount with respect to each Class, in each case as of the end of the related
Due Period.
(b) If on any Distribution Date, the Class Investor Charged- Off Amount
with respect to any Class exceeds the Class Charge-Off Reimbursement Amount
with respect to such Class, the Class Investor Interest and the Class Invested
Amount for such Class shall each be reduced by the amount of such excess (an
"Investor Loss" with respect to such Class).
(c) On each Distribution Date the Class Investor Interest and the Class
Invested Amount for each Class shall be increased by, and the amount of
aggregate unreimbursed Investor Losses for each such Class shall be decreased
by, the positive difference, if any, between the Class Charge-Off Reimbursement
Amount on such Distribution Date and the Class Investor Charged-Off Amount for
such Distribution Date; provided, however, that neither the Class Invested
Amount nor the Class Investor Interest shall exceed the Class Initial Investor
Interest for such Class minus the sum of (x) the aggregate amount of payments
of Certificate Principal paid to the Investor Certificateholders of such Class
prior to such Distribution Date, (y) in the case of the Class Investor
Interest, the amount on deposit in the Series Principal Funding Account for the
benefit of such Class in respect of Collections of Principal Receivables and
(z) the aggregate amount of losses, if any, on investments of principal of
funds on deposit in the Series Principal Funding Account for the benefit of
such Class;
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and provided, further, that the amount of Investor Losses with respect to any
Class shall not be reduced to an amount less than zero.
SECTION 14. Servicing Compensation. As compensation for its servicing
activities hereunder and under the Pooling and Servicing Agreement and
reimbursement of its expenses as set forth in Section 3.03 of the Pooling and
Servicing Agreement, the Master Servicer shall be entitled to receive a monthly
servicing fee with respect to the Series established hereby in respect of any
Due Period (or portion thereof) prior to the earlier of the date on which the
Series Investor Interest is reduced to zero and the Series Termination Date.
Such monthly servicing fees shall be composed of the Class Monthly Servicing
Fees and the Supplemental Servicing Fees, if any. The Class Monthly Servicing
Fees shall be paid to the Master Servicer on behalf of each Class on each
Distribution Date pursuant to Section 10. The Supplemental Servicing Fee, if
any, shall be paid to the Master Servicer on or before each Distribution Date
from the Series Additional Funds for such Distribution Date. In no event shall
the Trustee or the Investor Certificateholders be liable for the Supplemental
Servicing Fee.
SECTION 15. Class Interest Rate Caps.
(a) In the event that the Master Servicer has obtained a Class Interest
Rate Cap in favor of the Trustee for the benefit of a Class or Subclass that
does not have a fixed or maximum Certificate Rate, the Master Servicer hereby
represents that such Class Interest Rate Cap provides that (i) the Trust shall
not be required to make any payments thereunder and (ii) the Trust shall be
entitled to receive payments (determined in accordance with the Class Interest
Rate Cap) from the Interest Rate Cap Provider on an Interest Payment Date if
LIBOR or the Commercial Paper Rate, as applicable, for the related Calculation
Period exceeds the Class Cap Rate for the applicable Class or Subclass. Any
Class Interest Rate Cap Payment shall be deposited into the Series Interest
Funding Account.
(b) In the event that the commercial paper or certificate of deposit
rating of the Interest Rate Cap Provider is withdrawn or reduced below the
ratings specified in the Series Term Sheet (or, in either case, such lower
rating as the applicable Rating Agency shall allow), then within 30 days after
receiving notice of such decline in the creditworthiness of the Interest Rate
Cap Provider as determined by either Rating Agency, either (x) the Interest
Rate Cap Provider, with the prior confirmation of the Rating Agencies that such
arrangement will not result in the reduction or withdrawal of the rating of any
Investor Certificates of the Series established hereby, will enter into an
arrangement the purpose of which shall be to assure performance by the Interest
Rate Cap Provider of its obligations under the Class Interest Rate Caps; or (y)
the Master Servicer shall at its option either (i) with the prior confirmation
of the Rating Agencies that such action will not result in a reduction or
withdrawal of the rating of any Investor Certificates of the Series established
hereby, cause the Interest Rate Cap Provider to pledge securities in the manner
provided by applicable law, which shall be held by the Trustee or its agent
free and clear of the Lien of any third party, in a manner conferring on the
Trustee a perfected first Lien in such securities securing the Interest Rate
Cap Provider's performance of its obligations under the Class Interest Rate
Caps, or (ii) provided that Replacement Class Interest Rate Caps or Qualified
Substitute Cap Arrangements meeting the requirements of Section 15(c) have been
obtained, direct the Trustee (A) to provide written notice to the Interest Rate
Cap Provider of its intention to terminate the Class Interest Rate Caps within
such 30-day period and (B) to terminate the Class Interest Rate Caps within
such 30-day period, to request the payment to it of all amounts due to the
Trust under the Class Interest Rate Caps through the termination date and to
deposit any such amounts so received, on the day of receipt, to the Series
Interest Funding Account, or (iii) establish any other arrangement (including
an arrangement or arrangements in addition to or in substitution for any prior
arrangement made in accordance with the provisions of this Section 15(b))
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satisfactory to the Rating Agencies such that the Rating Agencies will not
reduce or withdraw the rating of any Investor Certificates of the Series
established hereby (a "Qualified Substitute Cap Arrangement"); provided,
however, that in the event at any time any alternative arrangement established
pursuant to clause (x) or (y)(i) or (y)(iii) above shall cease to be
satisfactory to the Rating Agencies then the provisions of this Section 15(b)
shall again be applied and in connection therewith the 30-day period referred
to above shall commence on the date the Master Servicer receives notice of such
cessation.
(c) Unless an alternative arrangement pursuant to clause (x) or (y)(i) of
Section 15(b) is being established, the Master Servicer shall use its best
efforts to obtain Replacement Class Interest Rate Caps or Qualified Substitute
Cap Arrangements meeting the requirements of this Section 15(c) during the
30-day period referred to in Section 15(b). The Trustee shall not terminate
the Class Interest Rate Caps unless, prior to the expiration of the 30-day
period referred to in Section 15(b), the Master Servicer delivers to the
Trustee (i) Replacement Class Interest Rate Caps or Qualified Substitute Cap
Arrangements, (ii) to the extent applicable, an Opinion of Counsel as to the
due authorization, execution and delivery and validity and enforceability of
each such Replacement Class Interest Rate Cap or Qualified Substitute Cap
Arrangement, as the case may be, and (iii) confirmation from each Rating Agency
that the termination of the Class Interest Rate Caps and their replacement with
such Replacement Class Interest Rate Caps or Qualified Substitute Cap
Arrangements will not adversely affect its rating of the Investor Certificates
of the Series established hereby.
(d) The Master Servicer shall notify the Trustee, the Rating Agencies and
the Credit Enhancement Provider within five Business Days after obtaining
knowledge that the commercial paper or certificate of deposit rating of the
Interest Rate Cap Provider has been withdrawn or reduced by either Rating
Agency.
(e) Notwithstanding the foregoing, the Master Servicer may at any time
obtain Replacement Class Interest Rate Caps, provided that the Master Servicer
delivers to the Trustee (i) an Opinion of Counsel as to the due authorization,
execution and delivery and validity and enforceability of such Replacement
Class Interest Rate Caps and (ii) confirmation from the Rating Agencies that
the termination of the then current Class Interest Rate Caps and their
replacement with such Replacement Class Interest Rate Caps will not adversely
affect the rating of the Investor Certificates of the Series established
hereby.
(f) The Trustee hereby appoints the Master Servicer to perform the duties
of the calculation agent under the Class Interest Rate Caps and the Master
Servicer accepts such appointment.
SECTION 16. Class Currency Swaps.
(a) In the event that the Investor Certificates of any Class are payable
in Foreign Currency, the Trustee will enter into a Class Currency Swap in a
form approved by the Master Servicer and the Rating Agencies pursuant to which
(A) the Trustee shall be required to make payments to the Currency Swap
Counterparty in Dollars and (B) the Trust shall be entitled to receive payments
from the Currency Swap Counterparty in such Foreign Currency. On the
Distribution Date occurring in the same calendar month as each Payment Date,
any payments to be made by the Trustee to the Currency Swap Counterparty under
the Class Currency Swap will be deposited in the Currency Swap Dollar Escrow
Account. Any payments made by the Currency Swap Counterparty pursuant to the
Class Currency Swap (other than payments in connection with the termination
thereof or the replacement of the Currency Swap Counterparty, which payments
will be made in accordance with the Class Currency Swap) will be deposited in
the Class Foreign Currency Distribution Account. In
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the event that a Counterparty Currency Swap Default shall occur, remaining
amounts on deposit in the Currency Swap Dollar Escrow Account (after making any
partial payments required by the Class Currency Swap) shall be released to the
Trustee in accordance with the terms of the Escrow Agreement and converted by
the Trustee to Foreign Currency at the then prevailing spot exchange rate in
New York and deposited in the Class Foreign Currency Distribution Account for
payment to the Investor Certificateholders of such Class.
(b) In the event of a Currency Swap Downgrade Trigger, then within 60
days after receiving notice of such decline in the creditworthiness of the
Currency Swap Counterparty as determined by either Rating Agency, the Master
Servicer shall at its option, and subject to any applicable provisions of the
Class Currency Swap, either (i) with the prior confirmation of the Rating
Agencies that such action will not result in a reduction or withdrawal of the
rating of any Investor Certificates of the Series established hereby below the
Minimum Investor Certificate Ratings specified in the Series Term Sheet, cause
the Currency Swap Counterparty to pledge securities in the manner provided by
applicable law, which shall be held by the Trustee or its agent free and clear
of the Lien of any third party, in a manner conferring on the Trustee a
perfected first Lien in such securities securing the Currency Swap
Counterparty's performance of its obligations under the Class Currency Swap,
(ii) with the prior confirmation of the Rating Agencies that such arrangement
will not result in the reduction or withdrawal of the rating of any Investor
Certificates of the Series established hereby below the Minimum Investor
Certificate Ratings specified in the Series Term Sheet, cause the Currency Swap
Counterparty to enter into an arrangement the purpose of which shall be to
assure performance by the Currency Swap Counterparty of its obligations under
the Class Currency Swap, (iii) provided that a Replacement Class Currency Swap
or Qualified Substitute Class Currency Swap Arrangement meeting the
requirements of Section 16(c) has been obtained, direct the Trustee (A) to
provide written notice to the Currency Swap Counterparty of its intention to
terminate the Class Currency Swap within such 60-day period and (B) to
terminate the Class Currency Swap within such 60-day period, to request the
payment to it of all amounts due to the Trust under the Class Currency Swap
through the termination date and to pay or deposit any such amounts as provided
in the Class Currency Swap, or (iv) establish any other arrangement (including
an arrangement or arrangements in addition to or in substitution for any prior
arrangement made in accordance with the provisions of this Section 16(b))
satisfactory to the Rating Agencies such that the Rating Agencies will not
reduce or withdraw the rating of any Investor Certificates of the Series
established hereby below the Minimum Investor Certificate Ratings specified in
the Series Term Sheet (a "Qualified Substitute Class Currency Swap
Arrangement"); provided, however, that in the event at any time any alternative
arrangement established pursuant to clause (i), (ii) or (iv) of this Section
16(b) shall cease to be satisfactory to the Rating Agencies then the provisions
of this Section 16(b) shall again be applied and in connection therewith the
60-day period referred to above shall commence on the date the Master Servicer
receives notice of such cessation.
(c) Unless an alternative arrangement pursuant to clause (i), (ii) or
(iv) of Section 16(b) is being established, the Master Servicer shall use its
best efforts (without expenditure of funds unless in its sole discretion it
otherwise elects) to obtain Replacement Class Currency Swaps or Qualified
Substitute Class Currency Swap Arrangements meeting the requirements of this
Section 16(c) during the 60-day period referred to in Section 16(b). The
Trustee shall not terminate the Class Currency Swap unless, prior to the
expiration of the 60-day period referred to in Section 16(b), the Master
Servicer delivers to the Trustee (i) Replacement Class Currency Swaps or
Qualified Substitute Class Currency Swap Arrangements, (ii) to the extent
applicable, an Opinion of Counsel (which may be Counsel for the Replacement
Currency Swap Counterparty or Qualified Substitute Currency Swap Counterparty)
as to the due authorization, execution and delivery and validity and
enforceability of each such Replacement Class Currency Swap or Qualified
Substitute Currency Swap Arrangement,
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as the case may be, and (iii) confirmation from each Rating Agency that the
termination of the Class Currency Swap and its replacement with such
Replacement Class Currency Swaps or Qualified Substitute Class Currency Swap
Arrangements will not result in a reduction or withdrawal of the rating of the
Investor Certificates of the Series established hereby below the Minimum
Investor Certificate Ratings specified in the Series Term Sheet.
(d) The Master Servicer shall notify the Trustee, the Rating Agencies and
the Credit Enhancement Provider within five Business Days after obtaining
knowledge that the long-term, unsecured and unguaranteed debt rating of the
Currency Swap Counterparty has been withdrawn or reduced by either Rating
Agency.
(e) Notwithstanding the foregoing, the Master Servicer may, subject to
the terms of the Class Currency Swap, at any time obtain (without expenditure
of funds unless it otherwise so elects), and the Trustee will enter into, a
Replacement Class Currency Swap, provided that the Master Servicer delivers to
the Trustee (i) an Opinion of Counsel (which may be Counsel for the Replacement
Currency Swap Counterparty or Qualified Substitute Class Currency Swap
Counterparty) as to the due authorization, execution and delivery and validity
and enforceability of such Replacement Class Currency Swap and (ii)
confirmation from the Rating Agencies that the termination of the then current
Class Currency Swap and its replacement with such Replacement Class Currency
Swap will not adversely affect the then-current rating of the Investor
Certificates of the Series established hereby.
SECTION 17. Investor Certificateholders' Monthly Statement. On each
Statement Date, a statement substantially in the form of Exhibit B prepared by
the Trustee (based on information provided by the Master Servicer) setting
forth the information listed thereon shall be available from the Trustee, each
Paying Agent and, if applicable, the Listing Agent.
SECTION 18. Master Servicer's Monthly Certificate. On or before the
second Business Day preceding each Statement Date, the Master Servicer shall
forward to Greenwood on behalf of the Holder of the Seller Certificate, the
Trustee and each Paying Agent a certificate of a Servicing Officer
substantially in the form of Exhibit C setting forth the information listed
thereon.
SECTION 19. Notices. Any notices to holders of Investor Certificates
issued in bearer form shall be given as described in the Series Term Sheet.
SECTION 20. Additional Amortization Events. If any one of the following
events shall occur:
(a) on any Distribution Date, the three month rolling average Series
Excess Spread is less than the Series Buffer Amount and the three month rolling
average Group Excess Spread is less than the Group Buffer Amount;
(b) if the Series established hereby has an Accumulation Period and,
after giving effect to payments and distributions on the Class Expected Final
Payment Date or the Class Final Maturity Date, as applicable, with respect to
any Class, the Class Invested Amount or the Class Foreign Currency Invested
Amount, as applicable, for such Class is not reduced to zero;
(c) if applicable, following either (i) the withdrawal or reduction of
the commercial paper or certificate of deposit rating of any Interest Rate Cap
Provider to below the ratings specified in the Series Term Sheet (or, in either
case, such lower rating as the applicable Rating Agency has allowed) or
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(ii) notice from either Rating Agency that any Qualified Substitute Cap
Arrangement or any other arrangement established pursuant to Section 15 is no
longer satisfactory to such Rating Agency, the Master Servicer shall fail,
within the applicable time period specified in Section 15, to (x) obtain
Replacement Class Interest Rate Caps or Qualified Substitute Cap Arrangements
or (y) cause the Interest Rate Cap Provider to pledge securities as collateral
securing the obligations of the Interest Rate Cap Provider or establish any
other arrangement as provided in Section 15, in each case in a manner
satisfactory to the Trustee and the Rating Agencies (such that neither Rating
Agency will reduce or withdraw the ratings of the Investor Certificates of the
Series established hereby);
(d) if applicable, following either (i) a Currency Swap Downgrade Trigger
which results (following the expiration of the 60-day period referred to in
Section 16) in the withdrawal or reduction of the ratings of the Investor
Certificates below the Minimum Investor Certificate Ratings specified in the
Series Term Sheet or (ii) notice from either Rating Agency that any Qualified
Substitute Currency Swap Arrangement or any other arrangement established
pursuant to Section 16 is no longer satisfactory to such Rating Agency, the
Master Servicer shall fail, within the applicable time period specified in
Section 16, to (x) obtain Replacement Class Currency Swaps or Qualified
Substitute Class Currency Swap Arrangements or (y) cause the Currency Swap
Counterparty to pledge securities as collateral securing the obligations of the
Currency Swap Counterparty or establish any other arrangement as provided in
Section 16, in each case in a manner satisfactory to the Trustee and the Rating
Agencies (such that neither Rating Agency will reduce or withdraw the ratings
of the Investor Certificates below the Minimum Investor Certificate Ratings
specified in the Series Term Sheet);
(e) if applicable, a Currency Swap Termination shall have occurred;
(f) if a Supplemental Credit Enhancement Event shall have occurred and
Greenwood as Servicer shall have failed to arrange for the Supplemental Credit
Enhancement in accordance with the requirements of Section 11(c) hereof
(including, without limitation, receipt of the confirmation from Standard &
Poor's required thereby);
(g) if the Master Servicer determines that the Trust has or will become
obligated to deduct or withhold amounts from payments to be made on the
Investor Certificates of a Class that is subject to a Class Currency Swap on
the next succeeding Interest Payment Date with respect to such Class, for or on
account of any tax, assessment or other governmental charge by the United
States or any political subdivision or taxing authority thereof or therein on
any amounts due to the Certificateholders of such Class, as a result of any
change in, or amendment to, the laws (or any regulations or ruling promulgated
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or any change in official position regarding the
application or interpretation of such laws, regulations or rulings, which
change or amendment becomes effective on or after the Series Closing Date,
provided that such obligation to deduct or withhold cannot be avoided by the
use of reasonable measures available to the Trust that, in the good faith
opinion of the Master Servicer, will not have either (a) a material adverse
impact on the conduct of the business of the Sellers or the Master Servicer or
(b) a material adverse effect on the rights or interests of the
certificateholders of any Class of any other Series then outstanding; or
(h) if the Master Servicer determines that payments on the Investor
Certificates of a Class that is subject to a Class Currency Swap on the next
succeeding Interest Payment Date with respect to such Class made outside the
United States by the Trustee, the Master Servicer or any Paying Agent would,
under any present or future law or regulation of the United States, be subject
to any certification, documentation, information or other reporting requirement
of any kind, the effect of which requirement is the disclosure to the Trustee,
the Master
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Servicer, any Paying Agent or any governmental authority of the nationality,
residence or identity of a beneficial owner of an Investor Certificate of such
Class who is a Non-U.S. Holder (other than such a requirement (a) which would
not be applicable to a payment made by the Trustee, the Master Servicer or by
any Paying Agent (i) directly to the beneficial owner or (ii) to a custodian,
nominee or other agent of the beneficial owner, (b) which can be satisfied by
such custodian, nominee or agent certifying that the beneficial owner is a
Non-U.S. Holder, provided that, in any case referred to in clauses (a)(ii) or
(b), payment by the custodian, nominee or agent to the beneficial owner is not
otherwise subject to any such requirement or (c) which would not be applicable
to a payment made by at least one other Paying Agent) or such certification,
documentation, information or other reporting requirement cannot be avoided by
the use of reasonable measures available to the Trust that, in the good faith
opinion of the Master Servicer, will not have either (a) a material adverse
effect on the Certificateholders of such Class who are Non-U.S. Holders or on
the conduct of the business of the Sellers or the Master Servicer or (b) cause
the withdrawal or reduction of the then current ratings on any Class of any
other Series then outstanding;
an Amortization Event shall occur with respect to the Investor Certificates of
the Series established hereby, immediately upon the occurrence of such event.
If an Amortization Event described in this Section 20 shall occur, this Section
20 constitutes written notice by the Trustee and not less than 51% of the Class
Invested Amount of each Class of the Series established hereby to the Master
Servicer and the Sellers that such Amortization Event has occurred. No
additional notice of any kind, which is hereby waived by the Sellers and the
Master Servicer, shall be required as a condition of the occurrence of any
Amortization Event described in this Section 20.
The Master Servicer's determination that an event described in clause (g)
or (h) has occurred will be evidenced by delivery to the Trustee of (i) a
certificate setting forth a statement of facts showing that such Amortization
Event has occurred or will occur and (ii) an opinion of independent legal
counsel to such effect based on such statement of facts. In any such case, the
Amortization Event shall be deemed to have occurred on the first Distribution
Date following the Master Servicer's determination, without any notice or other
action on the part of the Trustee or the Investor Certificateholders.
SECTION 21. Purchase of Investor Certificates and Series Termination.
(a) If as of any Distribution Date during the Amortization Period (after
giving effect to any payments calculated pursuant to Section 9 made on such
Distribution Date) the Series Investor Interest of the Series established
hereby is less than or equal to 5% of the Series Initial Investor Interest,
Greenwood on behalf of the Holder of the Seller Certificate may purchase and
cancel the Investor Certificates of the Series established hereby by depositing
into the Series Distribution Account, on the immediately succeeding
Distribution Date, an amount equal to the Series Investor Interest as of the
last day of the Due Period related to such immediately succeeding Distribution
Date. If any amount deposited pursuant to this Section 21(a) is (i) allocable
to the Investor Certificateholders of a Class that is subject to a Class
Currency Swap, the Master Servicer shall direct the Trustee in writing (x) if
no Currency Swap Termination has occurred, to withdraw the amount allocable to
such Class from the Series Distribution Account and deposit such amount into
the Currency Swap Dollar Escrow Account or (y) if a Currency Swap Termination
has occurred, to convert such amount into Foreign Currency at the then
prevailing spot exchange rate in New York, as applicable, and cause such amount
to be paid to the Investor Certificateholders of such Class pursuant to Section
10(c) of this Series Supplement or (ii) allocable to the Investor
Certificateholders of a Class that is not subject to a Class Currency Swap, the
Master Servicer shall direct the Trustee in writing to withdraw the amount
allocable to such Class from the Series Distribution Account and pay such
amount to the Investor Certificateholders of such Class pursuant to Section
12.02 of the Pooling and Servicing Agreement. If Greenwood on behalf of the
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Holder of the Seller Certificate elects to purchase Investor Certificates with
respect to a Class that is subject to a Class Currency Swap pursuant to this
Section 21(a), Greenwood on behalf of the Holder of the Seller Certificate
shall give notice to the Investor Certificateholders of such Class not less
than 30 days and not more than 45 days prior to such purchase in the manner set
forth in Section 19 hereof. All Investor Certificates of the Series
established hereby that are purchased by Greenwood on behalf of the Holder of
the Seller Certificate pursuant to this Section 21(a) shall be delivered by
Greenwood on behalf of the Holder of the Seller Certificate upon such purchase
to, and be cancelled by, the Transfer Agent and be disposed of in a manner
satisfactory to the Trustee and Greenwood on behalf of the Holder of the Seller
Certificate.
(b) If as of any Distribution Date during the Accumulation Period or the
Controlled Liquidation Period, as applicable (after giving effect to any
payments calculated pursuant to Section 9 made on such Distribution Date), the
Series Investor Interest of the Series established hereby is less than or equal
to 5% of the Series Initial Investor Interest (before giving effect to any
reduction in the Series Initial Investor Interest pursuant to Section 6.14 of
the Pooling and Servicing Agreement), Greenwood on behalf of the Holder of the
Seller Certificate may, but shall not be obligated to, purchase the Investor
Certificates of the Series established hereby by depositing into the Series
Principal Funding Account, on such Distribution Date, an amount equal to such
Series Investor Interest. After giving effect to such deposit, such Series
Investor Interest shall be reduced to zero, and the Seller Interest shall be
increased by the amount of such deposit. If Greenwood on behalf of the Holder
of the Seller Certificate elects to purchase Investor Certificates with respect
to a Class that is subject to a Class Currency Swap pursuant to this Section
21(b), Greenwood on behalf of the Holder of the Seller Certificate shall give
notice to the Investor Certificateholders of such Class not less than 30 days
and not more than 45 days prior to such purchase in the manner set forth in
Section 19 hereof.
(c) Following the sale of Receivables pursuant to Section 12.02 of the
Pooling and Servicing Agreement, the Master Servicer shall direct the Trustee
in writing (i) with respect to Investor Certificateholders of a Class that is
subject to a Class Currency Swap (a) if no Currency Swap Termination has
occurred, to withdraw the amount allocable to such Class from the Series
Distribution Account and deposit such amount into the Currency Swap Dollar
Escrow Account or (b) if a Currency Swap Termination has occurred, to convert
such amount into Foreign Currency at the then prevailing spot exchange rate in
New York, as applicable, and cause such amount to be paid to the Investor
Certificateholders of such Class pursuant to Section 10(c) of this Series
Supplement or (ii) with respect to Investor Certificateholders of a Class that
is not subject to a Class Currency Swap, to withdraw the amount allocable to
such Class from the Series Distribution Account and pay such amount to the
Investor Certificateholders of such Class pursuant to Section 12.02 of the
Pooling and Servicing Agreement.
SECTION 22. Variable Accumulation Period. If the Series Term Sheet for
the Series established hereby so provides, the Master Servicer may elect, by
written notice to the Trustee, Greenwood on behalf of the Holder of the Seller
Certificate and the Credit Enhancement Provider, to delay the commencement of
the Accumulation Period, and extend the length of the Revolving Period, subject
to the conditions set forth in this Section 22; provided, however, that the
Accumulation Period shall commence no later than the first day of the Due
Period related to the Class A Expected Final Payment Date. Any such election
by the Master Servicer shall be made no later than the first day of the last
scheduled Due Period of the Revolving Period (including any prior extension of
the Revolving Period pursuant to this Section 22).
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The Master Servicer may make such election only if the following
conditions are satisfied: (i) the Master Servicer shall have delivered to the
Trustee a certificate to the effect that the Master Servicer reasonably
believes that the delay in the commencement of the Accumulation Period would
not result in the Class Invested Amount with respect to any Class of the Series
established hereby not being paid in full on the relevant Class Expected Final
Payment Date; (ii) the Rating Agencies shall have advised the Master Servicer
and Greenwood on behalf of the Holder of the Seller Certificate that such
election to delay the commencement of the Accumulation Period would not cause
the rating of any Class of any Series then outstanding to be lowered or
withdrawn; and (iii) the amount to be deposited in the Series Principal Funding
Account in respect of the Accumulation Amount shall have been adjusted.
SECTION 23. Series Yield Factor. The Series Yield Factor for the Series
established hereby shall initially be the Series Yield Factor set forth in the
Series Term Sheet. The Master Servicer may change the Series Yield Factor upon
20 days prior written notice to the Trustee, Greenwood on behalf of the Holder
of the Seller Certificate, the Credit Enhancement Provider and the Rating
Agencies, provided that the following conditions are satisfied: (i) the Series
Yield Factor may not be reduced below the initial Series Yield Factor or
increased to more than a total of 0.05; (ii) the Master Servicer shall have
delivered to the Trustee a certificate to the effect that the Master Servicer
reasonably believes that the change in the Series Yield Factor would not (x)
result in any delay in the payment of principal to the Investor
Certificateholders of any Series then outstanding, or (y) cause an Amortization
Event to occur with respect to any Series then outstanding; and (iii) Standard
& Poor's shall have advised the Master Servicer and Greenwood on behalf of the
Holder of the Seller Certificate that such change in the Series Yield Factor
would not cause the rating of any Class of any Series then outstanding to be
lowered or withdrawn. Any such change shall be effective as of the first day
of the Due Period specified in the notice of the Master Servicer.
SECTION 24. Ratification of Pooling and Servicing Agreement. As
supplemented and amended by this Series Supplement, the Pooling and Servicing
Agreement is in all respects ratified and confirmed and the Pooling and
Servicing Agreement as so supplemented by this Series Supplement shall be read,
taken, and construed as one and the same instrument.
SECTION 25. Counterparts. This Series Supplement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and
the same instrument.
SECTION 26. Governing Law. THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE
TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
56
<PAGE> 70
EXHIBIT A-1
FORM OF CLASS A CERTIFICATE
[FORM OF THE FACE OF THE CLASS A CERTIFICATES]
UNLESS THIS CLASS A CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS A CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
<TABLE>
<S> <C> <C>
NO. $
CUSIP NO.
</TABLE>
DISCOVER CARD MASTER TRUST I, SERIES 199_-_
FLOATING RATE CLASS A CREDIT CARD PASS-THROUGH CERTIFICATE
GREENWOOD TRUST COMPANY
MASTER SERVICER, SERVICER AND SELLER
(NOT AN INTEREST IN OR OBLIGATION OF GREENWOOD TRUST COMPANY AND NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.)
This certifies that Cede & Co. (the "Class A
Certificateholder") is the registered owner of a Fractional Undivided
Interest in the Discover Card Master Trust I (the "Trust"), the corpus
of which consists of a portfolio of receivables (the "Receivables")
existing as of the Cut-Off Date (or, with respect to Receivables in
Additional Accounts, as of the applicable Additional Account Cut-Off Date)
or thereafter created under certain open end credit card accounts for
specified Persons (the "Accounts") originated by Greenwood Trust Company, a
Delaware banking corporation ("Greenwood"), or an affiliate of Greenwood,
and transferred to the Trust by Greenwood or one or more Additional
Sellers, all monies due or to become due with respect thereto, all proceeds
(as defined in Section 9-306 of the Uniform Commercial Code as in effect in the
Applicable State) of such Receivables pursuant to a Pooling and Servicing
Agreement, dated as of October 1, 1993, by and between First Bank National
Association (successor trustee to Bank of America Illinois, formerly
Continental Bank, National Association) as Trustee (the "Trustee") and
Greenwood as Master Servicer, Servicer and Seller, as amended (the "Pooling
and Servicing Agreement"), a summary of certain of the pertinent provisions of
which is set forth herein below, and benefits under any Credit Enhancement
with respect to any Series of investor certificates issued from time to
time pursuant to the Pooling and Servicing Agreement, to the extent
applicable. Reference is hereby made to the further provisions of this
Class A Certificate set forth on the reverse hereof, and such further
provisions shall for all purposes have the same effect as if set forth at
this place.
A-1-1
<PAGE> 71
This Class A Certificate shall not be entitled to any benefit
under the Pooling and Servicing Agreement or any amendment thereto,
or the Series Supplement, dated as of , 199_ (the "Series Supplement"),
by and between the Trustee and Greenwood or any amendment thereto, or
become vested or obligatory for any purpose until the
certificate of authentication hereon shall have been signed by or on behalf
of the Trustee under the Pooling and Servicing Agreement.
A-1-2
<PAGE> 72
IN WITNESS WHEREOF, Greenwood has caused this Class A Certificate
to be duly executed and authenticated.
GREENWOOD TRUST COMPANY
By:________________________________
A-1-3
<PAGE> 73
[FORM OF THE REVERSE OF THE CLASS A CERTIFICATES]
It is the intent of the Sellers and the Investor
Certificateholders that, for federal, state and local income and franchise
tax purposes only, the Investor Certificates will be evidence of
indebtedness of the Sellers. The Sellers and the Class A
Certificateholder, by the acceptance of this Class A Certificate, agree to
treat this Class A Certificate for federal, state and local income and
franchise tax purposes as indebtedness of the Sellers secured by the
Receivables and other assets held in the Trust.
To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Pooling and Servicing Agreement or
the Series Supplement. This Class A Certificate is issued under and is
subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement and the Series Supplement, to which Pooling and Servicing
Agreement and Series Supplement, as each may be amended from time to time,
the Class A Certificateholder by virtue of the acceptance hereof
assents and by which the Class A Certificateholder is bound.
This Class A Certificate is one of a series of Certificates
entitled "Discover Card Master Trust I, Series 199_- _ Floating Rate Class A
Credit Card Pass-Through Certificates" (the "Class A Certificates"), each
of which represents a Fractional Undivided Interest in the Trust including
the right to receive the Collections and other amounts at the times and in the
amounts specified in the Pooling and Servicing Agreement and the Series
Supplement to be deposited in the Investor Accounts with respect to Discover
Card Master Trust I, Series 199_-_ or paid to the Class A Certificateholders.
Also issued under the Pooling and Servicing Agreement and the Series
Supplement are Investor Certificates designated as "Discover Card Master
Trust I, Series 199_-_ Floating Rate Class B Credit Card
Pass-Through Certificates" (the "Class B Certificates"). The Class A
Certificates and the Class B Certificates are collectively referred to
herein as the Investor Certificates.
The aggregate interest represented by the Class A Certificates
at any time in the assets of the Trust shall not exceed an amount equal to
the Class A Investor Interest at such time, plus accrued but unpaid
Certificate Interest for the Class A Certificates and any interest thereon.
The Class Initial Investor Interest of the Class A Certificates is $ .
The Class A Invested Amount on any Distribution Date will be an amount
equal to the Class A Initial Investor Interest minus the sum of (a)
the aggregate amount of payments of Certificate Principal paid to the
Class A Certificateholders prior to such Distribution Date, (b) the
aggregate amount of Investor Losses for such Class not reimbursed prior to
such Distribution Date and (c) the aggregate amount of losses of principal on
investments in funds on deposit for the benefit of such Class in the
Series Principal Funding Account. In addition to the Investor
Certificates, a Seller Certificate has been issued pursuant to the Pooling
and Servicing Agreement which represents, at any time, the undivided
interest in the Trust not represented by the Investor Certificates or the
investor certificates of any other Series of investor certificates then
outstanding. Subject to the terms and conditions of the Pooling and Servicing
Agreement, the Sellers may from time to time direct the Trustee, on behalf
of the Trust, to issue one or more new Series of investor
certificates, which will represent Fractional Undivided Interests in the Trust.
During the Revolving Period, which begins on the Series Cut-Off
Date, and during the Accumulation Period, Certificate Interest will be
distributed on the 15th day of each calendar month with respect to
interest accrued during the preceding Interest Accrual Period, commencing in
, or if such 15th day is not a Business Day, on the next succeeding
Business Day (an "Interest Payment Date"), to the Class A
Certificateholders of record as of the last day of the month preceding
the related Interest Payment Date. Principal on the Class A Certificates
will be paid in a single payment on the Distribution Date in
(the "Class A Expected Final Payment Date"), but may be paid sooner
or later and in installments if an Amortization Event occurs. During the
Amortization Period, if any, Certificate Interest and Certificate Principal
collected by the Master Servicer will be distributed to the Class A
Certificateholders on the Distribution Date of each calendar month, commencing
in the month following the commencement of the Amortization Period. In any
event, the final payment of principal of either class will be made no later
than (the "Series Termination Date").
A-1-4
<PAGE> 74
The amount to be distributed on each Distribution Date to the
holder of this Class A Certificate will be equal to the product of (a) the
percentage equivalent of a fraction, the numerator of which is the portion
of the Class A Initial Investor Interest evidenced by this Class A
Certificate and the denominator of which is the Class A Initial Investor
Interest and (b) the aggregate of all payments to be made to the Class A
Certificateholders on such Distribution Date. Distributions with respect to
this Class A Certificate will be made by the Paying Agent by check mailed
to the address of the Class A Certificateholder of record appearing in
the Certificate Register (except for the final distribution in respect of
this Class A Certificate) without the presentation or surrender of this
Class A Certificate or the making of any notation thereon, except that with
respect to Class A Certificates registered in the name of Cede & Co., the
nominee registrant for The Depository Trust Company, distributions will be
made in the form of immediately available funds.
This Class A Certificate does not represent an obligation
of, or an interest in, the Master Servicer. This Class A Certificate is
limited in right of payment to certain Collections respecting the
Receivables, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement and the Series Supplement.
The Pooling and Servicing Agreement permits, with certain
exceptions, the amendment and modification of the rights and obligations of
the Master Servicer, and the rights of Investor Certificateholders under
the Pooling and Servicing Agreement and Series Supplement, at any time
by the Master Servicer, the Sellers and the Trustee in certain cases (some
of which require confirmation from the Rating Agencies that such amendment
will not result in the downgrading or withdrawal of the rating assigned to the
Investor Certificates) without the consent of the Investor Certificateholders,
and in all other cases with the consent of the Investor Certificateholders
owning Fractional Undivided Interests aggregating not less than 66-2/3% of
the Class Invested Amount of each such affected Class (and with
confirmation from the Rating Agencies that such amendment will not result
in the downgrading or withdrawal of the rating assigned to the Investor
Certificates); provided, however, that no such amendment shall (a) have a
material adverse effect on any Class of Investor Certificateholders by
reducing in any manner the amount of, or delaying the timing of, distributions
which are required to be made on any Investor Certificate without the
consent of the affected Investor Certificateholders or (b) reduce the
aforesaid percentage required to consent to any such amendment, without
the consent of each Investor Certificateholder of each affected Class then of
record. Any such amendment and any such consent by the Class A
Certificateholder shall be conclusive and binding on such Class A
Certificateholder and upon all future Holders of this Class A Certificate and
of any Class A Certificate issued in exchange hereof or in lieu hereof
whether or not notation thereof is made upon this Class A Certificate.
The transfer of this Class A Certificate shall be registered
in the Certificate Register upon surrender of this Investor Certificate for
registration of transfer at any office or agency maintained by the
Transfer Agent and Registrar accompanied by a written instrument of
transfer in a form satisfactory to the Trustee and the Transfer Agent and
Registrar duly executed by the Class A Certificateholder or such Class A
Certificateholder's attorney duly authorized in writing, and thereupon
one or more new Class A Certificates of authorized denominations and for
the same aggregate Fractional Undivided Interest will be issued to the
designated transferee or transferees.
A-1-5
<PAGE> 75
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A Certificates are
exchangeable for new Class A Certificates evidencing like aggregate
Fractional Undivided Interests, as requested by the Class A
Certificateholder surrendering such Class A Certificates. No service charge
may be imposed for any such exchange but the Master Servicer or Transfer
Agent and Registrar may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection
therewith.
The Master Servicer, the Trustee, the Paying Agent and the Transfer
Agent, and any agent of any of them, may treat the person in whose name this
Class A Certificate is registered as the owner hereof for all purposes,
and neither the Master Servicer, the Trust nor the Trustee, the Paying
Agent, the Transfer Agent, nor any agent of any of them or any such agent
shall be affected by notice to the contrary except in certain circumstances
described in the Pooling and Servicing Agreement.
Subject to certain conditions in the Pooling and Servicing
Agreement and the Series Supplement, if the principal of the Investor
Certificates has not been paid in full prior to the Series Termination
Date, the obligations created by the Pooling and Servicing Agreement and
the Series Supplement with respect to the Investor Certificates shall
terminate on the Series Termination Date.
A-1-6
<PAGE> 76
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Class A Certificates referred to in the within
mentioned Pooling and Servicing Agreement and Series Supplement.
FIRST BANK NATIONAL ASSOCIATION, as Trustee
By:________________________________
Authorized Officer
A-1-7
<PAGE> 77
EXHIBIT A-2
FORM OF CLASS B CERTIFICATE
[FORM OF THE FACE OF THE CLASS B CERTIFICATES]
UNLESS THIS CLASS B CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CLASS B CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
<TABLE>
<S> <C> <C>
NO. $
CUSIP NO.
</TABLE>
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AND TO THE RIGHTS OF THE MASTER SERVICER AS DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT AND SERIES SUPPLEMENT REFERRED TO HEREIN.
DISCOVER CARD MASTER TRUST I, SERIES 199_-_
FLOATING RATE CLASS B CREDIT CARD PASS-THROUGH CERTIFICATE
GREENWOOD TRUST COMPANY
MASTER SERVICER, SERVICER AND SELLER
(NOT AN INTEREST IN OR OBLIGATION OF GREENWOOD TRUST COMPANY AND NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.)
THIS INVESTOR CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT
OF ANY EMPLOYEE BENEFIT PLAN (AS DEFINED BELOW).
This certifies that Cede & Co. (the "Class B
Certificateholder") is the registered owner of a Fractional Undivided
Interest in the Discover Card Master Trust I (the "Trust"), the corpus
of which consists of a portfolio of receivables (the "Receivables")
existing as of the Cut-Off Date (or, with respect to Receivables in
Additional Accounts, as of the applicable Additional Account Cut-Off Date)
or thereafter created under certain open end credit card accounts for
specified Persons (the "Accounts") originated by Greenwood Trust Company, a
Delaware banking corporation ("Greenwood"), or an affiliate of Greenwood,
and transferred to the Trust by Greenwood or one or more Additional
Sellers, all monies due or to become due with respect thereto, all proceeds
(as defined in Section 9-306 of the
A-2-1
<PAGE> 78
Uniform Commercial Code as in effect in the Applicable State) of such
Receivables pursuant to a Pooling and Servicing Agreement, dated as of
October 1, 1993, by and between First Bank National Association (successor
trustee to Bank of America Illinois, formerly Continental Bank, National
Association) as Trustee (the "Trustee") and Greenwood as Master Servicer,
Servicer and Seller, as amended (the "Pooling and Servicing Agreement"), a
summary of certain of the pertinent provisions of which is set forth herein
below, and benefits under any Credit Enhancement with respect to any Series
of investor certificates issued from time to time pursuant to the Pooling
and Servicing Agreement, to the extent applicable. Reference is hereby made
to the further provisions of this Class B Certificate set forth on the
reverse hereof, and such further provisions shall for all purposes have the
same effect as if set forth at this place.
This Class B Certificate shall not be entitled to any benefit
under the Pooling and Servicing Agreement or any amendment thereto,
or the Series Supplement, dated as of ________, 199_ (the "Series
Supplement"), by and between the Trustee and Greenwood or any amendment
thereto, or become vested or obligatory for any purpose until the
certificate of authentication hereon shall have been signed by or on behalf
of the Trustee under the Pooling and Servicing Agreement.
A-2-2
<PAGE> 79
IN WITNESS WHEREOF, Greenwood has caused this Class B Certificate
to be duly executed and authenticated.
GREENWOOD TRUST COMPANY
By:________________________________
A-2-3
<PAGE> 80
[FORM OF THE REVERSE OF THE CLASS B CERTIFICATES]
It is the intent of the Sellers and the Investor
Certificateholders that, for federal, state and local income and franchise
tax purposes only, the Investor Certificates will be evidence of
indebtedness of the Sellers. The Sellers and the Class B
Certificateholder, by the acceptance of this Class B Certificate, agree to
treat this Class B Certificate for federal, state and local income and
franchise tax purposes as indebtedness of the Sellers secured by the
Receivables and other assets held in the Trust.
To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Pooling and Servicing Agreement or
the Series Supplement. This Class B Certificate is issued under and is
subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement and the Series Supplement, to which Pooling and Servicing
Agreement and Series Supplement, as each may be amended from time to time,
the Class B Certificateholder by virtue of the acceptance hereof
assents and by which the Class B Certificateholder is bound.
This Class B Certificate is one of a series of Certificates
entitled "Discover Card Master Trust I, Series 199_- _ Floating Rate Class B
Credit Card Pass-Through Certificates" (the "Class B Certificates"), each
of which represents a Fractional Undivided Interest in the Trust including
the right to receive the Collections and other amounts at the times and in the
amounts specified in the Pooling and Servicing Agreement and the Series
Supplement to be deposited in the Investor Accounts with respect to Discover
Card Master Trust I, Series 199_-_ or paid to the Class B Certificateholders.
Also issued under the Pooling and Servicing Agreement and the Series
Supplement are Investor Certificates designated as "Discover Card Master
Trust I, Series 199_-_ Floating Rate Class A Credit Card
Pass-Through Certificates" (the "Class A Certificates"). The Class A
Certificates and the Class B Certificates are collectively referred to
herein as the Investor Certificates.
The aggregate interest represented by the Class B Certificates
at any time in the assets of the Trust shall not exceed an amount equal to
the Class Investor Interest of the Class B Certificates at such time,
plus accrued but unpaid Certificate Interest for the Class B
Certificates and any interest thereon. The Class B Certificateholders
are also entitled to the benefit of the Credit Enhancement, to the extent
provided in the Series Supplement. The Class Initial Investor Interest of
the Class B Certificates is $ . The Class B Invested Amount on
any Distribution Date will be an amount equal to the Class B Initial
Investor Interest minus the sum of (a) the aggregate amount of payments of
Certificate Principal paid to the Class B Certificateholders prior to such
Distribution Date, (b) the aggregate amount of Investor Losses for such Class
not reimbursed prior to such Distribution Date and (c) the aggregate
amount of losses of principal on investments in funds on deposit for the
benefit of such Class in the Series Principal Funding Account. In addition
to the Investor Certificates, a Seller Certificate has been issued pursuant
to the Pooling and Servicing Agreement which represents, at any time, the
undivided interest in the Trust not represented by the Investor
Certificates or the investor certificates of any other Series of investor
certificates then outstanding. Subject to the terms and conditions of the
Pooling and Servicing Agreement, the Sellers may from time to time direct the
Trustee, on behalf of the Trust, to issue one or more new Series of investor
certificates, which will represent Fractional Undivided Interests in the
Trust.
During the Revolving Period, which begins on the Series Cut-Off
Date, and during the Accumulation Period, Certificate Interest will be
distributed on the 15th day of each calendar month with respect to
interest accrued during the preceding Interest Accrual Period, commencing in
, or if such 15th day is not a Business Day, on the next succeeding Business
Day (an "Interest Payment Date"), to the Class B Certificateholders of
record as of the last day of the month preceding the related
A-2-4
<PAGE> 81
Interest Payment Date. Principal on the Class B Certificates will be
paid in a single payment on the Distribution Date in (the "Class B
Expected Final Payment Date), but may be paid sooner or later and in
installments if an Amortization Event occurs. During the Amortization
Period, if any, Certificate Interest and Certificate Principal collected
by the Master Servicer will be distributed to the Class B Certificateholders
on the Distribution Date of each calendar month, commencing in the month
following the commencement of the Amortization Period; provided, however,
that no Certificate Principal will be distributed to the Class B
Certificateholders until the Class A Investor Interest has been reduced to
zero. The rights of the Class B Certificateholders to receive the
distributions to which they would otherwise be entitled on the Receivables
will be subordinated to the rights of the Class A Certificateholders and the
Master Servicer to the extent described in the Pooling and Servicing
Agreement and Series Supplement. In any event, the final payment of
principal of either Class will be made no later than (the
"Series Termination Date").
The amount to be distributed on each Distribution Date to the
holder of this Class B Certificate will be equal to the product of (a) the
percentage equivalent of a fraction, the numerator of which is the portion
of the Class B Initial Investor Interest evidenced by this Class B
Certificate and the denominator of which is the Class B Initial Investor
Interest and (b) the aggregate of all payments to be made to the Class B
Certificateholders on such Distribution Date. Distributions with respect to
this Class B Certificate will be made by the Paying Agent by check mailed
to the address of the Class B Certificateholder of record appearing in
the Certificate Register (except for the final distribution in respect of
this Class B Certificate) without the presentation or surrender of this
Class B Certificate or the making of any notation thereon, except that with
respect to Class B Certificates registered in the name of Cede & Co., the
nominee registrant for The Depository Trust Company, distributions will be
made in the form of immediately available funds.
This Class B Certificate does not represent an obligation
of, or an interest in, the Master Servicer. This Class B Certificate is
limited in right of payment to certain Collections respecting the
Receivables, all as more specifically set forth hereinabove and in the Pooling
and Servicing Agreement and the Series Supplement.
The Pooling and Servicing Agreement permits, with certain
exceptions, the amendment and modification of the rights and obligations of
the Master Servicer, and the rights of Investor Certificateholders under
the Pooling and Servicing Agreement and Series Supplement, at any time
by the Master Servicer, the Sellers and the Trustee in certain cases (some
of which require confirmation from the Rating Agencies that such amendment
will not result in the downgrading or withdrawal of the rating assigned to the
Investor Certificates) without the consent of the Investor Certificateholders,
and in all other cases with the consent of the Investor Certificateholders
owning Fractional Undivided Interests aggregating not less than 66-2/3% of
the Class Invested Amount of each such affected Class (and with
confirmation from the Rating Agencies that such amendment will not result
in the downgrading or withdrawal of the rating assigned to the Investor
Certificates); provided, however, that no such amendment shall (a) have a
material adverse effect on any Class of Investor Certificateholders by
reducing in any manner the amount of, or delaying the timing of, distributions
which are required to be made on any Investor Certificate without the
consent of the affected Investor Certificateholders or (b) reduce the
aforesaid percentage required to consent to any such amendment, without
the consent of each Investor Certificateholder of each affected Class then of
record. Any such amendment and any such consent by the Class B
Certificateholder shall be conclusive and binding on such Class B
Certificateholder and upon all future Holders of this Class B Certificate and
of any Class B Certificate issued in exchange hereof or in lieu hereof
whether or not notation thereof is made upon this Class B Certificate.
A-2-5
<PAGE> 82
The transfer of this Class B Certificate shall be registered
in the Certificate Register upon surrender of this Investor Certificate for
registration of transfer at any office or agency maintained by the
Transfer Agent and Registrar accompanied by a written instrument of
transfer in a form satisfactory to the Trustee and the Transfer Agent and
Registrar duly executed by the Class B Certificateholder or such Class B
Certificateholder's attorney duly authorized in writing, and thereupon
one or more new Class B Certificates of authorized denominations and for
the same aggregate Fractional Undivided Interest will be issued to the
designated transferee or transferees.
The transfer of this Investor Certificate is subject to certain
restrictions set forth in the Pooling and Servicing Agreement. In no
event shall this Investor Certificate, or any interest therein, be
transferred to an employee benefit plan, trust or account subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), and not excepted under Section 4975(g). Any Holder
of this Investor Certificate, by its acceptance hereof, shall be deemed to
represent and warrant that it is not (i) an employee benefit plan (as
defined in Section 3(3) of ERISA), that is subject to Title I of
ERISA, (ii) a plan described in Section 4975(e)(l) of the Code, and not
excepted under Section 4975(g), or (iii) an entity using assets to
purchase such Certificates which constitute plan assets by reason of a plan's
investment in such Holder.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class B Certificates are
exchangeable for new Class B Certificates evidencing like aggregate
Fractional Undivided Interests, as requested by the Class B
Certificateholder surrendering such Class B Certificates. No service charge
may be imposed for any such exchange but the Master Servicer or Transfer
Agent and Registrar may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection
therewith.
The Master Servicer, the Trustee, the Paying Agent and the Transfer
Agent, and any agent of any of them, may treat the person in whose name this
Class B Certificate is registered as the owner hereof for all purposes,
and neither the Master Servicer, the Trust nor the Trustee, the Paying
Agent, the Transfer Agent, nor any agent of any of them or any such agent
shall be affected by notice to the contrary except in certain circumstances
described in the Pooling and Servicing Agreement.
Subject to certain conditions in the Pooling and Servicing
Agreement and the Series Supplement, if the principal of the Investor
Certificates has not been paid in full prior to the Series Termination
Date, the obligations created by the Pooling and Servicing Agreement and
the Series Supplement with respect to the Investor Certificates shall
terminate on the Series Termination Date.
A-2-6
<PAGE> 83
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Class B Certificates referred to in the within
mentioned Pooling and Servicing Agreement and Series Supplement.
FIRST BANK NATIONAL ASSOCIATION, as Trustee
By:________________________________
Authorized Officer
A-2-7
<PAGE> 84
Exhibit B
Form of Investor Certificateholders' Monthly Statement
Discover Card Master Trust I
Series 199_-_ Monthly Statement
Trust Distribution Date: __________ __, ____Due Period Ending: _ _________ __,
____
Pursuant to the Series Supplement dated as of __________ __, 1995 relating to
the Pooling and Servicing Agreement dated as of October 1, 1993 by and between
Greenwood Trust Company and First Bank National Association (successor trustee
to Bank of America Illinois, formerly Continental Bank, National Association)
as Trustee, as amended, the Trustee is required to prepare certain information
each month regarding current distributions to Certificateholders and the
performance of the Trust. The information for the Due Period and the Trust
Distribution Date listed above is set forth below.
1. Payments for the benefit of Series Investors this Due Period (per $1,000
of Class Initial Investor Interest)
<TABLE>
<CAPTION>
Total Interest Principal
<S> <C> <C> <C>
Series 199_-_
Class A $____________ $____________ $____________
Class B $____________ $____________ $____________
</TABLE>
2. Principal Receivables at the end of the Due Period
<TABLE>
<S> <C> <C>
(a) Aggregate Investor Interest $____________
Seller Interest $____________
TOTAL MASTER TRUST $____________
(b) Group One Investor Interest $____________
(c) Group Two Investor Interest $____________
(d) Series 199_-_ Series Investor Interest $____________
(e) Class A Investor Interest $____________
Class B Investor Interest $____________
</TABLE>
3. Allocation of Receivables Collected During the Due Period
<TABLE>
<CAPTION>
Finance Charge Principal Yield Additional
Collections Collections Collections Funds
<S> <C> <C> <C> <C>
(a) Allocation of Collections between
Investors and Seller
Aggregate Investor Allocation $____________ $___________ N/A N/A
Seller Allocation $____________ $___________ N/A N/A
(b) Group One Allocation $____________ $___________ N/A N/A
(c) Group Two Allocation $____________ $___________ N/A N/A
(d) Series 199_-_ Allocations $____________ $___________ $_________ N/A
(e) Class A Allocations $___________ $___________ $_________ N/A
Class B Allocations $___________ $___________ $_________ N/A
</TABLE>
B-1
<PAGE> 85
4. Information Concerning the Series Principal Funding Accounts ("SPFA")
<TABLE>
<CAPTION>
Deposits into the SPFAs Deficit Amount
This Due Period This Due Period Total
Deposits Investment Income
<S> <C> <C> <C> <C>
Series 199_-_ $ $ $ $
</TABLE>
5. Information Concerning Amount of Controlled Liquidation Payments
<TABLE>
<CAPTION>
Amount Paid Deficit Amount Total Payments Through
This Due Period This Due Period The Due Period
<S> <C> <C> <C>
Series 199_-_ N/A N/A N/A
</TABLE>
6. Information Concerning the Series Interest Funding Accounts ("SIFA")
<TABLE>
<CAPTION>
Deposits into the SIFAs
This Due Period SIFA Balance
<S> <C> <C>
Series 199_-_ N/A N/A
</TABLE>
7. Pool Factors
<TABLE>
<CAPTION>
This Due Period
<S> <C>
Class A $_________
Class B $_________
</TABLE>
8. Investor Charged-Off Amount
<TABLE>
<CAPTION>
This Due Period Cumulative Investor
Charged-Off Amount
<S> <C> <C> <C>
(a) Group One $_________ $_________
(b) Group Two $_________ $_________
(c) Series 199_-_ $_________ $_________
(d) Class A $_________ $_________
Class B $_________ $_________
</TABLE>
9. Investor Losses This Due Period
<TABLE>
<CAPTION>
Total per $1,000 of Original
Invested Principal
<S> <C> <C> <C>
(a) Group One $_________ $_________
(b) Group Two $_________ $_________
(c) Series 199_-_ $_________ $_________
(d) Class A $_________ $_________
Class B $_________ $_________
</TABLE>
B-2
<PAGE> 86
10. Reimbursement of Investor Losses This Due Period
<TABLE>
<CAPTION>
Total per $1,000 of Original
Invested Principal
<S> <C> <C> <C>
(a) Group One $_________ $_________
(b) Group Two $_________ $_________
(c) Series 199_-_ $_________ $_________
(d) Class A $_________ $_________
Class B $_________ $_________
</TABLE>
11. Aggregate Amount of Unreimbursed Investor Losses
<TABLE>
<CAPTION>
Total per $1,000 of Original
Invested Principal
<S> <C> <C> <C>
(a) Group One $_________ $_________
(b) Group Two $_________ $_________
(c) Series 199_-_ $_________ $_________
(d) Class A $_________ $_________
Class B $_________ $_________
</TABLE>
12. Investor Monthly Servicing Fee Payable This Due Period
<TABLE>
<S> <C> <C> <C>
(a) Group One $_________
(b) Group Two $_________ $_________
(c) Series 199_-_ $_________
(d) Class A $_________
Class B $_________
</TABLE>
13. Class Available Subordinated Amount at the end of the Due Period
<TABLE>
<CAPTION>
as a percentage of
Total Class A Invested Amount
<S> <C> <C>
Series 199_-_, Class B $____________ $____________
</TABLE>
14. Total Available Credit Enhancement Amounts
<TABLE>
<CAPTION>
Shared Amount Class B Amount
<S> <C>
Maximum Amount N/A $__________
Available Amount N/A $__________
Amount of Drawings on Credit
Enhancement for this Due Period N/A $__________
</TABLE>
B-3
<PAGE> 87
15. Delinquency Summary
<TABLE>
<S> <C>
End of Due Period Mater
Trust Receivables Outstanding $_________
</TABLE>
<TABLE>
<CAPTION>
Delinquent Amount Percentage of Ending
Payment Status Ending Balance Receivables Outstanding
<S> <C> <C>
30 - 59 days $_________ _________%
60 - 179 days $_________ _________%
</TABLE>
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
By:__________________________________________________
B-4
<PAGE> 88
Exhibit C
Form of Master Servicer's Monthly Certificate
Discover Card Master Trust I
Series 199_-_
CREDIT CARD
PASS-THROUGH CERTIFICATES
The undersigned, a duly authorized representative of Greenwood Trust
Company ("Greenwood"), as Master Servicer pursuant to the Pooling and Servicing
Agreement dated as of October 1, 1993, as amended (the "Pooling and Servicing
Agreement"), and the Series Supplement, dated as of __________ __, 1995 (the
"Series Supplement") by and between Greenwood and First Bank National
Association (successor trustee to Bank of America Illinois, formerly
Continental Bank, National Association) as Trustee, does hereby certify as
follows with respect to the Series Supplement for the Discover Card Master
Trust I, Series 199_-_ Certificates for the Distribution Date occurring on
_______________:
<TABLE>
<S> <C>
1. Greenwood is Master Servicer under the Pooling and
Servicing Agreement.
2. The undersigned is a Servicing Officer of Greenwood
as Master Servicer.
3. The aggregate amount of Collections processed during
the related Due Period is equal to $_____
4. The aggregate amount of Class A Principal Collections
processed during the related Due Period is equal to $_____
5. The aggregate amount of Class A Finance Charge Collections
processed during the related Due Period is equal to $_____
6a. The aggregate amount of Class A Principal Collections
recharacterized as Series Yield Collections during the
related Due Period is equal to $_____
6b. The aggregate amount of Class A Additional Funds for
this Distribution Date is equal to $_____
7. The sum of all amounts payable to the Class A Certificate-
holders on the current Distribution Date is equal to $_____
8. The aggregate amount of Class B Principal Collections
processed during the related Due Period is equal to $_____
</TABLE>
C-1
<PAGE> 89
<TABLE>
<S> <C>
9. The aggregate amount of Class B Finance Charge Collections
processed during the related Due Period is equal to $_____
10a. The aggregate amount of Class B Principal Collections
recharacterized as Series Yield Collections during
the related Due Period is $_____
10b. The aggregate amount of Class B Additional Funds for
this Distribution Date is equal to $_____
11. The amount of drawings under the Credit Enhancement
required to be made on the related Drawing Date pursuant
to the Series Supplement:
(a) with respect to the Class B Required Amount Shortfall
is equal to $______
(b) with respect to the Class B Cumulative Investor
Charged-Off Amount is equal to $_____
(c) with respect to the Class B Investor Interest
is equal to $_____
12. The sum of all amounts payable to the Class B Certificate-
holders on the current Distribution Date is equal to $_____
13. Attached hereto is a true copy of the statement required
to be delivered by the Master Servicer on the date of this
Certificate to the Trustee pursuant to Section 16 of the
Series Supplement.
</TABLE>
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this certificate this ____day of ____________, 19__.
GREENWOOD TRUST COMPANY,
as Master Servicer
By:________________________________
Title:
C-2
<PAGE> 1
Exhibit 4.5
BOOK-ENTRY-ONLY COLLATERALIZED MORTGAGE OBLIGATIONS (CMOs)
(WITHOUT OWNER OPTION TO REDEEM)
OTHER ASSET-BACKED SECURITIES/AND PASS-THROUGH CERTIFICATES
Letter of Representations*
[To be Completed by Issuer and Trustee]
Greenwood Trust Company on behalf of
Discover Card Master Trust I, Series 199 -
[Name of Issuer]
First Bank National Association
[Name of Trustee]
_________, 199_
[Date]
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 WATER STREET; 49TH FLOOR
New York, NY 10041-0099
Re: Floating Rate Class A Credit Card Pass-Through Certificates and
Floating Rate Class B Credit Card Pass-Through Certificates,
Discover Card Master Trust I, Series 199 -
[Issue Description]
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the above-referenced issue (the "Securities"). Trustee will act as
trustee with respect to the Securities pursuant to a trust indenture dated
October 1, 1993 (the "Document"). Dean Witter Reynolds Inc., ______, ______
and are __________ distributing the Securities through The Depository Trust
Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC, and
to act in accordance with its Rules with respect to the Securities, Issuer and
Trustee make the following representations to DTC:
1. Prior to closing on the Securities on __________, 199__, there shall
be deposited with DTC one Security certificate registered in the name of DTC's
nominee, Cede & Co., for each stated maturity of the Securities in the face
amounts set forth on Schedule A hereto, the total of which represents 100% of
the principal amount of such Securities. If, however, the aggregate principal
amount of any maturity exceeds $200 million, one certificate will be issued
with respect to each $200 million of principal amount and an additional
certificate will be issued with respect to any remaining principal amount.
Each Security certificate shall bear the following legend:
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
*This Letter of Representations includes the Addendum attached hereto, which
modifies and supersedes this Letter of representations to the extent set forth
therein.
<PAGE> 2
payment is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
2. In the event of any solicitation of consents from or voting by
holders of the Securities, Issuer or Trustee shall establish a record date for
such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall send notice of such record date to DTC not less
than 15 calendar days in advance of such record date. Notices to DTC pursuant
to this Paragraph by telecopy shall be sent to DTC's Reorganization Department
at (212) 709-6896 or (212) 709-6897, and receipt of such notices shall be
confirmed by telephoning (212) 709-6870. Notices to DTC pursuant to this
Paragraph by mail or by any other means shall be sent to DTC's Reorganization
Department as indicated in Paragraph 4.
3. In the event of a full or partial redemption, Issuer or Trustee shall
send a notice to DTC specifying: (a) the amount of the redemption or refunding;
(b) in the case of a refunding, the maturity date(s) established under the
refunding; and (c) the date such notice is to be mailed to Security holders or
published (the "Publication Date"). Such notice shall be sent to DTC by a
secure means (e.g., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before or,
if possible, two business days before the Publication Date. Issuer or Trustee
shall forward such notice either in a separate secure transmission for each
CUSIP number or in a secure transmission for multiple CUSIP numbers (if
applicable) which includes a manifest or list of each CUSIP number submitted in
that transmission. (The party sending such notice shall have a method to
verify subsequently the use of such means and the timeliness of such notice.)
The Publication Date shall be not less than 30 days nor more than 60 days prior
to the redemption date or, in the case of an advance refunding, the date that
the proceeds are deposited in escrow. Notices to DTC pursuant to this
Paragraph by telecopy shall be sent to DTC's Call Notification Department at
(516) 227-4039 or (516) 227-4190. If the party sending the notice does not
receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (516) 227-4070. Notices to DTC pursuant
to this Paragraph by mail or by any other means shall be sent to:
Manager, Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
4. In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or Trustee
to Security holders specifying the terms of the tender and the Publication Date
of such notice shall be sent to DTC by a secure means in the manner set forth
in the preceding Paragraph. Notices to DTC pursuant to this Paragraph and
notices of other corporate actions by telecopy shall be sent to DTC's
Reorganization Department at (212) 709-1093 or (212) 709- 1094, and receipt of
such notices shall be confirmed by telephoning (212) 709-6884. Notices to DTC
pursuant to the above by mail or by any other means shall be sent to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004-2695
2
<PAGE> 3
5. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.
6. Trustee shall send DTC written notice with respect to the dollar
amount per $1,000 original face value (or other minimum authorized denomination
if less than $1,000 face value) payable on each payment date allocated as to
the interest and principal portions thereof preferably 5, but not less than 2,
business days prior to such payment date. Such notices, which shall also
contain the current pool factor, any special adjustments to principal/interest
rates (e.g., adjustments due to deferred interest or shortfall), and Trustee
contact's name and telephone number, shall be sent by telecopy to DTC's
Dividend Department at (212) 709-1723, or if by mail or by any other means to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, NY 10004-2695
7. The interest accrual period is payment date to payment date.
8. Trustee must provide DTC, no later than noon (Eastern Time) on the
payment date, CUSIP numbers for each issue for which payment is being sent, as
well as the dollar amount of the payment for each issue. Notification of
payment details should be sent using automated communications.
9. Interest payments and principal payments that are part of periodic
principal-and-interest payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns in same- day funds, no later than 2:30 p.m.
(Eastern Time) on each payment date (in accordance with existing arrangements
between Issuer or Trustee and DTC). Absent any other arrangements between
Issuer or Trustee and DTC, such funds shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C
The Depository Trust Company
Dividend Deposit Account 066-026776
Issuer or Trustee shall provide interest payment information to a standard
announcement service subscribed to by DTC. In the unlikely event that no such
service exists, Issuer or Trustee shall provide interest payment information
directly to DTC in advance of the interest payment date as soon as the
information is available. This information should be conveyed directly to DTC
electronically. If electronic transmission is not available, absent any other
arrangements between Trustee and DTC, such information should be sent by
telecopy to DTC's Dividend Department at (212) 709-1723 or (212) 709-1686, and
receipt of such notices shall be confirmed by telephoning (212) 709-1270.
Notices to DTC pursuant to the above by mail or by any other means shall be
sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
3
<PAGE> 4
10. DTC shall receive maturity and redemption payments allocated with
respect to each CUSIP number on the payable date in same-day funds by 2:30 p.m.
(Eastern Time). Absent any other arrangements between Trustee and DTC, such
payments shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C
The Depository Trust Company
Redemption Account 066-027306
in accordance with existing SDFS payment procedures in the manner set forth in
DTC's SDFS Paying Agent Operating Procedures, a copy of which has previously
been furnished to Trustee.
11. DTC shall receive all reorganization payments and CUSIP- level detail
resulting from corporate actions (such as tender offers, remarketings, or
mergers) on the first payable date in same-day funds by 2:30 p.m. (Eastern
Time). Absent any other arrangements between Trustee and DTC, such payments
shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C
The Depository Trust Company
Reorganization Account 066-027608
12. DTC may direct Issuer or Trustee to use any other number or address
as the number or address to which notices or payments of interest or principal
may be sent.
13. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or
Trustee's invitation) necessitating a reduction in the aggregate principal
amount of Securities outstanding or an advance refunding of part of the
Securities outstanding, DTC, in its discretion: (a) may request Issuer or
Trustee to issue and authenticate a new Security certificate; or (b) may make
an appropriate notation on the Security certificate indicating the date and
amount of such reduction in principal except in the case of final maturity, in
which case the certificate will be presented to Issuer or Trustee prior to
payment, if required.
14. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Trustee
shall notify DTC of the availability of certificates. In such event, Issuer or
Trustee shall issue, transfer, and exchange certificates in appropriate
amounts, as required by DTC and others.
15. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
Issuer or Trustee (at which time DTC will confirm with Issuer or Trustee the
aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request Issuer and Trustee shall cooperate fully with
DTC by taking appropriate action to make available one or more separate
certificates evidencing Securities to any DTC Participant having Securities
credited to its DTC accounts.
16. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the Security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificates by virtue of submission of such certificate(s) to DTC.
4
<PAGE> 5
17. Nothing herein shall be deemed to require Trustee to advance funds on
behalf of Issuer.
NOTES: Very truly yours,
A. If there is a Trustee (as defined
in this Letter of Representations), GREENWOOD TRUST COMPANY
Trustee as well as Issuer must sign this _______________________________
Letter. If there is no Trustee, in signing (Issuer)
this Letter Issuer itself undertakes to
perform all of the obligations set forth By:_____________________________
herein. (Authorized Officer's Signature)
B. Schedule B contains statements that DTC FIRST BANK NATIONAL ASSOCIATION
believes accurately describe DTC, the method
of effecting book-entry transfers of By:____________________________
securities distributed through DTC, and (Authorized Officer's Signature)
certain related matters.
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By:_________________________
cc: Underwriter
Underwriter's Counsel
5
<PAGE> 6
A D D E N D U M
to
Letter of Representations dated
Discover Card Master Trust I, Series 199 -
<TABLE>
<S> <C>
General: For purposes of this Letter of Representations:
"Securities" shall mean the $
aggregate principal amount of Floating Rate Class
A Credit Card Pass-Through Certificates and the
$ aggregate principal amount of
Floating Rate Class B Credit Card Pass-Through
Certificates issued by Discover Card Master Trust
I, Series 199 - and "Security holders" shall mean
the holders of such certificates;
"Issuer" shall mean Greenwood Trust Company
("Greenwood") on behalf of Discover Card Master
Trust I, Series 199 - ; and
"Document" shall mean the Pooling and Servicing
Agreement dated as of October 1, 1993, as amended
and as supplemented by the Series Supplement dated
as of , 199 , each by and between
Greenwood as Master Servicer, Servicer and Seller
and the Trustee.
Paragraph 1: The second sentence of Paragraph 1 is hereby
deleted in its entirety and replaced with the
following:
"The $ aggregate principal amount of the Class A
Certificates shall be represented by one certificate. The $
aggregate principal amount of the Class B Certificates shall
be represented by one certificate."
The introduction to the third sentence of
Paragraph 1 is hereby deleted in its entirety and
replaced with the following:
"Each certificate shall bear the following legend:"
The following is hereby added after the third
sentence of Paragraph 1:
"Each certificate shall remain in the Trustee's custody
subject to the provisions of the Fast Balance Certificate
Agreement currently in effect between the Trustee and DTC."
Paragraph 2: The first sentence of Paragraph 2 is hereby
deleted in its entirety and replaced with the
following:
"The Document provides for the solicitation of consents from
and voting by holders of the Securities under certain
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
circumstances. The Issuer or Trustee shall
establish a record date for such purposes
(with no provision for revocation of consents
or votes by subsequent holders) and shall, to
the extent possible, send notice of such
record date to DTC not less than 15 calendar
days in advance of such record date."
Paragraph 3: The first sentence in Paragraph 3 is hereby
deleted in its entirety and replaced with the
following:
"There will be no case in which a partial redemption of the
Securities will occur. In the event of a full redemption,
Issuer or Trustee shall send a notice to DTC not less than
10 days nor more than 60 days prior to the redemption date
(except that failure to provide timely notice shall not be a
breach under this letter if Issuer shall become obligated
less than 10 days prior to such redemption date under the
Document to redeem the Securities) specifying: (a) the
amount of the redemption or refunding; (b) in the case of a
refunding, the maturity date(s) established under the
refunding; and (c) the date such notice is to be mailed to
Security holders or published (the "Publication Date")."
Paragraph 4: The first sentence of Paragraph 4 is hereby
deleted in its entirety and replaced with the
following:
"In the event of an invitation to tender the Securities,
notice by Issuer or Trustee to Security holders specifying
the terms of the tender and the date such notice is to be
mailed to Security holders or published (the "Publication
Date") shall be sent to DTC in the manner set forth in the
preceding Paragraph by a secure means (e.g., legible
telecopy to 516-227-4039, registered or certified mail,
overnight delivery) in a timely manner designed to assure
that such notice is in DTC's possession no later than 8:00
A.M. on the Publication Date. (The party sending such
notice shall have a method to verify subsequently the use of
such means and the timeliness of such notice.)"
Paragraph 5: The following is hereby added after the first
sentence of Paragraph 5:
"Issuer or Trustee will forward such notice either in a
separate secure transmission for each CUSIP number or in a
secure transmission for multiple CUSIP numbers (if
applicable) which includes a manifest or list of each CUSIP
submitted in that transmission."
</TABLE>
2
<PAGE> 8
<TABLE>
<S> <C>
Paragraph 12: The following is hereby inserted after the word
"Trustee" in line 1 of Paragraph 12:
", and if requested, shall confirm such
direction in writing,"
Paragraph 15: Paragraph 15 is hereby deleted in its entirety and
replaced with the following:
"DTC may discontinue its services as securities depository
with respect to the Securities at any time by giving
reasonable notice (60 days) to Trustee (at which time DTC
will confirm with Trustee the aggregate principal amount of
Securities outstanding); provided, however, that if DTC is
required to discontinue its services as securities
depository with respect to the Securities pursuant to any
governmental, judicial or regulatory order or decree, and
such discontinuation is required in less than 60 days from
the date of such order or decree, then DTC may discontinue
such services by giving notice to the Trustee as soon as
reasonably possible, but in no event more than three
business days after DTC receives notice of such order or
decree. Under such circumstances, at DTC's request Trustee
shall cooperate with DTC by taking appropriate action to
make available one or more separate definitive certificates
evidencing Securities to any DTC Participant having
Securities credited to its DTC accounts."
Paragraph 18: This Letter of Representations is further amended
by inserting this Paragraph 18:
"Issuer and Agent recognize that DTC does not in any way
undertake to, and shall not have any responsibility to,
monitor or ascertain whether a transfer of Securities could
give rise to a transaction prohibited or not otherwise
permissible under the Employee Retirement Income Security
Act of 1974 or under Section 4975 of the Internal Revenue
Code of 1986. Issuer and Agent acknowledge that: a) so
long as Cede & Co. is the sole record owner of the
Securities, it shall be entitled to all voting rights in
respect thereof and to receive the full amount of all
principal, premium, if any, and interest payable with
respect thereto; and b) DTC shall treat any DTC Participant
having Securities credited to its DTC accounts as entitled
to the full benefits of ownership of such Securities even if
the crediting of such Securities to the DTC accounts of such
Participant results from transfers or failures to transfer
in violation of such laws. (The treatment by DTC of the
effects of the crediting by it of Securities to the accounts
of DTC Participants shall not affect
</TABLE>
3
<PAGE> 9
<TABLE>
<S> <C>
the rights of Issuer or purchasers, sellers,
or holders of Securities against any DTC
Participant.)"
</TABLE>
4
<PAGE> 10
SCHEDULE A
(Describe Issue)
Floating Rate Class A Credit Card Pass-Through Certificates and Floating
Rate Class B Credit Card Pass-Through Certificates,
Discover Card Master Trust I, Series 199 -
<TABLE>
<CAPTION>
Principal Amount Maturity Date* Interest Rate
<S> <C> <C> <C> <C>
CLASS A
CERTIFICATES
CUSIP Number
[ ]
Certificate Number: 1 $ [ ] Floating
CLASS B
CERTIFICATES
CUSIP Number
[ ]
Certificate Number: 1 $ [ ] Floating
</TABLE>
* Last Possible Distribution Date
5
<PAGE> 1
Exhibit 5.1
LATHAM & WATKINS
<TABLE>
<S> <C> <C>
PAUL R. WATKINS (1899-1973) ATTORNEYS AT LAW NEW YORK OFFICE
DANA LATHAM (1898-1974) SEARS TOWER, SUITE 5800 885 THIRD AVENUE, SUITE 1000
CHICAGO, ILLINOIS 60606 NEW YORK, NEW YORK 10022-4802
TELEPHONE (312) 876-7700 TELEPHONE (212) 906-1200
LONDON OFFICE FAX (312) 993-9767 FAX (212) 751-4864
ONE ANGEL COURT TLX 590776
LONDON EC2R 7HJ ENGLAND ELN 62793271 ORANGE COUNTY OFFICE
TELEPHONE + 44-171-374 4444 650 TOWN CENTER DRIVE SUITE 2000
FAX + 44-171-374 4460 COSTA MESA, CALIFORNIA 92626-1925
TELEPHONE (714) 540-1235
__________ FAX (714) 755-8290
MOSCOW OFFICE SAN DIEGO OFFICE
113/1 LENINSKY PROSPECT, SUITE C200 701 "B" STREET, SUITE 2100
MOSCOW 117198 RUSSIA SAN DIEGO, CALIFORNIA 92101-8197
TELEPHONE + 7-503 956-5555 TELEPHONE (619) 236-1234
FAX + 7-503 956-5556 FAX (619) 696-7419
November 13, 1996
LOS ANGELES OFFICE SAN FRANCISCO OFFICE
633 WEST FIFTH STREET, SUITE 4000 506 MONTGOMERY STREET, SUITE 1900
LOS ANGELES, CALIFORNIA 90071-2007 SAN FRANCISCO, CALIFORNIA 94111-2562
TELEPHONE (213) 485-1234 TELEPHONE (415) 391-0600
FAX (213) 891-8763 FAX (415) 395-8095
NEW JERSEY OFFICE WASHINGTON, D.C. OFFICE
ONE NEWARK CENTER 1001 PENNSYLVANIA AVE., N.W., SUITE 1300
NEWARK, NEW JERSEY 07101-3174 WASHINGTON, D.C. 20004-2505
TELEPHONE (201) 639-1234 TELEPHONE (202) 637-2200
FAX (201) 639-7298 FAX (202) 637-2201
</TABLE>
Greenwood Trust Company, as Originator of Discover Card Master Trust I
12 Read's Way
New Castle, Delaware 19720
Re: Discover Card Master Trust I;
Registration Statement on Form S-3
Ladies and Gentlemen:
At your request, we have examined the above-captioned Registration
Statement (the "Registration Statement"), together with the exhibits thereto,
to be filed by you with the Securities and Exchange Commission registering
credit card pass-through certificates (the "Investor Certificates")
representing undivided interests in the Discover Card Master Trust I (the
"Trust"). The Investor Certificates of a particular series will be issued
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of October 1, 1993, which is incorporated by reference to
Exhibit 4.1 of the Registration Statement on Form S-1 (Registration No.
33-71502) of Greenwood Trust Company ("Greenwood"), as amended by the First
Amendment to Pooling and Servicing Agreement, dated as of August 15, 1994,
which is incorporated by reference to Exhibit 4.2 of Greenwood's Current Report
on Form 8-K, dated August 1, 1995, and by the Second Amendment to Pooling and
Servicing Agreement, dated as of February 29, 1996, which is incorporated by
reference to Exhibit 4.4 of Greenwood's Current Report on Form 8-K dated April
30, 1996, and as supplemented by a related Series Supplement (the "Series
Supplement"), a copy of the form of which is included as Exhibit 4.4 to the
Registration Statement, each by and between Greenwood as Master Servicer,
Servicer and Seller and First Bank National Association (successor trustee to
Bank of America Illinois, formerly Continental Bank, National Association) as
Trustee. We are familiar with the proceedings taken and to be taken by
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Greenwood as originator of the Trust in connection with the authorization of
the issuance and sale of Investor Certificates, and have examined such
documents and such questions of law and fact as we have deemed necessary in
order to express the opinion hereinafter stated.
We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary. We are opining herein as
to the effect on the subject transactions of only United States federal law and
the laws of the State of New York, and we express no opinion with respect to
the applicability thereto or the effect thereon of the laws of any other
jurisdiction or as to any matters of municipal law or the laws of any local
agencies within any state.
Based on the foregoing, and subject to the proposed additional
proceedings being taken as now contemplated prior to the issuance of a
particular series of Investor Certificates and the terms of the particular
series of Investor Certificates being otherwise in compliance with then
applicable law, we are of the opinion, as of the date hereof, that the Investor
Certificates of a particular series, upon issuance and sale thereof in the
manner described in the Registration Statement and as provided in the Pooling
and Servicing Agreement and a related Series Supplement, will be legally
issued, fully paid and nonassessable, and enforceable in accordance with their
terms and entitled to the benefits of the Pooling and Servicing Agreement and
the related Series Supplement, except as the same may be limited by insolvency,
bankruptcy, reorganization, moratorium or other similar laws now or hereinafter
in effect relating to creditors' rights generally or by general equity
principles (whether considered in a proceeding at law or in equity) and by the
discretion of the court before which any proceeding therefor may be brought.
We hereby consent to the filing of (i) this opinion and (ii) the
opinion to be filed as Exhibit 8.1 to the Registration Statement and to the
reference to our firm in the prospectus to be included therein under the
captions "Legal Matters," "Certain Federal Income Tax Consequences," "Certain
State Income Tax Consequences" and "The Seller -- Insolvency Related Matters."
Very truly yours,
/s/ Latham & Watkins
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EXHIBIT 5.2
[FORM OF LATHAM & WATKINS OPINION]
[ ], 199[ ]
First Bank National Association
410 N. Michigan Avenue -- Suite 370
Chicago, Illinois 60611
Re: Greenwood Trust Company
Discover Card Master Trust I,
Series [ ] Investor Certificates
Ladies and Gentlemen:
We have acted as counsel to Greenwood Trust Company ("Greenwood") in
connection with the transactions contemplated by the Pooling and Servicing
Agreement, dated as of October 1, 1993, between Greenwood as Master Servicer,
Servicer and Seller and First Bank National Association (successor trustee to
Bank of America Illinois, formerly Continental Bank, National Association) as
Trustee (the "Trustee"), as amended on or prior to the date hereof (the
"Pooling and Servicing Agreement"), as supplemented by the Series Supplement
between Greenwood and the Trustee, dated as of [ ], 199[ ] (the
"Series Supplement"). Pursuant to the Pooling and Servicing Agreement,
Greenwood has sold or otherwise conveyed certain Discover Card receivables to
the Discover Card Master Trust I (the "Trust"). The Trust will issue the
Discover Card Master Trust I, Series [ ] Investor Certificates pursuant to the
Series Supplement. The Trust previously has issued other series of investor
certificates, and is expected to issue one or more additional series of
investor certificates from time to time in the future.
Except as the context clearly requires otherwise, all capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Pooling and Servicing Agreement or the Series
Supplement. As used herein "Lien," in addition to the meaning ascribed to such
term in the Pooling and Servicing Agreement, means statutory and non-
consensual liens. As used herein, "Receivables" does not include any
Receivables relating to Additional Accounts or the proceeds thereof. The term
"UCC" means the Uniform Commercial Code as in effect in the State of New York.
The phrase "security interest" is used herein as defined in Section 1-201(37)
of the UCC and includes any interest of a buyer of accounts or chattel paper
which is subject to Article 9 of the UCC.
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In our capacity as such counsel, we have examined originals or copies
of such records, documents or other instruments as in our judgment are
necessary or appropriate to enable us to render the opinions expressed below.
These records, documents and instruments include the following (the "Relevant
Documents") for purposes of this opinion letter:
(i) the Pooling and Servicing Agreement;
(ii) the Series Supplement;
(iii) a certificate dated as of the date hereof of a senior
financial officer of Greenwood;
(iv) a certificate dated as of the date hereof of an officer of the
Trustee; and
(v) an opinion of Young, Conaway, Stargatt & Taylor (the "Delaware
Counsel Opinion") dated as of the date hereof with respect to
certain matters of Delaware law.
Greenwood, as a Delaware-chartered bank insured by the Federal
Deposit Insurance Corporation (the "FDIC"), is not eligible to be a debtor
under the Bankruptcy Code (11 U.S.C. Section 1 et seq.). Rather, should
Greenwood become insolvent, it would be the subject of a conservatorship or
receivership proceeding. Under the Federal Deposit Insurance Act (12 U.S.C.
Section 1811 et seq.), as amended (the "FDIA" or "Act"), the FDIC is the
organization most likely to be appointed the conservator or receiver in such a
proceeding involving Greenwood. If the FDIC were appointed the receiver or
conservator of Greenwood pursuant to Section 11(c)(3) of the Act, the FDIC may
exercise the powers conferred upon a receiver or conservator by Delaware law
and, in addition, may exercise the powers conferred on the FDIC by the Act as if
Greenwood were a federal depository institution for which the FDIC had been
appointed conservator or receiver. Under Section 11(c)(4) of the Act, the FDIC
may appoint itself as conservator or receiver of Greenwood and, pursuant to
such appointment, may exercise the powers conferred on the FDIC by the Act as
if Greenwood were a federal depository institution, except that, under Section
11(c)(13) of the Act, the FDIC shall apply certain aspects of Delaware law.
With the exception of an FDIC Statement of Policy Regarding Treatment
of Security Interests After Appointment of the FDIC as Conservator or Receiver
(58 Fed. Reg. 16833 (1993)) (the "Policy Statement"), no regulations of the
FDIC have been promulgated pursuant to Section 11(d)(1) of the FDIA regarding
the conduct of conservatorships or receiverships under the Act; nor are we
aware of any cases that have been decided under those sections of the FDIA and
which are applicable by analogy to the
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transactions herein contemplated other than certain cases decided under Section
11(d) and Section 13(e) of the Act, which cases did not affect our opinions
expressed in respect of the Act. Accordingly, until such time as a body of
jurisprudence develops interpreting the relevant sections of the FDIA, our
analysis and the opinions expressed herein with respect to the Act are not and
cannot be rendered nor relied upon to the same extent as opinions rendered in
areas of law where there exists a well-developed jurisprudence. To the extent
the opinions herein rely on letters issued by the FDIC or its staff, we note
that it is the policy of the FDIC not to issue binding advisory opinions as to
positions it would adopt in hypothetical situations that arise in future
receiverships or conservatorships of insured depository institutions and that
the FDIC's actions as receiver or conservator are determined on a case by case
basis, in accordance with applicable laws and in light of the specific factual
situations. Subject to the foregoing limitations, such analysis and opinions
are based upon our interpretation of the statutory language of the Act and the
legal principles that we believe a court would employ in a conservatorship or
receivership case arising under the Act.
We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary. We are opining herein as
to the effect on the subject transactions of only United States federal law and
the laws of the State of New York, and we express no opinion with respect to
the applicability thereto or the effect thereon of the laws of any other
jurisdiction or as to any matters of municipal law or the laws of any other
local agencies within any state. You understand that the transactions that are
the subject of the opinions set forth in this opinion letter involve
significant matters governed by Delaware law and, insofar as such matters are
governed by Delaware law, we refer you to the Delaware Counsel Opinion. The
opinions expressed herein are subject to the applicable assumptions,
qualifications and limitations set forth in the Delaware Counsel Opinion.
We have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with authentic originals of all documents submitted to us as copies.
I. ASSUMPTIONS OF FACT
In rendering the opinions set forth in this opinion letter, we have
made no independent investigation of the facts referred to herein and have
relied for the purpose of rendering this opinion letter exclusively on facts
set forth in each of the Relevant Documents and in officer's certificates from
authorized officers of Greenwood and the Trustee, including the representations
and warranties contained therein, and on the facts and assumptions set forth
below, in each case which we assume have been and will continue to be true.
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The Pooling and Servicing Agreement, the Series Supplement and the
receipt of the consideration for Greenwood's obligations thereunder were
approved by the Executive Committee of the Board of Directors of Greenwood, and
such approval is reflected in the minutes of such Executive Committee of the
Board of Directors. Each such agreement has been and will be, continuously
from the time of execution thereof, an official record of Greenwood. Each such
agreement and the transactions contemplated thereby are not subject to a cease
and desist order made under Section 8(b)(6)(D) of the Act, and are not
inconsistent with any formal or informal enforcement action by a bank
regulatory agency.
Greenwood received or will receive reasonably equivalent value in
return for the transfer to the Trust of its interest in the Receivables and the
proceeds thereof. To the extent such a transfer is deemed not to constitute an
absolute transfer, Greenwood has granted a security interest to the Trust in
the Receivables. The Pooling and Servicing Agreement is consistent with the
terms that would result from arm's-length negotiations between Greenwood and
the Investor Certificateholders (as such term is defined in the Pooling and
Servicing Agreement) and was entered into in the ordinary course of Greenwood's
business.
Neither Greenwood nor the Trustee has, in contemplation of the
insolvency of Greenwood or with the intent to hinder, delay or defraud
Greenwood or its creditors: (i) executed the Pooling and Servicing Agreement;
(ii) granted to the Trust or received from Greenwood, as applicable, a security
interest in the Receivables or the proceeds thereof; (iii) caused, permitted or
suffered the perfection or attachment of such security interest; or (iv)
otherwise transferred the Receivables to the Trust or received the Receivables
from Greenwood, as applicable, pursuant to the Pooling and Servicing Agreement.
At the present time neither the Receivables nor the proceeds thereof
are subject to any statutory or non-consensual Lien (including without
limitation any attachment or execution lien) or Lien of any kind that does not
require the filing of a financing statement. With respect to Liens that
require the filing of a financing statement, we are relying, with your
permission, exclusively on the Delaware Counsel Opinion.
The Receivables are created under and are evidenced solely by Credit
Agreements. There has been delivered to the Trustee a list of Accounts with
respect to the Receivables, in accordance with the terms of the Pooling and
Servicing Agreement.
All statements contained in certificates delivered to us by Greenwood
or the Trustee are accurate and correct including, without limitation, the
certificate of Greenwood to the effect that its chief executive office, chief
place of business and the only office where it keeps records concerning the
Receivables are located in the State of Delaware. We have further assumed that
where a certification is made to the best
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knowledge of a person signing a certificate described in this paragraph, such
person has knowledge of all of the relevant facts.
II. OPINION
On the basis of the foregoing, and in reliance thereon, we are of the
opinion that, as of the date hereof:
1. The Receivables constitute either "general intangibles" or
"accounts," in each case as defined in Section 9-106 of the UCC. Under Section
9-103(3) of the UCC, the perfection and the effect of perfection or
non-perfection of a security interest in the Receivables are governed by
Delaware law, as to which we understand you are relying solely on the Delaware
Counsel Opinion.
2. If the transfer of the Receivables and the proceeds thereof to
the Trust pursuant to the Pooling and Servicing Agreement constitutes an
absolute transfer of the Receivables and the proceeds thereof to the Trust,
then such absolute transfer transfers to the Trust all of the right, title and
interest of Greenwood in and to the Receivables and the proceeds thereof.
A. QUALIFICATION WITH RESPECT TO RECEIVABLES THAT CONSTITUTE
"ACCOUNTS."
To the extent that any Receivables constitute "accounts," the
ownership interest of the Trust in such Receivables is subject to the same
limitations applicable to the perfection and priority of the security
interest created by the Pooling and Servicing Agreement in Receivables in
favor of the Trust. See UCC Section 9-102(1). To the extent our opinion
in this paragraph 2 relates to such perfection and priority, we refer you
to the Delaware Counsel Opinion.
We call to your attention that Section 9-318(3) of the UCC
provides in effect that the Obligor in respect of a Receivable is
authorized to make payments to Greenwood until such Obligor receives
notification that such Receivable has been assigned to the Trust and that
payment thereof is to be made to the Trust. Accordingly, unless and until
such Obligor is so notified and directed, all payments made to Greenwood
(or to a subsequent assignee if Greenwood should make a subsequent
assignment of such Receivable and notify such Obligor of such assignment
and direct such Obligor to make payments to such subsequent assignee) in
respect of such Receivable will discharge a corresponding amount of such
Receivable, and the amount of such payment may not be recovered from the
applicable Account Obligor. We note that Greenwood is the Servicer for
the Greenwood Discover Card Accounts and that Section 4.03 of the Pooling
and Servicing
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Agreement provides that if, at any time with respect to any Servicer, any
of certain conditions occurs, thereafter such Servicer shall deposit an
amount equal to the Required Daily Deposit with respect to such Servicer
in the Collections Account not later than two Business Days following the
Date of Processing of such Collections.
B. Qualifications with respect to Receivables that Constitute
"General Intangibles."
To the extent that any Receivables constitute "general
intangibles," the ownership interest of the Trust in such Receivables is
not subject to the provisions of the UCC. See Official Uniform Comment 2
to Section 9-102. With respect to such Receivables as exist on the date
hereof, it is our opinion that no further action is required under the
laws of the State of New York to protect the ownership interest of the
Trust in such Receivables against creditors of, or subsequent purchasers
from, Greenwood except as set forth in the second following paragraph.
With respect to Receivables that constitute "general
intangibles" and that come into existence after the date hereof, it is
arguable that the Trust's ownership interest in such Receivables will be
subject to such Liens as antedate the date on which any such Receivables
come into existence. However, in our judgment a court, properly presented
with the facts and arguments, should hold that the Trust's ownership
interest in such Receivables is not subject to such Liens and that no
further action is required to protect such ownership interest of the Trust
against creditors of, or subsequent purchasers from, Greenwood except as
set forth in the following paragraph.
A result similar to that under Section 9-318(3) of the UCC noted
supra, with respect to Receivables that constitute "accounts," will occur
if the Obligors of Receivables constituting "general intangibles" are not
directed to make payments to the Trust.
3. If the transfer is deemed not to be a sale, it would be treated
as a loan secured by the property purported to be sold, in which event the
Pooling and Servicing Agreement creates a valid security interest in favor of
the Trust, in Greenwood's right, title and interest in and to the Receivables
and the proceeds thereof.
We note that Section 9-205 of the UCC provides that "a security
interest is not invalid or fraudulent against creditors by reason of liberty in
the debtor to . . . collect or compromise accounts or chattel paper . . . . "
The omission of the phrase "general intangibles" from such portion of Section
9-205 may permit the argument that the security interest in Receivables
constituting "general intangibles" is invalid because of the
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provision of the Pooling and Servicing Agreement which provides that Greenwood,
with respect to Greenwood Discover Card Accounts, will service and administer,
and collect payments due under, the Receivables. However, in our opinion, for
the reasons set forth below, the omission of the phrase "general intangibles"
was not intended to limit the scope of the quoted provision of Section 9-205 to
exclusively accounts and chattel paper, and the security interest granted by
the Pooling and Servicing Agreement is not invalidated by the aforementioned
provision of the Pooling and Servicing Agreement.
The purpose of Section 9-205 was to specifically validate security
interests in accounts and chattel paper without requiring the creditor to
exercise dominion and control over such types of collateral and was
specifically included in the Uniform Commercial Code because accounts
receivable and inventory financings on the basis of collateral consisting of
accounts and chattel paper were significant commercial transactions at the time
of the promulgation of the Uniform Commercial Code by the National Conference
of Commissioners on Uniform State Laws. See Official Uniform Comment 1 to
Section 9-205.
In our view, general intangibles were not mentioned in the quoted
portion of Section 9-205 not because of an intent to exclude this type of
collateral from the benefits extended to accounts and chattel paper but because
financings on the basis of general intangibles were not a commercially
significant method of finance at the time and, therefore, no consideration was
given to including general intangibles in such portion of Section 9-205.
Furthermore, invalidating a security interest in general intangibles because
the debtor may collect the general intangibles is inconsistent with other
provisions of the UCC.
Section 9-502(1), for example, provides that on default a secured
party may notify an account debtor to make payments to the secured party
whether or not the assignor was theretofore making collections on the
collateral. Section 9-105 defines "account debtor" as "a person who is
obligated on an account, chattel paper or general intangible." Thus, Section
9-502(1) presupposes that a debtor may be collecting from an account party that
is an obligor on a general intangible, and such presupposition would be
inconsistent with interpreting the omission of "general intangible" from
Section 9-205 as invalidating security interests in general intangibles in
circumstances where debtors collect from account parties on the general
intangibles. See also Section 9-318(3) (account party authorized to pay
assignor until notified to pay assignee).
4. Subject to the discussion and qualifications in this letter, it
is our opinion that the security interest granted in the Pooling and Servicing
Agreement in favor of the Trust is enforceable in accordance with its terms,
notwithstanding the insolvency of Greenwood or the appointment of the FDIC as
conservator or receiver of Greenwood, except as may be limited otherwise by
general principles of equity; however, in our opinion, the insolvency of
Greenwood in and of itself would not be a proper basis for a court, if properly
presented, to
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permanently enjoin the Trustee's rights to enforce its security interest.
Furthermore, in the event of the insolvency of, or appointment of a receiver or
conservator with respect to, Greenwood, the enforceability of such security
interest may be subject to the restrictions and limitations contained in the
Act.
A. Under Section 11(d)(12) of the Act, a court is required to
grant a stay requested by a conservator or receiver of an insured
depository institution, such as Greenwood, of any judicial action or
proceeding to which such insured depository institution is or becomes
a party. Such conservator or receiver may request such a stay for a
period not in excess of (i) 45 days in the case of a conservator and
(ii) 90 days in the case of a receiver. In addition, under Section
11(d)(3) of the Act, the FDIC as receiver has the power to determine
claims of creditors of a closed depository institution in accordance
with regulations of the FDIC promulgated pursuant to Section 11(d)(4)
of the Act, and the requirements of Section 11(d) of the Act,
including Section 11(d)(11) which establishes the priority of claims.
Nevertheless, no regulations have been promulgated under Section
11(d)(4) of the Act as of the date hereof and the priority provisions
of 12 C.F.R. Section 360.3 have been expressly amended to not apply
to any conservatorships or receiverships occurring after August 10,
1993. In addition, Section 11(d)(11), while prioritizing the claims
against the closed depository institution, does not determine the
enforceability of a security interest in the assets thereof.
B. In general, under Section 11(d)(5) of the Act, before the
end of the 180-day period beginning on the date any claim against a
depository institution is filed with the FDIC as receiver, the FDIC
shall determine whether to allow or disallow the claim and shall
notify the claimant of any determination with respect to such claim
unless such 180-day period is extended by written agreement between
such claimant and the FDIC. However, Section 11(d)(8) of the Act
directs the FDIC to establish a procedure outside the general claims
procedure for expedited relief for claimants who --
(i) allege the existence of legally valid and
enforceable or perfected security interests in assets of any
depository institution for which the FDIC has been appointed
receiver; and
(ii) allege that irreparable injury will occur if
the general claims procedure is followed.
To date, no such procedures have been established by the
FDIC. With respect to self-help liquidation of collateral by secured
claimants in FDIC
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receiverships of insured depository institutions generally, we call
to your attention the letter dated December 15, 1989 from John L.
Douglas, General Counsel of the FDIC, to Ms. Frances R. Bermanzohn,
Senior Vice President and General Counsel of the Public Securities
Association, a copy of which is attached hereto (the "Letter").
C. Section 11(d)(9) of the Act states that, subject to an
exception not material for the purposes hereof, any agreement that
does not meet the requirements set forth in Section 13(e) of the Act
shall not form the basis of, or substantially comprise, a claim
against the receiver or the FDIC. Among the requirements contained
in Section 13(e) is:
"(2) [the agreement] was executed by the
depository institution and any person claiming an adverse
interest thereunder, including the obligor, contemporaneously
with the acquisition of the asset by the depository institution.
. . ."
Arguably, the "contemporaneous" requirement of Section
13(e) could defeat the security interest of the Trust in any
Receivables not created contempor aneously with the execution of the
Pooling and Servicing Agreement. However, although there are no
judicial decisions based on directly similar facts nor any analogous
judicial decisions, based on the considerations set forth below, it
is our view that a court, if properly presented with the facts and
arguments, should hold that the "contemporaneous" requirement of
Section 13(e) does not defeat the enforceability of the security
interest of the Trust with respect to Receivables not created
contemporaneously with the execution of the Pooling and Servicing
Agreement. With respect to Receivables created after the date
hereof, we refer you to our discussion of such future Receivables
infra.
Section 13(e) of the Act is a re-enactment of the last
paragraph of Section 13(e) of the FDIA (the "Prior Section 13(e)")
with certain additions not relevant for the following discussion. We
are not aware of any reported decisions interpreting Prior Section
13(e) or Section 13(e) of the Act in a fact situation similar to that
presented by the Pooling and Servicing Agreement. Furthermore, the
decisions of which we are aware interpreting Section 13(e) of the Act
did not interpret the "contemporaneous" requirement; nor do they, in
our view, diminish the applicability of decisions interpreting or
applying Prior Section 13(e).
The reported decisions of which we are aware interpreting
Prior Section 13(e) or Section 13(e) involve circumstances which
would condition or excuse
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performance of otherwise valid, although possibly voidable,
obligations in favor of banks, such as a loan by such bank to a
borrower. In those instances, the requirements of Prior Section
13(e) or Section 13(e) serve to ensure appropriate consideration of
unusual loan transactions by senior bank officials and prevent
fraudulent insertion of new terms, with the collusion of bank
employees, when a bank appears headed for failure. See Langley v.
FDIC, 484 U.S. 86, 92 (1987); see also Thigpen v. Sparks, 1993 U.S.
App. Lexis 2273 (5th Cir. 1993); but see North Arkansas Medical
Center v. Barrett, 962 F.2d 780 (8th Cir. 1992) (affirming the
dismissal of a claim by a depositor of an insolvent savings and loan
association ("S&L") that the depositor had a perfected security
interest in certain assets held by the S&L to secure the S&L's
obligations under certain certificates of deposit because of the
depositor's failure to comply with Section 13(e)).
Because of the concerns prompted in the financial industry
by the decision in North Arkansas Medical Center, the FDIC
promulgated the Policy Statement, which applies to all security
agreements to which an insured depository institution is a party
regardless of the date of such agreements, if the FDIC is or was
appointed conservator or receiver of such institution on or after
August 9, 1989. In 1994, after the adoption of the Policy Statement
by the FDIC, Congress amended Section 13(e) of the FDIA to codify the
Policy Statement as it relates to deposits by government agencies.
The FDIC made the following assumptions in the Policy Statement:
(a) the agreement was undertaken in the ordinary course of
business, not in contemplation of insolvency, and with no intent
to hinder, delay or defraud the Institution or its creditors; (b)
the secured obligation represents a bona fide and arm's length
transaction; (c) the secured party or parties are not insiders or
affiliates of the Institution; (d) the grant or creation of the
security interest was for adequate consideration; and (e) the
security agreement evidencing the security interest is in
writing, was approved by the Institution's board of directors or
loan committee (which approval is reflected in the minutes of a
meeting of the board of directors or committee), and has been,
continuously from the time of its execution, an official record
of the Institution.
58 Fed. Reg. 16834 (1993). See also Letter dated March 2, 1994 from
Cristeena G. Naser, Attorney at the FDIC, FDIC 94-10 (restating the
assumptions). Provided that these assumptions and all of the other
statutory requirements of Section 13(e) are met, the Policy Statement
states the FDIC's interpretation of the
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"contemporaneous" requirement of Sections 11(e) and 13(e) and its
policy that the FDIC, acting as conservator or receiver for a
depository institution,
will not seek to avoid an otherwise legally enforceable and
perfected security interest solely because the security agreement
granting or creating such security interest does not meet the
"contemporaneous" requirement of sections 11(d)(9), 11(n)(4)(I),
and 13(e) of the Act. Specifically, the FDIC will not seek to
avoid such a security interest solely because the secured
obligation or collateral subject to the security interest (a) was
not acquired by the Institution contemporaneously with the
approval and execution of the security agreement granting the
security interest and/or (b) may change, increase, or be subject
to substitution from time to time during the period that the
security interest is enforceable and perfected.
Id.
With regard to the security interest of the Trust created
by the Pooling and Servicing Agreement, the Policy Statement
precludes, in our view, challenges by the FDIC to the enforceability
of such security interest in both (i) existing Receivables not
created contemporaneously with the execution of the Pooling and
Servicing Agreement (including investment proceeds arising in the
future from existing Receivables), and (ii) Receivables that come
into existence after the execution of the Pooling and Servicing
Agreement.
Moreover, in contrast to the situations in the decisions we
reviewed involving Prior Section 13(e) or Section 13(e), which
involved the conditioning or excusing of an obligor's obligation, the
obligations of Obligors in respect of Receivables are unaffected by
the Pooling and Servicing Agreement. The purpose of the Pooling and
Servicing Agreement is not to provide for the release or modification
of Obligors' obligations but to provide for the transfer of
Receivables to the Trust in return for consideration and, to the
extent such transfer is deemed not to constitute an absolute
transfer, the grant of a security interest in such Receivables to the
Trust. In that regard, we are informed that Greenwood's grant or
creation of a security interest in the Receivables represents a bona
fide and arm's length transaction for adequate consideration. We
are also informed that the Pooling and Servicing Agreement was
undertaken in the ordinary course of business, not in contemplation
of insolvency, and with no intent to hinder, delay or defraud
Greenwood or its creditors. Finally, the Pooling and Servicing
Agreement is in writing and Greenwood has informed us that such
agreement was
11
<PAGE> 12
approved by the Executive Committee of its Board of Directors as
reflected in the resolutions of the Executive Committee, and has
been, continuously from the time of its execution, an official record
of Greenwood.
With regard to the FDIC's non-affiliation assumption, we
are informed that the Certificateholders (as such term is defined in
the Pooling and Servicing Agreement), the beneficiaries of the
security interest in the Receivables, are not affiliates or insiders
of Greenwood. Furthermore, the policies underlying Section 13(e) and
the Policy Statement suggest that the FDIC, acting as conservator or
receiver for Greenwood, would not seek to avoid the security interest
in the Receivables. Both Section 13(e) and the Policy Statement
serve to prevent secret and collusive agreements between failing
banks and third parties, including their secured creditors, which are
not for adequate consideration. See Langley, 484 U.S. at 86;
Thigpen, 983 F.2d at 644. Even if the Trust is treated as an insider
or affiliate of Greenwood, thereby falling outside of the express
assumptions of the Policy Statement, the above concerns are
inapplicable in the instant circumstance. The Pooling and Servicing
Agreement discloses in full the entire terms of the transaction
contemplated thereby and represents a bona fide and arm's length
transaction for adequate consideration. Moreover, as indicated
above, we are informed that such agreements have been approved by the
Executive Committee of the Board of Directors. We are also informed
that Greenwood received consideration which it believes to be
reasonably equivalent and fair consideration for the transfer of
Receivables.
D. Section 11(e)(1) of the Act permits any conservator or
receiver of an insured depository institution to disaffirm or
repudiate any contract or lease of such insured depository
institution that such conservator or receiver determines, in its
discretion, to be burdensome and the disaffirmance or repudiation of
which will promote the orderly administration of the institution's
affairs. Nonetheless, Section 11(e)(11) of the Act provides that:
No provision of [Section 11(e)] shall be construed as permitting
the avoidance of any legally enforceable or perfected security
interest in any of the assets of any depository institution
except where such an interest is taken in contemplation of the
institution's insolvency or with the intent to hinder, delay or
defraud the institution or the creditors of such institution.
As stated above, we are aware of no facts that indicate any transfer
of Receivables by Greenwood to the Trust has been or will be made in
contemplation of
12
<PAGE> 13
Greenwood's insolvency; nor are we aware of any facts that indicate
any transfer of Receivables to the Trust has been or will be made
with the intent to hinder, delay or defraud Greenwood or the
creditors of Greenwood.
Notwithstanding the above, the Policy Statement expressly
reserves the FDIC's right, "as conservator or receiver, to redeem or
prepay any secured obligation of a depositary institution by
repudiation or otherwise" (58 Fed. Reg. 16834 (1993)). We note that
the Policy Statement further provides that the FDIC will make such a
decision within a reasonable period of time which generally should
not exceed 180 days from the date of appointment of the FDIC as
conservator or receiver for the depository institution.
In case of a repudiation pursuant to Section 11(e), the
secured party is entitled to damages. The Policy Statement
emphasizes, however, that Section 11(e) limits the liability of the
FDIC as conservator or receiver for exercising its repudiation rights
to "actual direct compensatory damages" and that the secured party's
damages are to be determined as of the date of appointment of the
conservator or receiver, and not, as in certain "qualified financial
contracts," as of the date of repudiation (58 Fed. Reg. 16834 (1993).
We note that the Resolution Trust Corporation, which has ceased to
exist as of December 31, 1995 (the FDIC has taken over its
responsibilities), took the position that it had the authority to
repudiate a depository institution's obligation to pay
post-insolvency interest, but adopted a policy of not doing so. We
note that in a 1993 case involving the repudiation by the Resolution
Trust Corporation of certain secured zero-coupon bonds issued by a
savings association, a United States federal district court held that
"actual direct compensatory damages" in the case of a marketable
security meant the market value of the repudiated bonds as of the
date of repudiation. See Employees' Retirement System of Alabama v.
Resolution Trust Corporation, 840 F.Supp. 972 (S.D.N.Y. 1993).
E. If the FDIC were appointed as receiver or conservator of
Greenwood pursuant to Section 11(c)(3) of the Act, it would have in
addition to the powers conferred on it by Section 11 of the Act, the
powers conferred on it under any provision of Delaware law applicable
to a conservator or receiver of a Delaware state depository
institution. However, if the FDIC were appointed as receiver or
conservator of Greenwood pursuant to Section 11(c)(4) of the Act,
Delaware law as a general rule does not apply to the conservatorship
or receivership.
We do not express any opinion herein:
13
<PAGE> 14
(i) as to the creation, validity or enforceability of any
interest of Greenwood in the Receivables or the proceeds
thereof;
(ii) as to Greenwood's rights in or title to any of the
Receivables or the proceeds thereof;
(iii) as to whether the transfer of Receivables to the
Trust constitutes an absolute transfer;
(iv) as to whether the purported absolute transfer of all
Receivables now existing or hereafter created is effective to
convey to the Trust, as of the date of purported absolute
transfer, Receivables that do not exist as of the date of such
purported absolute transfer, or as to whether Receivables
hereafter created in an Account are deemed to exist as of the
date hereof;
(v) with respect to Receivables relating to Additional
Accounts or the proceeds thereof;
(vi) as to whether the administrative expenses of the FDIC
or any other receiver or conservator of Greenwood would have
priority over the Trust's interest in Receivables or proceeds
thereof;
(vii) as to whether a court in an equitable proceeding
might issue a temporary restraining order or preliminary
injunction pending resolution of the Trust's rights in the
Receivables, the proceeds thereof or rights to payment; and
(viii) as to the consequences of a discontinuation or
revocation by the FDIC or a court of the Policy Statement or the
Letter or the refusal by the FDIC or a court to apply the Policy
Statement or the Letter.
This opinion is rendered only to you and is solely for your benefit
in connection with the above transactions. This opinion may not be relied upon
by you for any other purpose, or furnished to, quoted to, or relied upon by any
other person, firm or corporation for any purpose without our prior written
consent, except that each of Standard & Poor's Ratings Services, Moody's
Investors Service, Inc., Fitch Investors Service, L.P., Discover Receivables
Financing Corporation, and Dean Witter Reynolds Inc. may rely upon the
foregoing opinions to the same extent as if this letter were addressed to it.
Very truly yours,
14
<PAGE> 15
Ms. Frances R. Bermanzohn
Senior Vice President and General Counsel
Public Securities Association
40 Broad Street
New York, New York 10004
Re: Self-Help Liquidation of Collateral by
Second Claimants in Insured Depository
Institution Receiverships
Dear Ms. Bermanzohn:
This is in reference to your recent inquiry regarding the rights of certain
creditors of failed insured depository institutions. Specifically, you have
requested my opinion with regard to the ability of secured creditors of an
insured depository institution to proceed with "self-help" liquidation after
the appointment of the Federal Deposit Insurance Corporation (FDIC) or the
Resolution Trust Corporation (RTC) as receiver of such institution. In
particular you have requested my views as to the "exclusivity" of the claims
process under the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 (FIRREA).
As you are aware, neither the FDIC nor the RTC issues binding advisory opinions
as to positions they would adopt in hypothetical situations that arise in
future receiverships of insured institutions. The FDIC's and the RTC's actions
in their capacity as receiver of a failed insured institution are determined on
a case by case basis, in accordance with applicable laws and in light of the
specific factual situation. I am willing, however, to provide my views as to
what a court would hold in response to a challenge by the FDIC or the RTC as
receiver of such an institution to a bona fide, perfected secured creditor's
actions to liquidate properly pledged collateral absent the need for the FDIC
or the RTC to be a party to the liquidation process.
In my opinion FIRREA does not contain an "automatic stay provision" similar to
the Bankruptcy Code. Assuming an arms length, bona fide transaction, not
involving an affiliate or insider, which would pass muster under appropriate
fraudulent conveyance law or other applicable and which involved a legally
perfected security interest enforceable under other applicable law, it is my
opinion that such a secured creditor of an insured depository institution for
which a receiver had been appointed could liquidate the creditor's properly
pledged collateral by commercially reasonable "self-help" methods, provided
that no involvement of the receiver was required and that there was a default
other than through an ipso facto provision in the contract. The appointment of
a receiver is not a default enforceable against the FDIC or the RTC under any
contract except as specifically provided for in FIRREA. If some action is
required by the receiver or liquidation would require judicial
<PAGE> 16
action, then the claims process in FIRREA would have to be followed. Moreover,
the receiver may have rights outside of the provisions of FIRREA which may
allow the receiver to seek a temporary restraining order or other injunctive
relief in a particular situation.
It is my opinion that the claims process in FIRREA is exclusive. If a "secured
creditor" liquidated its collateral; failed to file a proof of claim within the
prescribed time; and was later challenged by the receiver and lost, the
creditor would have to pay the receiver the proceeds of the liquidation; would
be liable for any damages resulting from the improper liquidation; and would
have no claim against the receivership due to having allowed the period to file
a claim to lapse. Accordingly, any "secured creditor", even one who is
comfortable with its secured position, should file a "protective" proof of
claim with the receiver to not only preserve its rights in the event of a
deficiency, but also to avoid any risk of losing its claim altogether. In
situations where the creditor's contract or claim is assumed by another
institution in a resolution transaction, the new institution would be
responsible to the extent set forth in the agreements governing the transaction
and if there were a full assumption of the liability, no proof of claim would
be needed.
Sincerely,
John L. Douglas
General Counsel
2
<PAGE> 1
Exhibit 5.3
[FORM OF YCS&T OPINION]
_________________, 199_
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Re: Discover Card Master Trust I
Ladies and Gentlemen:
We have acted as Delaware counsel to Greenwood Trust Company
("Greenwood") in connection with the transactions contemplated by the
Pooling and Servicing Agreement, dated as of October 1, 1993, between
Greenwood and First Bank National Association (successor trustee to Bank
of America Illinois, formerly Continental Bank, National Association), as
trustee (the "Trustee") as amended (the "Pooling and Servicing Agreement"), as
supplemented by the Series Supplement (the "Series Supplement") dated as of
________________, 199_ between Greenwood and the Trustee by which the Trustee
will issue, on behalf of the Trust, Discover Card Master Trust I Series 199_-_
floating rate Class A Credit Card Pass-Through Certificates (the "199_-_
Class A Certificates") and Discover Card Master Trust I Series 199_-_
floating rate Class B Credit Card Pass-Through Certificates (the "199_-_ Class
B Certificates"). As such Delaware counsel we are furnishing this opinion
letter to you with respect to matters of Delaware law. No one other than
you, Latham & Watkins, Dean Witter Reynolds Inc., First Bank National
Association, Standard & Poor's Ratings Services, Moody's Investors Service,
Inc. and Fitch Investors Service, L.P. shall be entitled to rely on the
opinions expressed herein. This opinion letter is not intended to be
employed in any transaction other than the one described above. This opinion
letter is being delivered to you solely for your benefit in connection with
the offering and sale of the 199_-_ Class A Certificates and the 199_-_
Class B Certificates on the understanding that neither it nor its contents
may be published, communicated or otherwise made available, in whole or in
part, to any other person or entity other than as set forth above without,
in each instance, our specific prior written consent.
Pursuant to the Pooling and Servicing Agreement, Greenwood
has conveyed and will convey certain Discover Card Receivables to the
Discover Card Master Trust I (the "Trust"). The transactions contemplated
by the Pooling and Servicing Agreement and the Series Supplement are
described in that certain certificate of a senior officer of
Greenwood dated _________________, 199_.
<PAGE> 2
All capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Pooling and
Servicing Agreement or the Series Supplement, as the case may be. As used
herein "Lien", in addition to the meaning ascribed to such term in the
Pooling and Servicing Agreement, means statutory and other non-consensual
liens. As used herein, "Receivables" does not include any Receivables
relating to Additional Accounts, Surviving Accounts, or the proceeds
thereof. The Uniform Commercial Code as in effect in the State of Delaware
is sometimes hereinafter referred to as the "UCC".
We have reviewed copies supplied by you of the following
documents and any exhibits thereto (the "Relevant Documents") for purposes
of this opinion letter:
(i) the Pooling and Servicing Agreement, as amended;
(ii) the Series Supplement;
(iii) a certificate dated ______________, 199_ of the Assistant
Secretary of Greenwood;
(iv) a certificate dated ______________, 199_ of an authorized
officer of the Trustee;
(v) a certificate dated ______________, 199_ of the President of
Greenwood;
(vi) that certain financing statement dated October 25, 1993 on Form
UCC-1 naming Greenwood as "debtor" and the Trustee as "secured
party", as amended (the "UCC Financing Statement");
(vii) a certificate of the Secretary of State of the State of
Delaware, dated as of ________________, 199_ as to UCC
financing statements with respect to Greenwood on file with
such Secretary of State; and
(viii) certain letters dated as of ___________________, 199_ as to
filings and notices of federal and state tax liens, attachment
liens and judgment liens with respect to Greenwood (the
certificate referred to in clause (vii) and the letters
2
<PAGE> 3
referred to in this clause are collectively referred to as the
"Lien Searches").
We have assumed that the copies of the Relevant Documents
submitted to us as copies conform to the originals of the Relevant Documents.
We have also examined the opinion letter of Latham & Watkins to
you of even date herewith concerning creditor's rights issues relating to
Greenwood.
This opinion is limited solely to matters involving the jurisdiction
and current laws of the State of Delaware as such laws may be applicable to
the opinions expressed herein and we have assumed that there will be no
material changes in such laws. We express no opinion with respect to any
Federal laws or the laws of any other state.
I. ASSUMPTIONS OF FACT
In rendering the opinions set forth in this opinion letter, we
have made no independent investigation of the facts referred to herein and
have relied for the purpose of rendering this opinion letter exclusively on
the Lien Searches (the dates of which are set forth in Schedule I to this
opinion letter), facts set forth in each of the Relevant Documents, including
the representations and warranties contained therein, and on the facts
and assumptions set forth below and which we assume have been and will
continue to be true.
The Pooling and Servicing Agreement, the Series Supplement
and the receipt of the consideration for Greenwood's obligations thereunder
were approved by the Board of Directors of Greenwood and such approval is
reflected in the minutes of such Board of Directors. Each of such
agreements has been and will be, continuously from the time of execution
thereof, an official record of Greenwood.
Greenwood is not required to register as an "investment company" nor
is Greenwood controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
The Trustee had the corporate power and authority to make, execute
and deliver the Pooling and Servicing Agreement and to perform the terms and
provisions thereof. The Pooling and
3
<PAGE> 4
Servicing Agreement was duly authorized, executed and delivered by the
Trustee and is enforceable against the Trustee in accordance with its
terms.
At the time of the filing of the UCC Financing Statement
with the office of the Secretary of State of the State of Delaware, neither
the Trustee nor the Certificate-holders had any knowledge of any rights,
liens or interests affecting any Receivables or the proceeds thereof other
than as contemplated by the Pooling and Servicing Agreement.
At the present time neither the Receivables nor the proceeds
thereof are subject to any statutory or non-consensual Lien (including
without limitation any attachment or execution lien) or Lien of any kind that
does not require the filing of a financing statement.
The Receivables are created under and are evidenced solely by
Credit Agreements. None of the Receivables is or will be due from the
United States or any State of the United States or any agency or department of
the United States or any State.
There has been delivered to the Trustee a list of Accounts
with respect to the Receivables in accordance with Section 2.01(b) of the
Pooling and Servicing Agreement.
Immediately prior to the transfer of any Receivables by Greenwood to
the Trust pursuant to the Pooling and Servicing Agreement, all right,
title and interest in and to such Receivables was or will be vested in
Greenwood, free and clear of any lien, security interest, charge or encumbrance
except for the obligations to transfer such Receivables set forth in the
Pooling and Servicing Agreement.
If a third party, including a potential purchaser of Receivables,
should inquire, Greenwood will promptly identify the Receivables transferred to
the Trust pursuant to the Pooling and Servicing Agreement and will indicate
that it has transferred all of its right, title and interest in such
Receivables to the Trust.
The grant of the security interest in the Receivables in favor of
the Trust, as provided in the Pooling and Servicing Agreement, does not
result, pursuant to any agreement, judgment or order to which Greenwood is a
party, or by which its property is bound, in the creation of any Lien in
favor of any entity other than the Trust. We note that pursuant to Section
2.07 of the Pooling and Servicing Agreement, Greenwood is obligated to
repurchase any Receivables subject to Liens from the Trust.
4
<PAGE> 5
In connection with the conveyance of the Receivables to the Trust,
Greenwood has indicated and will continue to indicate in its computer files
that the Receivables have been transferred to the Trust. Each Account has
been identified on the computer records of Greenwood with a "41" or "42" in
the field captioned "CHD-Portfolio - No."
All statements contained in certificates delivered to us by
Greenwood or the Trustee are accurate and correct including, without
limitation, (i) the certificate of Greenwood to the effect that (A) at
the present time it owns the Receivables free and clear of all Liens
(other than statutory or non-consensual Liens) except the interests created by
the Pooling and Servicing Agreement; (B) to the best knowledge of the person
signing such certificate, neither the Receivables nor the proceeds
thereof are subject to any statutory or non-consensual Liens (including
without limitation any attachment or execution lien) or Lien of any kind that
does not require the filing of a financing statement; (C) its chief executive
office, chief place of business and office where it keeps records
concerning the Receivables are located in the State of Delaware; (D) it has
not changed its name, whether by amendment of its charter, by
reorganization or otherwise within the past four months; nor has it changed
its chief executive office, chief place of business or its office where it
keeps records concerning the Receivables within the last four months; and
(E) Greenwood has not executed as "debtor" any financing statement with
respect to Receivables except for the UCC Financing Statement; and (ii) the
certificate of the Trustee to the effect that the person signing such
certificate does not have knowledge of any Lien affecting the Receivables
or the proceeds thereof except the interests created by the Pooling and
Servicing Agreement. We have further assumed that where a certification is
made to the best knowledge of a person signing a certificate described
herein, such person has knowledge of all of the relevant facts.
All filings and notices with respect to Liens on the property of
Greenwood in the nature of the Receivables (including the UCC Financing
Statement) have been properly filed and indexed; and the Lien Search
accurately and completely reflects all such filings and notices as of the
index date thereof and no filings or notices have been subsequently filed
and indexed except as provided in the Pooling and Servicing Agreement.
II. OPINION
Based upon the foregoing, and in reliance thereon and subject to
the assumptions, qualifications, exceptions and
5
<PAGE> 6
limitations set forth in this opinion letter, we are of the opinion that:
1. To the extent the substantive law of the State of Delaware is
applicable, the Receivables constitute "accounts", as defined in Section 9-106
of the UCC.
2. If the transfer of the Receivables to the Trust pursuant to
the Pooling and Servicing Agreement constitutes an absolute transfer of the
Receivables to the Trust, such absolute transfer, to the extent the
substantive law of the State of Delaware is applicable, transfers all of
the right, title and interest of Greenwood in and to such Receivables and the
proceeds thereof to the Trust.
The ownership interest of the Trust in such Receivables is subject
to the same limitations applicable to the perfection and priority of the
security interest created by the Pooling and Servicing Agreement in
Receivables in favor of the Trust. See UCC Section 9-102(1). Accordingly,
the ownership interest of the Trust in Receivables is a perfected ownership
interest and a first priority ownership interest to the same extent that
the security interest created by the Pooling and Servicing Agreement is a
perfected security interest and a first priority security interest. We refer
you to paragraphs 5, 6 and 7 of this opinion letter wherein we express the
respective opinions that such security interest is a perfected security
interest and is a first priority security interest, subject, in each case, to
no Liens and to the limitations and qualifications contained in such
paragraphs and the limitation contained in the following paragraph.
We call to your attention that Section 9-318(3) of the UCC provides
in effect that the Obligor in respect of a Receivable is authorized to
make payments to Greenwood until such Obligor receives notification that
such Receivable has been assigned to the Trust and the payment thereof is
to be made to the Trust. Accordingly, unless and until such Obligor is
so notified and directed, all payments made to Greenwood (or to a second
assignee if Greenwood should make a second assignment of such Receivable and
notify such Obligor of such assignment and direct such Obligor to make
payments to such second assignee) in respect of such Receivable will discharge
a corresponding amount of such Receivable, and the amount of such
payment may be recovered only from the person not entitled to receive the
same. We note that Section 4.03 of the Pooling and Servicing Agreement
provides that if at any time Greenwood is the Servicer and any of certain
other conditions occurs, Greenwood shall deposit, with respect to
Receivables for which it is the Servicer, an amount
6
<PAGE> 7
equal to the sum of the Required Daily Deposits (as defined in the Series
Supplements for each Series then outstanding) in the Collections Account for
each Series then outstanding not later than two Business Days following
the date of processing such Collections, except, under certain circumstances,
in the case of the first such deposit.
3. To the extent the substantive law of the State of Delaware is
applicable, the Pooling and Servicing Agreement created a valid security
interest in favor of the Trust in Greenwood's right, title and interest in
and to the Receivables and the proceeds thereof.
Such security interest is enforceable against Greenwood in accordance
with its terms except as the enforceability thereof may be subject to (i)
general principles of equity (regardless of whether enforceability is sought
in a proceeding at law or in equity) including without limitation, concepts
of materiality, reasonableness, good faith and fair dealing, and
(ii) receivership, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally.
4. The proper office for filing Financing Statements with respect
to the Receivables and the proceeds thereof is the Office of the Secretary of
State of the State of Delaware. The UCC Financing Statement was in proper
form for filing with the Delaware Secretary of State in order to perfect
the security interest in the Receivables and the proceeds thereof (subject to
the limitations and qualifications contained in Paragraph 5 of this opinion
letter) created by the Pooling and Servicing Agreement.
5. The security interest created by the Pooling and Servicing
Agreement in the Receivables in favor of the Trust is a perfected security
interest in the Receivables in existence on the date hereof and the proceeds
thereof except that in the case of non-identifiable cash proceeds,
continuation of the Trust's security interest therein being limited to the
extent set forth in Section 9-306 of the UCC. We call to your attention that
in order to maintain the effectiveness of the UCC Financing Statement,
and therefore the perfection of the aforementioned security interest:
(i) Section 13.02 of the Pooling and
Servicing Agreement and Article 9 of the UCC
require the filing of continuation statements
within the period of six months prior to the
expiration of five years from the date of the
filing of the UCC Financing
7
<PAGE> 8
Statement and within six months prior to the
expiration of each succeeding five year period;
and
(ii) Article 9 of the UCC requires the filing
of additional and/or amended financing
statements if Greenwood changes the location of
its chief executive office from the State of
Delaware or under certain circumstances
changes its name, identity or corporate
structure.
6. The security interest in favor of the Trust in the Receivables
and the proceeds thereof perfected as described in paragraph 5 is a first
priority security interest except as such priority may be subject to:
(i) Liens of any government or any agency or
instrumentality thereof that are given priority
by operation of law, including without
limitation Sections 6323(c)(2) and (d) of the
Internal Revenue Code of 1986, as amended, and
the Employee Retirement Income Security Act of
1974, as amended;
(ii) Liens under Section 4-208 of the UCC
(relating to the security interest of a
collecting bank);
(iii) Claims of the United States under the
Federal priority statute (31 U.S.C. Section
3713); and
(iv) Statutory and non-consensual liens,
claims or other interests or rights that may
arise by operation of Delaware law and which
take priority over previously perfected
security interests by virtue of such law.
7. With respect to Receivables that come into existence
after the date hereof, when such Receivables come into existence and
Greenwood acquires rights therein, the security interest created by the
Pooling and Servicing Agreement in favor of the Trust in such Receivables and
the proceeds thereof will be a perfected security interest and a first
priority security interest subject, in each case, to the respective
limitations and qualifications contained in paragraphs 5 and 6 of this
opinion letter. The opinion expressed in this paragraph 7, as pertaining to
Receivables coming into existence after the date hereof, is also subject to
the exception for Liens constituting "purchase money security interests"
(within the meaning of Section 9-107 of
8
<PAGE> 9
the UCC) created in respect of any Receivables arising after the date hereof
to the extent provided in Section 9-312 of the UCC.
Insofar as the opinions expressed in this paragraph 7 pertain to
the relative priority of the security interest of the Trust and a "lien
creditor" (within the meaning of Section 9-301(3) of the UCC) in Receivables
and the proceeds thereof, and the enforceability of the Trust's security
interest, such opinions are based upon the considerations set forth below.
Section 9-301(1) of the UCC provides in part that "an unperfected
security interest is subordinate to the rights of . . . (b) A person who
becomes a lien creditor before the security interest is perfected". If the
FDIC were appointed as a receiver of Greenwood, a state-chartered bank, it is
likely that the FDIC would qualify as a "lien creditor" within the meaning of
Section 9-301(3). See Rockford Housing Authority v. FDIC, slip op. (N.D. Ill.
December 5, 1986) (FDIC as receiver under the National Bank Act has the
status of a lien creditor under Section 9-301(1)(b) of the Uniform Commercial
Code).
It is arguable that Section 9-301 could be read to provide
priority to a lien creditor of Greenwood (such as the FDIC as a receiver
of Greenwood) in Receivables coming into existence after an entity becomes
such lien creditor (e.g., after the appointment of the FDIC as such receiver)
and proceeds on the following basis: (i) under Section 9-303(1), the
security interest of the Trust in a Receivable is not perfected until it has
attached; (ii) under Section 9-203(1), in order for such security interest
to attach in any Receivable, Greenwood must have rights in such Receivable;
(iii) Greenwood does not have rights in any Receivable before it comes
into existence, and accordingly, at the time, for example, the FDIC is
appointed as receiver of Greenwood, the security interest of the Trust in
Receivables not then in existence is not perfected at such time; (iv) under
Section 9-301, the question of priority between the Trust and FDIC as
receiver with respect to Receivables is to be determined at the time of such
appointment; and (v) therefore, the FDIC as receiver of Greenwood has
priority with respect to Receivables not in existence at the time of the
appointment of the FDIC as such receiver.
Sperry Corp. v. Farm Implement, Inc., 760 F.2d 196 (8th Cir. 1985)
is the only reported decision we found dealing with the relative priority of
a secured party and a lien creditor in after-acquired property in those
circumstances under Section 9-301. The court in Sperry ruled in favor of
the secured party on the basis that the lien of the lien creditor does not
attach prior to the time at which the security interest is perfected.
9
<PAGE> 10
The lien attaches and the security interest is perfected at the same time;
i.e., the time at which the after-acquired property comes into existence. 760
F.2d at 198; see also Texas Oil & Gas Corp. v. United States, 466 F.2d 1040
(5th Cir. 1972), cert. denied, 410 U.S. 929 (1973) (dictum).
In our view, the Sperry court reached the correct result under
the Uniform Commercial Code.
* * *
We do not express any opinion herein:
(i) as to the creation, validity or enforceability of any
interest of Greenwood in the Receivables or the proceeds
thereof;
(ii) as to Greenwood's rights in or title to any of the
Receivables or the proceeds thereof;
(iii) as to whether the transfer of the Receivables to the
Trust constitutes an absolute transfer;
(iv) as to whether the purported sale of all
Receivables now existing or hereafter created is
effective to convey to the Trust, as of the date of
purported sale, Receivables that do not exist as of the
date of such purported sale, or as to whether
Receivables hereafter created in an Account are deemed to
exist as of the date hereof;
(v) with respect to Receivables relating to Additional
Accounts or the proceeds thereof;
(vi) with respect to Receivables relating to Surviving
Accounts or the proceeds thereof;
(vii) whether the administrative expenses of the FDIC or any
other receiver or conservator of Green- wood would have
priority over the Trust's
10
<PAGE> 11
interest in Receivables or proceeds thereof*; and
(viii) as to whether a court in an equitable proceeding might
issue a temporary restraining order or preliminary
injunction pending resolution of the Trust's rights in the
Receivables, the proceeds thereof or rights to payment.
Very truly yours,
- -----------------------
* In addition, although the matter is not free from doubt and there is no
reported case law precedent, it is our view that a Delaware Court of
Chancery in a receivership of Greenwood would not apply 5 Del. C. Section
131(d) to authorize the avoidance of the security interests created in favor
of the Trust in the Receivables or to authorize a receiver to secure a loan
by the pledge of the Receivables which would have a preference or priority
over the security interest created in favor of the Trust in the Receivables.
11
<PAGE> 12
SCHEDULE I
Lien Searches
<TABLE>
<CAPTION>
Lien Search Dates
<S> <C>
Secretary of State's Certificate As of ______________, 199_
Delaware Secretary of State
County of Kent, Delaware As of ______________, 199_
UCC from 10/1/89
County of New Castle, Delaware As of ______________, 199_
UCC from 10/1/89
County of Sussex, Delaware As of _____________, 199_
UCC from 10/1/89
United States District Court As of _____________, 199_
for the District of Delaware
</TABLE>
12
<PAGE> 1
LATHAM & WATKINS
<TABLE>
<S> <C> <C>
PAUL R. WATKINS (1899-1973) ATTORNEYS AT LAW NEW YORK OFFICE
DANA LATHAM (1898-1974) SEARS TOWER, SUITE 5800 885 THIRD AVENUE, SUITE 1000
CHICAGO, ILLINOIS 60606 NEW YORK, NEW YORK 10022-4802
TELEPHONE (312) 876-7700 TELEPHONE (212) 906-1200
LONDON OFFICE FAX (312) 993-9767 FAX (212) 751-4864
ONE ANGEL COURT TLX 590776
LONDON EC2R 7HJ ENGLAND ELN 62793271 ORANGE COUNTY OFFICE
TELEPHONE + 44-171-374 4444 650 TOWN CENTER DRIVE SUITE 2000
FAX + 44-171-374 4460 COSTA MESA, CALIFORNIA 92626-1925
TELEPHONE (714) 540-1235
__________ FAX (714) 755-8290
MOSCOW OFFICE SAN DIEGO OFFICE
113/1 LENINSKY PROSPECT, SUITE C200 701 "B" STREET, SUITE 2100
MOSCOW 117198 RUSSIA SAN DIEGO, CALIFORNIA 92101-8197
TELEPHONE + 7-503 956-5555 TELEPHONE (619) 236-1234
FAX + 7-503 956-5556 FAX (619) 696-7419
November 13, 1996
LOS ANGELES OFFICE SAN FRANCISCO OFFICE
633 WEST FIFTH STREET, SUITE 4000 506 MONTGOMERY STREET, SUITE 1900
LOS ANGELES, CALIFORNIA 90071-2007 SAN FRANCISCO, CALIFORNIA 94111-2562
TELEPHONE (213) 485-1234 TELEPHONE (415) 391-0600
FAX (213) 891-8763 FAX (415) 395-8095
NEW JERSEY OFFICE WASHINGTON, D.C. OFFICE
ONE NEWARK CENTER 1001 PENNSYLVANIA AVE., N.W., SUITE 1300
NEWARK, NEW JERSEY 07101-3174 WASHINGTON, D.C. 20004-2505
TELEPHONE (201) 639-1234 TELEPHONE (202) 637-2200
FAX (201) 639-7298 FAX (202) 637-2201
</TABLE>
Greewood Trust Company
12 Read's Way
New Castle, Delaware 19720
Re: Discover Card Master Trust I
Registration Statement on Form S-3
Ladies and Gentlemen:
In connection with the filing of the registration statement on Form
S-3 with the Securities and Exchange Commission on November 14, 1996 (the
"Registration Statement") by Greenwood Trust Company ("Greenwood") relating to
the Discover Master Trust I (the "Trust"), you have requested our opinion
regarding the description of certain tax consequences contained in the
prospectus (the "Prospectus") included in the Registration Statement.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Prospectus.
Our opinion is based on our examination of the Prospectus, the
Pooling and Servicing Agreement dated as of October 1, 1993, as amended (the
"Pooling Agreement") between Greenwood as Seller and Servicer and First Bank
National Association (successor trustee to Bank of America Illinois, formerly
Continental Bank, National Association) as Trustee, and such other documents,
instruments and information as we considered necessary. Our opinion also is
based on (i) the assumption that neither the Trustee nor any affiliate thereof
will become either the Servicer or the delegee of the Servicer; (ii) the
assumption that all agreements relating to the issuance of the investor
certificates and the creation of the Trust will remain in full force and
effect; (iii) currently applicable provisions of the federal income tax laws,
including the Internal Revenue Code of 1986, as amended, applicable Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practice; and (iv) a legal opinion rendered by local
tax counsel retained by Greenwood relative to
<PAGE> 2
the income tax laws of Delaware (upon which we have relied for purposes of
rendering our opinion with respect to the laws of Delaware).
We also note that the documents reviewed do not relate to a specific
transaction. Accordingly, the above-referenced description of tax consequences
may, under certain circumstances, require modification in the context of a
specific transaction.
Based on the foregoing, it is our opinion that, as of the date
hereof, the statements in the Prospectus under the captions "Certain Federal
Income Tax Consequences" and "Certain State Income Tax Consequences," to the
extent that they constitute matters of law or legal conclusions with respect
thereto, are a fair and accurate summary of the matters addressed therein,
under existing law and the assumptions stated therein.
Very truly yours,
/s/ Latham & Watkins
2
<PAGE> 1
EXHIBIT 23.2
YOUNG, CONAWAY, STARGATT & TAYLOR
Eleventh Floor
Rodney Square North
P.O. Box 391
Wilmington, Delaware 19899-0391
(302) 571-6620
November 13, 1996
Greenwood Trust Company
12 Read's Way
New Castle, Delaware 19720
Re: Discover Card Master Trust I
Ladies and Gentlemen:
We hereby consent to the filing of our opinion as an Exhibit to the
Registration Statement on Form S-3 of Greenwood Trust Company on or about
November 13, 1996 and to the references to our firm in the prospectus included
therein under the captions "The Seller -- Insolvency-Related Matters" and
"Legal Matters."
Very truly yours,
YOUNG, CONAWAY, STARGATT & TAYLOR
By: /s/ Edward B. Maxwell, 2nd
-------------------------------
Edward B. Maxwell, 2nd
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
director or officer of Greenwood Trust Company, a Delaware banking corporation
(the "Corporation"), does hereby constitute and appoint THOMAS R. BUTLER, J.
NATHAN HILL, JOHN J. COANE, CHRISTINE A. EDWARDS, RAYMOND A. KENNEDY, BIRENDRA
KUMAR, FRANK K. REILLY and JOSEPH A. YOB with full power to each of them to act
alone, as the true and lawful attorneys and agents of the undersigned with full
power of substitution and resubstitution to each of said attorneys, to execute,
file or deliver any and all instruments and to do any and all acts and things
which said attorneys and agents, or any of them, deem advisable to enable the
Corporation to comply with the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and any requirements or regulations of the Securities and
Exchange Commission in respect thereto, in connection with the registration
under the Securities Act of Credit Card Pass-Through Certificates (the
"Certificates") to be issued by a trust originated by the Corporation, and the
registration under the Exchange Act of the Certificates, including
specifically, but without limitation of the general authority hereby granted,
the power and authority to sign his or her name in the name and on behalf of
the Corporation or as a director or officer of the Corporation, as indicated
below opposite his or her signature, to the registration statements, or any
amendments, post-effective amendments, supplements or papers supplemental
thereto, to be filed in respect of said Certificates; and each of the
undersigned does hereby fully ratify and confirm all that said attorneys and
agents, or any of them, or the substitute of any of them, shall do or cause to
be done by virtue hereof.
<PAGE> 2
If this Power of Attorney is executed in Counterparts, each
counterpart shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, as of this 12th day of November, 1996.
<TABLE>
<S> <C>
/s/ Thomas R. Butler Chairman of the Board, Investment Officer,
-------------------- Loan Officer and Director
Thomas R. Butler (Principal Executive Officer)
President, Chief Operating Officer, Loan
J. Nathan Hill Officer, Assistant Secretary and Director
Vice President, Director of Accounting,
John J. Coane Treasurer and Assistant Secretary
(Principal Financial Officer and Principal
Accounting Officer)
Director
Christine A. Edwards
Director
Raymond A. Kennedy
Director
Birendra Kumar
Director
Frank K. Reilly
Director
Joseph A. Yob
</TABLE>
<PAGE> 3
If this Power of Attorney is executed in Counterparts, each
counterpart shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, as of this 12th day of November, 1996.
<TABLE>
<S> <C>
Chairman of the Board, Investment Officer,
Thomas R. Butler Loan Officer and Director
(Principal Executive Officer)
/s/ J. Nathan Hill President, Chief Operating Officer, Loan
------------------ Officer, Assistant Secretary and Director
J. Nathan Hill
Vice President, Director of Accounting,
John J. Coane Treasurer and Assistant Secretary
(Principal Financial Officer and Principal
Accounting Officer)
Director
Christine A. Edwards
Director
Raymond A. Kennedy
Director
Birendra Kumar
Director
Frank K. Reilly
Director
Joseph A. Yob
</TABLE>
<PAGE> 4
If this Power of Attorney is executed in Counterparts, each
counterpart shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, as of this 12th day of November, 1996.
<TABLE>
<S> <C>
Chairman of the Board, Investment Officer,
Thomas R. Butler Loan Officer and Director
(Principal Executive Officer)
President, Chief Operating Officer, Loan
J. Nathan Hill Officer, Assistant Secretary and Director
Vice President, Director of Accounting,
John J. Coane Treasurer and Assistant Secretary
(Principal Financial Officer and Principal
Accounting Officer)
/s/ Christine A. Edwards Director
--------------------------
Christine A. Edwards
Director
Raymond A. Kennedy
Director
Birendra Kumar
Director
Frank K. Reilly
Director
Joseph A. Yob
</TABLE>
<PAGE> 5
If this Power of Attorney is executed in Counterparts, each
counterpart shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, as of this 12th day of November, 1996.
<TABLE>
<S> <C>
Chairman of the Board, Investment Officer,
Thomas R. Butler Loan Officer and Director
(Principal Executive Officer)
President, Chief Operating Officer, Loan
J. Nathan Hill Officer, Assistant Secretary and Director
Vice President, Director of Accounting,
John J. Coane Treasurer and Assistant Secretary
(Principal Financial Officer and Principal
Accounting Officer)
Director
Christine A. Edwards
/s/ Raymond A. Kennedy Director
------------------------
Raymond A. Kennedy
Director
Birendra Kumar
Director
Frank K. Reilly
Director
Joseph A. Yob
</TABLE>
<PAGE> 6
If this Power of Attorney is executed in Counterparts, each
counterpart shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, as of this 12th day of November, 1996.
<TABLE>
<S> <C>
Chairman of the Board, Investment Officer,
Thomas R. Butler Loan Officer and Director
(Principal Executive Officer)
President, Chief Operating Officer, Loan
J. Nathan Hill Officer, Assistant Secretary and Director
Vice President, Director of Accounting,
John J. Coane Treasurer and Assistant Secretary
(Principal Financial Officer and Principal
Accounting Officer)
Director
Christine A. Edwards
Director
Raymond A. Kennedy
/s/ Birendra Kumar Director
----------------------------
Birendra Kumar
Director
Frank K. Reilly
Director
Joseph A. Yob
</TABLE>
<PAGE> 7
If this Power of Attorney is executed in Counterparts, each
counterpart shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, as of this 12th day of November, 1996.
<TABLE>
<S> <C>
Chairman of the Board, Investment Officer,
Thomas R. Butler Loan Officer and Director
(Principal Executive Officer)
President, Chief Operating Officer, Loan
J. Nathan Hill Officer, Assistant Secretary and Director
Vice President, Director of Accounting,
John J. Coane Treasurer and Assistant Secretary
(Principal Financial Officer and Principal
Accounting Officer)
Director
Christine A. Edwards
Director
Raymond A. Kennedy
Director
Birendra Kumar
/s/ Frank K. Reilly Director
--------------------
Frank K. Reilly
Director
Joseph A. Yob
</TABLE>
<PAGE> 8
If this Power of Attorney is executed in Counterparts, each
counterpart shall be deemed an original.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, as of this 12th day of November, 1996.
<TABLE>
<S> <C>
Chairman of the Board, Investment Officer,
Thomas R. Butler Loan Officer and Director
(Principal Executive Officer)
President, Chief Operating Officer, Loan
J. Nathan Hill Officer, Assistant Secretary and Director
Vice President, Director of Accounting,
John J. Coane Treasurer and Assistant Secretary
(Principal Financial Officer and Principal
Accounting Officer)
Director
Christine A. Edwards
Director
Raymond A. Kennedy
Director
Birendra Kumar
Director
Frank K. Reilly
/s/ Joseph A .Yob Director
-----------------
Joseph A. Yob
</TABLE>
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
director or officer of Greenwood Trust Company, a Delaware banking corporation
(the "Corporation"), does hereby constitute and appoint J. NATHAN HILL and
BIRENDRA KUMAR with full power to each of them to act alone, as the true and
lawful attorneys and agents of the undersigned with full power of substitution
and resubstitution to each of said attorneys, to execute, file or deliver any
and all instruments and to do any and all acts and things which said attorneys
and agents, or any of them, deem advisable to enable the Corporation to comply
with the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any
requirements or regulations of the Securities and Exchange Commission in
respect thereto, in connection with the registration under the Securities Act
of Credit Card Pass-Through Certificates (the "Certificates") to be issued by a
trust originated by the Corporation, and the registration under the Exchange
Act of the Certificates, including specifically, but without limitation of the
general authority hereby granted, the power and authority to sign his or her
name in the name and on behalf of the Corporation or as a director or officer
of the Corporation, as indicated below opposite his or her signature, to the
registration statements, or any amendments, post-effective amendments,
supplements or papers supplemental thereto, to be filed in respect of said
Certificates; and each of the undersigned does hereby fully ratify and confirm
all that said attorneys and agents, or any of them, or the substitute of any of
them, shall do or cause to be done by virtue hereof.
If this Power of Attorney is executed in Counterparts, each
counterpart shall be deemed an original.
<PAGE> 10
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents, as of this 12th day of November, 1996.
<TABLE>
<S> <C>
President, Chief Operating Officer, Loan
J. Nathan Hill Officer, Assistant Secretary and Director
/s/ John J. Coane Vice President, Director of Accounting,
------------------
John J. Coane Treasurer and Assistant Secretary
(Principal Financial Officer and Principal
Accounting Officer)
Director
Birendra Kumar
</TABLE>
