<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Capital One Bank
(Originator of the Capital One Master Trust)
on behalf of the
Capital One Master Trust
(Issuer of the Asset Backed Certificates)
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 54-1719855
- ----------------------------------------- ------------------
(State of incorporation or organization) (IRS Employer
Identification No.)
11013 West Broad Street Road
Glen Allen, Virginia 23060
- --------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
If this form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A(c)(1) please check the
following box. [ ]
If this form relates to the registration of a class of debt securities and is
to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A(c)(2) please check the following box. [ ]
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Capital One Master Trust
Class A Floating Rate Asset Backed Certificates, Series 1996-2
Class A Floating Rate Asset Backed Certificates, Series 1996-3
---------------------------------------------------------------
(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Description of Registrant's Securities to be Registered.
The description of the Class A Floating Rate Asset Backed
Certificates, Series 1996-2 appearing under the captions
entitled: "Summary of Series Terms"; "Summary of Series
Provisions"; "Risk Factors"; "Maturity Considerations"; "The
Receivables"; and "Series Provisions" in the Prospectus
Supplement dated November 25, 1996 and "Prospectus Summary";
"Risk Factors"; "Description of the Certificates"; "Certain
Legal Aspects of the Receivables"; "Certain Federal Income Tax
Consequences"; and "ERISA Considerations" in the Prospectus,
dated November 25, 1996 (the Prospectus and the Prospectus
Supplement are incorporated herein by reference as Exhibit 8).
The description of the Class A Floating Rate Asset Backed
Certificates, Series 1996-3 appearing under the captions
entitled: "Summary of Series Terms"; "Summary of Series
Provisions"; "Risk Factors"; "Maturity Considerations"; "The
Receivables"; and "Series Provisions" in the Prospectus
Supplement dated December 11, 1996 and "Prospectus Summary";
"Risk Factors"; "Description of the Certificates"; "Certain
Legal Aspects of the Receivables"; "Certain Federal Income Tax
Consequences"; and "ERISA Considerations" in the Prospectus,
dated December 11, 1996 (the Prospectus and the Prospectus
Supplement are incorporated herein by reference as Exhibit 9).
Item 2. Exhibits.
Exhibit 1-- Form of specimens of certificates
representing Class A Floating Rate Asset
Backed Certificates, Series 1996-2.
Exhibit 2-- Form of specimens of certificates
representing Class A Floating Rate Asset
Backed Certificates, Series 1996-3.
Exhibit 3-- Pooling and Servicing Agreement (incorporated
by reference to the Registrant's Current
Report on Form 8-K filed with the Securities
and Exchange Commission on February 1, 1994).
Exhibit 4-- Standard Definitions and Provisions Annex
dated December 5, 1996.
Exhibit 5-- Series 1996-2 Supplement dated December 5,
1996.
2
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Exhibit 6-- Standard Definitions and Provisions Annex
dated December 18, 1996.
Exhibit 7-- Series 1996-3 Supplement dated December 18,
1996.
Exhibit 8-- Prospectus Supplement dated November 25, 1996
together with the Prospectus dated November
25, 1996 (incorporated by reference to
Prospectus Supplement and Prospectus filed
with the Securities and Exchange Commission
on November 25, 1996, pursuant to Rule
424(b)(5)).
Exhibit 9-- Prospectus Supplement dated December 11, 1996
together with the Prospectus dated December
11, 1996 (incorporated by reference to
Prospectus Supplement and Prospectus filed
with the Securities and Exchange Commission
on December 11, 1996, pursuant to Rule
424(b)(5)).
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, as amended, Capital One Bank on behalf of the Capital One
Master Trust has duly caused this Form 8-A to be signed on its behalf by the
undersigned, thereto duly authorized.
CAPITAL ONE MASTER TRUST
BY: CAPITAL ONE BANK
Date: August 25, 1997 By: /s/ Lee J. Jacobson
-------------------------
Name: Lee J. Jacobson
Title: Assistant Treasurer
4
<PAGE> 5
INDEX TO EXHIBITS
Exhibit 1-- Form of specimens of certificates representing Class A
Floating Rate Asset Backed Certificates, Series 1996-2.
Exhibit 2-- Form of specimens of certificates representing Class A
Floating Rate Asset Backed Certificates, Series 1996-3.
Exhibit 3-- Pooling and Servicing Agreement (incorporated by reference to
the Registrant's Current Report on Form 8-K filed with the
Securities and Exchange Commission on February 1, 1994).
Exhibit 4-- Standard Definitions and Provisions Annex dated December 5,
1996.
Exhibit 5-- Series 1996-2 Supplement dated December 5, 1996.
Exhibit 6-- Standard Definitions and Provisions Annex dated December 18,
1996.
Exhibit 7-- Series 1996-3 Supplement dated December 18, 1996.
Exhibit 8-- Prospectus Supplement dated November 25, 1996 together with
the Prospectus dated November 25, 1996, (incorporated by
reference to Prospectus Supplement and Prospectus filed with
the Securities and Exchange Commission on November 25, 1996,
pursuant to Rule 424(b)(5)).
Exhibit 9-- Prospectus Supplement dated December 11, 1996 together with
the Prospectus dated December 11, 1996, (incorporated by
reference to Prospectus Supplement and Prospectus filed with
the Securities and Exchange Commission on December 11, 1996,
pursuant to Rule 424(b)(5)).
5
<PAGE> 1
EXHIBIT 1
REGISTERED $200,000,000
No. R-1 CUSIP NO. 14040KAE8
Unless this Class A Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the 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
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.
CAPITAL ONE MASTER TRUST
Series 1996-2
FLOATING RATE CLASS A ASSET BACKED CERTIFICATE
Class A Expected Final Payment Date:
The December 2001 Distribution Date
Each $1,000 minimum denomination represents a
1/600,000 undivided interest
in certain assets of the
CAPITAL ONE MASTER TRUST
Evidencing an undivided interest in a trust, the corpus of which consists
primarily of receivables generated from time to time in the ordinary course of
business in a portfolio of consumer revolving credit card accounts by
CAPITAL ONE BANK
and, in certain circumstances, certain Additional Sellers (as defined in the
Pooling and Servicing Agreement referred to below).
(Not an interest in or obligation of Capital One Bank
any Additional Sellers or any affiliate thereof)
<PAGE> 2
2
This certifies that Cede & Co. (the "Class A Certificateholder") is the
registered owner of a fractional undivided interest in certain assets of a
trust (the "Trust") created pursuant to the Pooling and Servicing Agreement
dated as of September 30, 1993 (as amended and supplemented, the "Agreement"),
as supplemented by the Series 1996-2 Supplement dated as of December 5, 1996
(as amended and supplemented, the "Series Supplement"), among Capital One Bank,
as Seller and Servicer, and The Bank of New York, a New York banking
corporation, as trustee (the "Trustee"). The corpus of the Trust consists of
(i) a portfolio of all receivables (the "Receivables") existing in the consumer
revolving credit card accounts and other consumer revolving credit accounts
identified under the Agreement from time to time (the "Accounts"), (ii) all
Receivables generated under the Accounts from time to time thereafter, (iii)
funds collected or to be collected from accountholders in respect of the
Receivables, (iv) all funds which are from time to time on deposit in the
Collection Account and in the Series Accounts, (v) an interest in any Funds
Collateral relating to secured accounts, (vi) the benefits of any Series
Enhancement and (vii) all other assets and interests constituting the Trust.
The Holder of this Certificate is entitled to the benefit of funds, if any, on
deposit in a Cash Collateral Account and any Series Enhancement to the extent
provided in the Series Supplement. Although a summary of certain provisions of
the Agreement and the Series Supplement is set forth below and on the Summary
of Terms and Conditions attached hereto and made a part hereof, this Class A
Certificate does not purport to summarize the Agreement and the Series
Supplement and reference is made to the Agreement and the Series Supplement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Agreement and the Series Supplement (without
schedules) may be requested from the Trustee by writing to the Trustee at the
Corporate Trust Office. To the extent not defined herein, the capitalized
terms used herein have the meanings ascribed to them in the Agreement or the
Series Supplement, as applicable.
This Class A Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Series Supplement, to which
Agreement and Series Supplement, each as amended and supplemented from time to
time, the Class A Certificateholder by virtue of the acceptance hereof assents
and is bound.
<PAGE> 3
3
It is the intent of the Seller and the Investor Certificateholders
that, for Federal, state and local income and franchise tax purposes only, the
Investor Certificates will qualify as indebtedness of the Seller secured by the
Receivables. The Class A Certificateholder, by the acceptance of this Class A
Certificate, agrees to treat this Class A Certificate for Federal, state and
local income and franchise tax purposes as indebtedness of the Seller.
In general, payments of principal with respect to the Class A
Certificates are limited to the Class A Invested Amount, which may be less than
the unpaid principal balance of the Class A Certificates. The Class A Expected
Final Payment Date is the December 2001 Distribution Date, but principal with
respect to the Class A Certificates may be paid earlier if the Servicer elects
not to extend the Initial Principal Payment Date, and may also be paid earlier
or later under certain circumstances described in the Agreement and the Series
Supplement. If for one or more months during the Class A Accumulation Period
there are not sufficient funds to pay the Controlled Deposit Amount, then to
the extent that excess funds are not available on subsequent Distribution Dates
with respect to the Class A Accumulation Period to make up for such shortfalls,
the final payment of principal of the Class A Certificates will occur later
than the Class A Expected Final Payment Date.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class A Certificate
shall not be entitled to
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4
any benefit under the Agreement or the Series Supplement or be valid for any
purpose.
IN WITNESS WHEREOF, the Seller has caused this Class A Certificate to
be duly executed.
CAPITAL ONE BANK
By: /s/ LEE J. JACOBSON
-------------------------
Name:
Title:
Dated: December 5, 1996
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5
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates described in the within-mentioned
Agreement and Series Supplement.
THE BANK OF NEW YORK,
as Trustee,
By: /s/ JOSEPH G. ERNST
-------------------------------
Authorized Officer
or
By:
as Authenticating Agent
for the Trustee,
By:
-------------------------------
Authorized Officer
<PAGE> 6
6
CAPITAL ONE MASTER TRUST
Series 1996-2
FLOATING RATE CLASS A ASSET BACKED CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise generally
from the purchase of goods and services and amounts advanced to accountholders
as cash advances and Finance Charge Receivables. This Class A Certificate is
one of a Series of Certificates entitled Capital One Master Trust, Series
1996-2 (the "Series 1996-2 Certificates"), and one of a class thereof entitled
Floating Rate Class A Asset Backed Certificates, Series 1996-2 (the "Class A
Certificates"), each of which represents a fractional undivided interest in
certain assets of the Trust. The Trust Assets are allocated in part to the
certificateholders of all outstanding Series (the "Certificateholders'
Interest") with the remainder allocated to the Seller. The aggregate interest
represented by the Class A Certificates at any time in the Principal
Receivables in the Trust shall not exceed an amount equal to the Class A
Invested Amount at such time. The Class A Initial Invested Amount is
$600,000,000. The Class A Invested Amount on any date will be an amount equal
to (a) the Class A Initial Invested Amount, minus (b) the aggregate amount of
principal payments made to the Class A Certificateholders on or prior to such
date, minus (c) the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs for all prior Distribution Dates over the aggregate amount of Class
A Investor Charge-Offs reimbursed pursuant to Section 4.06(a) of the Series
Supplement prior to such date. In addition, a class of the Series 1996-2
Certificates entitled Floating Rate Class B Asset Backed Certificates, Series
1996-2 (the "Class B Certificates") will be issued. Also, a Seller's
Certificate has been issued to Capital One Bank pursuant to the Agreement which
represents the Seller's Interest.
Subject to the terms and conditions of the Agreement, the Seller 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 certain of the Trust Assets.
<PAGE> 7
7
On each Payment Date, the Paying Agent shall distribute to each Class
A Certificateholder of record on the last day of the preceding calendar month
(each a "Record Date") such Class A Certificateholder's pro rata share of such
amounts (including amounts on deposit in the Collection Account, the Interest
Funding Account, if any, and the Principal Funding Account) as are payable to
the Class A Certificateholders pursuant to the Agreement and the Series
Supplement. 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 without the
presentation or surrender of this Class A Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class A
Certificate) except that with respect to Class A Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class A Certificate will be made only upon presentation and surrender of this
Class A Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Class A Certificateholders in
accordance with the Agreement and the Series Supplement.
On any day occurring on or after the day on which the Invested Amount
is reduced to 5% or less of the Initial Invested Amount, the Seller has the
option to repurchase the Class A Certificateholders' Interest in the Trust.
The repurchase price will be equal to (a) if such day is a Distribution Date,
the Reassignment Amount for such Distribution Date or (b) if such day is not a
Distribution Date, the Reassignment Amount for the Distribution Date following
such day. Following the deposit of the Reassignment Amount in the Collection
Account, Class A Certificateholders and the Collateral Indebtedness Holder will
not have any interest in the Receivables and the Class A Certificates will
represent only the right to receive such Reassignment Amount.
This Class A Certificate does not represent an obligation of, or an
interest in, the Seller, the Servicer or any affiliate of any of them and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency or instrumentality. This Class A Certificate is
limited in right of payment to certain Collections with respect to the
Receivables (and certain
<PAGE> 8
8
other amounts), all as more specifically set forth hereinabove and in the
Agreement and the Series Supplement.
The Agreement or any Supplement may, subject to certain conditions, be
amended by the Seller, the Servicer and the Trustee without Certificateholder
consent. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's rights, duties or immunities under the
Agreement or otherwise.
The Agreement or any Supplement may also be amended from time to time
(including in connection with the issuance of a Supplemental Certificate) by
the Servicer, the Seller and the Trustee, with the consent of the Holders of
Investor Certificates evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Investor Certificates of all adversely affected Series,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Agreement or any Supplement or of
modifying in any manner the rights of the Investor Certificateholders;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of or delay the timing of any distributions to be made to Investor
Certificateholders or deposits of amounts to be so distributed or the amount
available under any Series Enhancement without the consent of each affected
Investor Certificateholder, (ii) change the definition of or the manner of
calculating the interest of any Investor Certificateholder without the consent
of each affected Investor Certificateholder, (iii) reduce the aforesaid
percentage required to consent to any such amendment without the consent of
each Investor Certificateholder or (iv) adversely affect the rating of any
Series or Class by each Rating Agency without the consent of the Holders of
Investor Certificates of such Series or Class evidencing not less than 66-2/3%
of the aggregate unpaid principal amount of the Investor Certificates of such
Series or Class. The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's rights, duties or immunities
under this Agreement or otherwise.
The Class A Certificates are issuable only in minimum denominations of
$1,000 and integral multiples of $1,000. The transfer of this Class A
Certificate shall be registered in the Certificate Register upon surrender of
this Class A Certificate for registration of transfer at any office or agency
maintained by the Transfer Agent and Registrar accompanied by a written
instrument of transfer,
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9
in a form satisfactory to the Trustee or the Transfer Agent and Registrar, duly
executed by the Class A Certificateholder or such Class A Certificateholder's
attorney, and duly authorized in writing with such signature guaranteed, 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.
As provided in the 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
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 Servicer, the Trustee, the Paying Agent and the Transfer Agent and
Registrar 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 Servicer nor the Trustee, the Paying Agent, the Transfer Agent and
Registrar, nor any agent of any of them, shall be affected by notice to the
contrary except in certain circumstances described in the Agreement.
THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
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.
<PAGE> 1
EXHIBIT 2
REGISTERED $200,000,000
No. R-1 CUSIP No. 14040KAG3
Unless this Class A Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the 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
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.
CAPITAL ONE MASTER TRUST
Series 1996-3
FLOATING RATE CLASS A ASSET BACKED CERTIFICATE
Class A Expected Final Payment Date:
The January 2004 Distribution Date
Each $1,000 minimum denomination represents a
1/400,000 undivided interest
in certain assets of the
CAPITAL ONE MASTER TRUST
Evidencing an undivided interest in a trust, the corpus of which consists
primarily of receivables generated from time to time in the ordinary course of
business in a portfolio of consumer revolving credit card accounts by
CAPITAL ONE BANK
and, in certain circumstances, certain Additional Sellers (as defined in the
Pooling and Servicing Agreement referred to below).
(Not an interest in or obligation of Capital One Bank,
any Additional Seller or any affiliate thereof)
<PAGE> 2
2
This certifies that Cede & Co. (the "Class A Certificateholder") is the
registered owner of a fractional undivided interest in certain assets of a
trust (the "Trust") created pursuant to the Pooling and Servicing Agreement
dated as of September 30, 1993 (as amended and supplemented, the "Agreement"),
as supplemented by the Series 1996-3 Supplement dated as of December 18, 1996
(as amended and supplemented, the "Series Supplement"), among Capital One Bank,
as Seller and Servicer, and The Bank of New York, a New York banking
corporation, as trustee (the "Trustee"). The corpus of the Trust consists of
(i) a portfolio of all receivables (the "Receivables") existing in the consumer
revolving credit card accounts and other consumer revolving credit accounts
identified under the Agreement from time to time (the "Accounts"), (ii) all
Receivables generated under the Accounts from time to time thereafter, (iii)
funds collected or to be collected from accountholders in respect of the
Receivables, (iv) all funds which are from time to time on deposit in the
Collection Account and in the Series Accounts, (v) an interest in any Funds
Collateral relating to secured accounts, (vi) the benefits of any Series
Enhancement and (vii) all other assets and interests constituting the Trust.
The Holder of this Certificate is entitled to the benefit of funds, if any, on
deposit in a Cash Collateral Account and any Series Enhancement to the extent
provided in the Series Supplement. Although a summary of certain provisions of
the Agreement and the Series Supplement is set forth below and on the Summary
of Terms and Conditions attached hereto and made a part hereof, this Class A
Certificate does not purport to summarize the Agreement and the Series
Supplement and reference is made to the Agreement and the Series Supplement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Agreement and the Series Supplement (without
schedules) may be requested from the Trustee by writing to the Trustee at the
Corporate Trust Office. To the extent not defined herein, the capitalized
terms used herein have the meanings ascribed to them in the Agreement or the
Series Supplement, as applicable.
This Class A Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Series Supplement, to which
Agreement and Series Supplement, each as amended and supplemented from time to
time, the Class A Certificateholder by virtue of the acceptance hereof assents
and is bound.
<PAGE> 3
3
It is the intent of the Seller and the Investor Certificateholders
that, for Federal, state and local income and franchise tax purposes only, the
Investor Certificates will qualify as indebtedness of the Seller secured by the
Receivables. The Class A Certificateholder, by the acceptance of this Class A
Certificate, agrees to treat this Class A Certificate for Federal, state and
local income and franchise tax purposes as indebtedness of the Seller.
In general, payments of principal with respect to the Class A
Certificates are limited to the Class A Invested Amount, which may be less than
the unpaid principal balance of the Class A Certificates. The Class A Expected
Final Payment Date is the January 2004 Distribution Date, but principal with
respect to the Class A Certificates may be paid earlier if the Servicer elects
not to extend the Initial Principal Payment Date, if any, and may also be paid
earlier or later under certain circumstances described in the Agreement and the
Series Supplement. If for one or more months during the Class A Accumulation
Period there are not sufficient funds to pay the Controlled Deposit Amount,
then to the extent that excess funds are not available on subsequent
Distribution Dates with respect to the Class A Accumulation Period to make up
for such shortfalls, the final payment of principal of the Class A Certificates
will occur later than the Class A Expected Final Payment Date.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Class A Certificate
shall not be entitled to
<PAGE> 4
4
any benefit under the Agreement or the Series Supplement or be valid for any
purpose.
IN WITNESS WHEREOF, the Seller has caused this Class A Certificate to
be duly executed.
CAPITAL ONE BANK,
By: /s/ LEE J. JACOBSON
--------------------------
Name: Lee J. Jacobson
Title: Assistant Treasurer
Dated: December 18, 1996
<PAGE> 5
5
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates described in the within-mentioned
Agreement and Series Supplement.
THE BANK OF NEW YORK,
as Trustee,
By: /s/ JOSEPH G. ERNST
------------------------------
Authorized Officer
or
By:
as Authenticating Agent
for the Trustee,
By:
------------------------------
Authorized officer
<PAGE> 6
6
CAPITAL ONE MASTER TRUST
SERIES 1996-3
FLOATING RATE CLASS A ASSET BACKED CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise generally
from the purchase of goods and services and amounts advanced to accountholders
as cash advances and Finance Charge Receivables. This Class A Certificate is
one of a Series of Certificates entitled Capital One Master Trust, Series
1996-3 (the "Series 1996-3 Certificates"), and one of a class thereof entitled
Floating Rate Class A Asset Backed Certificates, Series 1996-3 (the "Class A
Certificates"), each of which represents a fractional undivided interest in
certain assets of the Trust. The Trust Assets are allocated in part to the
certificateholders of all outstanding Series (the "Certificateholders'
Interest") with the remainder allocated to the Seller. The aggregate interest
represented by the Class A Certificates at any time in the Principal
Receivables in the Trust shall not exceed an amount equal to the Class A
Invested Amount at such time. The Class A Initial Invested Amount is
$400,000,000. The Class A Invested Amount on any date will be an amount equal
to (a) the Class A Initial Invested Amount, minus (b) the aggregate amount of
principal payments made to the Class A Certificateholders on or prior to such
date, minus (c) the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs for all prior Distribution Dates over the aggregate amount of Class
A Investor Charge-Offs reimbursed pursuant to Section 4.06(a) of the Series
Supplement prior to such date. In addition, a class of the Series 1996-3
Certificates entitled Floating Rate Class B Asset Backed Certificates, Series
1996-3 (the "Class B Certificates") will be issued. Also, a Seller's
Certificate has been issued to Capital One Bank pursuant to the Agreement which
represents the Seller's Interest.
Subject to the terms and conditions of the Agreement, the Seller 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 certain of the Trust Assets.
<PAGE> 7
7
On each Payment Date, the Paying Agent shall distribute to each Class
A Certificateholder of record on the last day of the preceding calendar month
(each a "Record Date") such Class A Certificateholder's pro rata share of such
amounts (including amounts on deposit in the Collection Account, the Interest
Funding Account, if any, and the Principal Funding Account) as are payable to
the Class A Certificateholders pursuant to the Agreement and the Series
Supplement. 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 without the
presentation or surrender of this Class A Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class A
Certificate) except that with respect to Class A Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class A Certificate will be made only upon presentation and surrender of this
Class A Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Class A Certificateholders in
accordance with the Agreement and the Series Supplement.
On any day occurring on or after the day on which the Invested Amount
is reduced to 5% or less of the Initial Invested Amount, the Seller has the
option to repurchase the Class A Certificateholders' Interest in the Trust.
The repurchase price will be equal to (a) if such day is a Distribution Date,
the Reassignment Amount for such Distribution Date or (b) if such day is not a
Distribution Date, the Reassignment Amount for the Distribution Date following
such day. Following the deposit of the Reassignment Amount in the Collection
Account, Class A Certificateholders and the Collateral Indebtedness Holder will
not have any interest in the Receivables and the Class A Certificates will
represent only the right to receive such Reassignment Amount.
This Class A Certificate does not represent an obligation of, or an
interest in, the Seller, the Servicer or any affiliate of any of them and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency or instrumentality. This Class A Certificate is
limited in right of payment to certain Collections with respect to the
Receivables (and certain
<PAGE> 8
8
other amounts), all as more specifically set forth hereinabove and in the
Agreement and the Series Supplement.
The Agreement or any Supplement may, subject to certain conditions, be
amended by the Seller, the Servicer and the Trustee without Certificateholder
consent. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's rights, duties or immunities under the
Agreement or otherwise.
The Agreement or any Supplement may also be amended from time to time
(including in connection with the issuance of a Supplemental Certificate) by
the Servicer, the Seller and the Trustee, with the consent of the Holders of
Investor Certificates evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Investor Certificates of all adversely affected Series,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Agreement or any Supplement or of
modifying in any manner the rights of the Investor Certificateholders;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of or delay the timing of any distributions to be made to Investor
Certificateholders or deposits of amounts to be so distributed or the amount
available under any Series Enhancement without the consent of each affected
Investor Certificateholder, (ii) change the definition of or the manner of
calculating the interest of any Investor Certificateholder without the consent
of each affected Investor Certificateholder, (iii) reduce the aforesaid
percentage required to consent to any such amendment without the consent of
each Investor Certificateholder or (iv) adversely affect the rating of any
Series or Class by each Rating Agency without the consent of the Holders of
Investor Certificates of such Series or Class evidencing not less than 66-2/3%
of the aggregate unpaid principal amount of the Investor Certificates of such
Series or Class. The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's rights, duties or immunities
under this Agreement or otherwise.
The Class A Certificates are issuable only in minimum denominations of
$1,000 and integral multiples of $1,000. The transfer of this Class A
Certificate shall be registered in the Certificate Register upon surrender of
this Class A Certificate for registration of transfer at any office or agency
maintained by the Transfer Agent and Registrar accompanied by a written
instrument of transfer,
<PAGE> 9
9
in a form satisfactory to the Trustee or the Transfer Agent and Registrar, duly
executed by the Class A Certificateholder or such Class A Certificateholder's
attorney, and duly authorized in writing with such signature guaranteed, 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.
As provided in the 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
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 Servicer, the Trustee, the Paying Agent and the Transfer Agent and
Registrar 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 Servicer nor the Trustee, the Paying Agent, the Transfer Agent and
Registrar, nor any agent of any of them, shall be affected by notice to the
contrary except in certain circumstances described in the Agreement.
THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
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.
<PAGE> 10
10
ASSIGNMENT
Social Security or other identifying number of assignee _______________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________________________________________________
_______________________________________________________________________________
(name and address of assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________________________________________,
attorney, to transfer said certificate on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: *
--------------------------------
Signature Guaranteed:
--------------------------------
- -------------------
(*) NOTE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Certificate in
every particular, without alteration, enlargement or any change whatsoever.
<PAGE> 1
EXHIBIT 4
CAPITAL ONE MASTER TRUST
(formerly Signet Master Trust)
December 5, 1996
STANDARD DEFINITIONS AND PROVISIONS ANNEX
ARTICLE I
Designation of the Annex
Section 1.01. Designation (a) The Seller, the Servicer and
the Trustee have, prior to the execution and delivery of the attached Term
Sheet, designated standard definitions and provisions to be incorporated
therein. The standard definitions and provisions relating to the attached Term
Sheet are identified in this December 5, 1996 Standard Definitions and
Provisions Annex (the "Annex"). A copy of this Annex is maintained by the
Trustee and the Servicer. The Term Sheet for the Designated Series and the
Annex are collectively referred to herein as the "Supplement".
(b) Notwithstanding any provision in the Agreement or in the
Supplement to the contrary, (i) the first Distribution Date with respect to the
Designated Series shall be the Initial Distribution Date, (ii) if the
Designated Series is an Extendable Series, then the Designated Series will be
deemed to be a Variable Funding Series from the Determination Date immediately
preceding the Monthly Period in which the Initial Principal Payment Date occurs
(prior to any extensions) and (iii) if the Designated Series is a Prefunded
Series, then the "Initial Invested Amount" for the Designated Series, as such
term is used in any previously issued Series (according to the related
Supplement), will be deemed to be equal to the Initial Invested Amount plus, as
of such date of determination, the amount of any increases in the Invested
Amount during the Funding Period.
(c) The Collateral Indebtedness Holder, as holder of an
"Investor Certificate" and as a "Series Enhancer" under the Agreement, shall be
entitled to the benefits of the Agreement and the Supplement. Whenever the
Agreement specifies that any notice, approval right or other right is to be
given to the Series Enhancer to the extent the Series Enhancer is entitled
thereto under the related Supplement, the Collateral Indebtedness Holder, as
Series Enhancer, shall be so entitled. Notwithstanding the foregoing, except
as expressly provided herein or in the attached Term Sheet,
<PAGE> 2
2
the provisions of Article VI and Article XII of the Agreement relating to the
registration, authentication, delivery, presentation, cancellation and
surrender of Registered Certificates shall not be applicable to the Collateral
Indebtedness Interest. The Collateral Indebtedness Interest shall be deemed to
arise upon the payment of the amounts due on the Closing Date pursuant to the
Collateral Agreement.
ARTICLE II
Definitions
Section 2.01. Definitions. (a) Whenever used in the
Supplement, the following words and phrases shall have the following meanings,
and the definitions of such terms are applicable to the singular as well as the
plural forms of such terms and the masculine as well as the feminine and neuter
genders of such terms.
"Accumulation Period" shall mean the Class A Accumulation
Period and the Class B Accumulation Period.
"Accumulation Period Amount" shall mean for each Monthly
Period, an amount equal to the product of (a) Available Expected Principal for
such Monthly Period and (b) a fraction, (i) the numerator of which is the Class
A Initial Invested Amount plus, if applicable, the amount of any increases in
the Class A Invested Amount during the Funding Period, and (ii) the denominator
of which is the sum of (A) the Class A Initial Invested Amount plus, if
applicable, the amount of any increases in the Class A Invested Amount during
the Funding Period and (B) the invested amounts of all other Variable
Accumulation Series which are not scheduled to be in their revolving periods as
of such Monthly Period; provided that, for purposes of this definition, the
commencement date of the accumulation period of each such Variable Accumulation
Series shall be deemed to have been postponed to the latest permissible date,
determined as if the provisions of Section 4.03(g) applied to each such Series
with such changes as may be specified with respect to such Series (applying
such provisions first
<PAGE> 3
3
to the Variable Accumulation Series with the latest expected final payment date
and next to each Series with the next preceding expected final payment date).
"Additional Class A Certificates" shall have the meaning
specified in Section 9.03(a).
"Additional Class B Certificates" shall have the meaning
specified in Section 9.03(a).
"Additional Interest" shall mean, at any time of
determination, the Class A Additional Interest, the Class B Additional Interest
and the Collateral Additional Interest.
"Additional Investor Certificates" shall mean any one of the
Additional Class A Certificates or the Additional Class B Certificates.
"Additional Issuance" shall have the meaning specified in
Section 9.03(a).
"Additional Issuance Date" shall have the meaning specified in
Section 9.03(a).
"Adjusted Invested Amount" shall mean, with respect to any
date of determination, an amount equal to the Invested Amount less the
Principal Funding Account Balance on such date of determination.
"Annex" shall have the meaning specified in Section 1.01(a).
"Available Cash Collateral Amount" shall mean, with respect to
any Distribution Date, the lesser of (a) the amount on deposit in the Cash
Collateral Account on such date (before giving effect to any deposit to, or
withdrawal from, the Cash Collateral Account to be made with respect to such
date) and (b) the lesser of the Required Collateral Amount and the Adjusted
Invested Amount as of such date.
"Available Collateral Amount" shall mean, for any date of
determination, the sum of (a) the Collateral Indebtedness Amount and (b) the
aggregate amount of funds on
<PAGE> 4
4
deposit in the Cash Collateral Account, in each case on such date.
"Available Expected Principal" for any date of determination
with respect to each Monthly Period shall be equal to the excess of (a) the
Expected Monthly Principal for such Monthly Period over (b) the sum of, without
duplication, all scheduled amortizations or accumulations of principal,
including past due shortfalls as of such date of determination, for all
Non-Variable Accumulation Series which are not scheduled to be in their
revolving periods as of such Monthly Period.
"Available Investor Principal Collections" shall mean, with
respect to any Monthly Period, an amount equal to the sum of (a)(i) an amount
equal to the Investor Principal Collections minus (ii) the amount of
Reallocated Principal Collections with respect to such Monthly Period which
pursuant to Section 4.08(a) are required to fund any deficiency in the amount
to be distributed pursuant to Sections 4.05(a)(i), (ii) and (iii) for the
related Distribution Date (excluding Reallocated Principal Collections that
have resulted in a reduction of the Collateral Indebtedness Amount pursuant to
Section 4.06(c)), plus (b) the amount of Miscellaneous Payments, if any, for
such Monthly Period that are allocated to the Designated Series pursuant to
Section 4.03 of the Agreement, plus (c) any Shared Principal Collections with
respect to other Series that are allocated to the Designated Series in
accordance with Section 4.04 of the Agreement and Section 4.10 hereof, plus (d)
the amount, if any, of Class A Available Funds to be distributed pursuant to
Section 4.05(a)(iii) with respect to the related Distribution Date and plus (e)
any other amounts which pursuant to Section 4.07 hereof are to be treated as
Available Investor Principal Collections with respect to the related
Distribution Date.
"Available Reserve Account Amount" shall mean, with respect to
any Distribution Date, the lesser of (a) the amount on deposit in the Reserve
Account on such date (before giving effect to any deposit to be made to the
<PAGE> 5
5
Reserve Account on such date) and (b) the Required Reserve Account Amount for
such Distribution Date.
"Base Rate" shall mean, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction, the numerator of which is
equal to the sum of the Monthly Interest and the Monthly Servicing Fee with
respect to the related Distribution Date and the denominator of which is the
Investor Amount as of the last day of the preceding Monthly Period.
"Cash Collateral Account" shall have the meaning specified in
Section 4.12(a).
"Cash Collateral Surplus" shall mean, as of any date of
determination, the lesser of (a) the Collateral Surplus and (b) the amount on
deposit in the Cash Collateral Account. Any Cash Collateral Surplus shall be
applied in accordance with the Collateral Agreement.
"Class A Accumulation Period" shall mean, unless a Pay Out
Event or a Principal Payment Event shall have occurred prior thereto, the
period commencing at the close of business on the Class A Accumulation Period
Commencement Date or such later date as is determined in accordance with
Section 4.03(g) and ending on the first to occur of (a) the commencement of the
Early Amortization Period, (b) the payment in full to Class A
Certificateholders of the Class A Invested Amount, (c) the commencement of the
Principal Payment Period or (d) the Termination Date.
"Class A Accumulation Period Commencement Date" shall mean the
date specified as such in the attached Term Sheet.
"Class A Accumulation Period Length" shall have the meaning
specified in Section 4.03(g).
"Class A Additional Interest" shall have the meaning specified
in Section 4.02(a).
"Class A Adjusted Invested Amount" shall mean, with respect to
any date of determination, an amount equal
<PAGE> 6
6
to the Class A Invested Amount less the Principal Funding Account Balance on
such date.
"Class A Available Funds" shall mean, with respect to any
Monthly Period, an amount equal to the sum of (a) if such Monthly Period
relates to a Distribution Date that occurs prior to the Class B Principal
Commencement Date, the amount of Principal Funding Investment Proceeds, if any,
with respect to such Distribution Date, (b) if applicable, the Class A Initial
Percentage of the Prefunding Investment Proceeds with respect to such
Distribution Date, (c) the Class A Floating Percentage of the Collections of
Finance Charge Receivables (other than Finance Charge Receivables allocated to
Servicer Interchange with respect to such Monthly Period) allocated to the
Designated Series (including any investment earnings that are to be treated as
Collections of Finance Charge Receivables in accordance with the Agreement) and
(d) the amount of funds, if any, to be withdrawn from the Reserve Account
which, pursuant to Section 4.11(d), are required to be included in Class A
Available Funds with respect to such Distribution Date.
"Class A Certificate Rate" shall mean the rate specified as
such in the attached Term Sheet, though not to exceed the Class A Maximum
Interest Rate, if any.
"Class A Certificateholder" shall mean the Person in whose
name a Class A Certificate for the Designated Series is registered in the
Certificate Register.
"Class A Certificates" shall mean any one of the Certificates
for the Designated Series executed by the Bank and authenticated by or on
behalf of the Trustee, substantially in the form of Exhibit A-1. For the
avoidance of doubt, when used in the Supplement the term "Class A Certificates"
shall include any Additional Class A Certificates.
"Class A Expected Final Payment Date" shall mean the date
specified as such in the attached Term Sheet.
"Class A Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent
<PAGE> 7
7
(which percentage shall never exceed 100%) of a fraction, the numerator of
which is equal to the Class A Adjusted Invested Amount as of the close of
business on the last day of the preceding Monthly Period and the denominator of
which is equal to the Adjusted Invested Amount as of such day; provided,
however, that with respect to the first Monthly Period, the Class A Floating
Percentage shall mean the Class A Initial Percentage.
"Class A Floating Rate Index Maturity" shall mean the period
specified as such in the attached Term Sheet.
"Class A Initial Invested Amount" shall mean the Class A
Initial Investor Amount less the Class A Initial Percentage of the Initial
Prefunded Amount.
"Class A Initial Investor Amount" shall mean the aggregate
initial principal amount of the Class A Certificates, which is the amount
specified as such in the attached Term Sheet, and the aggregate initial
principal amount of any Additional Class A Certificates.
"Class A Initial Percentage" shall mean the percentage
equivalent of a fraction, the numerator of which is the Class A Initial
Investor Amount and the denominator of which is the Initial Investor Amount.
"Class A Interest Determination Date" shall mean the
determination date specified as such in the attached Term Sheet.
"Class A Interest Funding Account" if applicable, shall have
the meaning specified in Section 4.03(e)(i).
"Class A Interest Shortfall" shall have the meaning specified
in Section 4.02(a).
"Class A Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class A Initial Invested Amount,
minus (b) the aggregate amount of principal payments made to the Class A
Certificateholders on or prior to such date (other than, if applicable,
principal payments made from amounts on deposit in the Prefunding Account on
<PAGE> 8
8
the first Distribution Date following the end of the Funding Period), minus (c)
the excess, if any, of the aggregate amount of Class A Investor Charge-Offs for
all prior Distribution Dates over the aggregate amount of Class A Investor
Charge-Offs reimbursed pursuant to Section 4.06(a) prior to such date and plus
(d) if applicable, the amount of any increases in the Class A Invested Amount
during the Funding Period pursuant to Section 4.13(f).
"Class A Investor Amount" shall mean the sum of (a) the Class
A Invested Amount and (b) the Class A Initial Percentage of the Prefunded
Amount, if any.
"Class A Investor Charge-Offs" shall have the meaning
specified in Section 4.06(a).
"Class A Investor Default Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (i) the Investor
Default Amount for the related Monthly Period and (ii) the Class A Floating
Percentage for such Monthly Period.
"Class A Maximum Interest Rate" if applicable, shall mean the
rate specified as such in the attached Term Sheet.
"Class A Monthly Interest" shall have the meaning specified in
Section 4.02(a).
"Class A Monthly Principal" shall have the meaning specified
in Section 4.03(a).
"Class A Outstanding Additional Interest" shall mean the
amount of Class A Additional Interest previously due but not (a) paid to Class
A Certificateholders or (b) deposited in the Class A Interest Funding Account,
as applicable.
<PAGE> 9
9
"Class A Outstanding Monthly Interest" shall mean the amount
of Class A Monthly Interest previously due but not (a) paid to Class A
Certificateholders or (b) deposited in the Class A Interest Funding Account, as
applicable.
"Class A Penalty Rate" shall mean the sum of the Class A
Certificate Rate and 2.00% per annum.
"Class A Principal Percentage" shall mean, with respect to any
Monthly Period (i) during the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of
which is the Class A Invested Amount as of the last day of the immediately
preceding Monthly Period (or, in the case of the first Monthly Period, the
Closing Date) and the denominator of which is the Invested Amount as of such
day and (ii) during the Accumulation Period, the Principal Payment Period or
the Early Amortization Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is the Class A
Invested Amount as of the last day of the Revolving Period, and the denominator
of which is the Invested Amount as of such last day; provided, however, that
with respect to the first Monthly Period, the Class A Principal Percentage
shall mean the percentage equivalent of a fraction, the numerator of which is
the Class A Initial Invested Amount and the denominator of which is the Initial
Invested Amount.
"Class A Required Amount" shall have the meaning specified in
Section 4.04(a).
"Class A Servicing Fee" shall have the meaning specified in
Section 3.01.
"Class B Accumulation Period" shall mean the period commencing
on the Class B Principal Commencement Date and ending on the first to occur
thereafter of (a) the commencement of the Early Amortization Period, (b) the
payment in full to the Class B Certificateholders of the Class B Invested
Amount, (c) the commencement of the Principal Payment Period or (d) the
Termination Date.
"Class B Additional Interest" shall have the meaning specified
in Section 4.02(b).
"Class B Adjusted Invested Amount" shall mean, with respect to
any date of determination (a) if such date of determination occurs prior to the
Class B Principal
<PAGE> 10
10
Commencement Date, an amount equal to the Class B Invested Amount or (b) if
such date of determination occurs on or after the Class B Principal
Commencement Date, an amount equal to the Class B Invested Amount less the
Principal Funding Account Balance on such date.
"Class B Available Funds" shall mean, with respect to any
Monthly Period, an amount equal to the sum of (a) if such Monthly Period
relates to a Distribution Date that occurs on or after the Class B Principal
Commencement Date, the amount of Principal Funding Investment Proceeds, if any,
with respect to such Distribution Date, (b) if applicable, the Class B Initial
Percentage of the Prefunding Investment Proceeds with respect to such
Distribution Date, (c) the Class B Floating Percentage of the Collections of
Finance Charge Receivables (other than Finance Charge Receivables allocated to
Servicer Interchange with respect to such Monthly Period) allocated to the
Designated Series (including any investment earnings that are to be treated as
Collections of Finance Receivables in accordance with the Agreement) and (d)
the amount of funds, if any, to be withdrawn from the Reserve Account which
pursuant to Section 4.11(d) are required to be included in Class B Available
Funds with respect to such Distribution Date.
"Class B Certificate Rate" shall mean the rate specified as
such in the attached Term Sheet, though not to exceed the Class B Maximum
Interest Rate, if any.
"Class B Certificateholder" shall mean the Person in whose
name a Class B Certificate for the Designated Series is registered in the
Certificate Register.
"Class B Certificates" shall mean any one of the Certificates
for the Designated Series executed by the Bank and authenticated by or on
behalf of the Trustee, substantially in the form of Exhibit A-2. For the
avoidance of doubt, the term "Class B Certificates" when used in the Supplement
shall include any Additional Class B Certificates.
"Class B Expected Final Payment Date" shall mean the date
specified as such in the attached Term Sheet.
<PAGE> 11
11
"Class B Floating Rate Index Maturity" shall mean the period
specified as such in the attached Term Sheet.
"Class B Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class B Adjusted
Invested Amount as of the close of business on the last day of the preceding
Monthly Period and the denominator of which is equal to the Adjusted Invested
Amount as of the close of business on such day; provided, however, that with
respect to the first Monthly Period, the Class B Floating Percentage shall mean
the Class B Initial Percentage.
"Class B Initial Invested Amount" shall mean the Class B
Initial Investor Amount less the Class B Initial Percentage of the Initial
Prefunded Amount.
"Class B Initial Investor Amount" shall mean the aggregate
initial principal amount of the Class B Certificates, which is the amount
specified as such in the attached Term Sheet, and the aggregate initial
principal amount of any Additional Class B Certificates.
"Class B Initial Percentage" shall mean the percentage
equivalent of a fraction, the numerator of which is the Class B Initial
Investor Amount and the denominator of which is the Initial Investor Amount.
"Class B Interest Determination Date" shall mean the
determination date specified as such in the attached Term Sheet.
"Class B Interest Funding Account" if applicable, shall have
the meaning specified in Section 4.03(e)(ii).
"Class B Interest Shortfall" shall have the meaning specified
in Section 4.02(b).
"Class B Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class B Initial Invested Amount,
minus (b) the aggregate amount of principal payments made to the Class B
Certificateholders prior to
<PAGE> 12
12
such date (other than, if applicable, principal payments made from amounts on
deposit in the Prefunding Account on the first Distribution Date following the
end of the Funding Period), minus (c) the excess, if any, of the aggregate
amount of Class B Investor Charge-Offs for all prior Distribution Dates over
the aggregate amount of any reimbursement of Class B Investor Charge-Offs for
all Distribution Dates preceding such date, minus (d) the amount of Reallocated
Principal Collections allocated on all prior Distribution Dates pursuant to
Section 4.08(a) (excluding any Reallocated Principal Collections that have
resulted in a reduction in the Collateral Indebtedness Amount pursuant to
Section 4.06(c)), minus (e) an amount equal to the amount by which the Class B
Invested Amount has been reduced on all prior Distribution Dates pursuant to
Section 4.06(a), plus (f) the amount of Excess Spread and Excess Finance
Charges allocated and available on all prior Distribution Dates pursuant to
Section 4.07(d) for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c), (d) and (e) and plus (g) if applicable, the amount of
any increases in the Class B Invested Amount during the Funding Period pursuant
to Section 4.13(f).
"Class B Investor Amount" shall mean the sum of (a) the Class
B Invested Amount and (b) the Class B Initial Percentage of the Prefunded
Amount, if any.
"Class B Investor Charge-Offs" shall have the meaning
specified in Section 4.06(b).
"Class B Investor Default Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (i) the Investor
Default Amount for the related Monthly Period and (ii) the Class B Floating
Percentage for such Monthly Period.
"Class B Monthly Interest" shall have the meaning specified in
Section 4.02(b).
"Class B Monthly Principal" shall have the meaning specified
in Section 4.03(b).
<PAGE> 13
13
"Class B Outstanding Additional Interest" shall mean the
amount of Class B Additional Interest previously due but not (a) paid to Class
B Certificateholders or (b) deposited in the Class B Interest Funding Account,
as applicable.
"Class B Outstanding Monthly Interest" shall mean the amount
of Class B Monthly Interest previously due but not (a) paid to Class B
Certificateholders or (b) deposited in the Class B Interest Funding Account, as
applicable.
"Class B Penalty Rate" shall mean the sum of the Class B
Certificate Rate and 2.00% per annum.
"Class B Principal Commencement Date" shall mean the
Distribution Date on which the Class A Invested Amount is paid in full or, if
the Class A Invested Amount is paid in full on the Class A Expected Final
Payment Date and the Early Amortization Period has not commenced, the
Distribution Date following the Class A Expected Final Payment Date.
"Class B Principal Percentage" shall mean, with respect to any
Monthly Period (i) during the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of
which is the Class B Invested Amount as of the last day of the immediately
preceding Monthly Period (or, in the case of the first Monthly Period, the
Closing Date) and the denominator of which is the Invested Amount as of such
day and (ii) during the Accumulation Period, the Principal Payment Period or
the Early Amortization Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is the Class B
Invested Amount as of the last day of the Revolving Period, and the denominator
of which is the Invested Amount as of such last day; provided, however, that
with respect to the first Monthly Period, the Class B Principal Percentage
shall mean the percentage equivalent of a fraction, the numerator of which is
the Class B Initial Invested Amount and the denominator of which is the Initial
Invested Amount.
<PAGE> 14
14
"Class B Required Amount" shall have the meaning specified in
Section 4.04(b).
"Class B Servicing Fee" shall have the meaning specified in
Section 3.01.
"Closing Date" shall mean the date specified as such in the
attached Term Sheet.
"Collateral Additional Interest" shall have the meaning
specified in Section 4.02(c).
"Collateral Agreement" shall mean the agreement among the
Seller, the Servicer, the Trustee and the Collateral Indebtedness Holder
relating to the Designated Series, dated the same date as the Term Sheet, as
amended, supplemented or otherwise modified from time to time in accordance
with its terms.
"Collateral Available Funds" shall mean, with respect to any
Monthly Period, an amount equal to the sum of (a) if applicable, the Collateral
Initial Percentage of the Prefunding Investment Proceeds with respect to such
Distribution Date, and (b) the Collateral Floating Percentage of the
Collections of Finance Charge Receivables (other than Finance Charge
Receivables allocated to Servicer Interchange with respect to such Monthly
Period) allocated to the Designated Series (including any investment earnings
that are to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement).
"Collateral Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for the related Monthly Period and (ii) the Collateral Floating
Percentage for such Monthly Period.
"Collateral Floating Percentage" shall mean, with respect to
any Monthly Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Collateral
Indebtedness Amount as of the close of business on the last day of the
preceding Monthly Period and the denominator of which is equal to the
<PAGE> 15
15
Adjusted Invested Amount as of such day; provided, however, that with respect
to the first Monthly Period, the Collateral Floating Percentage shall mean the
Collateral Initial Percentage.
"Collateral Indebtedness Amount" shall mean, when used with
respect to any date, an amount equal to (a) the Collateral Initial Indebtedness
Amount, minus (b) the aggregate amount of deposits made to the Cash Collateral
Account pursuant to Section 4.05(e)(i), 4.05(f)(iii) and 4.05(g)(i) prior to
such date, minus (c) an amount equal to the amount by which the Collateral
Indebtedness Amount has been reduced on all prior Distribution Dates pursuant
to Section 4.06, plus (d) the aggregate amount of Excess Finance Charges and
Excess Spread allocated and available on all prior Distribution Dates pursuant
to Section 4.07(h) for the purpose of reimbursing amounts deducted pursuant to
the foregoing clause (c) and plus (e) if applicable, the amount of any
increases in the Collateral Indebtedness Amount during the Funding Period
pursuant to Section 4.13(f); provided, however, that the Collateral
Indebtedness Amount may not be reduced below zero.
"Collateral Indebtedness Holder" shall mean the entity so
designated in the Collateral Agreement.
"Collateral Indebtedness Interest" shall mean a fractional
undivided interest in the Trust which shall consist of the right to receive, to
the extent necessary to make the required payments to the Collateral
Indebtedness Holder under the Supplement, the portion of Collections allocable
thereto under the Agreement and the Supplement, funds on deposit in the
Collection Account allocable thereto pursuant to the Agreement and the
Supplement and, subject to the rights of the Investor Certificateholders with
respect thereto, funds on deposit in the Cash Collateral Account, the Reserve
Account and, if applicable, the Prefunding Account.
"Collateral Initial Indebtedness Amount" shall mean the
Collateral Initial Investor Amount less the Collateral Initial Percentage of
the Initial Prefunded Amount.
<PAGE> 16
16
"Collateral Initial Investor Amount" shall mean the amount
specified as such in the attached Term Sheet.
"Collateral Initial Percentage" shall mean the percentage
equivalent of a fraction, the numerator of which is the Collateral Initial
Investor Amount and the denominator of which is the Initial Investor Amount.
"Collateral Interest Shortfall" shall have the meaning
specified in subsection 4.02(c).
"Collateral Investor Amount" shall mean the sum of (a) the
Collateral Indebtedness Amount and (b) the Collateral Initial Percentage of the
Prefunded Amount, if any.
"Collateral Monthly Interest" shall have the meaning specified
in Section 4.02(c).
"Collateral Monthly Principal" shall have the meaning
specified in Section 4.03(c).
"Collateral Principal Collections" shall mean with respect to
any Distribution Date the amount of Invested Principal Collections with respect
to such date less the amount of Investor Principal Collections with respect to
such date plus the amount, if any, of Excess Spread and Excess Finance Charges
to be distributed pursuant to Section 4.07(g) and (h) on such Distribution Date
minus the amount of Reallocated Principal Collections with respect to such
Monthly Period which, pursuant to Section 4.08, are required to fund any
deficiency in the amounts to be distributed pursuant to Sections 4.05(a)(i),
(ii) and (iii) and 4.05(b)(i) and (ii) and Section 4.07(c)(II) for the related
Distribution Date (excluding Reallocated Principal Collections with respect to
the Class B Invested Amount).
"Collateral Principal Shortfall" shall mean, for any
Distribution Date during (a) the Accumulation Period, (b) the Early
Amortization Period or (c) the Principal Payment Period, the excess of
Collateral Monthly Principal for such Distribution Date over the amount of
Collateral
<PAGE> 17
17
Principal Collections available to be deposited in the Cash Collateral Account
on such date pursuant to Section 4.05(g)(i).
"Collateral Rate" shall mean the rate designated as such in
the Collateral Agreement, such rate not to exceed LIBOR Rate, as defined in the
Collateral Agreement, plus 1.00%.
"Collateral Servicing Fee" shall have the meaning specified in
Section 3.01.
"Collateral Surplus" shall mean, with respect to any
Distribution Date, the excess, if any, of (a) the amount on deposit in the Cash
Collateral Account plus the Collateral Indebtedness Amount over (b) the
Required Collateral Amount.
"Controlled Accumulation Amount" shall mean (a) for any
Distribution Date with respect to the Class A Accumulation Period, the amount
specified as such in the attached Term Sheet; provided, however, that, if the
Class A Accumulation Period is modified pursuant to Section 4.03(g), (i) the
Controlled Accumulation Amount for each Distribution Date with respect to the
Class A Accumulation Period shall mean the amount specified in accordance with
such Section 4.03(g) on the date on which the Class A Accumulation Period has
most recently been modified, (ii) the Controlled Accumulation Amount for each
related Monthly Period shall be no greater than the Accumulation Period Amount
for such Monthly Period and (iii) the sum of the Controlled Accumulation
Amounts for all Distribution Dates with respect to the modified Class A
Accumulation Period shall not be less than the Class A Initial Invested Amount
plus, if applicable, the amount of any increases in the Invested Amount during
the Funding Period; and (b) for any Distribution Date with respect to the Class
B Accumulation Period, an amount equal to one-half of the Class B Invested
Amount plus, if applicable, the amount of any increases in the Invested Amount
during the Funding Period, as of the Class B Principal Commencement Date.
<PAGE> 18
18
"Controlled Deposit Amount" shall mean, for any Distribution
Date with respect to the Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Distribution Date and any Deficit
Controlled Accumulation Amount for the immediately preceding Distribution Date.
"Covered Amount" shall mean (a) for any Distribution Date with
respect to the Class A Accumulation Period or the first Special Payment Date,
if such Special Payment Date occurs prior to the Class B Principal Commencement
Date, an amount equal to (i) if the Class A Certificate Rate is a fixed rate,
one-twelfth of the product of the Class A Certificate Rate and the Principal
Funding Account Balance, if any, as of the preceding Distribution Date, and
(ii) if the Class A Certificate Rate is a floating rate, the product of (A) a
fraction, the numerator of which is the actual number of days in the period
from and including the preceding Distribution Date to but excluding such
Distribution Date and the denominator of which is 360, (B) the Class A
Certificate Rate and (C) the Principal Funding Account Balance, if any, as of
the preceding Distribution Date and (b) for any Distribution Date with respect
to the Class B Accumulation Period or the first Special Payment Date, if such
Special Payment Date occurs on or after the Class B Principal Commencement
Date, an amount equal to (i) if the Class B Certificate Rate is a fixed rate,
one-twelfth of the product of the Class B Certificate Rate and the Principal
Funding Account Balance, if any, as of the preceding Distribution Date, and
(ii) if the Class B Certificate Rate is a floating rate, the product of (A) a
fraction, the numerator of which is the actual number of days in the period
from and including the preceding Distribution Date and the denominator of which
is 360, (B) the Class B Certificate Rate and (C) the Principal Funding Account
Balance, if any, as of the preceding Distribution Date.
"Cut-Off Date" shall mean the date specified as such in the
attached Term Sheet.
"Deficit Controlled Accumulation Amount" shall mean (a) on the
first Distribution Date with respect to the
<PAGE> 19
19
Class A Accumulation Period or the Class B Accumulation Period, the excess, if
any, of the Controlled Accumulation Amount for such Distribution Date over the
amount distributed from the Collection Account as Class A Monthly Principal or
Class B Monthly Principal, as the case may be, for such Distribution Date and
(b) on each subsequent Distribution Date with respect to the Class A
Accumulation Period or the Class B Accumulation Period, the excess, if any, of
the Controlled Deposit Amount for such subsequent Distribution Date plus any
Deficit Controlled Accumulation Amount for the prior Distribution Date over the
amount distributed from the Collection Account as Class A Monthly Principal or
Class B Monthly Principal, as the case may be, for such subsequent Distribution
Date.
"Designated Series" shall mean the Series of Certificates
(including any Additional Investor Certificates) established pursuant to the
Agreement by the Term Sheet and this Annex.
"Designated Series Accounts" shall have the meaning specified
in Section 4.03(f)(i).
"Designated Series Certificate" shall mean a Class A
Certificate or a Class B Certificate.
"Designated Series Certificateholder" shall mean a Class A
Certificateholder or a Class B Certificateholder.
"Early Amortization Period" shall mean the period commencing
at the close of business on the Business Day immediately preceding the day on
which a Pay Out Event with respect to the Designated Series is deemed to have
occurred, and ending on the first to occur of (i) the payment in full to the
Class A Certificateholders and the Class B Certificateholders of the Class A
Invested Amount and the Class B Invested Amount, if any, respectively, and the
payment in full to the Collateral Indebtedness Holder of the Collateral
Indebtedness Amount, if any, or (ii) the Termination Date.
"Excess Shared Principal Collections" shall mean the excess of
the Shared Principal Collections over the
<PAGE> 20
20
aggregate amount of Principal Shortfalls for all Series, as defined in each
related Supplement, which are Principal Sharing Series for such Distribution
Date.
"Excess Spread" shall mean, with respect to any Distribution
Date, the sum of the amounts, if any, specified pursuant to Sections
4.05(a)(iv), 4.05(b)(iii) and 4.05(c)(ii) with respect to such Distribution
Date.
"Expected Monthly Principal" shall be equal to the product of
(i) the lowest of the monthly principal payment rates (determined by dividing
Collections of Principal Receivables during a calendar month by the amount of
Principal Receivables in the Trust as of the last day of the preceding month,
adjusted for additions and removals occurring after such last day), expressed
as a decimal for the 12 calendar months preceding the date of such calculation
(or such lower principal payment rate as the Servicer may select) and (ii) the
sum of (a) the Initial Invested Amount of the Designated Series and (b) the
aggregate amount of the Initial Invested Amounts (as defined in the related
Supplement) of all other outstanding Series that are not Variable Funding
Series; provided, that for the purposes of this definition the "Initial
Invested Amount" of any outstanding Prefunded Series (including the Designated
Series) will be deemed to be equal to the Initial Invested Amount plus, as of
such date of determination, the amount of any increases in the Invested Amount
during the Funding Period of such Series.
"Extendable Series" shall mean the Designated Series, if so
specified in the attached Term Sheet, and each other Series specified as an
Extendable Series in the related Supplement.
"Final Funding Date" if applicable, shall mean the date
specified as such in the attached Term Sheet.
"Finance Charge Shortfall" shall have the meaning specified in
Section 4.09.
"Fitch" shall mean Fitch Investors Service, L.P.
<PAGE> 21
21
"Floating Allocation Percentage" shall mean, with respect to
any Monthly Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Adjusted Invested
Amount as of the last day of the preceding Monthly Period and the denominator
of which is the sum of the total amount of Principal Receivables in the Trust
and the principal amount on deposit in the Excess Funding Account as of such
last day; provided, however, that, with respect to the first Monthly Period,
the Floating Allocation Percentage shall mean the percentage equivalent of a
fraction, the numerator of which is the Initial Invested Amount and the
denominator of which is the sum of the total amount of Principal Receivables in
the Trust on the Cut-Off Date and the principal amount on deposit in the Excess
Funding Account as of such day and provided further, however, that if the
Designated Series is a Prefunded Series in which the Invested Amount has
increased during the preceding Monthly Period (including the first Monthly
Period) pursuant to Section 4.13(f), the numerator of the above fraction shall
instead be equal to the sum of the Adjusted Invested Amount on each day during
such Monthly Period divided by the number of days in such Monthly Period.
"Floating Rate Index Maturity" if applicable, shall mean, when
the Designated Series is based on a floating rate of interest, the period to
maturity of the instrument or obligation on which the particular interest rate
formula is based specified as such in the attached Term Sheet.
"Funding Date(s)" if applicable, shall mean the dates
specified as such in the attached Term Sheet.
"Funding Period" if applicable, shall mean the period
commencing on the Closing Date and ending upon the first to occur of (a) the
conclusion of the Revolving Period, (b) the date on which the Invested Amount
shall first equal the Investor Amount and (c) the Final Funding Date.
<PAGE> 22
22
"Group One" shall mean the Designated Series and each other
Series specified in the related Supplement to be included in Group One.
"Initial Distribution Date" shall mean the date specified as
such in the attached Term Sheet.
"Initial Funding Date" if applicable, shall mean the date
specified as such in the attached Term Sheet.
"Initial Invested Amount" shall mean the sum of the Class A
Initial Invested Amount, the Class B Initial Invested Amount and the Collateral
Initial Indebtedness Amount.
"Initial Investor Amount" shall mean the sum of the Class A
Initial Investor Amount, the Class B Initial Investor Amount and the Collateral
Initial Investor Amount.
"Initial Prefunded Amount" shall mean the amount specified as
such in the attached Term Sheet.
"Initial Principal Payment Date" if applicable, shall mean the
date specified as such in the attached Term Sheet.
"Initial Servicing Fee" shall have the meaning specified in
Section 3.01.
"Interest Funding Accounts" if applicable, shall mean the
Class A Interest Funding Account and the Class B Interest Funding Account.
"Interest Payment Date" shall mean the dates specified as such
in the attached Term Sheet, and the relevant Expected Final Payment Date.
"Interest Period" shall mean, with respect to any Payment
Date, the period from and including the Payment Date immediately preceding such
Payment Date (or, in the case of the first Payment Date, from and including the
Closing Date) to but excluding such Payment Date.
"Invested Amount" shall mean, as of any date of determination,
an amount equal to the sum of (a) the Class A Invested Amount as of such date,
(b) the Class B Invested Amount as of such date and (c) the Collateral
Indebtedness Amount as of such date.
<PAGE> 23
23
"Invested Principal Collections" shall mean, with respect to
any Monthly Period, an amount equal to the Principal Allocation Percentage of
all Collections of Principal Receivables received during such Monthly Period.
"Investor Amount" shall mean, as of any date of determination,
an amount equal to the sum of (a) the Invested Amount and (b) the Prefunded
Amount, if any.
"Investor Charge-Offs" shall mean Class A Investor Charge-Offs
and Class B Investor Charge-Offs.
"Investor Default Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Defaulted Amount
for the related Monthly Period and (b) the Floating Allocation Percentage for
such Monthly Period.
"Investor Principal Collections" shall mean, with respect to
any Monthly Period, an amount equal to the product of (i) Invested Principal
Collections with respect to such Monthly Period and (ii) the sum of the Class A
Principal Percentage and the Class B Principal Percentage with respect to such
Monthly Period.
"LIBOR" if applicable, shall mean, as of any LIBOR
Determination Date, the rate for deposits in United States dollars which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such date for a
period of the Class A Floating Rate Index Maturity or the Class B Floating Rate
Index Maturity, as applicable, commencing on the first day of the relevant
Interest Period. If such rate does not appear on Telerate Page 3750, the rate
for that day will be determined on the basis of the rates at which deposits in
United States dollars are offered by the Reference Banks at approximately 11:00
a.m., London time, on that day to prime banks in the London interbank market
for a period of the
<PAGE> 24
24
Class A Floating Rate Index Maturity or the Class B Floating Rate Index
Maturity, as applicable, commencing on the first day of the relevant Interest
Period. The Servicer will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for the day will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the
rate for that day will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Servicer, at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
international banks for a period of the Class A Floating Rate Index Maturity or
the Class B Floating Rate Index Maturity, as applicable, commencing on the
first day of the relevant Interest Period.
"LIBOR Determination Date" if applicable, shall mean, with
respect to any Interest Period, the second London Business Day prior to the
commencement of such Interest Period (or in the case of the initial Interest
Period, the second London Business Day prior to the Closing Date).
"London Business Day" if applicable, shall mean a day on which
dealings in deposits in United States dollars are transacted in the London
interbank market.
"Monthly Interest" means, with respect to any Distribution
Date, the Class A Monthly Interest, the Class B Monthly Interest and Collateral
Monthly Interest for such Distribution Date.
"Monthly Servicing Fee" shall have the meaning specified in
Section 3.01.
"Net Servicing Fee Rate" shall mean the rate specified as such
in the attached Term Sheet.
"Non-Variable Accumulation Series" shall mean Series 1993-1,
Series 1993-2, Series 1993-3, 1993-4 and each outstanding Series that is not a
Variable Funding Series or a Variable Accumulation Series.
<PAGE> 25
25
"Payment Date" shall mean any Interest Payment Date and any
Special Payment Date.
"Portfolio Adjusted Yield" shall mean, with respect to any
Distribution Date, the average of the percentages obtained for each of the
three preceding Monthly Periods by subtracting the Base Rate for each such
Monthly Period from the Portfolio Yield for each such Monthly Period.
"Portfolio Yield" shall mean, with respect to any Monthly
Period, the annualized percentage equivalent of a fraction, the numerator of
which is equal to (a) an amount equal to the product obtained by multiplying
the Floating Allocation Percentage with respect to such Monthly Period and the
amount of Collections of Finance Charge Receivables with respect to such
Monthly Period (including any investment earnings that are to be treated as
Collections of Finance Charge Receivables in accordance with the Agreement)
calculated on a billed basis, or, in the case of any such Collections
consisting of annual membership fees, on an amortized (rather than billed)
basis, plus (b) the amount of any Principal Funding Investment Proceeds for the
related Distribution Date plus (c) if applicable, the amount of any Prefunding
Investment Proceeds for the related Distribution Date, plus (d) any Excess
Finance Charges that are allocated to the Designated Series with respect to
such Monthly Period plus (e) the amount of funds, if any, withdrawn from the
Reserve Account which, pursuant to Section 4.11(d), are required to be included
as Class A Available Funds or Class B Available Funds, as the case may be, in
each case for the Distribution Date with respect to such Monthly Period minus
(f) the Investor Default Amount for the Distribution Date with respect to such
Monthly Period, and the denominator of which is the Investor Amount as of the
last day of the preceding Monthly Period.
"Prefunded Amount" if applicable, shall mean (a) the Initial
Prefunded Amount minus (b) the amount of any increases in the Invested Amount
during the Funding Period pursuant to Section 4.13(f) and minus (c)
disbursements from the Prefunding Account pursuant to Section 4.13(e).
<PAGE> 26
26
"Prefunded Series" shall mean the Designated Series, if so
specified in the attached Term Sheet, and each other Series specified as a
Prefunded Series in the related Supplement.
"Prefunding Account" if applicable, shall have the meaning set
forth in Section 4.13(b).
"Prefunding Investment Proceeds" if applicable, shall have the
meaning specified in Section 4.13(c).
"Principal Allocation Percentage" shall mean, with respect to
any day during a Monthly Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is (a) during
the Revolving Period, the Invested Amount as of the last day of the immediately
preceding Monthly Period (or, in the case of the first Monthly Period, the
Cut-Off Date) and (b) after the end of the Revolving Period, the Invested
Amount as of the last day of the Revolving Period and the denominator of which
is the greater of (i) the sum of the total amount of Principal Receivables in
the Trust as of the last day of the immediately preceding Monthly Period and
the principal amount on deposit in the Excess Funding Account as of such last
day (or, in the case of the first Monthly Period, the Cut-Off Date) and (ii)
the sum of the numerators used to calculate the principal allocation
percentages for all Series outstanding as of the date as to which such
determination is being made; provided, however, that if the Designated Series
is a Prefunded Series in which the Invested Amount has increased during the
previous Monthly Period (including the first Monthly Period) pursuant to
Section 4.13(f), the numerator of the above fraction during the Revolving
Period shall instead be equal to the sum of the Invested Amount on each day
during such Monthly Period divided by the number of days in such Monthly
Period, and provided further, however, that if after the commencement of the
Accumulation Period, the Principal Payment Period or the Early Amortization
Period a Pay Out Event occurs with respect to another Series that was
designated in the Supplement therefor as a Series that is a "Paired Series"
with respect to the Designated Series, the Seller may, by written notice
delivered to the Trustee and the Servicer,
<PAGE> 27
27
designate a different numerator for the foregoing fraction, provided that (x)
such numerator is not less than the Adjusted Invested Amount as of the last day
of the revolving period for such "Paired Series" and (y) the Seller shall have
received written notice from each Rating Agency that such designation will not
have a Ratings Effect and shall have delivered copies of each such written
notice to the Servicer and the Trustee.
"Principal Funding Account" shall have the meaning set forth
in Section 4.03(d)(i).
"Principal Funding Account Balance" shall mean, with respect
to any date of determination during the Accumulation Period, the principal
amount, if any, on deposit in the Principal Funding Account on such date of
determination.
"Principal Funding Investment Proceeds" shall have the meaning
specified in Section 4.03(d)(ii).
"Principal Payment Event" if applicable, shall mean the
delivery by the Servicer of a notice to the Trustee of its election not to
extend the Initial Principal Payment Date in accordance with Section 7.03.
"Principal Payment Period" if applicable, shall mean the
period beginning on the Interest Payment Date immediately following the
occurrence of a Principal Payment Event and ending upon the earliest to occur
of (i) the commencement of the Early Amortization Period, (ii) the payment in
full to the Designated Series Certificateholders of the Investor Amount and
(iii) the Termination Date.
"Principal Shortfall" shall have the meaning specified in
Section 4.10.
"Reallocated Principal Collections" shall mean, with respect
to any Monthly Period, the product of (a) the Principal Allocation Percentage
with respect to such Monthly Period, (b) the aggregate amount of Collections of
Principal Receivables deposited in the Collection Account for such Monthly
Period and (c) the sum of the Class B Floating
<PAGE> 28
28
Percentage and the Collateral Floating Percentage with respect to such Monthly
Period.
"Reassignment Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (i) the Adjusted
Invested Amount on such Distribution Date, plus (ii) Monthly Interest for such
Distribution Date and any Monthly Interest previously due but not distributed
to the Designated Series Certificate-holders and the Collateral Indebtedness
Holder on a prior Distribution Date, plus (iii) the amount of Additional
Interest, if any, for such Distribution Date and any Additional Interest
previously due but not distributed to the Designated Series Certificateholders
and the Collateral Indebtedness Holder on a prior Distribution Date.
"Reference Banks" if applicable, shall mean four major banks
in the London interbank market selected by the Servicer.
"Required Collateral Amount" shall mean, with respect to any
Distribution Date, the greater of (i) the product of (a) the sum of the Class A
Adjusted Invested Amount, the Class B Adjusted Invested Amount and the
Collateral Indebtedness Amount, each as of such Distribution Date after taking
into account distributions made on such date and (b) the Required Invested Base
Percentage and (ii) (a) if the Collateral Indebtedness Amount is greater than
zero, the product of the Required Collateral Base Percentage and the Initial
Invested Amount of the Designated Series, or (b) if the Collateral Indebtedness
Amount is equal to zero, the product of the Required Cash Base Percentage and
the Initial Invested Amount of the Designated Series; provided, however, that
(i) if there are any withdrawals from the Cash Collateral Account pursuant to
Section 4.12(c), any reductions in the Collateral Indebtedness Amount pursuant
to clause (c) of the definition of such amount, or a Pay Out Event occurs with
respect to the Designated Series, then the Required Collateral Amount for any
Distribution Date shall equal the Required Collateral Amount on the
Distribution Date immediately preceding such withdrawal, reduction or Pay Out
Event,
<PAGE> 29
29
(ii) in no event shall the Required Collateral Amount exceed the sum of the
Class A Adjusted Invested Amount and the Class B Adjusted Invested Amount on
any such date, and (iii) the Required Collateral Amount may be reduced without
the consent of the Designated Series Certificateholders, if the Seller shall
have received written notice from each Rating Agency that such reduction will
not result in the reduction or withdrawal of the then current rating of the
Designated Series Certificates and the Seller shall have delivered to the
Trustee a certificate of an authorized officer to the effect that, based on the
facts known to such officer at such time, in the reasonable belief of the
Seller, such reduction will not cause a Pay Out Event or an event that, after
the giving of notice or the lapse of time, would constitute a Pay Out Event, to
occur with respect to the Designated Series.
"Required Draw Amount" shall have the meaning specified in
Section 4.12(c).
"Required Cash Base Percentage" shall mean, the percentage
specified as such in the attached Term Sheet.
"Required Collateral Base Percentage" shall mean, the
percentage specified as such in the attached Term Sheet.
"Required Funding Percentage" if applicable, shall mean the
percentage specified as such in the attached Term Sheet.
"Required Invested Base Percentage" shall mean, the percentage
specified as such in the attached Term Sheet.
"Required Principal Balance" shall mean, as of any date of
determination, (a) the sum of the "Initial Invested Amount" (as defined in the
relevant Supplement) of the Investor Certificates of each Series outstanding on
such date plus, as of such date of determination, the aggregate amounts of any
increases in the Invested Amounts of each Prefunded Series outstanding (in each
case, other than any Series or portion thereof which is designated in the
relevant Supplement as then being an Excluded Series) minus (b) the principal
amount on deposit in the Excess Funding
<PAGE> 30
30
Account on such date; provided, however, if at any time the only Series
outstanding are Excluded Series and a Pay Out Event has occurred with respect
to one or more of such Series, the Required Principal Balance shall mean (a)
the sum of the "Invested Amount" (as defined in the relevant Supplement) of
each such Excluded Series as of the earliest date on which any such Pay Out
Event is deemed to have occurred, minus (b) the principal amount on deposit in
the Excess Funding Account.
"Required Reserve Account Amount" shall mean, with respect to
any Distribution Date prior to the Reserve Account Funding Date, $0, and on or
after the Reserve Account Funding Date, an amount equal to (a) the product of
(i) the Required Reserve Base Percentage of the sum of the Class A Invested
Amount and the Class B Invested Amount as of the preceding Distribution Date
(after giving effect to all changes therein on such date) and (ii) the Reserve
Account Factor for such Distribution Date, or (b) any other amount designated
by the Seller, provided that, if such designation is of a lesser amount, the
Seller (i) shall have received written notice from each Rating Agency that such
designation will not have a Ratings Effect and shall have delivered copies of
each such written notice to the Servicer and the Trustee, and (ii) shall have
delivered to the Trustee a certificate of an authorized officer to the effect
that, based on the facts known to such officer at such time, in the reasonable
belief of the Seller, such designation will not cause a Pay Out Event or an
event that, after the giving of notice or the lapse of time, would cause a Pay
Out Event, to occur with respect to the Designated Series.
"Required Reserve Base Percentage" shall mean, the percentage
specified as such in the attached Term Sheet.
"Reserve Account" shall have the meaning specified in Section
4.11(a).
"Reserve Account Factor" shall mean, with respect to any date
of determination, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the number of Monthly
Periods
<PAGE> 31
31
scheduled to be included in the Accumulation Period as of such date and the
denominator of which is twenty.
"Reserve Account Funding Date" shall mean the Distribution
Date with respect to the Monthly Period which commences 12 months prior to the
Monthly Period which as of the related Determination Date is scheduled to
commence the Accumulation Period in accordance with Section 4.03(g) provided
that the Seller may delay the Reserve Account Funding Date to the Distribution
Date which occurs not later than the number of months prior to the scheduled
commencement date of the Accumulation Period determined in accordance with the
following schedule:
<TABLE>
<CAPTION>
Number of Months
Portfolio Adjusted Yield (rounded up to nearest whole number)
------------------------ ------------------------------------
<S> <C>
Less than 2% . . . . . . . . . . . . . . . . . . . . . 12 x Reserve Account Factor
2% or more, but less than 3% . . . . . . . . . . . . . 6 x Reserve Account Factor
3% or more, but less than 4% . . . . . . . . . . . . . 4 x Reserve Account Factor
4% or more . . . . . . . . . . . . . . . . . . . . . . 3 x Reserve Account Factor
----------
</TABLE>
"Reserve Account Surplus" shall mean, as of any date of
determination, the amount, if any, by which the amount on deposit in the
Reserve Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" shall have the meaning specified in
Section 4.11(c).
"Revolving Period" shall mean the period beginning at the
close of business on the Cut-Off Date and ending on the earlier of (a) the
close of business on the day the Class A Accumulation Period commences, (b) the
close of business on the day the Early Amortization Period commences and (c)
the close of business on the day the Principal Payment Period commences.
"Servicer Interchange" shall mean, for any Monthly Period, the
product of (a) the Floating Allocation Percentage for such Monthly Period and
(b) the portion of collections of Finance Charge Receivables allocated to the
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Designated Series Certificates and the Collateral Indebtedness Interest with
respect to such Monthly Period that is attributable to Interchange; provided,
however, that Servicer Interchange for a Monthly Period shall not exceed
one-twelfth of the product of (i) the sum of the Invested Amount as of the last
day of such Monthly Period and (ii) a percentage equal to the Servicing Fee
Rate less the Net Servicing Fee Rate.
"Servicing Base Amount" shall have the meaning specified in
Section 3.01.
"Servicing Fee Rate" shall mean the rate specified as such in
the attached Term Sheet.
"Special Payment Date" shall mean each Distribution Date with
respect to the Early Amortization Period and the Principal Payment Period.
"Subordinated Excess Principal Series", shall mean the
Designated Series, if so specified in the Supplement, and each other Series
specified in the related supplement to be a Subordinated Excess Principal
Series.
"Subordinated Excess Principal Shortfall", shall have the
meaning specified in Section 4.10.
"Telerate Page 3750" if applicable, shall mean the display
page so designated on the Dow Jones Telerate Service (or such other page as may
replace that page on that Service for the purpose of displaying comparable
rates or prices).
"Termination Date" shall mean the date specified as such in
the attached Term Sheet.
"Variable Accumulation Series" shall mean each outstanding
Series, other than Series 1993-1, 1993-2, 1993-3, 1993-4 and any Variable
Funding Series, for which, pursuant to the terms of the related Supplement, at
the time a determination is made pursuant to Section 4.03(g), the commencement
date of the Accumulation Period may be changed.
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"Variable Funding Series" shall mean any Series designated in
the related Supplement as a Variable Funding Series.
(b) Notwithstanding anything to the contrary in the
Supplement or the Agreement, the term "Rating Agency" shall mean, whenever used
in the Supplement or the Agreement with respect to the Designated Series, each
statistical rating agency specified as a Rating Agency in the attached Term
Sheet. As used in the Supplement and in the Agreement with respect to the
Designated Series, "highest investment category" shall mean (i) in the case of
Standard & Poor's, A-1+, AAA, AAAm or AAAm-G, as applicable, (ii) in the case
of Moody's, P-1 or Aaa, as applicable and (iii) in the case of Fitch, if rated
by Fitch, F-1+ or AAA, as applicable; provided, however, that notwithstanding
any other provision of the Agreement or the Supplement to the contrary, for
purposes of the investment of funds in the Class B Interest Funding Account, if
any, and, on and after the Class B Principal Commencement Date, the Cash
Collateral Account, the Principal Funding Account and the Reserve Account,
"highest investment category" as used in the definition of "Eligible
Investments" shall mean (i) in the case of Standard & Poor's, A-1, A-1+ or AAA,
as applicable, (ii) in the case of Moody's, P-1 or Aaa, as applicable and (iii)
in the case of Fitch, if rated by Fitch, F-1 or F-1+, or AAA, as applicable.
(c) All capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to them in the Agreement.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in the Supplement shall refer to the Supplement as a
whole and not to any particular provision of the Supplement; references to any
Article, Section or Exhibit are references to Articles, Sections and Exhibits
in or to the Supplement unless otherwise specified; and the term "including"
means "including without limitation".
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Section 2.02. Amendment to Section 2.08 of the Agreement.
Section 2.08(c)(i) of the Agreement is hereby amended and restated in its
entirety to read as follows:
(c) Automatic Additional Accounts. (i) The Seller may from
time to time, at its sole discretion, subject to and in compliance
with the limitations specified in clause (ii) below and the applicable
conditions specified in paragraph (d) below, designate Eligible
Accounts to be included as Accounts as of the applicable Additional
Cut-Off Date. For purposes of this paragraph, Eligible Accounts shall
be deemed to include only consumer revolving credit card accounts or
other consumer revolving credit accounts which (x) are originated by
the Seller or any Affiliate of the Seller, (y) are of a type included
as Initial Accounts or which have previously been included in any
Addition which has been effected in accordance with all of the
conditions specified in paragraph (d) below and (z) have a designation
other than "Associate 20", "Associate 21", "Associate 195" or
"Associate 196" marketing programs in the Seller's credit card master
file.
ARTICLE III
Servicer and Trustee
Section 3.01. Servicing Compensation. The share of the
Servicing Fee allocable to the Designated Series Certificateholders and the
Collateral Indebtedness Holder with respect to any Distribution Date (the
"Monthly Servicing Fee") shall be equal to one-twelfth the product of (a) the
Servicing Fee Rate and (b) the Adjusted Invested Amount, if any, as of the last
day of the Monthly Period preceding such Distribution Date (the amount
calculated pursuant to this clause (b) is referred to as the "Servicing Base
Amount"); provided, however, with respect to the first Distribution Date, the
Monthly Servicing Fee (the "Initial Servicing Fee") shall be equal to the
Servicing Fee accrued on the Initial Invested Amount at the Servicing Fee Rate
for the period from the Closing Date to but excluding the first
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35
Distribution Date. On each Distribution Date, but only if the Seller or The
Bank of New York is the Servicer, Interchange with respect to the related
Monthly Period that is on deposit in the Collection Account shall be withdrawn
from the Collection Account and paid to the Servicer in payment of a portion of
the Monthly Servicing Fee with respect to such Monthly Period. In the case of
any insufficiency of Servicer Interchange on deposit in the Collection Account
a portion of the Monthly Servicing Fee with respect to such Monthly Period will
not be paid to the extent of such insufficiency of Servicer Interchange. The
share of the Monthly Servicing Fee allocable to the Class A Certificateholders
(after giving effect to the distribution of Servicer Interchange, if any, to
the Servicer) with respect to any Distribution Date (the "Class A Servicing
Fee") shall be equal to one-twelfth of the product of (a) the Class A Floating
Percentage, (b) the Net Servicing Fee Rate and (c) the Servicing Base Amount;
provided, however, that with respect to the first Distribution Date, the Class
A Servicing Fee shall be equal to the product of the Class A Floating
Percentage as of the first Distribution Date and the Initial Servicing Fee, and
provided further, that with respect to the first Distribution Date following
the Monthly Period in which an Additional Issuance Date occurs the Class A
Servicing Fee shall be increased by an amount equal to the product of (a) the
Net Servicing Fee Rate, (b) a fraction, the numerator of which is the actual
number of days in the period from and including such Additional Issuance Date
to but excluding such Distribution Date and the denominator of which is 360,
(c) the increase in the Invested Amount as a result of such Additional Issuance
and (d) the Class A Floating Percentage with respect to such Distribution Date.
The share of the Monthly Servicing Fee allocable to the Class B
Certificateholders (after giving effect to the distribution of Servicer
Interchange, if any, to the Servicer) with respect to any Distribution Date
(the "Class B Servicing Fee") shall be equal to one-twelfth of the product of
(a) the Class B Floating Percentage, (b) the Net Servicing Fee Rate and (c) the
Servicing Base Amount; provided, however, that with respect to the first
Distribution Date, the Class B Servicing Fee shall be equal to product of the
Class B Floating Percentage as of the first Distribution Date and
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the Initial Servicing Fee, and provided, further, that with respect to the
first Distribution Date following the Monthly Period in which an Additional
Issuance Date occurs, the Class B Servicing Fee shall be increased by an amount
equal to the product of (a) the Net Servicing Fee Rate, (b) a fraction, the
numerator of which is the actual number of days in the period from and
including such Additional Issuance Date to but excluding such Distribution Date
and the denominator of which is 360, (c) the increase in the Invested Amount as
a result of such Additional Issuance and (d) the Class B Floating Percentage
with respect to such Distribution Date. The share of the Monthly Servicing Fee
allocable to the Collateral Indebtedness Holder (after giving effect to the
distribution of Servicer Interchange, if any, to the Servicer) with respect to
such Distribution Date (the "Collateral Servicing Fee") shall be equal to
one-twelfth of the product of (c) the Collateral Floating Percentage, (b) the
Net Servicing Fee Rate and (c) the Servicing Base Amount; provided, however,
that with respect to the first Distribution Date, the Collateral Servicing Fee
shall be equal to the product of the Collateral Floating Percentage as of the
first Distribution Date and the Initial Servicing Fee. The remainder of the
Servicing Fee shall be paid by the Seller or the Certificateholders of other
Series (as provided in the related Supplements) and in no event shall the
Trust, the Trustee, the Designated Series Certificateholders or the Collateral
Indebtedness Holder be liable for the share of the Servicing Fee to be paid by
the Seller or the Certificateholders of any other Series. The (i) Class A
Servicing Fee shall be payable to the Servicer solely to the extent amounts are
available for distribution in respect thereof pursuant to Section 4.05(a)(ii),
4.07(a), 4.08(a) or 4.12(c); (ii) the Class B Servicing Fee shall be payable
solely to the extent amounts are available for distribution in respect thereof
pursuant to Section 4.05(b)(ii), 4.07(c), 4.08(b) or 4.12(c); and (iii) the
Collateral Servicing Fee shall be payable solely to the extent amounts are
available for distribution in respect thereof pursuant to Section 4.05(c)(i) or
4.07(f).
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ARTICLE IV
Rights of the Designated Series Certificateholders and
Collateral Indebtedness Holder and
Allocation and Application of Collections
Section 4.01. Collections and Allocations. The Servicer will
apply, or will instruct the Trustee to apply, all collections and other funds
on deposit in the Collection Account that are allocated to the Designated
Series Certificates and the Collateral Indebtedness Interest as described in
this Article IV.
Section 4.02. Determination of Monthly Interest. (a) The
amount of monthly interest ("Class A Monthly Interest") distributable from the
Collection Account with respect to the Class A Certificates on any Distribution
Date shall be an amount equal to (i) if the Class A Certificate Rate is a fixed
rate, one-twelfth of the product of the Class A Certificate Rate and the Class
A Investor Amount as of the preceding Record Date, and (ii) if the Class A
Certificate Rate is a floating rate, the product of (A) a fraction, the
numerator of which is the actual number of days in the period from and
including the preceding Distribution Date to but excluding such Distribution
Date and the denominator of which is 360, (B) the Class A Certificate Rate and
(C) the outstanding principal balance of the Class A Certificates as of the
preceding Record Date; provided, however, with respect to the first
Distribution Date, Class A Monthly Interest shall be equal to the interest
accrued on the Class A Initial Investor Amount at the Class A Certificate Rate
for the period from the Closing Date to but excluding the first Distribution
Date; and provided further, that with respect to the first Distribution Date
following the Monthly Period in which an Additional Issuance Date occurs, Class
A Monthly Interest shall be increased by the amount equal to the product of (a)
a fraction, the numerator of which is the actual number of days in the period
from and including such Additional Issuance Date to but excluding such
Distribution Date (which actual number of days in the period shall be computed
using a 30-day month if the Class A Certificate Rate is a fixed rate) and the
denominator of which is 360, (b) the Class A Certificate Rate and (c) the
increase in the
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outstanding principal balance of the Class A Certificates as a result of such
Additional Issuance.
On the Determination Date preceding each Payment Date, the
Servicer shall determine the excess, if any (the "Class A Interest Shortfall"),
of (x) the Class A Monthly Interest for the Interest Period applicable to such
Payment Date over (y) the aggregate amount of funds allocated and available to
pay the Class A Monthly Interest on such Payment Date or, if the Interest
Period (relating to the forthcoming Payment Date) is longer than one month, the
amount which will be on deposit in the Class A Interest Funding Account on such
Payment Date. If the Class A Interest Shortfall with respect to any Payment
Date is greater than zero, an additional amount ("Class A Additional Interest")
equal to (i) if the Class A Certificate Rate is a fixed rate, one-twelfth of
the product of the Class A Penalty Rate and such Class A Interest Shortfall (or
the portion thereof which has not been paid to Class A Certificateholders) ,
and (ii) if the Class A Certificate Rate is a floating rate, the product of (A)
a fraction, the numerator of which is the actual number of days from and
including the preceding Distribution Date to but excluding such Distribution
Date and the denominator of which is 360, (B) the Class A Penalty Rate and (C)
such Class A Interest Shortfall (or the portion thereof which has not been paid
to Class A Certificateholders), shall be payable as provided herein with
respect to the Class A Certificates on each Distribution Date following such
Payment Date to and including the Payment Date on which such Class A Interest
Shortfall is paid to Class A Certificateholders. Notwithstanding anything to
the contrary herein, Class A Additional Interest shall be payable or
distributed to Class A Certificateholders only to the extent permitted by
applicable law.
(b) The amount of monthly interest ("Class B Monthly
Interest") distributable from the Collection Account with respect to the Class
B Certificates on any Distribution Date shall be an amount equal to (i) if the
Class B Certificate Rate is a fixed rate, one-twelfth of the product of the
Class B Certificate Rate and the Class B Investor Amount as of the preceding
Record Date, and (ii) if the
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39
Class B Certificate Rate is a floating rate, the product of (A) a fraction, the
numerator of which is the actual number of days in the period from and
including the preceding Distribution Date to but excluding such Distribution
Date and the denominator of which is 360, (B) the Class B Certificate Rate and
(C) the outstanding principal balance of the Class B Certificates as of the
preceding Record Date; provided, however, with respect to the first
Distribution Date, Class B Monthly Interest shall be equal to the interest
accrued on the Class B Initial Investor Amount at the Class B Certificate Rate
for the period from the Closing Date to but excluding the first Distribution
Date; and provided further, that with respect to the first Distribution Date
following the Monthly Period in which an Additional Issuance Date occurs, Class
B Monthly Interest shall be increased by the amount equal to the product of (a)
a fraction, the numerator of which is the actual number of days in the period
from and including such Additional Issuance Date to but excluding such
Distribution Date (which actual number of days in the period shall be computed
using a 30-day month if the Class B Certificate Rate is a fixed rate) and the
denominator of which is 360, (b) the Class B Certificate Rate and (c) the
increase in the Class B Invested Amount as a result of such Additional
Issuance.
On the Determination Date preceding each Payment Date, the
Servicer shall determine the excess, if any (the "Class B Interest Shortfall"),
of (x) the Class B Monthly Interest for the Interest Period applicable to such
Payment Date over (y) the aggregate amount of funds allocated and available to
pay the Class B Monthly Interest on such Payment Date or, if the Interest
Period (relating to the forthcoming Payment Date) is longer than one month, the
amount which will be on deposit in the Class B Interest Funding Account on such
Payment Date. If the Class B Interest Shortfall with respect to any Payment
Date is greater than zero, an additional amount ("Class B Additional Interest")
equal to (i) if the Class B Certificate Rate is a fixed rate, one-twelfth of
the product of the Class B Penalty Rate and such Class B Interest Shortfall (or
the portion thereof which has not been paid to Class B Certificateholders), and
(ii) if the Class B Certificate Rate is a floating rate, the product of (A) a
fraction, the
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numerator of which is the actual number of days from and including the
preceding Distribution Date to but excluding such Distribution Date and the
denominator of which is 360, (B) the Class B Penalty Rate and (C) such Class B
Interest Shortfall (or the portion thereof which has not been paid to Class A
Certificateholders), shall be payable as provided herein with respect to the
Class B Certificates on each Distribution Date following such Payment Date to
and including the Payment Date on which such Class B Interest Shortfall is paid
to Class B Certificateholders. Notwithstanding anything to the contrary
herein, Class B Additional Interest shall be payable or distributed to Class B
Certificateholders only to the extent permitted by applicable law.
(c) The amount of monthly interest ("Collateral Monthly
Interest") distributable from the Collection Account with respect to the
Collateral Indebtedness Interest on any Distribution Date shall be an amount
equal to the product of (i) (A) a fraction, the numerator of which is the
actual number of days in the period from and including the preceding
Distribution Date to but excluding such Distribution Date and the denominator
of which is 360, times (B) the Collateral Rate and (ii) the Collateral Investor
Amount as of the preceding Record Date; provided, however, with respect to the
first Distribution Date, Collateral Monthly Interest shall be equal to the
interest accrued on the Collateral Initial Investor Amount at the Collateral
Rate for the period from the Closing Date to but excluding the first
Distribution Date.
On the Determination Date preceding each Distribution Date,
the Servicer shall determine the excess, if any (the "Collateral Interest
Shortfall"), of (x) the Collateral Monthly Interest for such Distribution Date
over (y) the aggregate amount of funds allocated and available to pay such
Collateral Monthly Interest on such Distribution Date. If the Collateral
Interest Shortfall with respect to any Distribution Date is greater than zero,
an additional amount ("Collateral Additional Interest") equal to the product of
(i) a fraction, the numerator of which is the actual number of days in the
period from and including the preceding Distribution Date to but excluding such
Distribution Date and the denominator of which is 360,
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(ii) the Collateral Rate and (iii) such Collateral Interest Shortfall (or the
portion thereof which has not been paid to the Collateral Indebtedness Holder)
shall be payable as provided herein with respect to the Collateral Indebtedness
Interest on each Distribution Date following such Distribution Date to and
including the Distribution Date on which such Collateral Interest Shortfall is
paid to the Collateral Indebtedness Holder. Notwithstanding anything to the
contrary herein, Collateral Additional Interest shall be payable or distributed
to the Collateral Indebtedness Holder only to the extent permitted by
applicable law.
Section 4.03. Determination of Monthly Principal; Designated
Series Accounts; Class A Accumulation Period. (a) The amount of monthly
principal ("Class A Monthly Principal") distributable from the Collection
Account with respect to the Class A Certificates on each Distribution Date,
beginning with the first to occur of (i) the first Special Payment Date, if
any, and (ii) the first Distribution Date with respect to the Class A
Accumulation Period, shall be equal to the least of (x) the Available Investor
Principal Collections on deposit in the Collection Account with respect to such
Distribution Date, (y) for each Distribution Date with respect to the Class A
Accumulation Period (and on or prior to the Class A Expected Final Payment
Date), the Controlled Deposit Amount for such Distribution Date and (z) the
Class A Adjusted Invested Amount on such Distribution Date.
(b) The amount of monthly principal ("Class B Monthly
Principal") distributable from the Collection Account with respect to the Class
B Certificates on each Distribution Date, beginning with the Class B Principal
Commencement Date, shall be equal to the least of (x) the Available Investor
Principal Collections on deposit in the Collection Account with respect to such
Distribution Date (minus the portion of such Available Investor Principal
Collections applied to Class A Monthly Principal on such Distribution Date),
(y) for each Distribution Date with respect to the Class B Accumulation Period
(and on or prior to the Class B Expected Final Payment Date), the Controlled
Deposit Amount for such Distribution Date and (z) the Class B Adjusted Invested
Amount on such Distribution Date.
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(c) The amount, if any, of monthly principal ("Collateral
Monthly Principal") distributable from the Collection Account with respect to
the Collateral Indebtedness Amount on each Distribution Date:
(i) beginning with the first Distribution Date with respect to
any Early Amortization Period, shall be an amount equal to the
Collateral Principal Collections with respect to such Distribution
Date;
(ii) beginning on any Distribution Date (other than any
Distribution Date during an Early Amortization Period), shall be an
amount equal to the lesser of (A) Collateral Principal Collections
with respect to such Distribution Date plus Available Investor
Principal Collections not applied to Class A Monthly Principal or
Class B Monthly Principal on such Distribution Date and (B) the
excess, if any, of (x) the Collateral Surplus on such Distribution
Date over (y) the Cash Collateral Surplus, if any, computed without
reference to distributions under this subsection;
(iii) beginning with the Distribution Date on which the Class B
Invested Amount is paid in full, shall be an amount equal to the sum
of the Available Investor Principal Collections with respect to such
Distribution Date (minus the portion of such Available Investor
Principal Collections applied to Class A Monthly Principal and Class B
Monthly Principal on such Distribution Date) and the Collateral
Principal Collections with respect to such Distribution Date; and
(iv) beginning on any Distribution Date, in addition to the
amount, if any, set forth in items (i) through (iii) above, at the
option of the Seller (as evidenced by written instructions to the
Servicer and the Trustee with a copy to the Collateral Indebtedness
Holder), and after receipt by the Servicer and the Trustee of a
written determination by each Rating Agency that such action will not
result in a reduction or withdrawal of the then current ratings of the
Class A Certificates and the Class B Certificates,
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shall be an amount established by the Seller and consistent with any
restrictions set forth in the determination of the Rating Agency;
provided, however, with respect to any Distribution Date, Collateral Monthly
Principal shall not exceed the Collateral Indebtedness Amount and, with respect
to any Distribution Date with respect to the Revolving Period and the
Accumulation Period, Collateral Monthly Principal shall be zero except to the
extent otherwise specified in, or pursuant to, clauses (ii), (iii) and (iv)
above.
(d)(i) The Servicer, for the benefit of the Designated Series
Certificateholders, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account (the "Principal Funding
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Designated Series Certificateholders.
The Principal Funding Account shall initially be established with the Trustee.
(ii) At the direction of the Servicer, funds on deposit in
the Principal Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Designated Series
Certificateholders; provided that on each Distribution Date all interest and
other investment income (net of losses and investment expenses) ("Principal
Funding Investment Proceeds") on funds on deposit therein shall be applied as
set forth in paragraph (iii) below. Funds on deposit in the Principal Funding
Account shall be invested in Eligible Investments that will mature so that such
funds will be available at the close of business on the Transfer Date preceding
the following Distribution Date. No Eligible Investment shall be disposed of
prior to its maturity; provided, however, that the Trustee may sell, liquidate
or dispose of an Eligible Investment before its maturity, if so directed by the
Servicer, the Servicer having reasonably determined that the interest of the
Designated Series Certificateholders may be adversely affected if such Eligible
Investment is held to its maturity. Unless the Servicer directs otherwise,
funds deposited in the Principal
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Funding Account on a Transfer Date (which immediately precedes a Payment Date)
upon the maturity of any Eligible Investments are not required to be invested
overnight.
(iii) On each Distribution Date with respect to the
Accumulation Period, the Servicer shall direct the Trustee to withdraw from the
Principal Funding Account and deposit into the Collection Account all Principal
Funding Investment Proceeds then on deposit in the Principal Funding Account
and such Principal Funding Investment Proceeds shall be treated as a portion of
(x) prior to the Class B Principal Commencement Date, Class A Available Funds
and (y) thereafter, Class B Available Funds, in each case for such Distribution
Date.
(iv) Reinvested interest and other investment income on funds
deposited in the Principal Funding Account shall not be considered to be
principal amounts on deposit therein for purposes of the Supplement.
(e)(i) If Interest Payment Dates occur less frequently than
monthly, the Servicer, for the benefit of the Class A Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account (the "Class A Interest Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Class A Certificateholders. Such Class A Interest Funding
Account shall initially be established with the Trustee.
(ii) If Interest Payment Dates occur less frequently than
monthly, the Servicer, for the benefit of the Class B Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account (the "Class B Interest Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Class B Certificateholders. Such Class B Interest Funding
Account shall initially be established with the Trustee.
(iii) If Interest Funding Accounts are established pursuant to
paragraphs (i) and (ii) above, then at the direction of the Servicer, funds on
deposit in such Interest
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Funding Accounts shall be invested by the Trustee in Eligible Investments
selected by the Servicer. All such Eligible Investments shall be held by the
Trustee for the benefit of the Class A Certificateholders or the Class B
Certificate-holders, as applicable; provided that on each Distribution Date,
all interest and other investment income (net of losses and investment
expenses) on funds on deposit in the Interest Funding Accounts shall be paid to
the Seller. Funds on deposit in such Interest Funding Accounts on any
Distribution Date (which are not distributed to Class A Certificateholders or
Class B Certificateholders, as applicable, pursuant to Section 5.01 on such
Distribution Date) shall be invested in Eligible Investments that will mature
so that such funds will be available at the close of business on the Transfer
Date preceding the following Distribution Date. No Eligible Investment shall
be disposed of prior to its maturity; provided, however, that the Trustee may
sell, liquidate or dispose of an Eligible Investment before its maturity, if so
directed by the Servicer, the Servicer having reasonably determined that the
interest of the Class A Certificateholders or the Class B Certificateholders,
as applicable, may be adversely affected if such Eligible Investment is held to
its maturity. Unless the Servicer directs otherwise, funds deposited in such
Interest Funding Accounts on a Transfer Date (which immediately precedes a
Payment Date) upon the maturity of any Eligible Investments are not required to
be invested overnight.
(f)(i) The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Interest Funding
Accounts, if any, and the Principal Funding Account (collectively, the
"Designated Series Accounts") and in all proceeds thereof. The Designated
Series Accounts shall be under the sole dominion and control of the Trustee for
the benefit of the Class A Certificateholders and/or the Class B
Certificateholders, as the case may be. If, at any time, any of the Designated
Series Accounts ceases to be an Eligible Deposit Account, the Trustee (or the
Servicer on its behalf) shall within 10 Business Days (or such longer period,
not to exceed 30 calendar days, as to which each Rating Agency may consent)
establish a new Designated Series Account meeting
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the conditions specified in paragraph (c)(i), (e)(i) or (ii) above as an
Eligible Deposit Account and shall transfer any cash and/or any investments to
such new Designated Series Account.
(ii) Pursuant to the authority granted to the Servicer in
Section 3.01(b) of the Agreement, the Servicer shall have the power, revocable
by the Trustee, to make withdrawals and payments or to instruct the Trustee to
make withdrawals and payments from the Designated Series Accounts for the
purposes of carrying out the Servicer's or Trustee's duties hereunder.
Pursuant to the authority granted to the Paying Agent in Section 5.01 of the
Supplement and Section 6.07 of the Agreement, the Paying Agent shall have the
power, revocable by the Trustee, to withdraw funds from the Designated Series
Accounts for the purpose of making distributions to the Designated Series
Certificateholders.
(g) The Class A Accumulation Period is scheduled to commence
at the close of business on the Class A Accumulation Period Commencement Date;
provided, however, that if the Class A Accumulation Period Length on any
Determination Date (determined as described below) is less than twenty months,
upon notice to the Trustee, the Seller, each Rating Agency and the Collateral
Indebtedness Holder, the Servicer, at its option, may elect to modify the date
on which the Class A Accumulation Period actually commences to the last
Business Day of any month that precedes the month that is the number of months
prior to the Class A Expected Final Payment Date equal to the Class A
Accumulation Period Length; provided, however, that (i) the length of the Class
A Accumulation Period will not be less than one month; and (ii) notwithstanding
any other provision of the Supplement to the contrary, no election to postpone
the commencement of the Class A Accumulation Period shall be made after a Pay
Out Event (as defined in the related Supplement) shall have occurred and is
continuing with respect to any other Series. On each Determination Date, the
Servicer will determine the "Class A Accumulation Period Length" which will
equal the number of months such that the Accumulation Period Amount for the
Monthly Period immediately preceding the Class A Expected Final Payment Date,
when aggregated with the Accumulation Period Amounts
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for each preceding Monthly Period, will equal or exceed the Class A Initial
Invested Amount plus, if applicable, the amount of any increases in the Class A
Invested Amount during the Funding Period. Any notice by the Servicer electing
to modify the commencement of the Class A Accumulation Period pursuant to this
subsection (g) shall specify (i) the Accumulation Period Length, (ii) the
commencement date of the Class A Accumulation Period and (iii) the Controlled
Accumulation Amount with respect to each Monthly Period during the Class A
Accumulation Period.
Section 4.04. Required Amount. (a) With respect to each
Distribution Date, on the related Determination Date, the Servicer shall
determine the amount (the "Class A Required Amount"), if any, by which (a) the
sum of (i) Class A Monthly Interest for such Distribution Date, (ii) any Class
A Outstanding Monthly Interest, (iii) any Class A Additional Interest for such
Distribution Date and any Class A Outstanding Additional Interest, (iv) the
Class A Servicing Fee for such Distribution Date, (v) any Class A Servicing Fee
previously due but not paid to the Servicer, and (vi) the Class A Investor
Default Amount, if any, for such Distribution Date exceeds (b) the Class A
Available Funds. In the event that the Class A Required Amount for such
Distribution Date is greater than zero, the Servicer shall give written notice
to the Trustee of such positive Class A Required Amount on the date of
computation and all or a portion of the Excess Spread and the Excess Finance
Charges allocable to the Designated Series with respect to the related Monthly
Period in an amount equal to the Class A Required Amount for such Distribution
Date shall be distributed from the Collection Account on such Distribution Date
pursuant to Section 4.07(a). In the event that the Class A Required Amount for
such Distribution Date exceeds the amount of Excess Spread and the amount of
Excess Finance Charges allocable to the Designated Series with respect to the
related Monthly Period, all or a portion of the Available Cash Collateral
Amount with respect to such Distribution Date in an amount equal to such excess
shall be applied to fund the Class A Required Amount. In the event that the
Class A Required Amount for such Distribution Date exceeds the amount of Excess
Spread, the amount of Excess Finance Charges allocable to the Designated Series
with
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respect to the related Monthly Period and the Available Cash Collateral Amount
with respect to such Distribution Date, all or a portion of the Reallocated
Principal Collections with respect to such Monthly Period in an amount equal to
such excess shall be distributed from the Collection Account on such
Distribution Date pursuant to Section 4.08(a).
(b) With respect to each Distribution Date, on the related
Determination Date, the Servicer shall determine the amount (the "Class B
Required Amount"), if any, by which (a) the sum of (i) Class B Monthly Interest
for such Distribution Date, (ii) any Class B Outstanding Monthly Interest,
(iii) any Class B Additional Interest for such Distribution Date and any Class
B Outstanding Additional Interest, (iv) the Class B Servicing Fee for such
Distribution Date, (v) any Class B Servicing Fee previously due but not paid to
the Servicer and (vi) the Class B Investor Default Amount, if any, for such
Distribution Date exceeds (b) the Class B Available Funds. In the event that
the Class B Required Amount for such Distribution Date is greater than zero,
the Servicer shall give written notice to the Trustee of such positive Class B
Required Amount on the date of computation and all or a portion of Excess
Spread and the Excess Finance Charges allocable to the Designated Series (other
than Excess Spread and Excess Finance Charges applied to fund the Class A
Required Amount with respect to such Distribution Date) with respect to the
related Monthly Period shall be applied to fund the Class B Required Amount.
In the event that the Class B Required Amount for such Distribution Date
exceeds the amount of Excess Spread and Excess Finance Charges allocable to the
Designated Series with respect to such Monthly Period and not used to fund the
Class A Required Amount, all or a portion of the Available Cash Collateral
Amount with respect to such Distribution Date pursuant to Section 4.12(c) shall
be applied to fund the Class B Required Amount. In the event that the Class B
Required Amount for such Distribution Date exceeds the portion of Excess Spread
and Excess Finance Charges allocated to the Designated Series with respect to
such Monthly Period and not used to fund the Class A Required Amount and the
portion of the Available Cash Collateral Amount with respect to such
Distribution Date withdrawn from the Cash Collateral Account to fund the
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Class B Required Amount, then a portion of the Reallocated Principal
Collections with respect to such Monthly Period shall be distributed from the
Collection Account on such Distribution Date pursuant to Section 4.08(b).
Section 4.05. Application of Class A Available Funds, Class B
Available Funds, Collateral Available Funds, Available Investor Principal
Collections and Collateral Principal Collections. The Servicer shall apply (if
the Seller is the Servicer and the Collection Account is maintained with the
Seller) or shall cause the Trustee to apply, on each Distribution Date, Class A
Available Funds, Class B Available Funds, Collateral Available Funds, Available
Investor Principal Collections and Collateral Principal Collections on deposit
in the Collection Account with respect to such Distribution Date to make the
following distributions:
(a) On each Distribution Date, an amount equal to the Class A
Available Funds with respect to such Distribution Date will be distributed in
the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Outstanding Monthly
Interest, plus the amount of any Class A Additional Interest for such
Distribution Date and any Class A Outstanding Additional Interest,
shall be distributed to the Paying Agent for payment to the Class A
Certificateholders or, if the Interest Period (relating to the first
Payment Date occurring on or after such Distribution Date) is longer
than one month, shall be deposited by the Servicer or the Trustee in
the Class A Interest Funding Account;
(ii) an amount equal to the Class A Servicing Fee for such
Distribution Date, plus the amount of any Class A Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer (unless such
amount has been netted against deposits to the
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Collection Account in accordance with Section 4.03 of the Agreement);
(iii) an amount equal to the Class A Investor Default Amount
for such Distribution Date shall be treated as a portion of Available
Investor Principal Collections for such Distribution Date; and
(iv) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.07.
(b) On each Distribution Date, an amount equal to the Class B
Available Funds with respect to such Distribution Date will be distributed in
the following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Outstanding Monthly
Interest, plus the amount of any Class B Additional Interest for such
Distribution Date and any Class B Outstanding Additional Interest,
shall be distributed to the Paying Agent for payment to the Class B
Certificateholders or, if the Interest Period (relating to the first
Payment Date occurring on or after such Distribution Date) is longer
than one month, shall be deposited by the Servicer or the Trustee in
the Class B Interest Funding Account;
(ii) an amount equal to the Class B Servicing Fee for such
Distribution Date, plus the amount of any Class B Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer (unless such
amount has been netted against deposits to the Collection Account in
accordance with Section 4.03 of the Agreement);
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.07.
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(c) On each Distribution Date, an amount equal to the
Collateral Available Funds with respect to such Distribution Date will be
distributed in the following priority:
(i) an amount equal to the Collateral Servicing Fee for such
Distribution Date, plus the amount of any Collateral Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer (unless such
amount has been netted against deposits to the Collection Account in
accordance with Section 4.03 of the Agreement); and
(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.07.
(d) On each Distribution Date with respect to the Revolving
Period, an amount equal to the Available Investor Principal Collections
deposited in the Collection Account for the related Monthly Period shall be
treated as Shared Principal Collections and applied in accordance with Section
4.04 of the Agreement.
(e) On each Distribution Date with respect to the Revolving
Period, an amount equal to the Collateral Principal Collections deposited in
the Collection Account for the related Monthly Period will be distributed in
the following priority:
(i) an amount equal to Collateral Monthly Principal for such
Distribution Date, up to the Collateral Indebtedness Amount on such
Distribution Date, shall be deposited in the Cash Collateral Account;
and
(ii) the balance, if any, of such Collateral Principal
Collections then on deposit in the Collection Account shall be treated
as Shared Principal Collections and applied in accordance with Section
4.04 of the Agreement.
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(f) On each Distribution Date with respect to the
Accumulation Period, the Early Amortization Period or the Principal Payment
Period, an amount equal to the Available Investor Principal Collections
deposited in the Collection Account for the related Monthly Period will be
distributed in the following priority:
(i) an amount equal to Class A Monthly Principal for such
Distribution Date, up to the Class A Adjusted Invested Amount, on such
Distribution Date, shall be deposited in the Principal Funding Account
or, if such Distribution Date is a Special Payment Date on which the
Principal Funding Account Balance is zero, shall be distributed to the
Paying Agent for payment to the Class A Certificateholders;
(ii) for each Distribution Date beginning on the Class B
Principal Commencement Date, an amount equal to Class B Monthly
Principal for such Distribution Date, up to the Class B Adjusted
Invested Amount on such Distribution Date, shall be deposited in the
Principal Funding Account or, if such Distribution Date is a Special
Payment Date on which the Principal Funding Account Balance is zero,
shall be distributed to the Paying Agent for payment to the Class B
Certificateholders;
(iii) the balance, if any, of such Available Investor
Principal Collections then on deposit in the Collection Account, to
the extent of the Collateral Principal Shortfall, if any, shall be
deposited in the Cash Collateral Account; and
(iv) for each Distribution Date, after giving effect to
paragraphs (i), (ii) and (iii) above, an amount equal to the balance,
if any, of such Available Investor Principal Collections then on
deposit in the Collection Account shall be treated as Shared Principal
Collections and applied in accordance with Section 4.04 of the
Agreement.
(g) On each Distribution Date following the end of the
Revolving Period, an amount equal to Collateral
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Principal Collections deposited in the Collection Account for the related
Monthly Period will be distributed in the following priority:
(i) an amount equal to Collateral Monthly Principal for such
Distribution Date, up to the Collateral Indebtedness Amount, shall be
deposited in the Cash Collateral Account; and
(ii) the balance, if any, of such Collateral Principal
Collections then on deposit in the Collection Account shall be treated
as Shared Principal Collections and applied in accordance with Section
4.04 of the Agreement.
Section 4.06. Defaulted Amounts; Investor Charge-Offs. (a)
On each Determination Date, the Servicer shall calculate the Class A Investor
Default Amount, if any, for the related Distribution Date. If, on any
Distribution Date, the Class A Required Amount for the related Monthly Period
exceeds the sum of (x) the amount of Reallocated Principal Collections with
respect to such Monthly Period, (y) the amount of Excess Spread and the Excess
Finance Charges allocable to the Designated Series with respect to such
Distribution Date and (z) the Available Cash Collateral Amount with respect to
such Distribution Date, the Collateral Indebtedness Amount will be reduced by
the amount of such excess, but not by more than the excess of the Class A
Investor Default Amount for such Distribution Date over the amount of
Reallocated Principal Collections, the amount of Excess Spread and Excess
Finance Charges and the amount withdrawn from the Cash Collateral Account used
to fund the Class A Investor Default Amount for such Distribution Date. In the
event that such reduction would cause the Collateral Indebtedness Amount to be
a negative number, the Collateral Indebtedness Amount will be reduced to zero
and the Class B Invested Amount shall be reduced by the amount by which the
Collateral Indebtedness Amount would have been reduced below zero, but not by
more than the excess, if any, of the Class A Investor Default Amount for such
Distribution Date over the amount of such reduction, if any, of the Collateral
Indebtedness Amount with respect to such Distribution Date and the amount of
Reallocated
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Principal Collections, the amount of Excess Spread and Excess Finance Charges
and the amount withdrawn from the Cash Collateral Account used to fund the
Class A Investor Default Amount for such Distribution Date. In the event that
such reduction would cause the Class B Invested Amount to be a negative number,
the Class B Invested Amount shall be reduced to zero, and the Class A Invested
Amount shall be reduced by the amount by which the Class B Invested Amount
would have been reduced below zero, but not by more than the excess, if any, of
the Class A Investor Default Amount for such Distribution Date over the
aggregate amount of the reductions, if any, of the Collateral Indebtedness
Amount and the Class B Invested Amount for such Distribution Date and the
amount of Reallocated Principal Collections, the amount of Excess Spread and
Excess Finance Charges and the amount withdrawn from the Cash Collateral
Account used to fund the Class A Investor Default Amount for such Distribution
Date (a "Class A Investor Charge-Off"). Class A Investor Charge-Offs shall
thereafter be reimbursed and the Class A Invested Amount increased (but not by
an amount in excess of the aggregate unreimbursed Class A Investor Charge-Offs)
on any Distribution Date by the amount of Excess Spread and Excess Finance
Charges allocated and available for that purpose pursuant to Section 4.07(b).
(b) On each Determination Date, the Servicer shall calculate
the Class B Required Amount, if any, for the related Distribution Date. If, on
any Distribution Date, the Class B Required Amount for such Distribution Date
exceeds the sum of (x) the amount of Excess Spread and Excess Finance Charges
allocated to the Designated Series with respect to the related Monthly Period
which are not used to fund the Class A Required Amount and Class A Investor
Charge-Offs on the related Distribution Date, (y) the portion, if any, of the
Available Cash Collateral Amount to be withdrawn from the Cash Collateral
Account pursuant to Section 4.12(c) which is remaining after applying such
amounts to fund any deficiency of amounts payable pursuant to Section 4.07(a)
with respect to such Distribution Date and (z) the amount of Reallocated
Principal Collections which are available to fund the Class B Required Amount
on such Distribution Date pursuant to Section 4.08(b), then the Collateral
Indebtedness Amount
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shall be reduced by the amount of such excess, but not by more than the excess
of the Class B Investor Default Amount for such Distribution Date over the
amount of Reallocated Principal Collections, the amount of Excess Spread and
Excess Finance Charges, and the amount withdrawn from the Cash Collateral
Account used to fund the Class B Investor Default Amount for such Distribution
Date. In the event that such reduction would cause the Collateral Indebtedness
Amount to be a negative number, the Collateral Indebtedness Amount shall be
reduced to zero, and the Class B Invested Amount shall be reduced by the amount
by which the Collateral Indebtedness Amount would have been reduced below zero,
but not by more than the excess, if any, of the Class B Investor Default Amount
for such Distribution Date over the amount of such reduction, if any, of the
Collateral Indebtedness Amount with respect to such Distribution Date and the
amount of Reallocated Principal Collections, the amount of Excess Spread and
Excess Finance Charges, and the amount withdrawn from the Cash Collateral
Account used to fund the Class B Investor Default Amount for such Distribution
Date (a "Class B Investor Charge-Off"). Class B Investor Charge-Offs shall
thereafter be reimbursed and the Class B Invested Amount increased (but not by
an amount in excess of the aggregate unreimbursed Class B Investor Charge-Offs)
on any Distribution Date by the amount of Excess Spread and Excess Finance
Charges allocated and available for that purpose pursuant to Section 4.07(d).
(c) If, on any Distribution Date, Reallocated Principal
Collections for such Distribution Date are applied pursuant to Section 4.08(a)
or (b), the Collateral Indebtedness Amount shall be reduced by the amount of
such Reallocated Principal Collections. In the event that such reduction would
cause the Collateral Indebtedness Amount to be a negative number, the
Collateral Indebtedness Amount shall be reduced to zero, and the Class B
Invested Amount shall be reduced by the amount by which the Collateral
Indebtedness Amount would have been reduced below zero.
(d) If, on any Distribution Date, the Collateral Default
Amount exceeds the amount of Excess Spread and Excess Finance Charges available
to fund the Collateral Default Amount pursuant to Section 4.07(g) on such
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Distribution Date, then the Collateral Indebtedness Amount shall be reduced by
the amount of such excess; provided, however, that the Collateral Indebtedness
Amount shall not be reduced below zero.
Section 4.07. Excess Spread; Excess Finance Charges. The
Servicer shall apply (if the Seller is the Servicer and the Collection Account
is maintained with the Seller) or shall cause the Trustee to apply, on each
Distribution Date, Excess Spread and Excess Finance Charges allocated to the
Designated Series with respect to the related Monthly Period, to make the
following distributions in the following priority:
(a) an amount equal to the Class A Required Amount, if any,
with respect to such Distribution Date shall be distributed by the
Trustee to fund any deficiency pursuant to Sections 4.05(a)(i), (ii)
and (iii); provided that, in the event the Class A Required Amount for
such Distribution Date exceeds the amount of Excess Spread and Excess
Finance Charges allocated to the Designated Series, such Excess Spread
and Excess Finance Charges shall be applied first to pay amounts due
with respect to such Distribution Date pursuant to Section 4.05(a)(i),
second to pay the Class A Servicing Fee pursuant to Section
4.05(a)(ii) and third to pay the Class A Investor Default Amount for
such Distribution Date pursuant to Section 4.05(a)(iii);
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed as provided in
Section 4.06(a) (after giving effect to the allocation on such
Distribution Date of any amount for that purpose pursuant to Section
4.06(a)) shall be treated as a portion of Available Investor Principal
Collections for such Distribution Date;
(c) an amount equal to the Class B Required Amount, if any,
with respect to such Distribution Date shall be distributed by the
Trustee (I) to fund any deficiency pursuant to Sections 4.05(b)(i) and
(ii), and (II) for application, up to the Class B Investor
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Default Amount, as a portion of Available Investor Principal
collections for such Distribution Date; provided that, in the event
the Class B Required Amount for Distribution Date exceeds the amount
of Excess Spread and Excess Finance Charges allocated to the
Designated Series and available to pay such amount pursuant to this
clause (c), such Excess Spread and Excess Finance Charges shall be
applied first to pay amounts due with respect to such Distribution
Date pursuant to Section 4.05(b)(i), second to pay the Class B
Servicing Fee pursuant to Section 4.05(b)(ii) and third as a portion
of Available Investor Principal Collections for such Distribution Date
pursuant to clause (II) above;
(d) an amount equal to the aggregate amount by which the Class
B Invested Amount has been reduced pursuant to clauses (c), (d) and
(e) of the definition of "Class B Invested Amount" in Section 2.01 of
the Supplement (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) shall be treated
as a portion of Available Investor Principal Collections for such
Distribution Date;
(e) an amount equal to the sum of (I) Collateral Monthly
Interest for such Distribution Date, plus the amount of any Collateral
Monthly Interest previously due but not distributed to the Collateral
Indebtedness Holder on a prior Distribution Date, plus the amount of
any Collateral Additional Interest for such Distribution Date and any
Collateral Additional Interest previously due but not distributed to
the Collateral Indebtedness Holder on a prior Distribution Date, and
(II) the excess, if any, of (A) the accrued and unpaid interest due on
the CA Investor Principal Balance (as defined in the Collateral
Agreement) at the Collateral Rate pursuant to the Collateral
Agreement, over (B) the sum of the amount available to be distributed
on such Distribution Date pursuant to clause (e)(I) above in respect
of Collateral Monthly Interest and Collateral Additional Interest and
the amount available from earnings on investments in the
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Cash Collateral Account and amounts on deposit in the Retention
Account (as defined in the Collateral Agreement) for payment of such
accrued and unpaid interest, will be distributed to the Collateral
Indebtedness Holder for application in accordance with the Collateral
Agreement; provided that, Excess Spread and Excess Finance Charges
shall be applied first to pay amounts due pursuant to clause (e)(I)
and then to pay amounts due pursuant to clause (e)(II).
(f) an amount equal to the Collateral Servicing Fee due but
not paid to the Servicer either on such Distribution Date or a prior
Distribution Date shall be paid to the Servicer;
(g) an amount equal to the Collateral Default Amount for such
Distribution Date shall be treated as a portion of Collateral
Principal Collections with respect to such Distribution Date;
(h) an amount equal to the aggregate amount by which the
Collateral Indebtedness Amount has been reduced pursuant to clause (c)
of the definition of "Collateral Indebtedness Amount" (but not in
excess of the aggregate amount of such reductions which have not been
previously reimbursed) shall be treated as a portion of Collateral
Principal Collections with respect to such Distribution Date;
(i) an amount up to the excess, if any, of the Required
Collateral Amount over the Available Collateral Amount (without
giving effect to any deposit made on such date hereunder) shall be
deposited into the Cash Collateral Account;
(j) on each Distribution Date from and after the Reserve
Account Funding Date, but prior to the date on which the Reserve
Account terminates as described in Section 4.11(f), an amount up to
the excess, if any, of the Required Reserve Account Amount over the
Available Reserve Account Amount shall be deposited into the Reserve
Account;
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(k) an amount equal to the aggregate of any other amounts then
due to the Collateral Indebtedness Holder pursuant to the Collateral
Agreement (to the extent such amounts are payable pursuant to the
Collateral Agreement out of "Available Non-Principal Funds" (as
defined therein)) shall be distributed to the Collateral Indebtedness
Holder for application in accordance with the Collateral Agreement;
and
(l) the balance, if any, will constitute Excess Finance
Charges for such Distribution Date and will be available for
allocation to other Series in Group One or to the Seller as described
in Section 4.05 of the Agreement.
Section 4.08. Reallocated Principal Collections. The
Servicer shall apply (if the Seller is the Servicer and the Collection Account
is maintained with the Seller) or shall cause the Trustee to apply on each
Distribution Date Reallocated Principal Collections (applying all such
Collections with respect to the Collateral Indebtedness Amount prior to
applying any such Collections with respect to the Class B Invested Amount and
applying no such Collections with respect to the Class B Invested Amount
pursuant to clause (b) below) with respect to such Distribution Date, to make
the following distributions in the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Distribution Date over
(ii) the sum of (x) the amount of Excess Spread and Excess Finance
Charges allocated to the Designated Series with respect to the related
Monthly Period and (y) the Available Cash Collateral Amount with
respect to such Distribution Date, shall be distributed by the Trustee
to fund any deficiency pursuant to Sections 4.05(a)(i), (ii) and
(iii); provided that, in the event the Class A Required Amount for
such Distribution Date exceeds the sum of the Available Cash
Collateral Amount for such Distribution Date, the amount of Excess
Spread and Excess Finance Charges allocated to the Designated Series
and the amount of Reallocated Principal
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Collections for such Distribution Date, the amount withdrawn from the
Cash Collateral Account with respect to such Class A Required Amount,
such Excess Spread and Excess Finance Charges allocated to the
Designated Series and Reallocated Principal Collections shall be
applied first to pay amounts due with respect to such Distribution
Date pursuant to Section 4.05(a)(i), second to pay the Class A
Servicing Fee pursuant to Section 4.05(a)(ii) and third to pay the
Class A Investor Default Amount for such Distribution Date pursuant to
Section 4.05(a)(iii);
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Distribution Date over
(ii) the sum of (x) the amount of Excess Spread and Excess Finance
Charges to be allocated and available to the Class B
Certificateholder's Interest pursuant to Section 4.07(c) on such
Distribution Date and (y) the amount withdrawn from the Cash
Collateral Account pursuant to Section 4.12(c) which is remaining
after application pursuant to Section 4.07(a) with respect to such
Distribution Date, shall be distributed by the Trustee to fund any
deficiency pursuant to Sections 4.05(b)(i) and (ii) and 4.07(c)(II);
provided that, in the event the Class B Required Amount for such
Distribution Date exceeds the sum of the amount to be withdrawn from
the Cash Collateral Account pursuant to Section 4.12(c) which is
remaining after application pursuant to Section 4.08(a) with respect
to such Distribution Date, the amount of Excess Spread and Excess
Finance Charges to be allocated to the Class B Certificateholders'
Interest on such Distribution Date and the amount of Reallocated
Principal Collections (other than Reallocated Principal Collections
distributed pursuant to clause (a) above) for such Distribution Date,
the amount withdrawn from the Cash Collateral Account with respect to
the Class B Required Amount, such Excess Spread and Excess Finance
Charges and such Reallocated Principal Collections shall be applied
first to pay the amounts due with respect to such Distribution Date
pursuant to Section 4.05(b)(i), second to pay the Class B Servicing
Fee pursuant to
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Section 4.05(b)(ii) and third to apply any remaining amount as a
portion of Available Investor Principal Collections for such
Distribution Date pursuant to Section 4.07(c)(II); and
(c) the balance, if any, of such Reallocated Principal
Collections allocable to the Class B Invested Amount shall be treated
as a portion of Available Investor Principal Collections to be applied
in accordance with Sections 4.05(d) and (f), and the balance, if any,
of such Reallocated Principal Collections allocable to the Collateral
Indebtedness Amount shall be treated as a portion of Collateral
Principal Collections to be applied in accordance with Sections
4.05(e) and (g).
Section 4.09. Excess Finance Charges. The Designated Series
shall be included in Group One. Subject to Section 4.05 of the Agreement,
Excess Finance Charges with respect to the Series in Group One for any
Distribution Date will be allocated to the Designated Series in an amount equal
to the product of (x) the aggregate amount of Excess Finance Charges with
respect to all the Series in Group One for such Distribution Date and (y) a
fraction, the numerator of which is the Finance Charge Shortfall for the
Designated Series for such Distribution Date and the denominator of which is
the aggregate amount of Finance Charge Shortfalls for all the Series in Group
One for such Distribution Date. The "Finance Charge Shortfall" for the
Designated Series for any Distribution Date will be equal to the excess, if
any, of (a) the full amount required to be paid, without duplication, pursuant
to Sections 4.05(a), 4.05(b), 4.05(c) and 4.07 on such Distribution Date over
(b) the Floating Allocation Percentage of Collections of Finance Charge
Receivables with respect to the related Monthly Period.
Section 4.10. Shared Principal Collections. Subject to
Section 4.04 of the Agreement, Shared Principal Collections for any
Distribution Date will be allocated to the Designated Series in an amount equal
to the product of (x) the aggregate amount of Shared Principal Collections with
respect to all Series for such Distribution Date and (y) a fraction, the
numerator of which is the Principal
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Shortfall for the Designated Series for such Distribution Date and the
denominator of which is the aggregate amount of Principal Shortfalls for all
the Series as defined in each related Supplement, which are Principal Sharing
Series for such Distribution Date. The "Principal Shortfall" for the
Designated Series will be equal to (a) for any Distribution Date with respect
to the Revolving Period, zero, (b) for any Distribution Date with respect to
the Accumulation Period (prior to the Class B Final Payment Date), the excess,
if any, of the Controlled Deposit Amount with respect to such Distribution Date
over the amount of Available Investor Principal Collections for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections), (c) for any Distribution Date with respect to the Early
Amortization Period and for each Distribution Date on or after the Class B
Expected Final Payment Date, the excess, if any, of the Invested Amount over
the amount of Available Investor Principal Collections and Collateral Principal
Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections) and (d) if the Designated Series
is an Extendable Series in its Principal Payment Period, the amount, if any,
that would have been the Controlled Deposit Amount for such Distribution Date
had the related Principal Payment Event not occurred, over the amount of
Available Investor Principal Collections for such Distribution Date (excluding
any portion thereof attributable to Shared Principal Collections).
If the Designated Series is a Subordinated Excess Principal
Series, then Excess Shared Principal Collections for the Distribution Date, if
any, will also be allocated to the Designated Series in an amount equal to the
lesser of (i) the Subordinated Excess Principal Shortfall of the Designated
Series for such Distribution Date and (ii) the product of (x) Excess Shared
Principal Collections and (y) a fraction, the numerator of which is the
Subordinated Excess Principal Shortfall of the Designated Series for such
Distribution Date and the denominator of which is the aggregate amount of
Subordinated Excess Principal Shortfalls (as defined in each related
Supplement) of all Subordinated Excess Principal Series. The "Subordinated
Excess Principal Shortfall" of the Designated Series for any
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Distribution Date with respect to the Principal Payment Period shall equal the
excess of the Invested Amount over the sum of (i) Available Investor Principal
Collections for such Distribution Date (excluding any portion thereof
attributable to Subordinated Excess Principal Collections) and (ii) the
Principal Shortfall for such Distribution Date.
Section 4.11. Reserve Account. (a) The Servicer shall
establish and maintain, in the name of the Trustee, on behalf of the Trust, for
the benefit of the Designated Series Certificateholders and the Collateral
Indebtedness Holder, an Eligible Deposit Account (the "Reserve Account")
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Designated Series Certificateholders and the
Collateral Indebtedness Holder. The Reserve Account shall initially be
established with the Trustee. The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Reserve Account and
in all proceeds thereof. The Reserve Account shall be under the sole dominion
and control of the Trustee for the benefit of the Designated Series
Certificateholders. If at any time the Reserve Account ceases to be an
Eligible Deposit Account, the Trustee (or the Servicer on its behalf) shall
within 10 Business Days (or such longer period, not to exceed 30 calendar days,
as to which each Rating Agency may consent) establish a new Reserve Account
meeting the conditions specified above as an Eligible Deposit Account, and
shall transfer any cash and/or any investments to such new Reserve Account.
The Trustee, at the direction of the Servicer, shall (i) make withdrawals from
the Reserve Account from time to time in an amount up to the Available Reserve
Account Amount at such time, for the purposes set forth in the Supplement, and
(ii) on each Distribution Date (from and after the Reserve Account Funding
Date) prior to the termination of the Reserve Account make a deposit into the
Reserve Account in the amount specified in, and otherwise in accordance with,
Section 4.07(j).
(b) Funds on deposit in the Reserve Account shall be invested
at the direction of the Servicer by the Trustee in Eligible Investments. Funds
on deposit in the Reserve Account on any Transfer Date, after giving effect to
any
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withdrawals from the Reserve Account on such Transfer Date, shall be invested
in such investments that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. The Trustee shall
maintain for the benefit of the Designated Series Certificateholders and the
Collateral Indebtedness Holder possession of the negotiable instruments or
securities, if any, evidencing such Eligible Investments. No Eligible
Investment shall be disposed of prior to its maturity; provided, however, that
the Trustee may sell, liquidate or dispose of an Eligible Investment before its
maturity, if so directed by the Servicer, the Servicer having reasonably
determined that the interest of the Designated Series Certificateholders may be
adversely affected if such Eligible Investment is held to its maturity. 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 Reserve Account shall be retained in the Reserve Account (to the extent
that the Available Reserve Account Amount is less than the Required Reserve
Account Amount) and the balance, if any, shall be deposited in the Collection
Account and treated as collections of Finance Charge Receivables. For purposes
of determining the availability of funds or the balance in the Reserve Account
for any reason under the Supplement, except as otherwise provided in the
preceding sentence, investment earnings on such funds shall be deemed not to be
available or on deposit.
(c) On the Determination Date preceding each Distribution
Date with respect to the Accumulation Period (prior to the Class B Expected
Final Payment Date) and the first Special Payment Date, the Servicer shall
calculate the "Reserve Draw Amount" which shall be equal to the excess, if any,
of the Covered Amount with respect to such Distribution Date or Special Payment
Date over the Principal Funding Investment Proceeds with respect to such
Distribution Date or Special Payment Date; provided that such amount will be
reduced to the extent that funds otherwise would be available for deposit in
the Reserve Account under Section 4.07(j) with respect to such Distribution
Date or Special Payment Date.
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(d) In the event that for any Distribution Date the Reserve
Draw Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on the
related Transfer Date by the Trustee (acting in accordance with the
instructions of the Servicer), deposited into the Collection Account and
included in (i) prior to the Class B Principal Commencement Date, Class A
Available Funds and (ii) thereafter, Class B Available Funds, in each case for
such Distribution Date.
(e) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Trustee, acting in accordance with the instructions of the Servicer,
shall withdraw from the Reserve Account, and pay to the Collateral Indebtedness
Holder for application in accordance with the Collateral Agreement, an amount
equal to such Reserve Account Surplus.
(f) Upon the earliest to occur of (i) the termination of the
Trust pursuant to Article XII of the Agreement, (ii) the day on which the sum
of the Class A Invested Amount and the Class B Invested Amount is paid in full
to the Designated Series Certificateholders, (iii) if the Accumulation Period
has not commenced, the occurrence of a Pay Out Event or Principal Payment Event
with respect to the Designated Series and (iv) if the Accumulation Period has
commenced, the earlier of the first Special Payment Date and the Class B
Expected Final Payment Date, the Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Designated Series Certificateholders which are payable from the Reserve
Account as provided herein, shall withdraw from the Reserve Account and pay to
the Collateral Indebtedness Holder in accordance with the Collateral Agreement,
all amounts, if any, on deposit in the Reserve Account and the Reserve Account
shall be deemed to have terminated for purposes of the Supplement.
Section 4.12. Cash Collateral Account. (a) The Servicer
shall establish and maintain, in the name of the
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Trustee, on behalf of the Trust, for the benefit of the Designated Series
Certificateholders and the Collateral Indebtedness Holder, as their interests
appear herein, an Eligible Deposit Account (the "Cash Collateral Account")
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Designated Series Certificateholders and the
Collateral Indebtedness Holder. The Cash Collateral Account shall initially be
established with the Trustee. The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Cash Collateral
Account and in all proceeds thereof. The Cash Collateral Account shall be
under the sole dominion and control of the Trustee for the benefit of the
Designated Series Certificateholders and the Collateral Indebtedness Holder.
The interest of the Collateral Indebtedness Holder in the Cash Collateral
Account shall be subordinated to the interests of the Designated Series
Certificateholders as provided herein and in the Collateral Agreement. If at
any time the Cash Collateral Account ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) shall within 10 Business Days (or
such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Cash Collateral Account meeting the
conditions specified above as an Eligible Deposit Account, and shall transfer
any cash and/or any investments to such new Cash Collateral Account. The
Trustee, at the direction of the Servicer, shall make deposits to and
withdrawals from the Cash Collateral Account in the amounts and at the times
set forth in the Supplement and the Collateral Agreement. All withdrawals
from the Cash Collateral Account shall be made in the priority set forth below.
The Collateral Indebtedness Holder shall not be entitled to reimbursement from
the Trust Assets for any withdrawals from the Cash Collateral Account except as
specifically provided in the Supplement and the Collateral Agreement.
(b) Funds on deposit in the Cash Collateral Account shall be
invested at the direction of the Servicer (or the Collateral Indebtedness
Holder, as provided in the Collateral Agreement) by the Trustee in Eligible
Investments. Funds on deposit in the Cash Collateral Account on any Transfer
Date, after giving effect to any withdrawals
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from the Cash Collateral Account on such Transfer Date, shall be invested in
such investments that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. No Eligible Investment
shall be disposed of prior to its maturity; provided, however, that the Trustee
may sell, liquidate or dispose of an Eligible Investment before its maturity,
if so directed by the Servicer, the Servicer having reasonably determined that
the interest of the Designated Series Certificateholders may be adversely
affected if such Eligible Investment is held to its maturity. The proceeds of
any such investments shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the Transfer
Date immediately following the date of such investment. The Trustee shall
maintain for the benefit of the Designated Series Certificateholders and the
Collateral Indebtedness Holder possession of the negotiable instruments or
securities, if any, evidencing the Eligible Investments. On each Transfer
Date, all interest and earnings (net of losses and investment expenses) accrued
since the preceding Transfer Date on funds on deposit in the Cash Collateral
Account shall be paid to the Collateral Indebtedness Holder for application in
accordance with the Collateral Agreement. For purposes of determining the
availability of funds or the balances in the Cash Collateral Account for any
reason under the Supplement, all investment earnings on such funds shall be
deemed not to be available or on deposit.
(c) On each Determination Date, the Servicer shall calculate
the amount (the "Required Draw Amount") by which the amounts specified in
clauses (a) through (d) of Section 4.07 with respect to the related
Distribution Date exceed the amount of Excess Spread and Excess Finance Charges
allocated with respect to the related Monthly Period. In the event that for
any Distribution Date the Required Draw Amount is greater than zero, the
Servicer shall give written notice to the Trustee and the Collateral
Indebtedness Holder, in substantially the form of Exhibit B, of such positive
Required Draw Amount on the related Determination Date. On the related
Transfer Date, the Total Draw Amount, if any, up to the Available Cash
Collateral Amount shall be withdrawn from the Cash Collateral Account
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and distributed to fund any deficiency pursuant to Section 4.07(a) through (d)
(in the order of priority set forth in Section 4.07).
(d) In the event that the Cash Collateral Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Cash Collateral Account with respect to such Distribution Date, is greater
than zero, the Trustee, acting in accordance with the instructions of the
Servicer, shall withdraw from the Cash Collateral Account, and apply in
accordance with the Collateral Agreement, an amount equal to such Cash
Collateral Surplus.
SECTION 4.13. Prefunding Account. (a) Condition to the
Application of this Section. Section 4.13 shall apply to the Designated Series
only if the Designated Series is a Prefunded Series.
(b) Establishment of the Prefunding Account. The Servicer
shall establish and maintain, in the name of the Trustee, on behalf of the
Trust, for the benefit of the Designated Series Certificateholders and the
Collateral Indebtedness Holder, as their interests appear herein, an Eligible
Deposit Account (the "Prefunding Account") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Designated Series Certificateholders and the Collateral Indebtedness Holder.
The Prefunding Account shall initially be established with the Trustee. The
Seller shall on the Closing Date deposit into the Prefunding Account the
Initial Prefunded Amount. The Seller does hereby transfer, assign, set over
and otherwise convey to the Trustee for the benefit of the Designated Series
Certificateholders and the Collateral Indebtedness Holder, without recourse all
of its right, title and interest in, to and under the Prefunding Account, any
Eligible Investments on deposit therein and any proceeds of the foregoing. The
Trustee shall possess all right, title and interest in all funds on deposit
from time to time in the Prefunding Account and in all proceeds thereof. The
Prefunding Account shall be under the sole dominion and control of the Trustee
for the benefit of the Designated Series Certificateholders and the Collateral
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Indebtedness Holder. If at any time the Prefunding Account ceases to be an
Eligible Deposit Account, the Trustee (or the Servicer on its behalf) shall
within 10 Business Days (or such longer period, not to exceed 30 calendar days,
as to which each Rating Agency may consent) establish a new Prefunding Account
meeting the conditions specified above as an Eligible Deposit Account, and
shall transfer any cash and/or any investments to such new Prefunding Account.
Pursuant to subsection 3.01(b) of the Agreement, the Servicer shall have the
power, revocable by the Trustee, to make withdrawals and payments or to
instruct the Trustee to make withdrawals or payments from the Prefunding
Account for the purposes of carrying out the Servicer's or Trustee's duties
hereunder.
(c) Administration of the Prefunding Account. On each
Distribution Date, the Servicer shall direct the Trustee to withdraw from the
Prefunding Account and deposit into the Collection Account all interest and
other investment income (net of losses and investment expenses) ("Prefunding
Investment Proceeds") then on deposit in the Prefunding Account. Such
investment income shall be deemed to be Collections of Finance Charge
Receivables allocated to the Designated Series. Interest (including reinvested
interest) and other investment income on funds on deposit in the Prefunding
Account shall not be considered part of the Prefunded Amount.
(d) Investment of Funds in Prefunding Account. Funds on
deposit in the Prefunding Account shall be invested in Eligible Investments by
the Trustee (or, at the direction of the Trustee, by the Servicer on behalf of
the Trustee) selected at the direction of the Servicer. Funds on deposit in
the Prefunding Account on the Closing Date and thereafter shall be invested in
Eligible Investments that will mature so that such funds will be available for
withdrawal on the Business Day next succeeding the next increase in the
Invested Amount pursuant to Section 4.13(f) or, if earlier, on the next
succeeding Transfer Date.
(e) Principal Payments from Prefunding Account. In the event
that the Prefunded Amount exceeds zero at the end of the Funding Period, the
Servicer shall apply or shall
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cause the Trustee to apply the Prefunded Amount to the payment by the Paying
Agent of principal on the Class A Certificates, the Class B Certificates and
the Collateral Indebtedness Interest on a pro rata basis based on the Class A
Initial Invested Amount, the Class B Initial Invested Amount and the Collateral
Initial Indebtedness Amount.
(f) Increases in Invested Amount. On each Funding Date
during the Funding Period, commencing on the Initial Funding Date, the Invested
Amount shall increase to the extent that the Seller's Participation Amount on
such day exceeds the Required Funding Percentage of the sum of the aggregate
amount of Principal Receivables in the Trust and amounts on deposit in the
Excess Funding Account on such day; provided, however, that the Invested Amount
shall in no event exceed the Initial Investor Amount or increase pursuant to
this Section 4.13 by an amount in excess of the Prefunded Amount immediately
prior to giving effect to such increase, and provided further, however, that if
there is more than one Prefunded Series with a prefunded amount greater than
zero, the one with the earliest Closing Date shall have its Invested Amount
increased first. Such increase in the Invested Amount shall be allocated to
the Class A Certificates, the Class B Certificates and the Collateral
Indebtedness Interest on a pro rata basis based on the Class A Initial Invested
Amount, the Class B Initial Invested Amount and the Collateral Initial
Indebtedness Amount. Upon any increase in the Invested Amount pursuant to this
Section 4.13(f), the Servicer shall instruct the Trustee to withdraw from the
Prefunding Account and pay to the Seller no later than the next succeeding
Business Day an amount equal to the amount of such increase in the Invested
Amount.
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ARTICLE V
Distributions and Reports to
Designated Series Certificateholders
Section 5.01. Distributions. (a) On each Payment Date, the
Paying Agent shall distribute to each Class A Certificateholder of record on
the related Record Date (other than as provided in Section 12.02 of the
Agreement) such Class A Certificateholder's pro rata share of the amounts that
are allocated and available on such Payment Date to pay interest on the Class A
Certificates pursuant to the Supplement.
(b) On each Special Payment Date and on the Class A Expected
Final Payment Date, the Paying Agent shall distribute to each Class A
Certificateholder of record on the related Record Date (other than as provided
in Section 12.02 of the Agreement) such Class A Certificateholder's pro rata
share of the amounts on deposit in the Principal Funding Account or otherwise
held by the Paying Agent and which are allocated and available on such date to
pay principal of the Class A Certificates pursuant to the Supplement up to a
maximum amount on any such date equal to the Class A Investor Amount on such
date (unless there has been an optional repurchase of the Designated Series
Certificateholders' Interest pursuant to Section 10.01 of the Agreement, in
which event the foregoing limitation will not apply).
(c) On each Payment Date, the Paying Agent shall
distribute to each Class B Certificateholder of record on the related Record
Date (other than as provided in Section 12.02 of the Agreement) such Class B
Certificateholder's pro rata share of the amounts that are allocated and
available on such Payment Date to pay interest on the Class B Certificates
pursuant to the Supplement.
(d) On each Special Payment Date and on the Class B
Expected Final Payment Date, the Paying Agent shall distribute to each Class B
Certificateholder of record on the related Record Date (other than as provided
in Section 12.02 of the Agreement) such Class B Certificate-
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holder's pro rata share of the amounts on deposit in the Principal Funding
Account or otherwise held by the Paying Agent and which are allocated and
available on such date to pay principal of the Class B Certificates pursuant to
the Supplement up to a maximum amount on any such date equal to the Class B
Investor Amount on such date (unless there has been an optional repurchase of
the Designated Series Certificateholders' Interest pursuant to Section 10.01 of
the Agreement, in which event the foregoing limitation will not apply).
(e) The distributions to be made pursuant to this Section
5.01 are subject to the provisions of Sections 2.06, 9.02, 10.01 and 12.02 of
the Agreement and Sections 8.01 and 8.02 of the Supplement.
(f) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution, distributions to the Designated Series
Certificateholders hereunder shall be made by check mailed to each Designated
Series Certificateholder at such Designated Series Certificateholder's address
appearing in the Certificate Register without presentation or surrender of any
Designated Series Certificate or the making of any notation thereon; provided,
however, that with respect to the Designated Series Certificates registered in
the name of a Clearing Agency, such distributions shall be made to such
Clearing Agency in immediately available funds; provided further, however, that
if the Class B Certificates were privately placed pursuant to an agreement
between the Seller and the purchaser party thereto, distributions to each Class
B Certificateholder hereunder shall be made (i) by wire transfer of immediately
available funds to an account at a bank or other depository institution located
within the United States as shall have been designated by such Class B
Certificateholder by notice in writing to the related Class B Payment Date or
(ii) in the absence of such designation, by check mailed to each such Class B
Certificateholder at such Certificateholder's address appearing in the
Certificate Register without presentation or surrender of any such Class B
Certificate or the making of any notation thereon.
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Section 5.02. Reports and Statements to the Designated Series
Certificateholders. (a) On each Distribution Date, the Paying Agent, on
behalf of the Trustee, shall forward to each Designated Series
Certificateholder a statement substantially in the form of Exhibit C prepared
by the Servicer.
(b) Not later than each Determination Date, the Servicer
shall deliver to the Trustee, the Paying Agent, each Rating Agency and the
Collateral Indebtedness Holder (i) a statement substantially in the form of
Exhibit C prepared by the Servicer and (ii) a certificate of a Servicing
Officer substantially in the form of Exhibit D.
(c) A copy of each statement or certificate provided pursuant
to paragraph (a) or (b) may be obtained by any Designated Series
Certificateholder or any Certificate Owner thereof by a request in writing to
the Servicer.
(d) On or before January 31 of each calendar year, beginning
with the calendar year next succeeding the Closing Date, the Paying Agent, on
behalf of the Trustee, shall furnish or cause to be furnished to each Person
who at any time during the preceding calendar year was a Designated Series
Certificateholder, a statement prepared by the Servicer containing the
information which is required to be contained in the statement to the
Designated Series Certificateholders, as set forth in paragraph (a) or (b)
above, as applicable, aggregated for such calendar year or the applicable
portion thereof during which such Person was a Designated Series
Certificateholder, together with other information as is required to be
provided by an issuer of indebtedness under the Internal Revenue Code. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Paying Agent
pursuant to any requirements of the Internal Revenue Code as from time to time
in effect.
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ARTICLE VI
Section 6.01. Additional Pay Out Events. If any one of the
following events shall occur with respect to the Designated Series
Certificates:
(a) failure on the part of the Seller (i) to make any payment
or deposit required by the terms of the Agreement or the Supplement on
or before the date occurring five Business Days after the date such
payment or deposit is required to be made therein or herein or (ii)
duly to observe or perform any other covenants or agreements of the
Seller set forth in the Agreement or the Supplement (including the
covenants of the Seller contained in Article IX of the Supplement),
which failure has a material adverse effect on the Designated Series
Certificateholders and which continues unremedied for a period of 60
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Seller by the
Trustee, or to the Seller and the Trustee by any Holder of the
Investor Certificates;
(b) any representation or warranty made by the Seller in the
Agreement or the Supplement, or any information contained in a
computer file or microfiche list required to be delivered by the
Seller pursuant to Section 2.01 or 2.08 (g) of the Agreement shall
prove to have been incorrect in any material respect when made or when
delivered, which continues to be incorrect in any material respect for
a period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Seller by the Trustee, or to the Seller and the Trustee by any
Holder of the Designated Series Certificates and as a result of which
the interests of the Investor Certificateholders are materially and
adversely affected and continue to be materially and adversely
affected for such period; provided, however, that a Pay Out Event
pursuant to this Section 6.01(b) shall not be deemed to have occurred
hereunder if the Seller has accepted reassignment of the related
Receivable, or all of such Receivables, if applicable,
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during such period in accordance with the provisions of the Agreement;
(c) a failure by the Seller to convey Receivables in
Additional Accounts or Participation Interests to the Trust within
five Business Days after the day on which it is required to convey
such Receivables or Participation Interests pursuant to Section
2.08(a) of the Agreement or Section 9.02 of the Supplement;
(d) any Servicer Default shall occur;
(e) a Transfer Restriction Event shall occur;
(f) the average Portfolio Yield for any three consecutive
Monthly Periods is less than the average Base Rate for such three
Monthly Periods; or
(g) the Class A Invested Amount shall not be paid in full on
the Class A Expected Final Payment Date or the Class B Invested Amount
shall not be paid in full on the Class B Expected Final Payment Date;
then, in the case of any event described in subparagraph (a), (b) or (d), after
the applicable grace period, if any, set forth in such subparagraphs, either
the Trustee or the holders of Investor Certificates (including the Collateral
Indebtedness Holder) of the Designated Series evidencing more than 50% of the
aggregate unpaid principal amount of Investor Certificates (including the
Collateral Indebtedness Interest) by notice then given in writing to the Seller
and the Servicer (and to the Trustee if given by the holders of Investor
Certificates (including the Collateral Indebtedness Holder of the Designated
Series) may declare that a Pay Out Event has occurred with respect to the
Designated Series as of the date of such notice, and, in the case of any event
described in subparagraph (c), (e), (f) or (g) a Pay Out Event shall occur with
respect to the Designated Series without any notice or other action on the part
of the Trustee or holders of Investor Certificates (including the Collateral
Indebtedness Holder) of the Designated Series immediately upon the occurrence
of such event.
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ARTICLE VII
Optional Repurchase; Series Termination;
Initial Principal Payment Date
Section 7.01. Optional Repurchase. (a) On any day occurring
on or after the date on which the Invested Amount is reduced to 5% or less of
the sum of the Initial Invested Amount plus, if applicable, the amount of any
increases in the Invested Amount during the Funding Period, the Seller shall
have the option to purchase the interest of the Investor Certificateholders
(including the Collateral Indebtedness Interest), at a purchase price equal to
(i) if such day is a Distribution Date, the Reassignment Amount for such
Distribution Date or (ii) if such day is not a Distribution Date, the
Reassignment Amount for the Distribution Date following such day.
(b) The Seller shall give the Servicer and the Trustee at
least 30 days prior written notice of the date on which the Seller intends to
exercise such purchase option. Not later than 12:00 noon, Richmond time, on
such day the Seller shall deposit the Reassignment Amount into the Collection
Account in immediately available funds. Such purchase option is subject to
payment in full of the Reassignment Amount. Following the deposit of the
Reassignment Amount into the Collection Account in accordance with the
foregoing, the Invested Amount for the Designated Series shall each be reduced
to zero and the Designated Series Certificateholders and the Collateral
Indebtedness Holder shall have no further interest in the Receivables. The
Reassignment Amount shall be distributed as set forth in Section 8.01(b).
Section 7.02. Series Termination. (a) If, on the
Distribution Date two months prior to the Termination Date, the Invested Amount
(after giving effect to all changes therein on such date) would be greater than
zero, the Servicer, on behalf of the Trustee, shall, within the 40-day period
which begins on such Distribution Date, solicit bids for the sale of Principal
Receivables and the related Finance Charge Receivables (or interests therein)
in
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an amount equal to the Invested Amount at the close of business on the last day
of the Monthly Period preceding the Termination Date (after giving effect to
all distributions required to be made on the Termination Date, except pursuant
to this Section 7.02). Such bids shall require that such sale shall (subject
to Section 7.02(b)) occur on the Termination Date. The Seller and the
Collateral Indebtedness Holder shall be entitled to participate in, and to
receive from the Trustee a copy of each other bid submitted in connection with,
such bidding process.
(b) The Servicer, on behalf of the Trustee, shall sell such
Receivables (or interests therein) on the Termination Date to the bidder who
made the highest cash purchase offer. The proceeds of any such sale shall be
treated as Collections on the Receivables allocated to the Designated Series
Certificateholders and the Collateral Indebtedness Holder pursuant to the
Agreement and the Supplement; provided, however, that the Servicer shall
determine conclusively the amount of such proceeds which are allocable to
Finance Charge Receivables and the amount of such proceeds which are allocable
to Principal Receivables. During the period from the Distribution Date two
months prior to the Termination Date until the Termination Date, the Servicer
shall continue to collect payments on the Receivables and allocate and deposit
such collections in accordance with the provisions of the Agreement and the
Supplements.
Section 7.03. Initial Principal Payment Date. If applicable,
the "Initial Principal Payment Date" for the Designated Series shall be the
date specified as such in the Supplement; provided, however, that the Initial
Principal Payment Date shall automatically be extended to the next succeeding
Interest Payment Date (but not later than the Class A Expected Final Payment
Date) unless the Servicer, at least 30 days prior to the then-current Initial
Principal Payment Date, notifies the Trustee that the Initial Principal Payment
Date shall not be extended, in which case the Initial Principal Payment Date
shall be fixed. The Servicer shall provide notice of such election to the
Trustee not more than 60 days and not less than 30 days prior to the
then-current Intitial Principal Payment Date.
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Immediately upon receipt of such notice, the Trustee shall notify the Seller,
Designated Series Certificateholders, each Rating Agency and the Collateral
Indebtedness Holder of the Servicer's election not to extend the Initial
Principal Payment Date. In addition, if and so long as the Designated Series
Certificates are listed on the Luxembourg Stock Exchange, the Trustee shall
publish or cause to be published in an Authorized Newspaper of general
circulation in Luxembourg a notice to the effect that the Servicer has elected
not to extend the Initial Principal Payment Date.
ARTICLE VIII
Final Distributions
Section 8.01. Sale of Receivables or Certificateholders'
Interest pursuant to Section 2.06 or 10.01 of the Agreement. (a) Purchase
Price. (i) The amount to be paid by the Seller with respect to the Designated
Series in connection with a reassignment of Receivables to the Seller pursuant
to Section 2.06 of the Agreement shall equal the Reassignment Amount for the
first Distribution Date following the Monthly Period in which the reassignment
obligation arises under the Agreement.
(ii) The amount to be paid by the Seller with respect to the
Designated Series in connection with a repurchase of the Certificateholders'
Interest pursuant to Section 10.01 of the Agreement shall equal the sum of (x)
the Reassignment Amount for the Distribution Date of such repurchase and (y)
the sum of (A) the excess, if any, of (I) a price equivalent to the average of
bids quoted on the Record Date preceding the date of repurchase (or, if not a
Business Day, on the next succeeding Business Day) by at least two recognized
dealers selected by the Trustee (which may be selected from the list attached
as Schedule 1), for the purchase by such dealers of a security which is similar
to the Class A Certificates with a remaining maturity approximately equal to
the remaining maturity of the Class A Certificates and rated by each Rating
Agency in the rating category originally assigned to the Class A Certificates
over (II) the Reassignment Amount attributable to the
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Class A Certificates and (B) the excess, if any, of (I) a price equivalent to
the average of bids quoted on such Record Date or, if not a Business Day, on
the next succeeding Business Day by at least two recognized dealers selected by
the Trustee (which may be selected from the list attached as Schedule 1), for
the purchase by such dealers of a security which is similar to the Class B
Certificates with a remaining maturity approximately equal to the remaining
maturity of the Class B Certificates and rated by each Rating Agency in the
rating category originally assigned to the Class B Certificates over (II) the
portion of the Reassignment Amount attributable to the Class B Certificates.
(b) Distributions Pursuant to Section 7.01 or 7.02 of the
Supplement and Section 10.01 of the Agreement. With respect to the
Reassignment Amount deposited into the Collection Account pursuant to Section
7.01 or 8.01(a)(ii) or any amounts allocable to the Designated Series
Certificateholders' Interest deposited into the Collection Account pursuant to
Section 7.02, the Trustee shall, not later than 12:00 noon, Richmond time, on
the related Distribution Date, make deposits or distributions of the following
amounts (in the priority set forth below and, in each case, after giving effect
to any deposits and distributions otherwise to be made on such date) in
immediately available funds: (i) (x) the Class A Invested Amount on such
Distribution Date will be distributed to the Paying Agent for payment to the
Class A Certificateholders and (y) an amount equal to the sum of (A) Class A
Monthly Interest for such Distribution Date, (B) any Class A Outstanding
Monthly Interest, and (C) the amount of Class A Additional Interest, if any,
for such Distribution Date and any Class A Outstanding Additional Interest,
will be
<PAGE> 80
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distributed to the Paying Agent for payment to the Class A Certificateholders,
(ii) (x) the Class B Invested Amount on such Distribution Date will be
distributed to the Paying Agent for payment to the Class B Certificateholders
and (y) an amount equal to the sum of (A) Class B Monthly Interest for such
Distribution Date, (B) any Class B Outstanding Monthly Interest and (C) the
amount of Class B Additional Interest, if any, for such Distribution Date and
any Class B Outstanding Additional Interest, will be distributed to the Paying
Agent for payment to the Class B Certificateholders and (iii) the Collateral
Indebtedness Amount on such date and the amount of accrued and unpaid interest
on the Collateral Indebtedness Amount (including any unpaid Collateral
Additional Interest) will be distributed to the Collateral Indebtedness Holder
for application in accordance with the Collateral Agreement. Notwithstanding
anything to the contrary contained in the Supplement or the Agreement, the
amount of any excess determined pursuant to paragraph (a)(ii)(y) shall be
distributed to the Designated Series Certificateholders.
(c) Distributions Pursuant to Section 2.06 of the Agreement.
With respect to any amounts deposited into the Collection Account pursuant to
Section 8.01(a)(i), the Trustee shall, not later than 12:00 noon, Richmond
time, on the related Distribution Date, deposit the principal portion of such
amounts that are allocable to the Class A Certificateholders' Interest and the
Class B Certificateholders' Interest into the Principal Funding Account and the
principal portion of such amounts allocable to the Collateral Indebtedness
Interest shall be distributed to the Collateral Indebtedness Holder for
application in accordance with the Collateral Agreement.
(d) Notwithstanding anything to the contrary in the
Supplement or the Agreement, all amounts distributed to the Paying Agent
pursuant to Section 8.01(b) for payment to the Designated Series
Certificateholders shall be deemed distributed in full to the Designated Series
Certificateholders on the date on which such funds are distributed to the
Paying Agent pursuant to this Section and shall be deemed to be a final
distribution pursuant to Section 12.02 of the Agreement.
Section 8.02. Distribution of Proceeds of Sale, Disposition
or Liquidation of the Receivables pursuant to Section 9.02 of the Agreement.
(a) Not later than 12:00 noon, Richmond time, on the Distribution Date
following the date on which the Insolvency Proceeds are deposited into the
Collection Account pursuant to Section 9.02(b) of the Agreement, the Trustee
shall (in the following priority and, in each case, after giving effect to any
deposits and
<PAGE> 81
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distributions otherwise to be made on such Distribution Date) (i) deduct an
amount equal to the Class A Invested Amount on such Distribution Date from the
portion of the Insolvency Proceeds allocated to Collections of Principal
Receivables and distribute such amount to the Paying Agent for payment to the
Class A Certificateholders, provided that the amount of such distribution shall
not exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Collections of Principal Receivables and (y) the Principal Allocation
Percentage with respect to the related Monthly Period, (ii) deduct an amount
equal to the Class B Invested Amount on such Distribution Date from the portion
of the Insolvency Proceeds allocated to Collections of Principal Receivables
and distribute such amount to the Paying Agent for payment to the Class B
Certificateholders, provided that the amount of such distribution shall not
exceed (x) the product of (A) the portion of such Insolvency Proceeds allocated
to Collections of Principal Receivables and (B) the Principal Allocation
Percentage with respect to the related Monthly Period minus (y) the amount
distributed to the Paying Agent pursuant to clause (i) of this sentence and
(iii) deduct an amount equal to the Collateral Indebtedness Amount, if any, on
such Distribution Date from the portion of the Insolvency Proceeds allocated to
Collections of Principal Receivables and distribute such amount to the
Collateral Indebtedness Holder for application in accordance with the
Collateral Agreement, provided that the amount of such distribution shall not
exceed (x) the product of (1) the portion of the Insolvency Proceeds allocated
to Collections of Principal Receivables and (2) the Principal Allocation
Percentage with respect to such Monthly Period minus (y) the amounts
distributed to the Paying Agent pursuant to clauses (i) and (ii) of this
sentence. To the extent that the product of (A) the portion of the Insolvency
Proceeds allocated to Collections of Principal Receivables and (B) the
Principal Allocation Percentage with respect to the related Monthly Period
exceeds the aggregate amounts distributed to the Paying Agent and the
Collateral Indebtedness Holder pursuant to the preceding sentence, the excess
shall be allocated to the Seller's Interest and shall be released to the Seller
on such Distribution Date.
<PAGE> 82
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(b) Not later than 12:00 noon, Richmond time, on such
Distribution Date, the Trustee shall (in the following priority and, in each
case, after giving effect to any deposits and distributions otherwise to be
made on such Distribution Date) (i) deduct an amount equal to the sum of (w)
Class A Monthly Interest for such Distribution Date, (x) any Class A
Outstanding Monthly Interest and (y) the amount of Class A Additional Interest,
if any, for such Distribution Date and any Class A Outstanding Additional
Interest, from the portion of the Insolvency Proceeds allocated to Collections
of Finance Charge Receivables and distribute such amount to the Paying Agent
for payment to the Class A Certificateholders, provided that the amount of such
distribution shall not exceed the product of (x) the portion of the Insolvency
Proceeds allocated to Collections of Finance Charge Receivables, (y) the
Floating Allocation Percentage with respect to the related Monthly Period and
(z) the Class A Floating Percentage with respect to such Monthly Period and
(ii) deduct an amount equal to the sum of (w) Class B Monthly Interest for such
Distribution Date, (x) Class B Outstanding Monthly Interest and (y) the amount
of Class B Additional Interest, if any, for such Distribution Date and any
Class B Outstanding Additional Interest, from the portion of the Insolvency
Proceeds allocated to Collections of Finance Charge Receivables and distribute
such amount to the Paying Agent for payment to the Class B Certificateholders,
provided that the amount of such distribution shall not exceed the product of
(x) the portion of the Insolvency Proceeds allocated to Collections of Finance
Charge Receivables, (y) the Floating Allocation Percentage with respect to the
related Monthly Period and (z) the Class B Floating Percentage with respect to
such Monthly Period. To the extent that the product of (A) the portion of the
Insolvency Proceeds allocated to Collections of Finance Charge Receivables and
(B) the Floating Allocation Percentage with respect to the related Monthly
Period exceeds the aggregate amount distributed to the Paying Agent pursuant to
the preceding sentence, the excess shall be released to the Collateral
Indebtedness Holder for application by the Collateral Indebtedness Holder in
accordance with the Collateral Agreement.
<PAGE> 83
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(c) Notwithstanding anything to the contrary in the
Supplement or the Agreement, all amounts distributed to the Paying Agent
pursuant to this Section for payment to the Designated Series
Certificateholders shall be distributed in full to the Designated Series
Certificateholders on the date on which funds are distributed to the Paying
Agent pursuant to this Section and shall be deemed to be a final distribution
pursuant to Section 12.02 of the Agreement.
(d) Notwithstanding any provision of the Agreement or the
Supplement, for purposes of Section 9.02(a) of the Agreement, the Holders of
the Designated Series Certificates shall not be deemed to have disapproved a
liquidation of the Receivables following an Insolvency Event with respect to
the Seller unless (i) holders of more than 50% of the aggregate unpaid
principal amount of each of the Class A Certificates and the Class B
Certificates and (ii) beneficial owners of more than 50% of the Collateral
Indebtedness Interest shall have disapproved of such liquidation.
ARTICLE IX
New Issuances; Addition of Accounts; Additional Issuances
Section 9.01. New Issuances. The obligation of the Trustee
to authenticate the Investor Certificates of a new Series and to execute and
deliver the related Supplement shall be subject to the conditions set forth in
Section 6.03(b) of the Agreement and to the additional condition that, as of
the Series Issuance Date and after giving effect to such issuance, the
aggregate amount of Principal Receivables equals or exceeds the Required
Principal Balance.
Section 9.02. Addition of Accounts. (i) If, as of the
close of business on the last Business Day of any Monthly Period, the aggregate
amount of Principal Receivables is less than the Required Principal Balance on
such date, the Seller shall on or prior to the close of business on the 10th
Business Day following the last Business Day of such Monthly Period (the
"Required Designation Date"), unless the aggregate amount of Principal
<PAGE> 84
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Receivables exceeds the Required Principal Balance as of the close of business
on any day after the last Business Day of such Monthly Period and prior to the
Required Designation Date, designate additional Eligible Accounts to be
included as Accounts as of the Required Designation Date or any earlier date in
a sufficient amount such that, after giving effect to such addition, the
aggregate amount of Principal Receivables equals or exceeds the Required
Principal Balance on such date. Each such addition shall be subject to the
same conditions applicable to any Addition required to be made pursuant to
Section 2.08(a) of the Agreement. The failure of any condition set forth in
Section 2.08(c) or (d) of the Agreement, as the case may be, shall not relieve
the Seller of its obligation pursuant to this paragraph; provided, however,
that the failure of the Seller to transfer Receivables to the Trust as provided
in this paragraph solely as a result of the unavailability of a sufficient
amount of Eligible Receivables shall not constitute a breach of the Supplement;
provided further, that any such failure which has not been timely cured will
nevertheless result in the occurrence of a Pay Out Event with respect to the
Designated Series.
(ii) In lieu of, or in addition to, designating Additional
Accounts pursuant to clause (i) above, the Seller may, subject to the
conditions specified in Section 2.03(d) of the Agreement, convey to the Trust
Participation Interests. The addition of Participation Interests in the Trust
pursuant to this paragraph shall be effected by an amendment to the Agreement
and the Supplement, dated the applicable Addition Date, pursuant to Section
13.01(a) of the Agreement.
Section 9.03. Additional Issuances of the Designated Series
Certificates. (a) Subject to Sections 9.03(b) and (c) below, the Seller may
at any time, or from time to time, during the Revolving Period direct the
Trustee, on behalf of the Trust, to authenticate additional Class A
Certificates (the "Additional Class A Certificates") and additional Class B
Certificates (the "Additional Class B Certificates") on the first day of any
Monthly Period (each such day, an "Additional Issuance Date"). Any such
issuance of Additional Investor Certificates is referred to herein as
<PAGE> 85
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an "Additional Issuance". The outstanding Investor Certificates of each Class
and the Additional Investor Certificates of that Class shall be equally and
ratably entitled as provided herein to the benefits of the Agreement and the
Supplement without preference, priority or distinction, all in accordance with
the terms and provisions of the Agreement and the Supplement.
(b) The obligation of the Trustee to authenticate Additional
Investor Certificates is subject to the satisfaction of the following
conditions:
(i) on or before the fifth Business Day immediately preceding
the Additional Issuance Date, the Seller shall have given the Trustee,
the Servicer, each Rating Agency and the Collateral Indebtedness
Holder written notice of such Additional Issuance and the Additional
Issuance Date;
(ii) the Seller shall have delivered to the Trustee an amended
Supplement, in form satisfactory to the Trustee, executed by each
party hereto other than the Trustee;
(iii) after giving effect to the Additional Issuance, the
total amount of Principal Receivables shall be equal to, or greater
than, the Required Principal Balance;
(iv) the Seller shall have obtained additional Series
Enhancement for the benefit of the Designated Series
Certificateholders; provided that the ratio of the sum of the
Collateral Indebtedness Amount and the amount of such Series
Enhancement to the Invested Amount (after giving effect to such
Additional Issuance) shall be greater than or equal to the ratio of
the Collateral Indebtedness Amount to the Invested Amount (before
giving effect to such Additional Issuance);
(v) the Seller shall have delivered to the Trustee, each
Rating Agency and the Collateral Indebtedness Holder a Tax Opinion
dated the Additional
<PAGE> 86
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Issuance Date, with respect to such Additional Issuance;
(vi) the Seller shall have delivered to each Rating Agency (a)
an Opinion of Counsel to the effect that such Additional Issuance will
not violate applicable Federal securities laws and (b) such other
documents as the Rating Agencies may request;
(vii) the Seller shall have received written notice from each
Rating Agency that such Additional Issuance will not have a Ratings
Effect;
(viii) the Seller shall have delivered to the Trustee a
certificate of an authorized officer to the effect that, based on the
facts known to such officer at the time, in the reasonable belief of
the Seller, such Additional Issuance will not cause a Pay Out Event or
an event that, after the giving of notice or the lapse of time, would
constitute a Pay Out Event to occur with respect to the Designated
Series;
(ix) as of the Additional Issuance Date all amounts due and
owing to the Designated Series Certificateholders on or prior to such
date shall have been paid to such Certificateholders and there shall
not be any unreimbursed Investor Charge-Offs;
(x) the excess of the principal amount of the Additional
Investor Certificates over the issue price of the Additional Investor
Certificates shall not exceed the maximum amount permitted under the
Internal Revenue Code without the creation of original issue discount;
(xi) the Seller's Interest shall not be less than 2% of the
total amount of Principal Receivables, in each case as of the
Additional Issuance Date, after giving effect to such Additional
Issuance;
(xii) the ratio of the Controlled Accumulation Amount (after
giving effect to such Additional Issuance) to the Invested Amount
(after giving effect
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to such Additional Issuance) shall be equal to the ratio of the
Controlled Accumulation Amount (before giving effect to such
Additional Issuance) to the Invested Amount (before giving effect to
such Additional Issuance); and
(xiii) the Seller shall have delivered to the Trustee an
Officer's Certificate, dated the Additional Issuance Date, confirming
that the conditions referred to above have been satisfied.
Upon satisfaction of the above conditions, the Trustee shall authenticate the
Additional Investor Certificates upon execution thereof by the Seller.
(c) Notwithstanding any provision of the Agreement or the
Supplement, the Supplement may be amended by the Servicer, the Seller and the
Trustee, without the consent of any of the Certificateholders, to provide for
an Additional Issuance, provided that the conditions set forth in Section
9.03(b) have been satisfied.
ARTICLE X
Miscellaneous Provisions
Section 10.01. Ratification of Agreement. As supplemented by
the Supplement, the Agreement is in all respects ratified and confirmed and
the Agreement as so supplemented by the Supplement shall be read, taken and
construed as one and the same instrument.
Section 10.02. Counterparts. The Supplement may be executed
in two or more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.
Section 10.03. Governing Law. THE SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE
<PAGE> 88
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PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.04. Determination of Material Adverse Effect. Any
determination of material adverse effect on Investor Certificateholders under
the Agreement or the Supplement shall be made assuming the Collateral
Indebtedness Amount is zero and without regard to whether funds are available
in the Cash Collateral Account (including, without limitation, any
determination of whether a representation or warranty made therein is correct
or whether a Seller or the Servicer has duly performed a covenant contained
therein or herein).
<PAGE> 1
EXHIBIT 5
EXECUTION COPY
SERIES 1996-2 SUPPLEMENT, dated as of December
5, 1996 (the "Supplement"), between CAPITAL ONE BANK, a Virginia banking
corporation, as Seller and Servicer, and THE BANK OF NEW YORK, a New York
banking corporation, as Trustee.
Pursuant to the Pooling and Servicing Agreement dated as of
September 30, 1993 (as amended and supplemented, the "Agreement"), among the
Seller, the Servicer and the Trustee, the Seller has created the Capital One
Master Trust (the "Trust"). Section 6.03 of the Agreement provides that the
Seller may from time to time direct the Trustee to authenticate one or more new
Series of Investor Certificates representing fractional undivided interests in
the Trust. The Principal Terms of any new Series are to be set forth in a
Supplement to the Agreement.
This term sheet, by and among the Seller, the Servicer and the
Trustee (the "Term Sheet"), together with the December 5, 1996 Standard
Definitions and Provisions Annex attached hereto (the "Annex") constitute the
Supplement. A copy of the Annex is maintained by the Trustee and the Servicer.
The definitions and provisions contained in the Annex are incorporated by
reference in this Supplement, except to the extent specifically modified in the
Term Sheet. In the event that any term or provision contained in the
Supplement shall conflict with or be inconsistent with any term or provision
contained in the Agreement, the terms and provisions of this Supplement shall
govern.
Pursuant to this Supplement, the Seller and the Trustee hereby
create a Series of Investor Certificates to be issued pursuant to the Agreement
and this Supplement to be known as "Capital One Master Trust, Series 1996-2".
The Series 1996-2 Certificates shall be issued in two Classes, the first of
which shall be known as the "Floating Rate Class A Asset Backed Certificates,
Series 1996-2" and the second of which shall be known as the "Floating Rate
Class B Asset Backed Certificates, Series 1996-2". In addition, there is
hereby created a third Class f uncertificated interests in the Trust which,
except as expressly provided herein, shall be deemed to be "Investor
Certificates" for all purposes under the Agreement and this Supplement and
which shall be known as the "Collateral Indebtedness Interest, Series 1996-2".
<PAGE> 2
2
ARTICLE I
Series Terms
Section 1.01. Series Terms. This Series shall be included in
Group One as a Variable Accumulation Series and as a Principal Sharing Series
that is not subordinated to any other Series; provided, however, that if this
Series is an Extendable Series, such Series shall also be a Subordinated Excess
Principal Series.
<TABLE>
<S> <C>
Title of Securities $600,000,000 Floating Rate Class A Asset Backed
Certificates, Series 1996-2 (the "Class A
Certificates") and $82,500,000 Floating Rate Class B
Asset Backed Certificates, Series 1996-2 (the
"Class B Certificates)
Extendable Series No
Prefunded Series No
Class A Initial Investor Amount $600,000,000
Class B Initial Investor Amount $82,500,000
Collateral Initial Investor Amount $67,500,000
Initial Prefunded Amount Not applicable
Required Funding Percentage Not applicable
Funding Dates Not applicable
</TABLE>
<PAGE> 3
3
<TABLE>
<S> <C>
Initial Funding Date Not applicable
Final Funding Date Not applicable
Initial Principal Payment Date Not applicable
Class A Certificate Rate For each Interest Period, a per annum rate equal to
the Class A Floating Rate Index as of the Class A
Interest Determination Date plus the Class A
Certificate Rate Spread; provided, however, that
with respect to the initial Interest Period, the
Class A Certificate Rate shall equal the Class A
Certificate Rate Spread plus the greater of (i)
LIBOR for one-month United States dollar deposits
and (ii) the rate determined by reference to a
straight-line interpolation (based on the actual
number of days in the initial Interest Period)
between LIBOR for one-month United States dollar
deposits and LIBOR for two-month United States
dollar deposits
Class A Floating Rate Index LIBOR
Class A Floating Rate Index Maturity One month
Class A Certificate Rate Spread 0.10% per annum
Class A Maximum Interest Rate Not applicable
</TABLE>
<PAGE> 4
4
<TABLE>
<S> <C>
Class A Interest Determination Date LIBOR Determination Date
Class A Expected Final Payment Date The December 2001 Distribution Date
Class A Accumulation Period Commencement The last day of the March 2000 Monthly Period
Date
Controlled Accumulation Amount $30,000,000
Class B Certificate Rate For each Interest Period, a per annum rate equal to
the Class B Floating Rate Index as of the Class B
Interest Determination Date plus the Class B
Certificate Rate Spread; provided, however, that
with respect to the initial Interest Period, the
Class B Certificate Rate shall equal the Class B
Certificate Rate Spread plus the greater of (i)
LIBOR for one-month United States dollar deposits
and (ii) the rate determined by reference to a
straight-line interpolation (based on the actual
number of days in the initial Interest Period)
between LIBOR for one-month United States dollar
deposits and LIBOR for two-month United States
dollar deposits
Class B Floating Rate Index LIBOR
Class B Floating Rate Index Maturity One month
</TABLE>
<PAGE> 5
5
<TABLE>
<S> <C>
Class B Certificate Rate Spread 0.33% per annum
Class B Maximum Interest Rate Not applicable
Class B Interest Determination Date LIBOR Determination Date
Class B Expected Final Payment Date The February 2002 Distribution Date
Interest Payment Dates The 15th day of each month (or, if such day is not a
Business Day, the next succeeding Business Day),
commencing on the January 1997 Distribution Date
Required Cash Base Percentage 1.00%
Required Collateral Base Percentage 3.00%
Required Invested Base Percentage 9.00%
Required Reserve Base Percentage 0.50%
Closing Date December 5, 1996
Initial Distribution Date The January 1997 Distribution Date
Rating Agency Moody's, Standard & Poor's and Fitch
Net Servicing Fee Rate For (i) so long as the Seller is the Servicer, 0.75%
per annum, (ii) if the Bank of New York is the
Servicer, 1.25% per
</TABLE>
<PAGE> 6
6
<TABLE>
<S> <C>
annum and (iii) if the Seller or The Bank of
New York is no longer the Servicer, 2.00% per annum
Servicing Fee Rate 2.00%
Cut-Off Date December 1, 1996
Termination Date The February 2005 Distribution Date
</TABLE>
ARTICLE II
Modifications Relating To The Issuance
of The Class B Certificates
Section 2.01. Additional and Amended Definitions:
"Agency Agreement" shall mean the Agency Agreement dated as of
December 5, 1996 between the Seller and Servicer, Morgan Guaranty Trust Company
of New York, as Authenticating Agent, Co-Transfer Agent and Co-Registrar and
Co-Paying Agent thereunder, and the Trustee.
"Authenticating Agent" shall mean Morgan Guaranty Trust
Company of New York, as Authenticating Agent with respect to the Class B
Certificates under the Agency Agreement.
"Cede" shall mean Cede & Co., as DTC's nominee.
"Class B Underwriter" shall mean the underwriter of the Class
B Certificates, named in the Class B Underwriting Agreement.
"Class B Underwriting Agreement" shall mean the underwriting
agreement dated as of November 26, 1996 between the Seller and the underwriter
of the Class B Certificates named therein.
<PAGE> 7
7
"Common Depositary" shall mean Morgan Guaranty Trust Company,
London office, in its capacity as a common Depositary for the Foreign Clearing
Agencies with respect to the Regulation S Global Certificate as provided in the
Agency Agreement.
"Co-Paying Agent" shall mean Morgan Guaranty Trust Company of
New York, as Co-Paying Agent with respect to the Class B Certificates under the
Agency Agreement.
"Co-Transfer Agent and Co-Registrar" shall mean Morgan
Guaranty Trust Company of New York, as Co-Transfer Agent and Co-Registrar with
respect to the Class B Certificates under the Agency Agreement.
"DTC" shall mean The Depository Trust Company, a New York
corporation.
"FAST Custodian" shall mean Morgan Guaranty Trust Company of
New York, London office, as FAST custodian for DTC.
"Global Certificate" shall have the meaning specified in
Section 2.03(a)(ii) of this Term Sheet.
"MGTB" shall have the meaning specified in Section 2.03(a)(i)
of this Term Sheet.
"Regulation S" shall mean Regulation S promulgated under the
Act.
"Regulation S Global Certificate" shall have the meaning
specified in Section 2.03(a)(i) of this Term Sheet.
"Restricted Global Certificate" shall have the meaning
specified in Section 2.03(a)(ii) of this Term Sheet.
Notwithstanding any provision of the Agreement or this
Supplement, the term "Distribution Date", when used in the Agreement or this
Supplement with respect to the Class B Certificates, shall mean a day that is
both (i) a Business Day (as such term is defined in the Agreement) and (ii) a
London Business Day (as defined herein).
<PAGE> 8
8
Notwithstanding any provision of the Agreement or this
Supplement, the term "Paying Agent" when used in the Agreement or this
Supplement with respect to Series 1996-2, shall mean, (i) with respect to the
Class A Certificates and the Collateral Indebtedness Interest, the Paying Agent
specified pursuant to the Agreement, and (ii) with respect to the Class B
Certificates, the Co-Paying Agent's London office specified in the Agency
Agreement or a Paying Agent or other co-paying agent chosen by the Seller and
acceptable to the Trustee acting through such Paying Agent or other co-paying
agent's office outside the United States, and any successor Paying Agents or
co-paying agents with respect to the Class A Certificates and Class B
Certificates appointed by the Seller, and acceptable to the Trustee, from time
to time.
Notwithstanding any provision of the Agreement or this
Supplement, the term "Transfer Agent and Registrar" when used in the Agreement
or this Supplement with respect to Series 1996-2, shall mean, (i) with respect
to the Class A Certificates and the Collateral Indebtedness Interest, the
Transfer Agent and Registrar specified pursuant to the Agreement, and (ii) with
respect to the Class B Certificates, the Co-Transfer Agent and Co-Registrar,
and any successor Transfer Agent and Registrar or other co-transfer agent and
co-registrar with respect to the Class A Certificates or the Class B
Certificates appointed by the Seller, and acceptable to the Trustee, from time
to time.
Section 2.02. Distributions and Reporting to Class B
Certificateholders. Notwithstanding anything to the contrary in Section 5.01
of the Annex or elsewhere in the Agreement or this Supplement, distributions
from the Collection Account with respect to the Regulation S Global Certificate
shall be payable only through the Co-Paying Agent's London office specified in
the Agency Agreement or through a Paying Agent or other co-paying agent chosen
by the Seller and acceptable to the Trustee through such Paying Agent or other
co-paying agent's office outside the United States. If such payment at the
office of the Co-Paying Agent, or such Paying Agent or other co-paying agent,
outside the United States becomes illegal or is
<PAGE> 9
9
effectively precluded because of the imposition of exchange controls or other
similar restrictions on the full payment or receipt of such amounts in United
States dollars, payments with respect to the Regulation S Global Certificate
will be made at the office of the Co-Paying Agent, or such Paying Agent or
other co-paying agent, in New York City. Except as provided in the preceding
sentence, no demand for payment or payment with respect to the Regulation S
Global Certificate may be made at any office of the Co-Paying Agent or a Paying
Agent or other co-paying agent in the United States nor will any payment be
made by transfer to an account in, or by mail to an address in, the United
States.
Notwithstanding anything to the contrary in Section 5.02 of
the Annex or elsewhere in the Agreement or this Supplement, so long as any
Class B Certificates are represented by the Regulation S Global Certificate,
the Servicer shall notify (i) each Foreign Clearing Agency and (ii) if and so
long as such Class B Certificates are listed on the Luxembourg Stock Exchange
and the rules of the Luxembourg Stock Exchange so require, the Luxembourg Stock
Exchange of each determination of the Class B Certificate Rate, the Class B
Monthly Interest for the related Interest Period and the beginning and ending
dates of such Interest Period not later than two Business Days after such
determination is made.
Notwithstanding anything to the contrary in Section 5.02 of
the Annex or elsewhere in the Agreement or this Supplement, if and so long as
the Class B Certificates are listed on the Luxembourg Stock Exchange and the
rules of the Luxembourg Stock Exchange so require, the Servicer shall cause the
Class B Certificate Rate for each Interest Period, the Class B Monthly Interest
in respect of each U.S. $100,000 principal amount of Class B Certificates and
the beginning and ending dates and Payment Date for each Interest Period (and,
with respect to the Class B Expected Final Payment Date and any Special Payment
Date, the amount of principal to be distributed in respect of each U.S.
$100,000 principal amount of the Class A Certificates) to be published in a
daily newspaper of general circulation in Luxembourg (which is expected to be,
but need not be, the Luxembourg Wort), as soon as possible after the
<PAGE> 10
10
determination of the Class B Certificate Rate, but in no event later than the
day required pursuant to the rules of the Luxembourg Stock Exchange. If
applicable, the Class B Monthly Interest, Interest Period and Payment Date so
published may subsequently be changed (or appropriate alternative arrangements
be made by way of adjustment) without notice in the event of an extension or
shortening of such Interest Period.
Section 2.03. The Class B Certificates. (a) Form of Class B
Certificates. Notwithstanding anything to the contrary in Section 6.13 of the
Agreement, the Class B Certificates shall initially be represented by two or
more permanent global certificates in definitive, fully registered form,
without interest coupons, in respect of the entire aggregate principal amount
of the Class B Certificates.
(i) Regulation S Global Certificate. Class B Certificates
offered and sold in reliance on Regulation S shall be issued in the
form of one or more permanent global Class B Certificates in
definitive, fully registered form without interest coupons
(collectively, the "Regulation S Global Certificate"), substantially
in the form of Exhibit A-2 to this Supplement, duly executed by the
Seller and authenticated by the Trustee or the Authenticating Agent.
The Regulation S Global Certificate shall be registered in the name of
MGTB Nominees Limited ("MGTB") as nominee for, and shall be deposited
on or about the Closing Date with, the Common Depositary for credit on
the Closing Date to the accounts of the purchasers holding interests
therein through the Foreign Clearing Agencies.
(ii) Restricted Global Certificate. Class B Certificates
offered and sold in reliance on Rule 144A shall be issued in the form
of one or more permanent global Certificates in definitive, fully
registered form without interest coupons (collectively, the
"Restricted Global Certificate" and, together with the Regulation S
Global Certificate, the "Global Certificates"), substantially in the
form set forth in Exhibit A-3 to this Supplement, duly executed by the
<PAGE> 11
11
Seller and authenticated by the Trustee or the Authenticating Agent.
The Restricted Global Certificate will be registered in the name of
Cede as nominee for, and deposited on or about the Closing Date with
the FAST Custodian for, DTC for credit on the Closing Date to the
accounts of the purchasers holding interests therein through DTC.
(iii) Minimum Beneficial Interests. Beneficial interests in
Class B Certificates can be purchased and held only in a minimum
amount of $100,000 and in larger amounts that are integral multiples
of $1000.
(iv) Aggregate Class B Principal Amount. The sum of the
aggregate principal amounts of the Global Certificates shall never
exceed the Class B Initial Investor Amount. Any increase or decrease
in the principal amount of a Global Certificate in respect of any
exchange or transfer of a beneficial interest therein (other than any
issuance of definitive Class B Certificates in respect thereof) must
necessarily result in an opposite decrease or increase of equal amount
in the principal amount of the other Global Certificate in respect of
an exchange or transfer of a beneficial interest therein.
(b) Restrictions on Transfers and Exchanges.
(i) Global Certificates. Notwithstanding any provision to the
contrary herein, so long as a Global Certificate remains outstanding
and is (i) held by MGTB or otherwise held by or on behalf of the
Common Depositary or (ii) held by the FAST Custodian or otherwise held
by or on behalf of DTC or Cede or on behalf of DTC, transfers of a
Global Certificate or a beneficial interest therein, in whole or in
part, shall only be made in accordance with this Section 2.03(b)(i).
(A) Transfers of Global Certificates in Whole.
Subject to clauses (B) and (C) of this Section 2.03(b)(i), transfers
of the Regulation S Global Certificate shall be limited to transfers
of the
<PAGE> 12
12
Regulation S Global Certificate in whole, but not in part, to the
Common Depositary or to nominees of the Common Depositary or to a
successor of the Common Depositary or such successor's nominee and
transfers of the Restricted Global Certificate shall be limited to
transfers of the Restricted Global Certificate in whole, but not in
part, to DTC or to nominees of DTC or to a successor of DTC or such
successor's nominee.
(B) Transfer or Exchange from Restricted Global
Certificate to Regulation S Global Certificate. If a holder of a
beneficial interest in the Restricted Global Certificate wishes at any
time to exchange its interest in such Restricted Global Certificate
for an interest in the Regulation S Global Certificate, or to transfer
its interest in such Restricted Global Certificate to a person who
wishes to take delivery thereof in the form of an interest in the
Regulation S Global Certificate, such holder may, subject to the rules
and procedures of DTC, Euroclear and Cedel, exchange or cause the
exchange or transfer or cause the transfer of such interest for an
equivalent beneficial interest in the Regulation S Global Certificate
in accordance with this paragraph (B). Upon receipt by the
Co-Transfer Agent and Co-Registrar of (1) instructions given in
accordance with DTC's procedures from an agent member directing the
Co-Transfer Agent and Co-Registrar to credit or cause to be credited a
beneficial interest in the Regulation S Global Certificate in an
amount equal to the beneficial interest in the Restricted Global
Certificate to be exchanged or transferred, (2) a written order given
by the holder of such beneficial interest in accordance with DTC's
procedures containing information regarding the Euroclear or Cedel
account to be credited with such increase, and (3) a certificate in
the form of Exhibit A-4 attached hereto given by the holder of such
beneficial interest stating that the exchange or transfer of such
interest has been made in compliance with the transfer restrictions
applicable to the Class B Certificates represented by the Restricted
Global Certificate and that such transfer or exchange has been made
pursuant to and in accordance with
<PAGE> 13
13
Regulation S, the FAST Custodian shall instruct the Co-Transfer Agent
and Co-Registrar to reduce the Restricted Global Certificate by the
aggregate principal amount of the beneficial interest in the
Restricted Global Certificate to be so exchanged or transferred and to
increase the principal amount of the Regulation S Global Certificate
by the aggregate principal amount of the beneficial interest in the
Restricted Global Certificate to be so exchanged or transferred, and
to credit or cause to be credited to the account of the person
specified in such instructions a beneficial interest in the Regulation
S Global Certificate equal to the reduction in the principal amount of
the Restricted Global Certificate, and the Co-Transfer Agent and
Co-Registrar shall effect such increase and corresponding reduction.
(C) Transfer or Exchange from Regulation S Global
Certificate to Restricted Global Certificate. If a holder of a
beneficial interest in the Regulation S Global Certificate wishes at
any time to exchange its interest in such Regulation S Global
Certificate for an interest in the Restricted Global Certificate, or
to transfer its interest in such Regulation S Global Certificate to a
person who wishes to take delivery thereof in the form of an interest
in the Restricted Global Certificate, such holder may, subject to the
rules and procedures of DTC, Euroclear and Cedel, exchange or cause
the exchange or transfer or cause the transfer of such interest for an
equivalent beneficial interest in the Restricted Global Certificate in
accordance with this paragraph (C). Pursuant to the rules of the
Foreign Clearing Agencies, the participant of the relevant Foreign
Clearing Agency must send to such Foreign Clearing Agency delivery
free of payment instructions one business day prior to the settlement
date. Such Foreign Clearing Agency will transmit appropriate
instructions to the Common Depositary. The Common Depositary shall
transmit instructions to the FAST Custodian. Upon receipt by the
Co-Transfer Agent and Co-Registrar of (1) instructions from the FAST
Custodian directing the Co-Transfer Agent and Co-Registrar to credit
or cause to be
<PAGE> 14
14
credited a beneficial interest in the Restricted Global Certificate in
an amount equal to the beneficial interest in the Regulation S Global
Certificate to be exchanged or transferred and (2) if such transfer or
exchange is to occur on or before the 40th day following the later of
the commencement of any offering of the Class B Certificates pursuant
to Regulation S and the Closing Date, a certificate in the form of
Exhibit A-5 attached hereto given by the holder of such beneficial
interest stating that the exchange or transfer of such interest has
been made in compliance with Rule 144A and in accordance with any
applicable securities laws of any state of the United States or any
other jurisdiction, the FAST Custodian shall instruct the Co-Transfer
Agent and Co-Registrar to reduce the Regulation S Global Certificate
by the aggregate principal amount of the beneficial interest in the
Regulation S Global Certificate to be so exchanged or transferred and
to increase the principal amount of the Restricted Global Certificate
by the aggregate principal amount of the beneficial interest in the
Regulation S Global Certificate to be so exchanged or transferred, and
to credit or cause to be credited to the account of the person
specified in such instructions a beneficial interest in the Restricted
Global Certificate equal to the reduction in the principal amount of
the Regulation S Global Certificate, and the Co-Transfer Agent and
Co-Registrar shall effect such increase and corresponding reduction.
After such 40th day, the certification requirement in the form of
Exhibit A-5 will no longer apply to such transfers and exchanges, but
such transfers and exchanges will continue to be subject to the
transfer restrictions contained in the legend appearing on the
Regulation S Global Certificate, as set out in Exhibit A-3.
(D) Transfers or Exchanges of Definitive
Certificates. In the event that a Global Certificate is exchanged for
certificated Class B Certificates in definitive registered form
without interest coupons pursuant to Section 2.03(c), such definitive
Class B Certificates may be exchanged or transferred for one
<PAGE> 15
15
another only in accordance with such procedures as are substantially
consistent with the provisions of paragraphs (B) and (C) above
(including the certification requirements intended to ensure that such
exchanges or transfers comply with Rule 144A or Regulation S under the
Act, as the case may be) and as may be from time to time adopted or
required by the Seller, the Trustee and/or the Co-Transfer Agent and
Co-Registrar. Subject to the foregoing restrictions and the minimum
denominations specified in Section 2.03(a)(iii), the Holder of any
definitive Class B Certificate may transfer or exchange the same in
whole or in part by surrendering such definitive Class B Certificate
at the office of the Co-Transfer Agent and Co-Registrar (or at the
office of any other transfer agent that may be appointed by the Seller
in accordance with the Agreement and the Supplement) and complying
with the requirements for registration of transfer or exchange set
forth in Section 6.04 of the Agreement.
(c) Definitive Certificates.
(i) Conditions for Issuance. Notwithstanding anything to the
contrary in Section 6.12 if the Agreement, interests in the Regulation
S Global Certificate shall be transferred to the beneficial owners
thereof in the form of definitive Class B Certificates only if (A)
both of the Foreign Clearing Agencies is closed for business for a
continuous period of 14 days (other than by reason of legal holidays)
or announces an intention permanently to cease business or (B)
following a failure to pay principal when due on any Class B
Certificate, the Co-Transfer Agent and Co-Registrar or the Trustee has
received a notice from the Holder of the Regulation S Global
Certificate requesting exchange of the Regulation S Global Certificate
for definitive Class B Certificates. Notwithstanding anything to the
contrary in Section 6.12 if the Agreement, interests in the Restricted
Global Certificate shall be transferred to the beneficial owners
thereof in the form of definitive Class B Certificates only if (A) the
Seller advises the
<PAGE> 16
16
Trustee and the Co-Transfer Agent and Co-Registrar that the Clearing
Agency is no longer willing or able to discharge properly its
responsibilities under the Depositary Agreement with respect to the
Class B Certificates, (B) the Seller, at its option, advises the
Trustee that it elects to terminate the book-entry system with respect
to the Class B Certificates through the Clearing Agency or (C) after
the occurrence of a Servicer Default, Certificate Owners of Class B
Certificates held through the Clearing Agency evidencing not less than
50% of the aggregate unpaid principal amount of Class B Certificates
held through the Clearing Agency advise the Trustee and the Clearing
Agency through the Clearing Agency Participants that the continuation
of a book-entry system with respect to the Class B Certificates
through the Clearing Agency is no longer in the best interests of the
Certificate Owners with respect to such Class B Certificates.
(ii) Issuance. If interests in any Global Certificate are to
be transferred to the Certificate Owners thereof in the form of
definitive Class B Certificates, such Global Certificate shall be
surrendered by the Common Depositary or DTC, as applicable, and such
definitive Class B Certificates shall be issued pursuant to Section
6.12 of the Agreement. The definitive Class B Certificates
transferred shall be executed, authenticated and delivered only in the
denominations specified in Section 2.03(a)(iii) of this Term Sheet and
registered in such names as the Foreign Clearing Agencies or the
Clearing Agency, as applicable, shall direct in writing. In no event
will any Agent be liable for the costs and expenses of printing,
preparing or delivering any definitive Class B Certificate.
<PAGE> 17
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IN WITNESS WHEREOF, the undersigned have caused this
Supplement to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.
CAPITAL ONE BANK,
Seller and Servicer,
by /s/ LEE J. JACOBSON
-------------------------
Name:
Title:
THE BANK OF NEW YORK,
Trustee
by /s/ JOSEPH G. ERNST
-------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 6
CAPITAL ONE MASTER TRUST
(formerly Signet Master Trust)
December 18, 1996
STANDARD DEFINITIONS AND PROVISIONS ANNEX
ARTICLE I
Designation of the Annex
Section 1.01. Designation (a) The Seller, the Servicer and the
Trustee have, prior to the execution and delivery of the attached Term Sheet,
designated standard definitions and provisions to be incorporated therein. The
standard definitions and provisions relating to the attached Term Sheet are
identified in this December 18, 1996 Standard Definitions and Provisions Annex
(the "Annex"). A copy of this Annex is maintained by the Trustee and the
Servicer. The Term Sheet for the Designated Series and the Annex are
collectively referred to herein as the "Supplement".
(b) Notwithstanding any provision in the Agreement or in the
Supplement to the contrary, (i) the first Distribution Date with respect to the
Designated Series shall be the Initial Distribution Date, (ii) if the
Designated Series is an Extendable Series, then the Designated Series will be
deemed to be a Variable Funding Series from the Determination Date immediately
preceding the Monthly Period in which the Initial Principal Payment Date occurs
(prior to any extensions) and (iii) if the Designated Series is a Prefunded
Series, then the "Initial Invested Amount" for the Designated Series, as such
term is used in any previously issued Series (according to the related
Supplement), will be deemed to be equal to the Initial Invested Amount plus, as
of such date of determination, the amount of any increases in the Invested
Amount during the Funding Period.
(c) The Collateral Indebtedness Holder, as holder of an "Investor
Certificate" and as a "Series Enhancer" under the Agreement, shall be entitled
to the benefits of the Agreement and the Supplement. Whenever the Agreement
specifies that any notice, approval right or other right is to be given to the
Series Enhancer to the extent the Series Enhancer is entitled thereto under the
related Supplement, the Collateral Indebtedness Holder, as Series Enhancer,
shall be so entitled. Notwithstanding the foregoing, except as expressly
provided herein or in the attached Term Sheet,
<PAGE> 2
2
the provisions of Article VI and Article XII of the Agreement relating to the
registration, authentication, delivery, presentation, cancellation and
surrender of Registered Certificates shall not be applicable to the Collateral
Indebtedness Interest. The Collateral Indebtedness Interest shall be deemed to
arise upon the payment of the amounts due on the Closing Date pursuant to the
Collateral Agreement.
ARTICLE II
Definitions
Section 2.01. Definitions. (a) Whenever used in the Supplement,
the following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and the masculine as well as the feminine and neuter
genders of such terms.
"Accumulation Period" shall mean the Class A Accumulation Period
and the Class B Accumulation Period.
"Accumulation Period Amount" shall mean for each Monthly Period,
an amount equal to the product of (a) Available Expected Principal for such
Monthly Period and (b) a fraction, (i) the numerator of which is the Class A
Initial Invested Amount plus, if applicable, the amount of any increases in the
Class A Invested Amount during the Funding Period, and (ii) the denominator of
which is the sum of (A) the Class A Initial Invested Amount plus, if
applicable, the amount of any increases in the Class A Invested Amount during
the Funding Period and (B) the invested amounts of all other Variable
Accumulation Series which are not scheduled to be in their revolving periods as
of such Monthly Period; provided that, for purposes of this definition, the
commencement date of the accumulation period of each such Variable Accumulation
Series shall be deemed to have been postponed to the latest permissible date,
determined as if the provisions of Section 4.03(g) applied to each such Series
with such changes as may be specified with respect to such Series (applying
such provisions first
<PAGE> 3
3
to the Variable Accumulation Series with the latest expected final payment date
and next to each Series with the next preceding expected final payment date).
"Additional Class A Certificates" shall have the meaning specified
in Section 9.03(a).
"Additional Class B Certificates" shall have the meaning specified
in Section 9.03(a).
"Additional Interest" shall mean, at any time of determination,
the Class A Additional Interest, the Class B Additional Interest and the
Collateral Additional Interest.
"Additional Investor Certificates" shall mean any one of the
Additional Class A Certificates or the Additional Class B Certificates.
"Additional Issuance" shall have the meaning specified in Section
9.03(a).
"Additional Issuance Date" shall have the meaning specified in
Section 9.03(a).
"Adjusted Invested Amount" shall mean, with respect to any date
of determination, an amount equal to the Invested Amount less the Principal
Funding Account Balance on such date of determination.
"Annex" shall have the meaning specified in Section 1.01(a).
"Available Cash Collateral Amount" shall mean, with respect to any
Distribution Date, the lesser of (a) the amount on deposit in the Cash
Collateral Account on such date (before giving effect to any deposit to, or
withdrawal from, the Cash Collateral Account to be made with respect to such
date) and (b) the lesser of the Required Collateral Amount and the Adjusted
Invested Amount as of such date.
"Available Collateral Amount" shall mean, for any date of
determination, the sum of (a) the Collateral Indebtedness Amount and (b) the
aggregate amount of funds on
<PAGE> 4
4
deposit in the Cash Collateral Account, in each case on such date.
"Available Expected Principal" for any date of determination with
respect to each Monthly Period shall be equal to the excess of (a) the Expected
Monthly Principal for such Monthly Period over (b) the sum of, without
duplication, all scheduled amortizations or accumulations of principal,
including past due shortfalls as of such date of determination, for all
Non-Variable Accumulation Series which are not scheduled to be in their
revolving periods as of such Monthly Period.
"Available Investor Principal Collections" shall mean, with
respect to any Monthly Period, an amount equal to the sum of (a)(i) an amount
equal to the Investor Principal Collections minus (ii) the amount of
Reallocated Principal Collections with respect to such Monthly Period which
pursuant to Section 4.08(a) are required to fund any deficiency in the amount
to be distributed pursuant to Sections 4.05(a)(i), (ii) and (iii) for the
related Distribution Date (excluding Reallocated Principal Collections that
have resulted in a reduction of the Collateral Indebtedness Amount pursuant to
Section 4.06(c)), plus (b) the amount of Miscellaneous Payments, if any, for
such Monthly Period that are allocated to the Designated Series pursuant to
Section 4.03 of the Agreement, plus (c) any Shared Principal Collections with
respect to other Series that are allocated to the Designated Series in
accordance with Section 4.04 of the Agreement and Section 4.10 hereof, plus (d)
the amount, if any, of Class A Available Funds to be distributed pursuant to
Section 4.05(a)(iii) with respect to the related Distribution Date and plus (e)
any other amounts which pursuant to Section 4.07 hereof are to be treated as
Available Investor Principal Collections with respect to the related
Distribution Date.
"Available Reserve Account Amount" shall mean, with respect to any
Distribution Date, the lesser of (a) the amount on deposit in the Reserve
Account on such date (before giving effect to any deposit to be made to the
<PAGE> 5
5
Reserve Account on such date) and (b) the Required Reserve Account Amount for
such Distribution Date.
"Base Rate" shall mean, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction, the numerator of which is equal
to the sum of the Monthly Interest and the Monthly Servicing Fee with respect
to the related Distribution Date and the denominator of which is the Investor
Amount as of the last day of the preceding Monthly Period.
"Cash Collateral Account" shall have the meaning specified in
Section 4.12(a).
"Cash Collateral Surplus" shall mean, as of any date of
determination, the lesser of (a) the Collateral Surplus and (b) the amount on
deposit in the Cash Collateral Account. Any Cash Collateral Surplus shall be
applied in accordance with the Collateral Agreement.
"Class A Accumulation Period" shall mean, unless a Pay Out Event
or a Principal Payment Event shall have occurred prior thereto, the period
commencing at the close of business on the Class A Accumulation Period
Commencement Date or such later date as is determined in accordance with
Section 4.03(g) and ending on the first to occur of (a) the commencement of the
Early Amortization Period, (b) the payment in full to Class A
Certificateholders of the Class A Invested Amount, (c) the commencement of the
Principal Payment Period or (d) the Termination Date.
"Class A Accumulation Period Commencement Date" shall mean the
date specified as such in the attached Term Sheet.
"Class A Accumulation Period Length" shall have the meaning
specified in Section 4.03(g).
"Class A Additional Interest" shall have the meaning specified in
Section 4.02(a).
"Class A Adjusted Invested Amount" shall mean, with respect to any
date of determination, an amount equal
<PAGE> 6
6
to the Class A Invested Amount less the Principal Funding Account Balance on
such date.
"Class A Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the sum of (a) if such Monthly Period relates to a
Distribution Date that occurs prior to the Class B Principal Commencement Date,
the amount of Principal Funding Investment Proceeds, if any, with respect to
such Distribution Date, (b) if applicable, the Class A Initial Percentage of
the Prefunding Investment Proceeds with respect to such Distribution Date, (c)
the Class A Floating Percentage of the Collections of Finance Charge
Receivables (other than Finance Charge Receivables allocated to Servicer
Interchange with respect to such Monthly Period) allocated to the Designated
Series (including any investment earnings that are to be treated as Collections
of Finance Charge Receivables in accordance with the Agreement) and (d) the
amount of funds, if any, to be withdrawn from the Reserve Account which,
pursuant to Section 4.11(d), are required to be included in Class A Available
Funds with respect to such Distribution Date.
"Class A Certificate Rate" shall mean the rate specified as such
in the attached Term Sheet, though not to exceed the Class A Maximum Interest
Rate, if any.
"Class A Certificateholder" shall mean the Person in whose name a
Class A Certificate for the Designated Series is registered in the Certificate
Register.
"Class A Certificates" shall mean any one of the Certificates for
the Designated Series executed by the Bank and authenticated by or on behalf of
the Trustee, substantially in the form of Exhibit A-1. For the avoidance of
doubt, when used in the Supplement the term "Class A Certificates" shall
include any Additional Class A Certificates.
"Class A Expected Final Payment Date" shall mean the date
specified as such in the attached Term Sheet.
"Class A Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent
<PAGE> 7
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(which percentage shall never exceed 100%) of a fraction, the numerator of
which is equal to the Class A Adjusted Invested Amount as of the close of
business on the last day of the preceding Monthly Period and the denominator of
which is equal to the Adjusted Invested Amount as of such day; provided,
however, that with respect to the first Monthly Period, the Class A Floating
Percentage shall mean the Class A Initial Percentage.
"Class A Floating Rate Index Maturity" shall mean the period
specified as such in the attached Term Sheet.
"Class A Initial Invested Amount" shall mean the Class A Initial
Investor Amount less the Class A Initial Percentage of the Initial Prefunded
Amount.
"Class A Initial Investor Amount" shall mean the aggregate initial
principal amount of the Class A Certificates, which is the amount specified as
such in the attached Term Sheet, and the aggregate initial principal amount of
any Additional Class A Certificates.
"Class A Initial Percentage" shall mean the percentage equivalent
of a fraction, the numerator of which is the Class A Initial Investor Amount
and the denominator of which is the Initial Investor Amount.
"Class A Interest Determination Date" shall mean the determination
date specified as such in the attached Term Sheet.
"Class A Interest Funding Account" if applicable, shall have the
meaning specified in Section 4.03(e)(i).
"Class A Interest Shortfall" shall have the meaning specified in
Section 4.02(a).
"Class A Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class A Initial Invested Amount,
minus (b) the aggregate amount of principal payments made to the Class A
Certificateholders on or prior to such date (other than, if applicable,
principal payments made from amounts on deposit in the Prefunding Account on
<PAGE> 8
8
the first Distribution Date following the end of the Funding Period), minus (c)
the excess, if any, of the aggregate amount of Class A Investor Charge-Offs for
all prior Distribution Dates over the aggregate amount of Class A Investor
Charge-Offs reimbursed pursuant to Section 4.06(a) prior to such date and plus
(d) if applicable, the amount of any increases in the Class A Invested Amount
during the Funding Period pursuant to Section 4.13(f).
"Class A Investor Amount" shall mean the sum of (a) the Class A
Invested Amount and (b) the Class A Initial Percentage of the Prefunded Amount,
if any.
"Class A Investor Charge-Offs" shall have the meaning specified in
Section 4.06(a).
"Class A Investor Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for the related Monthly Period and (ii) the Class A Floating Percentage
for such Monthly Period.
"Class A Maximum Interest Rate" if applicable, shall mean the rate
specified as such in the attached Term Sheet.
"Class A Monthly Interest" shall have the meaning specified in
Section 4.02(a).
"Class A Monthly Principal" shall have the meaning specified in
Section 4.03(a).
"Class A Outstanding Additional Interest" shall mean the amount of
Class A Additional Interest previously due but not (a) paid to Class A
Certificateholders or (b) deposited in the Class A Interest Funding Account, as
applicable.
"Class A Outstanding Monthly Interest" shall mean the amount of
Class A Monthly Interest previously due but not (a) paid to Class A
Certificateholders or (b) deposited in the Class A Interest Funding Account, as
applicable.
<PAGE> 9
9
"Class A Penalty Rate" shall mean the sum of the Class A
Certificate Rate and 2.00% per annum.
"Class A Principal Percentage" shall mean, with respect to any
Monthly Period (i) during the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of
which is the Class A Invested Amount as of the last day of the immediately
preceding Monthly Period (or, in the case of the first Monthly Period, the
Closing Date) and the denominator of which is the Invested Amount as of such
day and (ii) during the Accumulation Period, the Principal Payment Period or
the Early Amortization Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is the Class A
Invested Amount as of the last day of the Revolving Period, and the denominator
of which is the Invested Amount as of such last day; provided, however, that
with respect to the first Monthly Period, the Class A Principal Percentage
shall mean the percentage equivalent of a fraction, the numerator of which is
the Class A Initial Invested Amount and the denominator of which is the Initial
Invested Amount.
"Class A Required Amount" shall have the meaning specified in
Section 4.04(a).
"Class A Servicing Fee" shall have the meaning specified in
Section 3.01.
"Class B Accumulation Period" shall mean the period commencing on
the Class B Principal Commencement Date and ending on the first to occur
thereafter of (a) the commencement of the Early Amortization Period, (b) the
payment in full to the Class B Certificateholders of the Class B Invested
Amount, (c) the commencement of the Principal Payment Period or (d) the
Termination Date.
"Class B Additional Interest" shall have the meaning specified in
Section 4.02(b).
"Class B Adjusted Invested Amount" shall mean, with respect to any
date of determination (a) if such date of determination occurs prior to the
Class B Principal
<PAGE> 10
10
Commencement Date, an amount equal to the Class B Invested Amount or (b) if
such date of determination occurs on or after the Class B Principal
Commencement Date, an amount equal to the Class B Invested Amount less the
Principal Funding Account Balance on such date.
"Class B Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the sum of (a) if such Monthly Period relates to a
Distribution Date that occurs on or after the Class B Principal Commencement
Date, the amount of Principal Funding Investment Proceeds, if any, with respect
to such Distribution Date, (b) if applicable, the Class B Initial Percentage of
the Prefunding Investment Proceeds with respect to such Distribution Date, (c)
the Class B Floating Percentage of the Collections of Finance Charge
Receivables (other than Finance Charge Receivables allocated to Servicer
Interchange with respect to such Monthly Period) allocated to the Designated
Series (including any investment earnings that are to be treated as Collections
of Finance Receivables in accordance with the Agreement) and (d) the amount of
funds, if any, to be withdrawn from the Reserve Account which pursuant to
Section 4.11(d) are required to be included in Class B Available Funds with
respect to such Distribution Date.
"Class B Certificate Rate" shall mean the rate specified as such
in the attached Term Sheet, though not to exceed the Class B Maximum Interest
Rate, if any.
"Class B Certificateholder" shall mean the Person in whose name a
Class B Certificate for the Designated Series is registered in the Certificate
Register.
"Class B Certificates" shall mean any one of the Certificates for
the Designated Series executed by the Bank and authenticated by or on behalf of
the Trustee, substantially in the form of Exhibit A-2. For the avoidance of
doubt, the term "Class B Certificates" when used in the Supplement shall
include any Additional Class B Certificates.
"Class B Expected Final Payment Date" shall mean the date
specified as such in the attached Term Sheet.
<PAGE> 11
11
"Class B Floating Rate Index Maturity" shall mean the period
specified as such in the attached Term Sheet.
"Class B Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class B Adjusted
Invested Amount as of the close of business on the last day of the preceding
Monthly Period and the denominator of which is equal to the Adjusted Invested
Amount as of the close of business on such day; provided, however, that with
respect to the first Monthly Period, the Class B Floating Percentage shall mean
the Class B Initial Percentage.
"Class B Initial Invested Amount" shall mean the Class B Initial
Investor Amount less the Class B Initial Percentage of the Initial Prefunded
Amount.
"Class B Initial Investor Amount" shall mean the aggregate initial
principal amount of the Class B Certificates, which is the amount specified as
such in the attached Term Sheet, and the aggregate initial principal amount of
any Additional Class B Certificates.
"Class B Initial Percentage" shall mean the percentage equivalent
of a fraction, the numerator of which is the Class B Initial Investor Amount
and the denominator of which is the Initial Investor Amount.
"Class B Interest Determination Date" shall mean the determination
date specified as such in the attached Term Sheet.
"Class B Interest Funding Account" if applicable, shall have the
meaning specified in Section 4.03(e)(ii).
"Class B Interest Shortfall" shall have the meaning specified in
Section 4.02(b).
"Class B Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class B Initial Invested Amount,
minus (b) the aggregate amount of principal payments made to the Class B
Certificateholders prior to
<PAGE> 12
12
such date (other than, if applicable, principal payments made from amounts on
deposit in the Prefunding Account on the first Distribution Date following the
end of the Funding Period), minus (c) the excess, if any, of the aggregate
amount of Class B Investor Charge-Offs for all prior Distribution Dates over
the aggregate amount of any reimbursement of Class B Investor Charge-Offs for
all Distribution Dates preceding such date, minus (d) the amount of Reallocated
Principal Collections allocated on all prior Distribution Dates pursuant to
Section 4.08(a) (excluding any Reallocated Principal Collections that have
resulted in a reduction in the Collateral Indebtedness Amount pursuant to
Section 4.06(c)), minus (e) an amount equal to the amount by which the Class B
Invested Amount has been reduced on all prior Distribution Dates pursuant to
Section 4.06(a), plus (f) the amount of Excess Spread and Excess Finance
Charges allocated and available on all prior Distribution Dates pursuant to
Section 4.07(d) for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c), (d) and (e) and plus (g) if applicable, the amount of
any increases in the Class B Invested Amount during the Funding Period pursuant
to Section 4.13(f).
"Class B Investor Amount" shall mean the sum of (a) the Class B
Invested Amount and (b) the Class B Initial Percentage of the Prefunded Amount,
if any.
"Class B Investor Charge-Offs" shall have the meaning specified in
Section 4.06(b).
"Class B Investor Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for the related Monthly Period and (ii) the Class B Floating Percentage
for such Monthly Period.
"Class B Monthly Interest" shall have the meaning specified in
Section 4.02(b).
"Class B Monthly Principal" shall have the meaning specified in
Section 4.03(b).
<PAGE> 13
13
"Class B Outstanding Additional Interest" shall mean the amount of
Class B Additional Interest previously due but not (a) paid to Class B
Certificateholders or (b) deposited in the Class B Interest Funding Account, as
applicable.
"Class B Outstanding Monthly Interest" shall mean the amount of
Class B Monthly Interest previously due but not (a) paid to Class B
Certificateholders or (b) deposited in the Class B Interest Funding Account, as
applicable.
"Class B Penalty Rate" shall mean the sum of the Class B
Certificate Rate and 2.00% per annum.
"Class B Principal Commencement Date" shall mean the Distribution
Date on which the Class A Invested Amount is paid in full or, if the Class A
Invested Amount is paid in full on the Class A Expected Final Payment Date and
the Early Amortization Period has not commenced, the Distribution Date
following the Class A Expected Final Payment Date.
"Class B Principal Percentage" shall mean, with respect to any
Monthly Period (i) during the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of
which is the Class B Invested Amount as of the last day of the immediately
preceding Monthly Period (or, in the case of the first Monthly Period, the
Closing Date) and the denominator of which is the Invested Amount as of such
day and (ii) during the Accumulation Period, the Principal Payment Period or
the Early Amortization Period, the percentage equivalent (which percentage
shall never exceed 100%) of a fraction, the numerator of which is the Class B
Invested Amount as of the last day of the Revolving Period, and the denominator
of which is the Invested Amount as of such last day; provided, however, that
with respect to the first Monthly Period, the Class B Principal Percentage
shall mean the percentage equivalent of a fraction, the numerator of which is
the Class B Initial Invested Amount and the denominator of which is the Initial
Invested Amount.
<PAGE> 14
14
"Class B Required Amount" shall have the meaning specified in
Section 4.04(b).
"Class B Servicing Fee" shall have the meaning specified in
Section 3.01.
"Closing Date" shall mean the date specified as such in the
attached Term Sheet.
"Collateral Additional Interest" shall have the meaning specified
in Section 4.02(c).
"Collateral Agreement" shall mean the agreement among the Seller,
the Servicer, the Trustee and the Collateral Indebtedness Holder relating to
the Designated Series, dated the same date as the Term Sheet, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Collateral Available Funds" shall mean, with respect to any
Monthly Period, an amount equal to the sum of (a) if applicable, the Collateral
Initial Percentage of the Prefunding Investment Proceeds with respect to such
Distribution Date, and (b) the Collateral Floating Percentage of the
Collections of Finance Charge Receivables (other than Finance Charge
Receivables allocated to Servicer Interchange with respect to such Monthly
Period) allocated to the Designated Series (including any investment earnings
that are to be treated as Collections of Finance Charge Receivables in
accordance with the Agreement).
"Collateral Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of (i) the Investor Default
Amount for the related Monthly Period and (ii) the Collateral Floating
Percentage for such Monthly Period.
"Collateral Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Collateral Indebtedness
Amount as of the close of business on the last day of the preceding Monthly
Period and the denominator of which is equal to the
<PAGE> 15
15
Adjusted Invested Amount as of such day; provided, however, that with respect
to the first Monthly Period, the Collateral Floating Percentage shall mean the
Collateral Initial Percentage.
"Collateral Indebtedness Amount" shall mean, when used with
respect to any date, an amount equal to (a) the Collateral Initial Indebtedness
Amount, minus (b) the aggregate amount of deposits made to the Cash Collateral
Account pursuant to Section 4.05(e)(i), 4.05(f)(iii) and 4.05(g)(i) prior to
such date, minus (c) an amount equal to the amount by which the Collateral
Indebtedness Amount has been reduced on all prior Distribution Dates pursuant
to Section 4.06, plus (d) the aggregate amount of Excess Finance Charges and
Excess Spread allocated and available on all prior Distribution Dates pursuant
to Section 4.07(h) for the purpose of reimbursing amounts deducted pursuant to
the foregoing clause (c) and plus (e) if applicable, the amount of any
increases in the Collateral Indebtedness Amount during the Funding Period
pursuant to Section 4.13(f); provided, however, that the Collateral
Indebtedness Amount may not be reduced below zero.
"Collateral Indebtedness Holder" shall mean the entity so
designated in the Collateral Agreement.
"Collateral Indebtedness Interest" shall mean a fractional
undivided interest in the Trust which shall consist of the right to receive, to
the extent necessary to make the required payments to the Collateral
Indebtedness Holder under the Supplement, the portion of Collections allocable
thereto under the Agreement and the Supplement, funds on deposit in the
Collection Account allocable thereto pursuant to the Agreement and the
Supplement and, subject to the rights of the Investor Certificateholders with
respect thereto, funds on deposit in the Cash Collateral Account, the Reserve
Account and, if applicable, the Prefunding Account.
"Collateral Initial Indebtedness Amount" shall mean the Collateral
Initial Investor Amount less the Collateral Initial Percentage of the Initial
Prefunded Amount.
<PAGE> 16
16
"Collateral Initial Investor Amount" shall mean the amount
specified as such in the attached Term Sheet.
"Collateral Initial Percentage" shall mean the percentage
equivalent of a fraction, the numerator of which is the Collateral Initial
Investor Amount and the denominator of which is the Initial Investor Amount.
"Collateral Interest Shortfall" shall have the meaning specified
in subsection 4.02(c).
"Collateral Investor Amount" shall mean the sum of (a) the
Collateral Indebtedness Amount and (b) the Collateral Initial Percentage of the
Prefunded Amount, if any.
"Collateral Monthly Interest" shall have the meaning specified in
Section 4.02(c).
"Collateral Monthly Principal" shall have the meaning specified in
Section 4.03(c).
"Collateral Principal Collections" shall mean with respect to any
Distribution Date the amount of Invested Principal Collections with respect to
such date less the amount of Investor Principal Collections with respect to
such date plus the amount, if any, of Excess Spread and Excess Finance Charges
to be distributed pursuant to Section 4.07(g) and (h) on such Distribution Date
minus the amount of Reallocated Principal Collections with respect to such
Monthly Period which, pursuant to Section 4.08, are required to fund any
deficiency in the amounts to be distributed pursuant to Sections 4.05(a)(i),
(ii) and (iii) and 4.05(b)(i) and (ii) and Section 4.07(c)(II) for the related
Distribution Date (excluding Reallocated Principal Collections with respect to
the Class B Invested Amount).
"Collateral Principal Shortfall" shall mean, for any Distribution
Date during (a) the Accumulation Period, (b) the Early Amortization Period or
(c) the Principal Payment Period, the excess of Collateral Monthly Principal
for such Distribution Date over the amount of Collateral
<PAGE> 17
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Principal Collections available to be deposited in the Cash Collateral Account
on such date pursuant to Section 4.05(g)(i).
"Collateral Rate" shall mean the rate designated as such in the
Collateral Agreement, such rate not to exceed LIBOR Rate, as defined in the
Collateral Agreement, plus 1.00%.
"Collateral Servicing Fee" shall have the meaning specified in
Section 3.01.
"Collateral Surplus" shall mean, with respect to any Distribution
Date, the excess, if any, of (a) the amount on deposit in the Cash Collateral
Account plus the Collateral Indebtedness Amount over (b) the Required
Collateral Amount.
"Controlled Accumulation Amount" shall mean (a) for any
Distribution Date with respect to the Class A Accumulation Period, the amount
specified as such in the attached Term Sheet; provided, however, that, if the
Class A Accumulation Period is modified pursuant to Section 4.03(g), (i) the
Controlled Accumulation Amount for each Distribution Date with respect to the
Class A Accumulation Period shall mean the amount specified in accordance with
such Section 4.03(g) on the date on which the Class A Accumulation Period has
most recently been modified, (ii) the Controlled Accumulation Amount for each
related Monthly Period shall be no greater than the Accumulation Period Amount
for such Monthly Period and (iii) the sum of the Controlled Accumulation
Amounts for all Distribution Dates with respect to the modified Class A
Accumulation Period shall not be less than the Class A Initial Invested Amount
plus, if applicable, the amount of any increases in the Invested Amount during
the Funding Period; and (b) for any Distribution Date with respect to the Class
B Accumulation Period, an amount equal to one-half of the Class B Invested
Amount plus, if applicable, the amount of any increases in the Invested Amount
during the Funding Period, as of the Class B Principal Commencement Date.
<PAGE> 18
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"Controlled Deposit Amount" shall mean, for any Distribution Date
with respect to the Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Distribution Date and any Deficit
Controlled Accumulation Amount for the immediately preceding Distribution Date.
"Covered Amount" shall mean (a) for any Distribution Date with
respect to the Class A Accumulation Period, the Principal Payment Period or the
first Special Payment Date, if such Special Payment Date occurs prior to the
Class B Principal Commencement Date, an amount equal to (i) if the Class A
Certificate Rate is a fixed rate, one-twelfth of the product of the Class A
Certificate Rate and the Principal Funding Account Balance, if any, as of the
preceding Distribution Date, and (ii) if the Class A Certificate Rate is a
floating rate, the product of (A) a fraction, the numerator of which is the
actual number of days in the period from and including the preceding
Distribution Date to but excluding such Distribution Date and the denominator
of which is 360, (B) the Class A Certificate Rate and (C) the Principal Funding
Account Balance, if any, as of the preceding Distribution Date and (b) for any
Distribution Date with respect to the Class B Accumulation Period or the first
Special Payment Date, if such Special Payment Date occurs on or after the Class
B Principal Commencement Date, an amount equal to (i) if the Class B
Certificate Rate is a fixed rate, one-twelfth of the product of the Class B
Certificate Rate and the Principal Funding Account Balance, if any, as of the
preceding Distribution Date, and (ii) if the Class B Certificate Rate is a
floating rate, the product of (A) a fraction, the numerator of which is the
actual number of days in the period from and including the preceding
Distribution Date and the denominator of which is 360, (B) the Class B
Certificate Rate and (C) the Principal Funding Account Balance, if any, as of
the preceding Distribution Date.
"Cut-Off Date" shall mean the date specified as such in the
attached Term Sheet.
"Deficit Controlled Accumulation Amount" shall mean (a) on the
first Distribution Date with respect to the
<PAGE> 19
19
Class A Accumulation Period or the Class B Accumulation Period, the excess, if
any, of the Controlled Accumulation Amount for such Distribution Date over the
amount distributed from the Collection Account as Class A Monthly Principal or
Class B Monthly Principal, as the case may be, for such Distribution Date and
(b) on each subsequent Distribution Date with respect to the Class A
Accumulation Period or the Class B Accumulation Period, the excess, if any, of
the Controlled Deposit Amount for such subsequent Distribution Date plus any
Deficit Controlled Accumulation Amount for the prior Distribution Date over the
amount distributed from the Collection Account as Class A Monthly Principal or
Class B Monthly Principal, as the case may be, for such subsequent Distribution
Date.
"Designated Series" shall mean the Series of Certificates
(including any Additional Investor Certificates) established pursuant to the
Agreement by the Term Sheet and this Annex.
"Designated Series Accounts" shall have the meaning specified in
Section 4.03(f)(i).
"Designated Series Certificate" shall mean a Class A Certificate
or a Class B Certificate.
"Designated Series Certificateholder" shall mean a Class A
Certificateholder or a Class B Certificateholder.
"Early Amortization Period" shall mean the period commencing at
the close of business on the Business Day immediately preceding the day on
which a Pay Out Event with respect to the Designated Series is deemed to have
occurred, and ending on the first to occur of (i) the payment in full to the
Class A Certificateholders and the Class B Certificateholders of the Class A
Invested Amount and the Class B Invested Amount, if any, respectively, and the
payment in full to the Collateral Indebtedness Holder of the Collateral
Indebtedness Amount, if any, or (ii) the Termination Date.
"Excess Shared Principal Collections" shall mean the excess of the
Shared Principal Collections over the
<PAGE> 20
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aggregate amount of Principal Shortfalls for all Series, as defined in each
related Supplement, which are Principal Sharing Series for such Distribution
Date.
"Excess Spread" shall mean, with respect to any Distribution Date,
the sum of the amounts, if any, specified pursuant to Sections 4.05(a)(iv),
4.05(b)(iii) and 4.05(c)(ii) with respect to such Distribution Date.
"Expected Monthly Principal" shall be equal to the product of (i)
the lowest of the monthly principal payment rates (determined by dividing
Collections of Principal Receivables during a calendar month by the amount of
Principal Receivables in the Trust as of the last day of the preceding month,
adjusted for additions and removals occurring after such last day), expressed
as a decimal for the 12 calendar months preceding the date of such calculation
(or such lower principal payment rate as the Servicer may select) and (ii) the
sum of (a) the Initial Invested Amount of the Designated Series and (b) the
aggregate amount of the Initial Invested Amounts (as defined in the related
Supplement) of all other outstanding Series that are not Variable Funding
Series; provided, that for the purposes of this definition the "Initial
Invested Amount" of any outstanding Prefunded Series (including the Designated
Series) will be deemed to be equal to the Initial Invested Amount plus, as of
such date of determination, the amount of any increases in the Invested Amount
during the Funding Period of such Series.
"Extendable Series" shall mean the Designated Series, if so
specified in the attached Term Sheet, and each other Series specified as an
Extendable Series in the related Supplement.
"Final Funding Date" if applicable, shall mean the date specified
as such in the attached Term Sheet.
"Finance Charge Shortfall" shall have the meaning specified in
Section 4.09.
"Fitch" shall mean Fitch Investors Service, L.P.
<PAGE> 21
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"Floating Allocation Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Adjusted Invested Amount as
of the last day of the preceding Monthly Period and the denominator of which is
the sum of the total amount of Principal Receivables in the Trust and the
principal amount on deposit in the Excess Funding Account as of such last day;
provided, however, that, with respect to the first Monthly Period, the Floating
Allocation Percentage shall mean the percentage equivalent of a fraction, the
numerator of which is the Initial Invested Amount and the denominator of which
is the sum of the total amount of Principal Receivables in the Trust on the
Cut-Off Date and the principal amount on deposit in the Excess Funding Account
as of such day and provided further, however, that if the Designated Series is
a Prefunded Series in which the Invested Amount has increased during the
preceding Monthly Period (including the first Monthly Period) pursuant to
Section 4.13(f), the numerator of the above fraction shall instead be equal to
the sum of the Adjusted Invested Amount on each day during such Monthly Period
divided by the number of days in such Monthly Period.
"Floating Rate Index Maturity" if applicable, shall mean, when the
Designated Series is based on a floating rate of interest, the period to
maturity of the instrument or obligation on which the particular interest rate
formula is based specified as such in the attached Term Sheet.
"Funding Date(s)" if applicable, shall mean the dates specified as
such in the attached Term Sheet.
"Funding Period" if applicable, shall mean the period commencing
on the Closing Date and ending upon the first to occur of (a) the conclusion of
the Revolving Period, (b) the date on which the Invested Amount shall first
equal the Investor Amount and (c) the Final Funding Date.
<PAGE> 22
22
"Group One" shall mean the Designated Series and each other Series
specified in the related Supplement to be included in Group One.
"Initial Distribution Date" shall mean the date specified as such
in the attached Term Sheet.
"Initial Funding Date" if applicable, shall mean the date
specified as such in the attached Term Sheet.
"Initial Invested Amount" shall mean the sum of the Class A
Initial Invested Amount, the Class B Initial Invested Amount and the Collateral
Initial Indebtedness Amount.
"Initial Investor Amount" shall mean the sum of the Class A
Initial Investor Amount, the Class B Initial Investor Amount and the Collateral
Initial Investor Amount.
"Initial Prefunded Amount" shall mean the amount specified as such
in the attached Term Sheet.
"Initial Principal Distribution Date" if applicable, shall mean
the date specified as such in the attached Term Sheet; provided, however, that
upon an irrevocable election by Class A Certificateholders evidencing 100% of
the aggregate unpaid principal amount of the Class A Certificates, the Initial
Principal Distribution Date shall be the Initial Principal Payment Date.
"Initial Principal Payment Date" if applicable, shall mean the
date specified as such in the attached Term Sheet; provided, however, that the
Initial Principal Payment Date shall automatically be extended pursuant to the
provisions of Section 7.03.
"Initial Servicing Fee" shall have the meaning specified in
Section 3.01.
"Interest Funding Accounts" if applicable, shall mean the Class A
Interest Funding Account and the Class B Interest Funding Account.
<PAGE> 23
23
"Interest Payment Date" shall mean the dates specified as such in
the attached Term Sheet, and the relevant Expected Final Payment Date.
"Interest Period" shall mean, with respect to any Payment Date,
the period from and including the Payment Date immediately preceding such
Payment Date (or, in the case of the first Payment Date, from and including the
Closing Date) to but excluding such Payment Date.
"Invested Amount" shall mean, as of any date of determination, an
amount equal to the sum of (a) the Class A Invested Amount as of such date, (b)
the Class B Invested Amount as of such date and (c) the Collateral Indebtedness
Amount as of such date.
"Invested Principal Collections" shall mean, with respect to any
Monthly Period, an amount equal to the Principal Allocation Percentage of all
Collections of Principal Receivables received during such Monthly Period.
"Investor Amount" shall mean, as of any date of determination, an
amount equal to the sum of (a) the Invested Amount and (b) the Prefunded
Amount, if any.
"Investor Charge-Offs" shall mean Class A Investor Charge-Offs and
Class B Investor Charge-Offs.
"Investor Default Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Defaulted Amount
for the related Monthly Period and (b) the Floating Allocation Percentage for
such Monthly Period.
"Investor Principal Collections" shall mean, with respect to any
Monthly Period, an amount equal to the product of (i) Invested Principal
Collections with respect to such Monthly Period and (ii) the sum of the Class A
Principal Percentage and the Class B Principal Percentage with respect to such
Monthly Period.
"LIBOR" if applicable, shall mean, as of any LIBOR Determination
Date, the rate for deposits in United States
<PAGE> 24
24
dollars which appears on Telerate Page 3750 as of 11:00 a.m., London time, on
such date for a period of the Class A Floating Rate Index Maturity or the Class
B Floating Rate Index Maturity, as applicable, commencing on the first day of
the relevant Interest Period. If such rate does not appear on Telerate Page
3750, the rate for that day will be determined on the basis of the rates at
which deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a period of the Class A Floating Rate Index Maturity or
the Class B Floating Rate Index Maturity, as applicable, commencing on the
first day of the relevant Interest Period. The Servicer will request the
principal London office of each of the Reference Banks to provide a quotation
of its rate. If at least two such quotations are provided, the rate for the
day will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that day will be the
arithmetic mean of the rates quoted by major banks in New York City, selected
by the Servicer, at approximately 11:00 a.m., New York City time, on that day
for loans in United States dollars to leading international banks for a period
of the Class A Floating Rate Index Maturity or the Class B Floating Rate Index
Maturity, as applicable, commencing on the first day of the relevant Interest
Period.
"LIBOR Determination Date" if applicable, shall mean, with respect
to any Interest Period, the second London Business Day prior to the
commencement of such Interest Period (or in the case of the initial Interest
Period, the second London Business Day prior to the Closing Date).
"London Business Day" if applicable, shall mean a day on which
dealings in deposits in United States dollars are transacted in the London
interbank market.
"Monthly Interest" means, with respect to any Distribution Date,
the Class A Monthly Interest, the Class B Monthly Interest and Collateral
Monthly Interest for such Distribution Date.
<PAGE> 25
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"Monthly Servicing Fee" shall have the meaning specified in
Section 3.01.
"Net Servicing Fee Rate" shall mean the rate specified as such in
the attached Term Sheet.
"Non-Variable Accumulation Series" shall mean Series 1993-1,
Series 1993-2, Series 1993-3, 1993-4 and each outstanding Series that is not a
Variable Funding Series or a Variable Accumulation Series.
"Payment Date" shall mean any Interest Payment Date and any
Special Payment Date.
"Portfolio Adjusted Yield" shall mean, with respect to any
Distribution Date, the average of the percentages obtained for each of the
three preceding Monthly Periods by subtracting the Base Rate for each such
Monthly Period from the Portfolio Yield for each such Monthly Period.
"Portfolio Yield" shall mean, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction, the numerator of which is
equal to (a) an amount equal to the product obtained by multiplying the
Floating Allocation Percentage with respect to such Monthly Period and the
amount of Collections of Finance Charge Receivables with respect to such
Monthly Period (including any investment earnings that are to be treated as
Collections of Finance Charge Receivables in accordance with the Agreement)
calculated on a billed basis, or, in the case of any such Collections
consisting of annual membership fees, on an amortized (rather than billed)
basis, plus (b) the amount of any Principal Funding Investment Proceeds for the
related Distribution Date plus (c) if applicable, the amount of any Prefunding
Investment Proceeds for the related Distribution Date, plus (d) any Excess
Finance Charges that are allocated to the Designated Series with respect to
such Monthly Period plus (e) the amount of funds, if any, withdrawn from the
Reserve Account which, pursuant to Section 4.11(d), are required to be included
as Class A Available Funds or Class B Available Funds, as the case may be, in
each case for the Distribution Date with respect to such Monthly
<PAGE> 26
26
Period minus (f) the Investor Default Amount for the Distribution Date with
respect to such Monthly Period, and the denominator of which is the Investor
Amount as of the last day of the preceding Monthly Period.
"Prefunded Amount" if applicable, shall mean (a) the Initial
Prefunded Amount minus (b) the amount of any increases in the Invested Amount
during the Funding Period pursuant to Section 4.13(f) and minus (c)
disbursements from the Prefunding Account pursuant to Section 4.13(e).
"Prefunded Series" shall mean the Designated Series, if so
specified in the attached Term Sheet, and each other Series specified as a
Prefunded Series in the related Supplement.
"Prefunding Account" if applicable, shall have the meaning set
forth in Section 4.13(b).
"Prefunding Investment Proceeds" if applicable, shall have the
meaning specified in Section 4.13(c).
"Principal Allocation Percentage" shall mean, with respect to any
day during a Monthly Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is (a) during the
Revolving Period, the Invested Amount as of the last day of the immediately
preceding Monthly Period (or, in the case of the first Monthly Period, the
Cut-Off Date) and (b) after the end of the Revolving Period, the Invested
Amount as of the last day of the Revolving Period and the denominator of which
is the greater of (i) the sum of the total amount of Principal Receivables in
the Trust as of the last day of the immediately preceding Monthly Period and
the principal amount on deposit in the Excess Funding Account as of such last
day (or, in the case of the first Monthly Period, the Cut-Off Date) and (ii)
the sum of the numerators used to calculate the principal allocation
percentages for all Series outstanding as of the date as to which such
determination is being made; provided, however, that if the Designated Series
is a Prefunded Series in which the Invested Amount has increased during the
previous Monthly Period (including the first Monthly Period) pursuant to
<PAGE> 27
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Section 4.13(f), the numerator of the above fraction during the Revolving
Period shall instead be equal to the sum of the Invested Amount on each day
during such Monthly Period divided by the number of days in such Monthly
Period, and provided further, however, that if after the commencement of the
Accumulation Period, the Principal Payment Period or the Early Amortization
Period a Pay Out Event occurs with respect to another Series that was
designated in the Supplement therefor as a Series that is a "Paired Series"
with respect to the Designated Series, the Seller may, by written notice
delivered to the Trustee and the Servicer, designate a different numerator for
the foregoing fraction, provided that (x) such numerator is not less than the
Adjusted Invested Amount as of the last day of the revolving period for such
"Paired Series" and (y) the Seller shall have received written notice from each
Rating Agency that such designation will not have a Ratings Effect and shall
have delivered copies of each such written notice to the Servicer and the
Trustee.
"Principal Distribution Date" shall mean, upon the occurrence of a
Principal Payment Event, each Distribution Date beginning with the Initial
Principal Distribution Date.
"Principal Funding Account" shall have the meaning set forth in
Section 4.03(d)(i).
"Principal Funding Account Balance" shall mean, with respect to
any date of determination during the Accumulation Period and the Principal
Payment Period, the principal amount, if any, on deposit in the Principal
Funding Account on such date of determination.
"Principal Funding Investment Proceeds" shall have the meaning
specified in Section 4.03(d)(ii).
"Principal Payment Event" if applicable, shall mean the delivery
by the Servicer of a notice to the Trustee of its election not to extend the
Initial Principal Payment Date in accordance with Section 7.03.
"Principal Payment Period" if applicable, shall mean, upon the
occurrence of a Principal Payment Event, the
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28
period beginning on the first day of the Monthly Period immediately preceding
the Initial Principal Payment Date or, if the Servicer elects not to extend the
January 1998 Initial Principal Payment Date, the first day of the Monthly
Period specified in a notice delivered by the Servicer to the Trustee, the
Seller, the Designated Series Certificateholders, each Rating Agency and the
Collateral Indebtedness Holder, but in any event no later than the first day of
the Monthly Period immediately preceding the January 1998 Initial Principal
Payment Date, and ending upon the earliest to occur of (i) the commencement of
the Early Amortization Period, (ii) the payment in full to the Designated
Series Certificateholders of the Investor Amount and (iii) the Termination
Date.
"Principal Shortfall" shall have the meaning specified in Section
4.10.
"Reallocated Principal Collections" shall mean, with respect to
any Monthly Period, the product of (a) the Principal Allocation Percentage with
respect to such Monthly Period, (b) the aggregate amount of Collections of
Principal Receivables deposited in the Collection Account for such Monthly
Period and (c) the sum of the Class B Floating Percentage and the Collateral
Floating Percentage with respect to such Monthly Period.
"Reassignment Amount" shall mean, with respect to any Distribution
Date, after giving effect to any deposits and distributions otherwise to be
made on such Distribution Date, the sum of (i) the Adjusted Invested Amount on
such Distribution Date, plus (ii) Monthly Interest for such Distribution Date
and any Monthly Interest previously due but not distributed to the Designated
Series Certificate-holders and the Collateral Indebtedness Holder on a prior
Distribution Date, plus (iii) the amount of Additional Interest, if any, for
such Distribution Date and any Additional Interest previously due but not
distributed to the Designated Series Certificateholders and the Collateral
Indebtedness Holder on a prior Distribution Date.
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"Reference Banks" if applicable, shall mean four major banks in
the London interbank market selected by the Servicer.
"Required Collateral Amount" shall mean, with respect to any
Distribution Date, the greater of (i) the product of (a) the sum of the Class A
Adjusted Invested Amount, the Class B Adjusted Invested Amount and the
Collateral Indebtedness Amount, each as of such Distribution Date after taking
into account distributions made on such date and (b) the Required Invested Base
Percentage and (ii) (a) if the Collateral Indebtedness Amount is greater than
zero, the product of the Required Collateral Base Percentage and the Initial
Invested Amount of the Designated Series, or (b) if the Collateral Indebtedness
Amount is equal to zero, the product of the Required Cash Base Percentage and
the Initial Invested Amount of the Designated Series; provided, however, that
(i) if there are any withdrawals from the Cash Collateral Account pursuant to
Section 4.12(c), any reductions in the Collateral Indebtedness Amount pursuant
to clause (c) of the definition of such amount, or a Pay Out Event occurs with
respect to the Designated Series, then the Required Collateral Amount for any
Distribution Date shall equal the Required Collateral Amount on the
Distribution Date immediately preceding such withdrawal, reduction or Pay Out
Event, (ii) in no event shall the Required Collateral Amount exceed the sum of
the Class A Adjusted Invested Amount and the Class B Adjusted Invested Amount
on any such date, and (iii) the Required Collateral Amount may be reduced
without the consent of the Designated Series Certificateholders, if the Seller
shall have received written notice from each Rating Agency that such reduction
will not result in the reduction or withdrawal of the then current rating of
the Designated Series Certificates and the Seller shall have delivered to the
Trustee a certificate of an authorized officer to the effect that, based on the
facts known to such officer at such time, in the reasonable belief of the
Seller, such reduction will not cause a Pay Out Event or an event that, after
the giving of notice or the lapse of time, would constitute a Pay Out Event, to
occur with respect to the Designated Series.
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"Required Draw Amount" shall have the meaning specified in Section
4.12(c).
"Required Cash Base Percentage" shall mean, the percentage
specified as such in the attached Term Sheet.
"Required Collateral Base Percentage" shall mean, the percentage
specified as such in the attached Term Sheet.
"Required Funding Percentage" if applicable, shall mean the
percentage specified as such in the attached Term Sheet.
"Required Invested Base Percentage" shall mean, the percentage
specified as such in the attached Term Sheet.
"Required Principal Balance" shall mean, as of any date of
determination, (a) the sum of the "Initial Invested Amount" (as defined in the
relevant Supplement) of the Investor Certificates of each Series outstanding on
such date plus, as of such date of determination, the aggregate amounts of any
increases in the Invested Amounts of each Prefunded Series outstanding (in each
case, other than any Series or portion thereof which is designated in the
relevant Supplement as then being an Excluded Series) minus (b) the principal
amount on deposit in the Excess Funding Account on such date; provided,
however, if at any time the only Series outstanding are Excluded Series and a
Pay Out Event has occurred with respect to one or more of such Series, the
Required Principal Balance shall mean (a) the sum of the "Invested Amount" (as
defined in the relevant Supplement) of each such Excluded Series as of the
earliest date on which any such Pay Out Event is deemed to have occurred, minus
(b) the principal amount on deposit in the Excess Funding Account.
"Required Reserve Account Amount" shall mean, with respect to any
Distribution Date prior to the Reserve Account Funding Date, $0, and on or
after the Reserve Account Funding Date, an amount equal to (a) the product of
(i) the Required Reserve Base Percentage of the sum of the Class A Invested
Amount and the Class B Invested Amount as of the preceding Distribution Date
(after giving effect to
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all changes therein on such date) and (ii) the Reserve Account Factor for such
Distribution Date, or (b) any other amount designated by the Seller, provided
that, if such designation is of a lesser amount, the Seller (i) shall have
received written notice from each Rating Agency that such designation will not
have a Ratings Effect and shall have delivered copies of each such written
notice to the Servicer and the Trustee, and (ii) shall have delivered to the
Trustee a certificate of an authorized officer to the effect that, based on the
facts known to such officer at such time, in the reasonable belief of the
Seller, such designation will not cause a Pay Out Event or an event that, after
the giving of notice or the lapse of time, would cause a Pay Out Event, to
occur with respect to the Designated Series.
"Required Reserve Base Percentage" shall mean, the percentage
specified as such in the attached Term Sheet.
"Reserve Account" shall have the meaning specified in Section
4.11(a).
"Reserve Account Factor" shall mean, with respect to any date of
determination, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the number of Monthly Periods
scheduled to be included in the Accumulation Period as of such date of
determination, and the denominator of which is twenty or, if a Principal
Payment Event has occurred, the numerator of which is the number of Monthly
Periods from the commencement of the Principal Payment Period until the Initial
Principal Distribution Date as of such date of determination, and the
denominator of which is twelve.
"Reserve Account Funding Date" shall mean the earlier of (a) the
Distribution Date with respect to the Monthly Period which commences 12 months
prior to the Monthly Period which as of the related Determination Date is
scheduled to commence the Accumulation Period in accordance with Section
4.03(g), provided that the Seller may delay the Reserve Account Funding Date to
the
<PAGE> 32
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Distribution Date which occurs not later than the number of months prior to the
scheduled commencement date of the Accumulation Period determined in accordance
with the following schedule:
<TABLE>
<CAPTION>
Number of Months
Portfolio Adjusted Yield (rounded up to nearest whole number)
------------------------ ------------------------------------
<S> <C>
Less than 2% . . . . . . . . . . . . . . . . 12 x Reserve Account Factor
2% or more, but less than 3% . . . . . . . . 6 x Reserve Account Factor
3% or more, but less than 4% . . . . . . . . 4 x Reserve Account Factor
4% or more . . . . . . . . . . . . . . . . . 3 x Reserve Account Factor
</TABLE>
and (b) the Distribution Date with respect to the first Monthly Period of the
Principal Payment Period, provided that such Distribution Date is not the
Initial Principal Distribution Date.
"Reserve Account Surplus" shall mean, as of any date of
determination, the amount, if any, by which the amount on deposit in the
Reserve Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" shall have the meaning specified in Section
4.11(c).
"Revolving Period" shall mean the period beginning at the close of
business on the Cut-Off Date and ending on the earlier of (a) the close of
business on the day the Class A Accumulation Period commences, (b) the close of
business on the day the Early Amortization Period commences and (c) the close
of business on the day the Principal Payment Period commences.
"Servicer Interchange" shall mean, for any Monthly Period, the
product of (a) the Floating Allocation Percentage for such Monthly Period and
(b) the portion of collections of Finance Charge Receivables allocated to the
Designated Series Certificates and the Collateral Indebtedness Interest with
respect to such Monthly Period that is attributable to Interchange; provided,
however, that Servicer Interchange for a Monthly Period shall not exceed
one-twelfth of the product of (i) the sum of the Invested Amount as of the last
day of such Monthly Period and (ii) 0.75%.
<PAGE> 33
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"Servicing Base Amount" shall have the meaning specified in
Section 3.01.
"Servicing Fee Rate" shall mean the rate specified as such in the
attached Term Sheet.
"Special Payment Date" shall mean each Distribution Date with
respect to the Early Amortization Period and each Principal Distribution Date
with respect to the Principal Payment Period.
"Subordinated Excess Principal Series", shall mean the Designated
Series, if so specified in the Supplement, and each other Series specified in
the related supplement to be a Subordinated Excess Principal Series.
"Subordinated Excess Principal Shortfall", shall have the meaning
specified in Section 4.10.
"Telerate Page 3750" if applicable, shall mean the display page so
designated on the Dow Jones Telerate Service (or such other page as may replace
that page on that Service for the purpose of displaying comparable rates or
prices).
"Termination Date" shall mean the date specified as such in the
attached Term Sheet.
"Variable Accumulation Series" shall mean each outstanding Series,
other than Series 1993-1, 1993-2, 1993-3, 1993-4 and any Variable Funding
Series, for which, pursuant to the terms of the related Supplement, at the time
a determination is made pursuant to Section 4.03(g), the commencement date of
the Accumulation Period may be changed.
"Variable Funding Series" shall mean any Series designated in the
related Supplement as a Variable Funding Series.
(b) Notwithstanding anything to the contrary in the Supplement or
the Agreement, the term "Rating Agency" shall mean, whenever used in the
Supplement or the Agreement with respect to the Designated Series, each
statistical rating agency specified as a Rating Agency in the attached
<PAGE> 34
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Term Sheet. As used in the Supplement and in the Agreement with respect to the
Designated Series, "highest investment category" shall mean (i) in the case of
Standard & Poor's, A-1+, AAA, AAAm or AAAm-G, as applicable, (ii) in the case
of Moody's, P-1 or Aaa, as applicable and (iii) in the case of Fitch, if rated
by Fitch, F-1+ or AAA, as applicable; provided, however, that notwithstanding
any other provision of the Agreement or the Supplement to the contrary, for
purposes of the investment of funds in the Class B Interest Funding Account, if
any, and, on and after the Class B Principal Commencement Date, the Cash
Collateral Account, the Principal Funding Account and the Reserve Account,
"highest investment category" as used in the definition of "Eligible
Investments" shall mean (i) in the case of Standard & Poor's, A-1, A-1+ or AAA,
as applicable, (ii) in the case of Moody's, P-1 or Aaa, as applicable and (iii)
in the case of Fitch, if rated by Fitch, F-1 or F-1+, or AAA, as applicable.
(c) All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Agreement.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in the Supplement shall refer to the Supplement as a
whole and not to any particular provision of the Supplement; references to any
Article, Section or Exhibit are references to Articles, Sections and Exhibits
in or to the Supplement unless otherwise specified; and the term "including"
means "including without limitation".
Section 2.02. Amendment to Section 2.08 of the Agreement.
Section 2.08(c)(i) of the Agreement is hereby amended and restated in its
entirety to read as follows:
(c) Automatic Additional Accounts. (i) The Seller may from time
to time, at its sole discretion, subject to and in compliance with the
limitations specified in clause (ii) below and the applicable conditions
specified in paragraph (d) below, designate Eligible Accounts to be
included as Accounts as of the applicable Additional Cut-Off Date. For
purposes of
<PAGE> 35
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this paragraph, Eligible Accounts shall be deemed to include only
consumer revolving credit card accounts or other consumer revolving
credit accounts which (x) are originated by the Seller or any Affiliate
of the Seller, (y) are of a type included as Initial Accounts or which
have previously been included in any Addition which has been effected in
accordance with all of the conditions specified in paragraph (d) below
and (z) have a designation other than "Associate 20", "Associate 21",
"Associate 195" or "Associate 196" marketing programs in the Seller's
credit card master file.
ARTICLE III
Servicer and Trustee
Section 3.01. Servicing Compensation. The share of the Servicing
Fee allocable to the Designated Series Certificateholders and the Collateral
Indebtedness Holder with respect to any Distribution Date (the "Monthly
Servicing Fee") shall be equal to one-twelfth the product of (a) the Servicing
Fee Rate and (b) the Adjusted Invested Amount, if any, as of the last day of
the Monthly Period preceding such Distribution Date (the amount calculated
pursuant to this clause (b) is referred to as the "Servicing Base Amount");
provided, however, with respect to the first Distribution Date, the Monthly
Servicing Fee (the "Initial Servicing Fee") shall be equal to the Servicing Fee
accrued on the Initial Invested Amount at the Net Servicing Fee Rate for the
period from the Closing Date to but excluding the first Distribution Date. On
each Distribution Date, but only if the Seller or The Bank of New York is the
Servicer, Servicer Interchange with respect to the related Monthly Period that
is on deposit in the Collection Account shall be withdrawn from the Collection
Account and paid to the Servicer in payment of a portion of the Monthly
Servicing Fee with respect to such Monthly Period. In the case of any
insufficiency of Servicer Interchange on deposit in the Collection Account a
portion of the Monthly Servicing Fee with respect to such Monthly Period will
not be paid to the extent of such insufficiency of Servicer Interchange. The
<PAGE> 36
36
share of the Monthly Servicing Fee allocable to the Class A Certificateholders
(after giving effect to the distribution of Servicer Interchange, if any, to
the Servicer) with respect to any Distribution Date (the "Class A Servicing
Fee") shall be equal to one-twelfth of the product of (a) the Class A Floating
Percentage, (b) the Net Servicing Fee Rate and (c) the Servicing Base Amount;
provided, however, that with respect to the first Distribution Date, the Class
A Servicing Fee shall be equal to the product of the Class A Floating
Percentage as of the first Distribution Date and the Initial Servicing Fee, and
provided further, that with respect to the first Distribution Date following
the Monthly Period in which an Additional Issuance Date occurs the Class A
Servicing Fee shall be increased by an amount equal to the product of (a) the
Net Servicing Fee Rate, (b) a fraction, the numerator of which is the actual
number of days in the period from and including such Additional Issuance Date
to but excluding such Distribution Date and the denominator of which is 360,
(c) the increase in the Invested Amount as a result of such Additional Issuance
and (d) the Class A Floating Percentage with respect to such Distribution Date.
The share of the Monthly Servicing Fee allocable to the Class B
Certificateholders (after giving effect to the distribution of Servicer
Interchange, if any, to the Servicer) with respect to any Distribution Date
(the "Class B Servicing Fee") shall be equal to one-twelfth of the product of
(a) the Class B Floating Percentage, (b) the Net Servicing Fee Rate and (c) the
Servicing Base Amount; provided, however, that with respect to the first
Distribution Date, the Class B Servicing Fee shall be equal to product of the
Class B Floating Percentage as of the first Distribution Date and the Initial
Servicing Fee, and provided, further, that with respect to the first
Distribution Date following the Monthly Period in which an Additional Issuance
Date occurs, the Class B Servicing Fee shall be increased by an amount equal to
the product of (a) the Net Servicing Fee Rate, (b) a fraction, the numerator of
which is the actual number of days in the period from and including such
Additional Issuance Date to but excluding such Distribution Date and the
denominator of which is 360, (c) the increase in the Invested Amount as a
result of such Additional Issuance and (d) the Class B Floating Percentage with
respect to such
<PAGE> 37
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Distribution Date. The share of the Monthly Servicing Fee allocable to the
Collateral Indebtedness Holder (after giving effect to the distribution of
Servicer Interchange, if any, to the Servicer) with respect to such
Distribution Date (the "Collateral Servicing Fee") shall be equal to
one-twelfth of the product of (c) the Collateral Floating Percentage, (b) the
Net Servicing Fee Rate and (c) the Servicing Base Amount; provided, however,
that with respect to the first Distribution Date, the Collateral Servicing Fee
shall be equal to the product of the Collateral Floating Percentage as of the
first Distribution Date and the Initial Servicing Fee. The remainder of the
Servicing Fee shall be paid by the Seller or the Certificateholders of other
Series (as provided in the related Supplements) and in no event shall the
Trust, the Trustee, the Designated Series Certificateholders or the Collateral
Indebtedness Holder be liable for the share of the Servicing Fee to be paid by
the Seller or the Certificateholders of any other Series. The (i) Class A
Servicing Fee shall be payable to the Servicer solely to the extent amounts are
available for distribution in respect thereof pursuant to Section 4.05(a)(ii),
4.07(a), 4.08(a) or 4.12(c); (ii) the Class B Servicing Fee shall be payable
solely to the extent amounts are available for distribution in respect thereof
pursuant to Section 4.05(b)(ii), 4.07(c), 4.08(b) or 4.12(c); and (iii) the
Collateral Servicing Fee shall be payable solely to the extent amounts are
available for distribution in respect thereof pursuant to Section 4.05(c)(i) or
4.07(f).
ARTICLE IV
Rights of the Designated Series Certificateholders and
Collateral Indebtedness Holder and
Allocation and Application of Collections
Section 4.01. Collections and Allocations. The Servicer will
apply, or will instruct the Trustee to apply, all collections and other funds
on deposit in the Collection Account that are allocated to the Designated
Series Certificates and the Collateral Indebtedness Interest as described in
this Article IV.
<PAGE> 38
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Section 4.02. Determination of Monthly Interest. (a) The amount
of monthly interest ("Class A Monthly Interest") distributable from the
Collection Account with respect to the Class A Certificates on any Distribution
Date shall be an amount equal to (i) if the Class A Certificate Rate is a fixed
rate, one-twelfth of the product of the Class A Certificate Rate and the Class
A Investor Amount as of the preceding Record Date, and (ii) if the Class A
Certificate Rate is a floating rate, the product of (A) a fraction, the
numerator of which is the actual number of days in the period from and
including the preceding Distribution Date to but excluding such Distribution
Date and the denominator of which is 360, (B) the Class A Certificate Rate and
(C) the outstanding principal balance of the Class A Certificates as of the
preceding Record Date; provided, however, with respect to the first
Distribution Date, Class A Monthly Interest shall be equal to the interest
accrued on the Class A Initial Investor Amount at the Class A Certificate Rate
for the period from the Closing Date to but excluding the first Distribution
Date; and provided further, that with respect to the first Distribution Date
following the Monthly Period in which an Additional Issuance Date occurs, Class
A Monthly Interest shall be increased by the amount equal to the product of (a)
a fraction, the numerator of which is the actual number of days in the period
from and including such Additional Issuance Date to but excluding such
Distribution Date (which actual number of days in the period shall be computed
using a 30-day month if the Class A Certificate Rate is a fixed rate) and the
denominator of which is 360, (b) the Class A Certificate Rate and (c) the
increase in the outstanding principal balance of the Class A Certificates as a
result of such Additional Issuance.
On the Determination Date preceding each Payment Date, the
Servicer shall determine the excess, if any (the "Class A Interest Shortfall"),
of (x) the Class A Monthly Interest for the Interest Period applicable to such
Payment Date over (y) the aggregate amount of funds allocated and available to
pay the Class A Monthly Interest on such Payment Date or, if the Interest
Period (relating to the forthcoming Payment Date) is longer than one month, the
amount which will be on deposit in the Class A Interest Funding Account on such
Payment Date. If the Class A
<PAGE> 39
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Interest Shortfall with respect to any Payment Date is greater than zero, an
additional amount ("Class A Additional Interest") equal to (i) if the Class A
Certificate Rate is a fixed rate, one-twelfth of the product of the Class A
Penalty Rate and such Class A Interest Shortfall (or the portion thereof which
has not been paid to Class A Certificateholders) , and (ii) if the Class A
Certificate Rate is a floating rate, the product of (A) a fraction, the
numerator of which is the actual number of days from and including the
preceding Distribution Date to but excluding such Distribution Date and the
denominator of which is 360, (B) the Class A Penalty Rate and (C) such Class A
Interest Shortfall (or the portion thereof which has not been paid to Class A
Certificateholders), shall be payable as provided herein with respect to the
Class A Certificates on each Distribution Date following such Payment Date to
and including the Payment Date on which such Class A Interest Shortfall is paid
to Class A Certificateholders. Notwithstanding anything to the contrary
herein, Class A Additional Interest shall be payable or distributed to Class A
Certificateholders only to the extent permitted by applicable law.
(b) The amount of monthly interest ("Class B Monthly Interest")
distributable from the Collection Account with respect to the Class B
Certificates on any Distribution Date shall be an amount equal to (i) if the
Class B Certificate Rate is a fixed rate, one-twelfth of the product of the
Class B Certificate Rate and the Class B Investor Amount as of the preceding
Record Date, and (ii) if the Class B Certificate Rate is a floating rate, the
product of (A) a fraction, the numerator of which is the actual number of days
in the period from and including the preceding Distribution Date to but
excluding such Distribution Date and the denominator of which is 360, (B) the
Class B Certificate Rate and (C) the outstanding principal balance of the Class
B Certificates as of the preceding Record Date; provided, however, with respect
to the first Distribution Date, Class B Monthly Interest shall be equal to the
interest accrued on the Class B Initial Investor Amount at the Class B
Certificate Rate for the period from the Closing Date to but excluding the
first Distribution Date; and provided further, that with respect to the first
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Distribution Date following the Monthly Period in which an Additional Issuance
Date occurs, Class B Monthly Interest shall be increased by the amount equal to
the product of (a) a fraction, the numerator of which is the actual number of
days in the period from and including such Additional Issuance Date to but
excluding such Distribution Date (which actual number of days in the period
shall be computed using a 30-day month if the Class B Certificate Rate is a
fixed rate) and the denominator of which is 360, (b) the Class B Certificate
Rate and (c) the increase in the Class B Invested Amount as a result of such
Additional Issuance.
On the Determination Date preceding each Payment Date, the
Servicer shall determine the excess, if any (the "Class B Interest Shortfall"),
of (x) the Class B Monthly Interest for the Interest Period applicable to such
Payment Date over (y) the aggregate amount of funds allocated and available to
pay the Class B Monthly Interest on such Payment Date or, if the Interest
Period (relating to the forthcoming Payment Date) is longer than one month, the
amount which will be on deposit in the Class B Interest Funding Account on such
Payment Date. If the Class B Interest Shortfall with respect to any Payment
Date is greater than zero, an additional amount ("Class B Additional Interest")
equal to (i) if the Class B Certificate Rate is a fixed rate, one-twelfth of
the product of the Class B Penalty Rate and such Class B Interest Shortfall (or
the portion thereof which has not been paid to Class B Certificateholders), and
(ii) if the Class B Certificate Rate is a floating rate, the product of (A) a
fraction, the numerator of which is the actual number of days from and
including the preceding Distribution Date to but excluding such Distribution
Date and the denominator of which is 360, (B) the Class B Penalty Rate and (C)
such Class B Interest Shortfall (or the portion thereof which has not been paid
to Class A Certificateholders), shall be payable as provided herein with
respect to the Class B Certificates on each Distribution Date following such
Payment Date to and including the Payment Date on which such Class B Interest
Shortfall is paid to Class B Certificateholders. Notwithstanding anything to
the contrary herein, Class B Additional Interest shall be payable or
distributed to Class B Certificateholders only to the extent permitted by
applicable law.
<PAGE> 41
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(c) The amount of monthly interest ("Collateral Monthly
Interest") distributable from the Collection Account with respect to the
Collateral Indebtedness Interest on any Distribution Date shall be an amount
equal to the product of (i) (A) a fraction, the numerator of which is the
actual number of days in the period from and including the preceding
Distribution Date to but excluding such Distribution Date and the denominator
of which is 360, times (B) the Collateral Rate and (ii) the Collateral Investor
Amount as of the preceding Record Date; provided, however, with respect to the
first Distribution Date, Collateral Monthly Interest shall be equal to the
interest accrued on the Collateral Initial Investor Amount at the Collateral
Rate for the period from the Closing Date to but excluding the first
Distribution Date.
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Collateral Interest
Shortfall"), of (x) the Collateral Monthly Interest for such Distribution Date
over (y) the aggregate amount of funds allocated and available to pay such
Collateral Monthly Interest on such Distribution Date. If the Collateral
Interest Shortfall with respect to any Distribution Date is greater than zero,
an additional amount ("Collateral Additional Interest") equal to the product of
(i) a fraction, the numerator of which is the actual number of days in the
period from and including the preceding Distribution Date to but excluding such
Distribution Date and the denominator of which is 360, (ii) the Collateral Rate
and (iii) such Collateral Interest Shortfall (or the portion thereof which has
not been paid to the Collateral Indebtedness Holder) shall be payable as
provided herein with respect to the Collateral Indebtedness Interest on each
Distribution Date following such Distribution Date to and including the
Distribution Date on which such Collateral Interest Shortfall is paid to the
Collateral Indebtedness Holder. Notwithstanding anything to the contrary
herein, Collateral Additional Interest shall be payable or distributed to the
Collateral Indebtedness Holder only to the extent permitted by applicable law.
<PAGE> 42
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Section 4.03. Determination of Monthly Principal; Designated
Series Accounts; Class A Accumulation Period. (a) The amount of monthly
principal ("Class A Monthly Principal") distributable from the Collection
Account with respect to the Class A Certificates on each Distribution Date,
beginning with the first to occur of (i) the first Special Payment Date, if
any, (ii) the first Distribution Date with respect to the Class A Accumulation
Period and (iii) the first Distribution Date with respect to the Principal
Payment Period, shall be equal to the least of (x) the Available Investor
Principal Collections on deposit in the Collection Account with respect to such
Distribution Date, (y) for each Distribution Date with respect to the Class A
Accumulation Period (and on or prior to the Class A Expected Final Payment
Date), the Controlled Deposit Amount for such Distribution Date and (z) the
Class A Adjusted Invested Amount on such Distribution Date.
(b) The amount of monthly principal ("Class B Monthly Principal")
distributable from the Collection Account with respect to the Class B
Certificates on each Distribution Date, beginning with the Class B Principal
Commencement Date, shall be equal to the least of (x) the Available Investor
Principal Collections on deposit in the Collection Account with respect to such
Distribution Date (minus the portion of such Available Investor Principal
Collections applied to Class A Monthly Principal on such Distribution Date),
(y) for each Distribution Date with respect to the Class B Accumulation Period
(and on or prior to the Class B Expected Final Payment Date), the Controlled
Deposit Amount for such Distribution Date and (z) the Class B Adjusted Invested
Amount on such Distribution Date.
(c) The amount, if any, of monthly principal ("Collateral Monthly
Principal") distributable from the Collection Account with respect to the
Collateral Indebtedness Amount on each Distribution Date:
(i) beginning with the first Distribution Date with respect to any
Early Amortization Period, shall be an amount equal to the Collateral
Principal Collections with respect to such Distribution Date;
<PAGE> 43
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(ii) beginning on any Distribution Date (other than any Distribution
Date during an Early Amortization Period), shall be an amount equal to
the lesser of (A) Collateral Principal Collections with respect to such
Distribution Date plus Available Investor Principal Collections not
applied to Class A Monthly Principal or Class B Monthly Principal on
such Distribution Date and (B) the excess, if any, of (x) the Collateral
Surplus on such Distribution Date over (y) the Cash Collateral Surplus,
if any, computed without reference to distributions under this
subsection;
(iii) beginning with the Distribution Date on which the Class B
Invested Amount is paid in full, shall be an amount equal to the sum of
the Available Investor Principal Collections with respect to such
Distribution Date (minus the portion of such Available Investor
Principal Collections applied to Class A Monthly Principal and Class B
Monthly Principal on such Distribution Date) and the Collateral
Principal Collections with respect to such Distribution Date; and
(iv) beginning on any Distribution Date, in addition to the amount,
if any, set forth in items (i) through (iii) above, at the option of the
Seller (as evidenced by written instructions to the Servicer and the
Trustee with a copy to the Collateral Indebtedness Holder), and after
receipt by the Servicer and the Trustee of a written determination by
each Rating Agency that such action will not result in a reduction or
withdrawal of the then current ratings of the Class A Certificates and
the Class B Certificates, shall be an amount established by the Seller
and consistent with any restrictions set forth in the determination of
the Rating Agency;
provided, however, with respect to any Distribution Date, Collateral Monthly
Principal shall not exceed the Collateral Indebtedness Amount and, with respect
to any Distribution Date with respect to the Revolving Period and the
Accumulation Period, Collateral Monthly Principal shall be
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44
zero except to the extent otherwise specified in, or pursuant to, clauses (ii),
(iii) and (iv) above.
(d)(i) The Servicer, for the benefit of the Designated Series
Certificateholders, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account (the "Principal Funding
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Designated Series Certificateholders.
The Principal Funding Account shall initially be established with the Trustee.
(ii) At the direction of the Servicer, funds on deposit in the
Principal Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Designated Series
Certificateholders; provided that on each Distribution Date all interest and
other investment income (net of losses and investment expenses) ("Principal
Funding Investment Proceeds") on funds on deposit therein shall be applied as
set forth in paragraph (iii) below. Funds on deposit in the Principal Funding
Account shall be invested in Eligible Investments that will mature so that such
funds will be available at the close of business on the Transfer Date preceding
the following Distribution Date. No Eligible Investment shall be disposed of
prior to its maturity; provided, however, that the Trustee may sell, liquidate
or dispose of an Eligible Investment before its maturity, if so directed by the
Servicer, the Servicer having reasonably determined that the interest of the
Designated Series Certificateholders may be adversely affected if such Eligible
Investment is held to its maturity. Unless the Servicer directs otherwise,
funds deposited in the Principal Funding Account on a Transfer Date (which
immediately precedes a Payment Date) upon the maturity of any Eligible
Investments are not required to be invested overnight.
(iii) On each Distribution Date with respect to the Accumulation
Period and the Principal Payment Period, the Servicer shall direct the Trustee
to withdraw from the Principal Funding Account and deposit into the Collection
Account all Principal Funding Investment Proceeds then on
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deposit in the Principal Funding Account and such Principal Funding Investment
Proceeds shall be treated as a portion of (x) prior to the Class B Principal
Commencement Date, Class A Available Funds and (y) thereafter, Class B
Available Funds, in each case for such Distribution Date.
(iv) Reinvested interest and other investment income on funds
deposited in the Principal Funding Account shall not be considered to be
principal amounts on deposit therein for purposes of the Supplement.
(e)(i) If Interest Payment Dates occur less frequently than
monthly, the Servicer, for the benefit of the Class A Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account (the "Class A Interest Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Class A Certificateholders. Such Class A Interest Funding
Account shall initially be established with the Trustee.
(ii) If Interest Payment Dates occur less frequently than monthly,
the Servicer, for the benefit of the Class B Certificateholders, shall establish
and maintain in the name of the Trustee, on behalf of the Trust, an Eligible
Deposit Account (the "Class B Interest Funding Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Class B Certificateholders. Such Class B Interest Funding Account shall
initially be established with the Trustee.
(iii) If Interest Funding Accounts are established pursuant to
paragraphs (i) and (ii) above, then at the direction of the Servicer, funds on
deposit in such Interest Funding Accounts shall be invested by the Trustee in
Eligible Investments selected by the Servicer. All such Eligible Investments
shall be held by the Trustee for the benefit of the Class A Certificateholders
or the Class B Certificate-holders, as applicable; provided that on each
Distribution Date, all interest and other investment income (net of losses and
investment expenses) on funds on deposit in the Interest Funding Accounts shall
be paid to the Seller. Funds on deposit in such Interest Funding Accounts
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46
on any Distribution Date (which are not distributed to Class A
Certificateholders or Class B Certificateholders, as applicable, pursuant to
Section 5.01 on such Distribution Date) shall be invested in Eligible
Investments that will mature so that such funds will be available at the close
of business on the Transfer Date preceding the following Distribution Date. No
Eligible Investment shall be disposed of prior to its maturity; provided,
however, that the Trustee may sell, liquidate or dispose of an Eligible
Investment before its maturity, if so directed by the Servicer, the Servicer
having reasonably determined that the interest of the Class A
Certificateholders or the Class B Certificateholders, as applicable, may be
adversely affected if such Eligible Investment is held to its maturity. Unless
the Servicer directs otherwise, funds deposited in such Interest Funding
Accounts on a Transfer Date (which immediately precedes a Payment Date) upon
the maturity of any Eligible Investments are not required to be invested
overnight.
(f)(i) The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Interest Funding Accounts, if
any, and the Principal Funding Account (collectively, the "Designated Series
Accounts") and in all proceeds thereof. The Designated Series Accounts shall
be under the sole dominion and control of the Trustee for the benefit of the
Class A Certificateholders and/or the Class B Certificateholders, as the case
may be. If, at any time, any of the Designated Series Accounts ceases to be an
Eligible Deposit Account, the Trustee (or the Servicer on its behalf) shall
within 10 Business Days (or such longer period, not to exceed 30 calendar days,
as to which each Rating Agency may consent) establish a new Designated Series
Account meeting the conditions specified in paragraph (c)(i), (e)(i) or (ii)
above as an Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Designated Series Account.
(ii) Pursuant to the authority granted to the Servicer in Section
3.01(b) of the Agreement, the Servicer shall have the power, revocable by the
Trustee, to make
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withdrawals and payments or to instruct the Trustee to make withdrawals and
payments from the Designated Series Accounts for the purposes of carrying out
the Servicer's or Trustee's duties hereunder. Pursuant to the authority
granted to the Paying Agent in Section 5.01 of the Supplement and Section 6.07
of the Agreement, the Paying Agent shall have the power, revocable by the
Trustee, to withdraw funds from the Designated Series Accounts for the purpose
of making distributions to the Designated Series Certificateholders.
(g) The Class A Accumulation Period is scheduled to commence at
the close of business on the Class A Accumulation Period Commencement Date;
provided, however, that if the Class A Accumulation Period Length on any
Determination Date (determined as described below) is less than twenty months,
upon notice to the Trustee, the Seller, each Rating Agency and the Collateral
Indebtedness Holder, the Servicer, at its option, may elect to modify the date
on which the Class A Accumulation Period actually commences to the last
Business Day of any month that precedes the month that is the number of months
prior to the Class A Expected Final Payment Date equal to the Class A
Accumulation Period Length; provided, however, that (i) the length of the Class
A Accumulation Period will not be less than one month; and (ii) notwithstanding
any other provision of the Supplement to the contrary, no election to postpone
the commencement of the Class A Accumulation Period shall be made after a Pay
Out Event (as defined in the related Supplement) shall have occurred and is
continuing with respect to any other Series. On each Determination Date, the
Servicer will determine the "Class A Accumulation Period Length" which will
equal the number of months such that the Accumulation Period Amount for the
Monthly Period immediately preceding the Class A Expected Final Payment Date,
when aggregated with the Accumulation Period Amounts for each preceding Monthly
Period, will equal or exceed the Class A Initial Invested Amount plus, if
applicable, the amount of any increases in the Class A Invested Amount during
the Funding Period. Any notice by the Servicer electing to modify the
commencement of the Class A Accumulation Period pursuant to this subsection (g)
shall specify (i) the Accumulation Period Length, (ii) the commencement date of
the Class A Accumulation Period and
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(iii) the Controlled Accumulation Amount with respect to each Monthly Period
during the Class A Accumulation Period.
Section 4.04. Required Amount. (a) With respect to each
Distribution Date, on the related Determination Date, the Servicer shall
determine the amount (the "Class A Required Amount"), if any, by which (a) the
sum of (i) Class A Monthly Interest for such Distribution Date, (ii) any Class
A Outstanding Monthly Interest, (iii) any Class A Additional Interest for such
Distribution Date and any Class A Outstanding Additional Interest, (iv) the
Class A Servicing Fee for such Distribution Date, (v) any Class A Servicing Fee
previously due but not paid to the Servicer, and (vi) the Class A Investor
Default Amount, if any, for such Distribution Date exceeds (b) the Class A
Available Funds. In the event that the Class A Required Amount for such
Distribution Date is greater than zero, the Servicer shall give written notice
to the Trustee of such positive Class A Required Amount on the date of
computation and all or a portion of the Excess Spread and the Excess Finance
Charges allocable to the Designated Series with respect to the related Monthly
Period in an amount equal to the Class A Required Amount for such Distribution
Date shall be distributed from the Collection Account on such Distribution Date
pursuant to Section 4.07(a). In the event that the Class A Required Amount for
such Distribution Date exceeds the amount of Excess Spread and the amount of
Excess Finance Charges allocable to the Designated Series with respect to the
related Monthly Period, all or a portion of the Available Cash Collateral
Amount with respect to such Distribution Date in an amount equal to such excess
shall be applied to fund the Class A Required Amount. In the event that the
Class A Required Amount for such Distribution Date exceeds the amount of Excess
Spread, the amount of Excess Finance Charges allocable to the Designated Series
with respect to the related Monthly Period and the Available Cash Collateral
Amount with respect to such Distribution Date, all or a portion of the
Reallocated Principal Collections with respect to such Monthly Period in an
amount equal to such excess shall be distributed from the Collection Account on
such Distribution Date pursuant to Section 4.08(a).
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49
(b) With respect to each Distribution Date, on the related
Determination Date, the Servicer shall determine the amount (the "Class B
Required Amount"), if any, by which (a) the sum of (i) Class B Monthly Interest
for such Distribution Date, (ii) any Class B Outstanding Monthly Interest,
(iii) any Class B Additional Interest for such Distribution Date and any Class
B Outstanding Additional Interest, (iv) the Class B Servicing Fee for such
Distribution Date, (v) any Class B Servicing Fee previously due but not paid to
the Servicer and (vi) the Class B Investor Default Amount, if any, for such
Distribution Date exceeds (b) the Class B Available Funds. In the event that
the Class B Required Amount for such Distribution Date is greater than zero,
the Servicer shall give written notice to the Trustee of such positive Class B
Required Amount on the date of computation and all or a portion of Excess
Spread and the Excess Finance Charges allocable to the Designated Series (other
than Excess Spread and Excess Finance Charges applied to fund the Class A
Required Amount with respect to such Distribution Date) with respect to the
related Monthly Period shall be applied to fund the Class B Required Amount.
In the event that the Class B Required Amount for such Distribution Date
exceeds the amount of Excess Spread and Excess Finance Charges allocable to the
Designated Series with respect to such Monthly Period and not used to fund the
Class A Required Amount, all or a portion of the Available Cash Collateral
Amount with respect to such Distribution Date pursuant to Section 4.12(c) shall
be applied to fund the Class B Required Amount. In the event that the Class B
Required Amount for such Distribution Date exceeds the portion of Excess Spread
and Excess Finance Charges allocated to the Designated Series with respect to
such Monthly Period and not used to fund the Class A Required Amount and the
portion of the Available Cash Collateral Amount with respect to such
Distribution Date withdrawn from the Cash Collateral Account to fund the Class
B Required Amount, then a portion of the Reallocated Principal Collections with
respect to such Monthly Period shall be distributed from the Collection Account
on such Distribution Date pursuant to Section 4.08(b).
Section 4.05. Application of Class A Available Funds, Class B
Available Funds, Collateral Available Funds,
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Available Investor Principal Collections and Collateral Principal Collections.
The Servicer shall apply (if the Seller is the Servicer and the Collection
Account is maintained with the Seller) or shall cause the Trustee to apply, on
each Distribution Date, Class A Available Funds, Class B Available Funds,
Collateral Available Funds, Available Investor Principal Collections and
Collateral Principal Collections on deposit in the Collection Account with
respect to such Distribution Date to make the following distributions:
(a) On each Distribution Date, an amount equal to the Class A
Available Funds with respect to such Distribution Date will be distributed in
the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Outstanding Monthly
Interest, plus the amount of any Class A Additional Interest for such
Distribution Date and any Class A Outstanding Additional Interest, shall
be distributed to the Paying Agent for payment to the Class A
Certificateholders or, if the Interest Period (relating to the first
Payment Date occurring on or after such Distribution Date) is longer
than one month, shall be deposited by the Servicer or the Trustee in the
Class A Interest Funding Account;
(ii) an amount equal to the Class A Servicing Fee for such
Distribution Date, plus the amount of any Class A Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer (unless such
amount has been netted against deposits to the Collection Account in
accordance with Section 4.03 of the Agreement);
(iii) an amount equal to the Class A Investor Default Amount for
such Distribution Date shall be treated as a portion of Available
Investor Principal Collections for such Distribution Date; and
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(iv) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed as set forth in Section 4.07.
(b) On each Distribution Date, an amount equal to the Class B
Available Funds with respect to such Distribution Date will be distributed in
the following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Outstanding Monthly
Interest, plus the amount of any Class B Additional Interest for such
Distribution Date and any Class B Outstanding Additional Interest, shall
be distributed to the Paying Agent for payment to the Class B
Certificateholders or, if the Interest Period (relating to the first
Payment Date occurring on or after such Distribution Date) is longer
than one month, shall be deposited by the Servicer or the Trustee in the
Class B Interest Funding Account;
(ii) an amount equal to the Class B Servicing Fee for such
Distribution Date, plus the amount of any Class B Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer (unless such
amount has been netted against deposits to the Collection Account in
accordance with Section 4.03 of the Agreement);
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.07.
(c) On each Distribution Date, an amount equal to the Collateral
Available Funds with respect to such Distribution Date will be distributed in
the following priority:
(i) an amount equal to the Collateral Servicing Fee for such
Distribution Date, plus the amount of any Collateral Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution
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52
Date, shall be distributed to the Servicer (unless such amount has been
netted against deposits to the Collection Account in accordance with
Section 4.03 of the Agreement); and
(ii) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed as set forth in Section 4.07.
(d) On each Distribution Date with respect to the Revolving
Period, an amount equal to the Available Investor Principal Collections
deposited in the Collection Account for the related Monthly Period shall be
treated as Shared Principal Collections and applied in accordance with Section
4.04 of the Agreement.
(e) On each Distribution Date with respect to the Revolving
Period, an amount equal to the Collateral Principal Collections deposited in
the Collection Account for the related Monthly Period will be distributed in
the following priority:
(i) an amount equal to Collateral Monthly Principal for such
Distribution Date, up to the Collateral Indebtedness Amount on such
Distribution Date, shall be deposited in the Cash Collateral Account;
and
(ii) the balance, if any, of such Collateral Principal Collections
then on deposit in the Collection Account shall be treated as Shared
Principal Collections and applied in accordance with Section 4.04 of the
Agreement.
(f) On each Distribution Date with respect to the Accumulation
Period, the Early Amortization Period or the Principal Payment Period, an
amount equal to the Available Investor Principal Collections deposited in the
Collection Account for the related Monthly Period will be distributed in the
following priority:
(i) an amount equal to Class A Monthly Principal for such
Distribution Date, up to the Class A Adjusted
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Invested Amount, on such Distribution Date, shall be deposited in the
Principal Funding Account or, if such Distribution Date is a Special
Payment Date on which the Principal Funding Account Balance is zero,
shall be distributed to the Paying Agent for payment to the Class A
Certificateholders;
(ii) for each Distribution Date beginning on the Class B Principal
Commencement Date, an amount equal to Class B Monthly Principal for such
Distribution Date, up to the Class B Adjusted Invested Amount on such
Distribution Date, shall be deposited in the Principal Funding Account
or, if such Distribution Date is a Special Payment Date on which the
Principal Funding Account Balance is zero, shall be distributed to the
Paying Agent for payment to the Class B Certificateholders;
(iii) the balance, if any, of such Available Investor Principal
Collections then on deposit in the Collection Account, to the extent of
the Collateral Principal Shortfall, if any, shall be deposited in the
Cash Collateral Account; and
(iv) for each Distribution Date, after giving effect to paragraphs
(i), (ii) and (iii) above, an amount equal to the balance, if any, of
such Available Investor Principal Collections then on deposit in the
Collection Account shall be treated as Shared Principal Collections and
applied in accordance with Section 4.04 of the Agreement.
(g) On each Distribution Date following the end of the Revolving
Period, an amount equal to Collateral Principal Collections deposited in the
Collection Account for the related Monthly Period will be distributed in the
following priority:
(i) an amount equal to Collateral Monthly Principal for such
Distribution Date, up to the Collateral Indebtedness Amount, shall be
deposited in the Cash Collateral Account; and
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54
(ii) the balance, if any, of such Collateral Principal Collections
then on deposit in the Collection Account shall be treated as Shared
Principal Collections and applied in accordance with Section 4.04 of the
Agreement.
Section 4.06. Defaulted Amounts; Investor Charge-Offs. (a) On
each Determination Date, the Servicer shall calculate the Class A Investor
Default Amount, if any, for the related Distribution Date. If, on any
Distribution Date, the Class A Required Amount for the related Monthly Period
exceeds the sum of (x) the amount of Reallocated Principal Collections with
respect to such Monthly Period, (y) the amount of Excess Spread and the Excess
Finance Charges allocable to the Designated Series with respect to such
Distribution Date and (z) the Available Cash Collateral Amount with respect to
such Distribution Date, the Collateral Indebtedness Amount will be reduced by
the amount of such excess, but not by more than the excess of the Class A
Investor Default Amount for such Distribution Date over the amount of
Reallocated Principal Collections, the amount of Excess Spread and Excess
Finance Charges and the amount withdrawn from the Cash Collateral Account used
to fund the Class A Investor Default Amount for such Distribution Date. In the
event that such reduction would cause the Collateral Indebtedness Amount to be
a negative number, the Collateral Indebtedness Amount will be reduced to zero
and the Class B Invested Amount shall be reduced by the amount by which the
Collateral Indebtedness Amount would have been reduced below zero, but not by
more than the excess, if any, of the Class A Investor Default Amount for such
Distribution Date over the amount of such reduction, if any, of the Collateral
Indebtedness Amount with respect to such Distribution Date and the amount of
Reallocated Principal Collections, the amount of Excess Spread and Excess
Finance Charges and the amount withdrawn from the Cash Collateral Account used
to fund the Class A Investor Default Amount for such Distribution Date. In the
event that such reduction would cause the Class B Invested Amount to be a
negative number, the Class B Invested Amount shall be reduced to zero, and the
Class A Invested Amount shall be reduced by the amount by which the Class B
Invested Amount would have been reduced below zero, but not by more than the
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excess, if any, of the Class A Investor Default Amount for such Distribution
Date over the aggregate amount of the reductions, if any, of the Collateral
Indebtedness Amount and the Class B Invested Amount for such Distribution Date
and the amount of Reallocated Principal Collections, the amount of Excess
Spread and Excess Finance Charges and the amount withdrawn from the Cash
Collateral Account used to fund the Class A Investor Default Amount for such
Distribution Date (a "Class A Investor Charge-Off"). Class A Investor
Charge-Offs shall thereafter be reimbursed and the Class A Invested Amount
increased (but not by an amount in excess of the aggregate unreimbursed Class A
Investor Charge-Offs) on any Distribution Date by the amount of Excess Spread
and Excess Finance Charges allocated and available for that purpose pursuant to
Section 4.07(b).
(b) On each Determination Date, the Servicer shall calculate the
Class B Required Amount, if any, for the related Distribution Date. If, on any
Distribution Date, the Class B Required Amount for such Distribution Date
exceeds the sum of (x) the amount of Excess Spread and Excess Finance Charges
allocated to the Designated Series with respect to the related Monthly Period
which are not used to fund the Class A Required Amount and Class A Investor
Charge-Offs on the related Distribution Date, (y) the portion, if any, of the
Available Cash Collateral Amount to be withdrawn from the Cash Collateral
Account pursuant to Section 4.12(c) which is remaining after applying such
amounts to fund any deficiency of amounts payable pursuant to Section 4.07(a)
with respect to such Distribution Date and (z) the amount of Reallocated
Principal Collections which are available to fund the Class B Required Amount
on such Distribution Date pursuant to Section 4.08(b), then the Collateral
Indebtedness Amount shall be reduced by the amount of such excess, but not by
more than the excess of the Class B Investor Default Amount for such
Distribution Date over the amount of Reallocated Principal Collections, the
amount of Excess Spread and Excess Finance Charges, and the amount withdrawn
from the Cash Collateral Account used to fund the Class B Investor Default
Amount for such Distribution Date. In the event that such reduction would
cause the Collateral Indebtedness Amount to be a negative number, the
Collateral Indebtedness
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Amount shall be reduced to zero, and the Class B Invested Amount shall be
reduced by the amount by which the Collateral Indebtedness Amount would have
been reduced below zero, but not by more than the excess, if any, of the Class
B Investor Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Collateral Indebtedness Amount with respect to such
Distribution Date and the amount of Reallocated Principal Collections, the
amount of Excess Spread and Excess Finance Charges, and the amount withdrawn
from the Cash Collateral Account used to fund the Class B Investor Default
Amount for such Distribution Date (a "Class B Investor Charge-Off"). Class B
Investor Charge-Offs shall thereafter be reimbursed and the Class B Invested
Amount increased (but not by an amount in excess of the aggregate unreimbursed
Class B Investor Charge-Offs) on any Distribution Date by the amount of Excess
Spread and Excess Finance Charges allocated and available for that purpose
pursuant to Section 4.07(d).
(c) If, on any Distribution Date, Reallocated Principal
Collections for such Distribution Date are applied pursuant to Section 4.08(a)
or (b), the Collateral Indebtedness Amount shall be reduced by the amount of
such Reallocated Principal Collections. In the event that such reduction would
cause the Collateral Indebtedness Amount to be a negative number, the
Collateral Indebtedness Amount shall be reduced to zero, and the Class B
Invested Amount shall be reduced by the amount by which the Collateral
Indebtedness Amount would have been reduced below zero.
(d) If, on any Distribution Date, the Collateral Default Amount
exceeds the amount of Excess Spread and Excess Finance Charges available to
fund the Collateral Default Amount pursuant to Section 4.07(g) on such
Distribution Date, then the Collateral Indebtedness Amount shall be reduced by
the amount of such excess; provided, however, that the Collateral Indebtedness
Amount shall not be reduced below zero.
Section 4.07. Excess Spread; Excess Finance Charges. The
Servicer shall apply (if the Seller is the Servicer and the Collection Account
is maintained with the Seller) or shall cause the Trustee to apply, on each
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Distribution Date, Excess Spread and Excess Finance Charges allocated to the
Designated Series with respect to the related Monthly Period, to make the
following distributions in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Distribution Date shall be distributed by the Trustee to
fund any deficiency pursuant to Sections 4.05(a)(i), (ii) and (iii);
provided that, in the event the Class A Required Amount for such
Distribution Date exceeds the amount of Excess Spread and Excess Finance
Charges allocated to the Designated Series, such Excess Spread and
Excess Finance Charges shall be applied first to pay amounts due with
respect to such Distribution Date pursuant to Section 4.05(a)(i), second
to pay the Class A Servicing Fee pursuant to Section 4.05(a)(ii) and
third to pay the Class A Investor Default Amount for such Distribution
Date pursuant to Section 4.05(a)(iii);
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed as provided in
Section 4.06(a) (after giving effect to the allocation on such
Distribution Date of any amount for that purpose pursuant to Section
4.06(a)) shall be treated as a portion of Available Investor Principal
Collections for such Distribution Date;
(c) an amount equal to the Class B Required Amount, if any, with
respect to such Distribution Date shall be distributed by the Trustee
(I) to fund any deficiency pursuant to Sections 4.05(b)(i) and (ii), and
(II) for application, up to the Class B Investor Default Amount, as a
portion of Available Investor Principal collections for such
Distribution Date; provided that, in the event the Class B Required
Amount for Distribution Date exceeds the amount of Excess Spread and
Excess Finance Charges allocated to the Designated Series and available
to pay such amount pursuant to this clause (c), such Excess Spread and
Excess Finance Charges shall be applied first to pay amounts due with
respect to such Distribution Date
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pursuant to Section 4.05(b)(i), second to pay the Class B Servicing Fee
pursuant to Section 4.05(b)(ii) and third as a portion of Available
Investor Principal Collections for such Distribution Date pursuant to
clause (II) above;
(d) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (c), (d) and (e) of
the definition of "Class B Invested Amount" in Section 2.01 of the
Supplement (but not in excess of the aggregate amount of such reductions
which have not been previously reimbursed) shall be treated as a portion
of Available Investor Principal Collections for such Distribution Date;
(e) an amount equal to the sum of (I) Collateral Monthly Interest
for such Distribution Date, plus the amount of any Collateral Monthly
Interest previously due but not distributed to the Collateral
Indebtedness Holder on a prior Distribution Date, plus the amount of any
Collateral Additional Interest for such Distribution Date and any
Collateral Additional Interest previously due but not distributed to the
Collateral Indebtedness Holder on a prior Distribution Date, and (II)
the excess, if any, of (A) the accrued and unpaid interest due on the CA
Investor Principal Balance (as defined in the Collateral Agreement) at
the Collateral Rate pursuant to the Collateral Agreement, over (B) the
sum of the amount available to be distributed on such Distribution Date
pursuant to clause (e)(I) above in respect of Collateral Monthly
Interest and Collateral Additional Interest and the amount available
from earnings on investments in the Cash Collateral Account and amounts
on deposit in the Retention Account (as defined in the Collateral
Agreement) for payment of such accrued and unpaid interest, will be
distributed to the Collateral Indebtedness Holder for application in
accordance with the Collateral Agreement; provided that, Excess Spread
and Excess Finance Charges shall be applied first to pay amounts due
pursuant to clause (e)(I) and then to pay amounts due pursuant to clause
(e)(II).
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(f) an amount equal to the Collateral Servicing Fee due but not
paid to the Servicer either on such Distribution Date or a prior
Distribution Date shall be paid to the Servicer;
(g) an amount equal to the Collateral Default Amount for such
Distribution Date shall be treated as a portion of Collateral Principal
Collections with respect to such Distribution Date;
(h) an amount equal to the aggregate amount by which the
Collateral Indebtedness Amount has been reduced pursuant to clause (c)
of the definition of "Collateral Indebtedness Amount" (but not in excess
of the aggregate amount of such reductions which have not been
previously reimbursed) shall be treated as a portion of Collateral
Principal Collections with respect to such Distribution Date;
(i) an amount up to the excess, if any, of the Required Collateral
Amount over the Available Collateral Amount (without giving effect to
any deposit made on such date hereunder) shall be deposited into the
Cash Collateral Account;
(j) on each Distribution Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve Account
terminates as described in Section 4.11(f), an amount up to the excess,
if any, of the Required Reserve Account Amount over the Available
Reserve Account Amount shall be deposited into the Reserve Account;
(k) an amount equal to the aggregate of any other amounts then due
to the Collateral Indebtedness Holder pursuant to the Collateral
Agreement (to the extent such amounts are payable pursuant to the
Collateral Agreement out of "Available Non-Principal Funds" (as defined
therein)) shall be distributed to the Collateral Indebtedness Holder for
application in accordance with the Collateral Agreement; and
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(l) the balance, if any, will constitute Excess Finance Charges
for such Distribution Date and will be available for allocation to other
Series in Group One or to the Seller as described in Section 4.05 of the
Agreement.
Section 4.08. Reallocated Principal Collections. The Servicer
shall apply (if the Seller is the Servicer and the Collection Account is
maintained with the Seller) or shall cause the Trustee to apply on each
Distribution Date Reallocated Principal Collections (applying all such
Collections with respect to the Collateral Indebtedness Amount prior to
applying any such Collections with respect to the Class B Invested Amount and
applying no such Collections with respect to the Class B Invested Amount
pursuant to clause (b) below) with respect to such Distribution Date, to make
the following distributions in the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Distribution Date over
(ii) the sum of (x) the amount of Excess Spread and Excess Finance
Charges allocated to the Designated Series with respect to the related
Monthly Period and (y) the Available Cash Collateral Amount with respect
to such Distribution Date, shall be distributed by the Trustee to fund
any deficiency pursuant to Sections 4.05(a)(i), (ii) and (iii); provided
that, in the event the Class A Required Amount for such Distribution
Date exceeds the sum of the Available Cash Collateral Amount for such
Distribution Date, the amount of Excess Spread and Excess Finance
Charges allocated to the Designated Series and the amount of Reallocated
Principal Collections for such Distribution Date, the amount withdrawn
from the Cash Collateral Account with respect to such Class A Required
Amount, such Excess Spread and Excess Finance Charges allocated to the
Designated Series and Reallocated Principal Collections shall be applied
first to pay amounts due with respect to such Distribution Date pursuant
to Section 4.05(a)(i), second to pay the Class A Servicing Fee pursuant
to Section 4.05(a)(ii) and third to pay the Class A
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Investor Default Amount for such Distribution Date pursuant to Section
4.05(a)(iii);
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Distribution Date over
(ii) the sum of (x) the amount of Excess Spread and Excess Finance
Charges to be allocated and available to the Class B Certificateholder's
Interest pursuant to Section 4.07(c) on such Distribution Date and (y)
the amount withdrawn from the Cash Collateral Account pursuant to
Section 4.12(c) which is remaining after application pursuant to Section
4.07(a) with respect to such Distribution Date, shall be distributed by
the Trustee to fund any deficiency pursuant to Sections 4.05(b)(i) and
(ii) and 4.07(c)(II); provided that, in the event the Class B Required
Amount for such Distribution Date exceeds the sum of the amount to be
withdrawn from the Cash Collateral Account pursuant to Section 4.12(c)
which is remaining after application pursuant to Section 4.08(a) with
respect to such Distribution Date, the amount of Excess Spread and
Excess Finance Charges to be allocated to the Class B
Certificateholders' Interest on such Distribution Date and the amount of
Reallocated Principal Collections (other than Reallocated Principal
Collections distributed pursuant to clause (a) above) for such
Distribution Date, the amount withdrawn from the Cash Collateral Account
with respect to the Class B Required Amount, such Excess Spread and
Excess Finance Charges and such Reallocated Principal Collections shall
be applied first to pay the amounts due with respect to such
Distribution Date pursuant to Section 4.05(b)(i), second to pay the
Class B Servicing Fee pursuant to Section 4.05(b)(ii) and third to apply
any remaining amount as a portion of Available Investor Principal
Collections for such Distribution Date pursuant to Section 4.07(c)(II);
and
(c) the balance, if any, of such Reallocated Principal Collections
allocable to the Class B Invested Amount shall be treated as a portion
of Available Investor Principal Collections to be applied in
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accordance with Sections 4.05(d) and (f), and the balance, if any, of
such Reallocated Principal Collections allocable to the Collateral
Indebtedness Amount shall be treated as a portion of Collateral
Principal Collections to be applied in accordance with Sections 4.05(e)
and (g).
Section 4.09. Excess Finance Charges. The Designated Series
shall be included in Group One. Subject to Section 4.05 of the Agreement,
Excess Finance Charges with respect to the Series in Group One for any
Distribution Date will be allocated to the Designated Series in an amount equal
to the product of (x) the aggregate amount of Excess Finance Charges with
respect to all the Series in Group One for such Distribution Date and (y) a
fraction, the numerator of which is the Finance Charge Shortfall for the
Designated Series for such Distribution Date and the denominator of which is
the aggregate amount of Finance Charge Shortfalls for all the Series in Group
One for such Distribution Date. The "Finance Charge Shortfall" for the
Designated Series for any Distribution Date will be equal to the excess, if
any, of (a) the full amount required to be paid, without duplication, pursuant
to Sections 4.05(a), 4.05(b), 4.05(c) and 4.07 on such Distribution Date over
(b) the Floating Allocation Percentage of Collections of Finance Charge
Receivables with respect to the related Monthly Period.
Section 4.10. Shared Principal Collections. Subject to Section
4.04 of the Agreement, Shared Principal Collections for any Distribution Date
will be allocated to the Designated Series in an amount equal to the product of
(x) the aggregate amount of Shared Principal Collections with respect to all
Series for such Distribution Date and (y) a fraction, the numerator of which is
the Principal Shortfall for the Designated Series for such Distribution Date
and the denominator of which is the aggregate amount of Principal Shortfalls
for all the Series as defined in each related Supplement, which are Principal
Sharing Series for such Distribution Date. The "Principal Shortfall" for the
Designated Series will be equal to (a) for any Distribution Date with respect
to the Revolving Period, zero, (b) for any Distribution Date with respect to
the Accumulation Period (prior to the Class B Final Payment Date), the excess,
if
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any, of the Controlled Deposit Amount with respect to such Distribution Date
over the amount of Available Investor Principal Collections for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections), (c) for any Distribution Date with respect to the Early
Amortization Period and for each Distribution Date on or after the Class B
Expected Final Payment Date, the excess, if any, of the Invested Amount over
the amount of Available Investor Principal Collections and Collateral Principal
Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections) and (d) if the Designated Series
is an Extendable Series in its Principal Payment Period, the amount, if any,
that would have been the Controlled Deposit Amount for such Distribution Date
had the related Principal Payment Event not occurred, over the amount of
Available Investor Principal Collections for such Distribution Date (excluding
any portion thereof attributable to Shared Principal Collections).
If the Designated Series is a Subordinated Excess Principal
Series, then Excess Shared Principal Collections for the Distribution Date, if
any, will also be allocated to the Designated Series in an amount equal to the
lesser of (i) the Subordinated Excess Principal Shortfall of the Designated
Series for such Distribution Date and (ii) the product of (x) Excess Shared
Principal Collections and (y) a fraction, the numerator of which is the
Subordinated Excess Principal Shortfall of the Designated Series for such
Distribution Date and the denominator of which is the aggregate amount of
Subordinated Excess Principal Shortfalls (as defined in each related
Supplement) of all Subordinated Excess Principal Series. The "Subordinated
Excess Principal Shortfall" of the Designated Series for any Distribution Date
with respect to the Principal Payment Period shall equal the excess of the
Invested Amount over the sum of (i) Available Investor Principal Collections
for such Distribution Date (excluding any portion thereof attributable to
Subordinated Excess Principal Collections) and (ii) the Principal Shortfall for
such Distribution Date.
Section 4.11. Reserve Account. (a) The Servicer shall establish
and maintain, in the name of the Trustee, on
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behalf of the Trust, for the benefit of the Designated Series
Certificateholders and the Collateral Indebtedness Holder, an Eligible Deposit
Account (the "Reserve Account") bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Designated Series
Certificateholders and the Collateral Indebtedness Holder. The Reserve Account
shall initially be established with the Trustee. The Trustee shall possess all
right, title and interest in all funds on deposit from time to time in the
Reserve Account and in all proceeds thereof. The Reserve Account shall be
under the sole dominion and control of the Trustee for the benefit of the
Designated Series Certificateholders. If at any time the Reserve Account
ceases to be an Eligible Deposit Account, the Trustee (or the Servicer on its
behalf) shall within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a new
Reserve Account meeting the conditions specified above as an Eligible Deposit
Account, and shall transfer any cash and/or any investments to such new Reserve
Account. The Trustee, at the direction of the Servicer, shall (i) make
withdrawals from the Reserve Account from time to time in an amount up to the
Available Reserve Account Amount at such time, for the purposes set forth in
the Supplement, and (ii) on each Distribution Date (from and after the Reserve
Account Funding Date) prior to the termination of the Reserve Account make a
deposit into the Reserve Account in the amount specified in, and otherwise in
accordance with, Section 4.07(j).
(b) Funds on deposit in the Reserve Account shall be invested at
the direction of the Servicer by the Trustee in Eligible Investments. Funds on
deposit in the Reserve Account on any Transfer Date, after giving effect to any
withdrawals from the Reserve Account on such Transfer Date, shall be invested
in such investments that will mature so that such funds will be available for
withdrawal on or prior to the following Transfer Date. The Trustee shall
maintain for the benefit of the Designated Series Certificateholders and the
Collateral Indebtedness Holder possession of the negotiable instruments or
securities, if any, evidencing such Eligible Investments. No Eligible
Investment shall be disposed of prior to its maturity; provided, however, that
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the Trustee may sell, liquidate or dispose of an Eligible Investment before its
maturity, if so directed by the Servicer, the Servicer having reasonably
determined that the interest of the Designated Series Certificateholders may be
adversely affected if such Eligible Investment is held to its maturity. 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 Reserve Account shall be retained in the Reserve Account (to the extent
that the Available Reserve Account Amount is less than the Required Reserve
Account Amount) and the balance, if any, shall be deposited in the Collection
Account and treated as collections of Finance Charge Receivables. For purposes
of determining the availability of funds or the balance in the Reserve Account
for any reason under the Supplement, except as otherwise provided in the
preceding sentence, investment earnings on such funds shall be deemed not to be
available or on deposit.
(c) On the Determination Date preceding each Distribution Date
with respect to the Accumulation Period (prior to the Class B Expected Final
Payment Date), the Principal Payment Period (on or prior to the Initial
Principal Distribution Date) or the first Special Payment Date, the Servicer
shall calculate the "Reserve Draw Amount" which shall be equal to the excess,
if any, of the Covered Amount with respect to such Distribution Date or Special
Payment Date over the Principal Funding Investment Proceeds with respect to
such Distribution Date or Special Payment Date; provided that such amount will
be reduced to the extent that funds otherwise would be available for deposit in
the Reserve Account under Section 4.07(j) with respect to such Distribution
Date or Special Payment Date.
(d) In the event that for any Distribution Date the Reserve Draw
Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on the
related Transfer Date by the Trustee (acting in accordance with the
instructions of the Servicer), deposited into the Collection Account and
included in (i) prior to the Class B Principal Commencement Date, Class A
Available Funds and
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(ii) thereafter, Class B Available Funds, in each case for such Distribution
Date.
(e) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Trustee, acting in accordance with the instructions of the Servicer,
shall withdraw from the Reserve Account, and pay to the Collateral Indebtedness
Holder for application in accordance with the Collateral Agreement, an amount
equal to such Reserve Account Surplus.
(f) Upon the earliest to occur of (i) the termination of the
Trust pursuant to Article XII of the Agreement, (ii) the day on which the sum
of the Class A Invested Amount and the Class B Invested Amount is paid in full
to the Designated Series Certificateholders, (iii) if the Accumulation Period
or Principal Payment Period has not commenced, a Pay Out Event with respect to
the Designated Series and (iv) if the Accumulation Period or Principal Payment
Period has commenced, the earlier of the first Special Payment Date and the
Class B Expected Final Payment Date, the Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Designated Series Certificateholders which are payable from the Reserve
Account as provided herein, shall withdraw from the Reserve Account and pay to
the Collateral Indebtedness Holder in accordance with the Collateral Agreement,
all amounts, if any, on deposit in the Reserve Account and the Reserve Account
shall be deemed to have terminated for purposes of the Supplement.
Section 4.12. Cash Collateral Account. (a) The Servicer shall
establish and maintain, in the name of the Trustee, on behalf of the Trust, for
the benefit of the Designated Series Certificateholders and the Collateral
Indebtedness Holder, as their interests appear herein, an Eligible Deposit
Account (the "Cash Collateral Account") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Designated Series Certificateholders and the Collateral Indebtedness Holder.
The Cash Collateral Account shall initially be
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established with the Trustee. The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Cash Collateral
Account and in all proceeds thereof. The Cash Collateral Account shall be
under the sole dominion and control of the Trustee for the benefit of the
Designated Series Certificateholders and the Collateral Indebtedness Holder.
The interest of the Collateral Indebtedness Holder in the Cash Collateral
Account shall be subordinated to the interests of the Designated Series
Certificateholders as provided herein and in the Collateral Agreement. If at
any time the Cash Collateral Account ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) shall within 10 Business Days (or
such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Cash Collateral Account meeting the
conditions specified above as an Eligible Deposit Account, and shall transfer
any cash and/or any investments to such new Cash Collateral Account. The
Trustee, at the direction of the Servicer, shall make deposits to and
withdrawals from the Cash Collateral Account in the amounts and at the times
set forth in the Supplement and the Collateral Agreement. All withdrawals
from the Cash Collateral Account shall be made in the priority set forth below.
The Collateral Indebtedness Holder shall not be entitled to reimbursement from
the Trust Assets for any withdrawals from the Cash Collateral Account except as
specifically provided in the Supplement and the Collateral Agreement.
(b) Funds on deposit in the Cash Collateral Account shall be
invested at the direction of the Servicer (or the Collateral Indebtedness
Holder, as provided in the Collateral Agreement) by the Trustee in Eligible
Investments. Funds on deposit in the Cash Collateral Account on any Transfer
Date, after giving effect to any withdrawals from the Cash Collateral Account
on such Transfer Date, shall be invested in such investments that will mature
so that such funds will be available for withdrawal on or prior to the
following Transfer Date. No Eligible Investment shall be disposed of prior to
its maturity; provided, however, that the Trustee may sell, liquidate or
dispose of an Eligible Investment before its maturity, if so directed by the
Servicer, the Servicer having reasonably determined
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that the interest of the Designated Series Certificateholders may be adversely
affected if such Eligible Investment is held to its maturity. The proceeds of
any such investments shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the Transfer
Date immediately following the date of such investment. The Trustee shall
maintain for the benefit of the Designated Series Certificateholders and the
Collateral Indebtedness Holder possession of the negotiable instruments or
securities, if any, evidencing the Eligible Investments. On each Transfer
Date, all interest and earnings (net of losses and investment expenses) accrued
since the preceding Transfer Date on funds on deposit in the Cash Collateral
Account shall be paid to the Collateral Indebtedness Holder for application in
accordance with the Collateral Agreement. For purposes of determining the
availability of funds or the balances in the Cash Collateral Account for any
reason under the Supplement, all investment earnings on such funds shall be
deemed not to be available or on deposit.
(c) On each Determination Date, the Servicer shall calculate the
amount (the "Required Draw Amount") by which the amounts specified in clauses
(a) through (d) of Section 4.07 with respect to the related Distribution Date
exceed the amount of Excess Spread and Excess Finance Charges allocated with
respect to the related Monthly Period. In the event that for any Distribution
Date the Required Draw Amount is greater than zero, the Servicer shall give
written notice to the Trustee and the Collateral Indebtedness Holder, in
substantially the form of Exhibit B, of such positive Required Draw Amount on
the related Determination Date. On the related Transfer Date, the Total Draw
Amount, if any, up to the Available Cash Collateral Amount shall be withdrawn
from the Cash Collateral Account and distributed to fund any deficiency
pursuant to Section 4.07(a) through (d) (in the order of priority set forth in
Section 4.07).
(d) In the event that the Cash Collateral Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Cash Collateral Account with respect to such Distribution Date, is greater
than
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zero, the Trustee, acting in accordance with the instructions of the Servicer,
shall withdraw from the Cash Collateral Account, and apply in accordance with
the Collateral Agreement, an amount equal to such Cash Collateral Surplus.
SECTION 4.13. Prefunding Account. (a) Condition to the
Application of this Section. Section 4.13 shall apply to the Designated Series
only if the Designated Series is a Prefunded Series.
(b) Establishment of the Prefunding Account. The Servicer shall
establish and maintain, in the name of the Trustee, on behalf of the Trust, for
the benefit of the Designated Series Certificateholders and the Collateral
Indebtedness Holder, as their interests appear herein, an Eligible Deposit
Account (the "Prefunding Account") bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Designated
Series Certificateholders and the Collateral Indebtedness Holder. The
Prefunding Account shall initially be established with the Trustee. The Seller
shall on the Closing Date deposit into the Prefunding Account the Initial
Prefunded Amount. The Seller does hereby transfer, assign, set over and
otherwise convey to the Trustee for the benefit of the Designated Series
Certificateholders and the Collateral Indebtedness Holder, without recourse all
of its right, title and interest in, to and under the Prefunding Account, any
Eligible Investments on deposit therein and any proceeds of the foregoing. The
Trustee shall possess all right, title and interest in all funds on deposit
from time to time in the Prefunding Account and in all proceeds thereof. The
Prefunding Account shall be under the sole dominion and control of the Trustee
for the benefit of the Designated Series Certificateholders and the Collateral
Indebtedness Holder. If at any time the Prefunding Account ceases to be an
Eligible Deposit Account, the Trustee (or the Servicer on its behalf) shall
within 10 Business Days (or such longer period, not to exceed 30 calendar days,
as to which each Rating Agency may consent) establish a new Prefunding Account
meeting the conditions specified above as an Eligible Deposit Account, and
shall transfer any cash and/or any investments to such new Prefunding Account.
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Pursuant to subsection 3.01(b) of the Agreement, the Servicer shall have the
power, revocable by the Trustee, to make withdrawals and payments or to
instruct the Trustee to make withdrawals or payments from the Prefunding
Account for the purposes of carrying out the Servicer's or Trustee's duties
hereunder.
(c) Administration of the Prefunding Account. On each
Distribution Date, the Servicer shall direct the Trustee to withdraw from the
Prefunding Account and deposit into the Collection Account all interest and
other investment income (net of losses and investment expenses) ("Prefunding
Investment Proceeds") then on deposit in the Prefunding Account. Such
investment income shall be deemed to be Collections of Finance Charge
Receivables allocated to the Designated Series. Interest (including reinvested
interest) and other investment income on funds on deposit in the Prefunding
Account shall not be considered part of the Prefunded Amount.
(d) Investment of Funds in Prefunding Account. Funds on deposit
in the Prefunding Account shall be invested in Eligible Investments by the
Trustee (or, at the direction of the Trustee, by the Servicer on behalf of the
Trustee) selected at the direction of the Servicer. Funds on deposit in the
Prefunding Account on the Closing Date and thereafter shall be invested in
Eligible Investments that will mature so that such funds will be available for
withdrawal on the Business Day next succeeding the next increase in the
Invested Amount pursuant to Section 4.13(f) or, if earlier, on the next
succeeding Transfer Date.
(e) Principal Payments from Prefunding Account. In the event
that the Prefunded Amount exceeds zero at the end of the Funding Period, the
Servicer shall apply or shall cause the Trustee to apply the Prefunded Amount
to the payment by the Paying Agent of principal on the Class A Certificates,
the Class B Certificates and the Collateral Indebtedness Interest on a pro rata
basis based on the Class A Initial Invested Amount, the Class B Initial
Invested Amount and the Collateral Initial Indebtedness Amount.
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(f) Increases in Invested Amount. On each Funding Date during
the Funding Period, commencing on the Initial Funding Date, the Invested Amount
shall increase to the extent that the Seller's Participation Amount on such day
exceeds the Required Funding Percentage of the sum of the aggregate amount of
Principal Receivables in the Trust and amounts on deposit in the Excess Funding
Account on such day; provided, however, that the Invested Amount shall in no
event exceed the Initial Investor Amount or increase pursuant to this Section
4.13 by an amount in excess of the Prefunded Amount immediately prior to giving
effect to such increase, and provided further, however, that if there is more
than one Prefunded Series with a prefunded amount greater than zero, the one
with the earliest Closing Date shall have its Invested Amount increased first.
Such increase in the Invested Amount shall be allocated to the Class A
Certificates, the Class B Certificates and the Collateral Indebtedness Interest
on a pro rata basis based on the Class A Initial Invested Amount, the Class B
Initial Invested Amount and the Collateral Initial Indebtedness Amount. Upon
any increase in the Invested Amount pursuant to this Section 4.13(f), the
Servicer shall instruct the Trustee to withdraw from the Prefunding Account and
pay to the Seller no later than the next succeeding Business Day an amount
equal to the amount of such increase in the Invested Amount.
ARTICLE V
Distributions and Reports to
Designated Series Certificateholders
Section 5.01. Distributions. (a) On each Payment Date, the
Paying Agent shall distribute to each Class A Certificateholder of record on
the related Record Date (other than as provided in Section 12.02 of the
Agreement) such Class A Certificateholder's pro rata share of the amounts that
are allocated and available on such Payment Date to pay interest on the Class A
Certificates pursuant to the Supplement.
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(b) On each Special Payment Date and on the Class A Expected
Final Payment Date, the Paying Agent shall distribute to each Class A
Certificateholder of record on the related Record Date (other than as provided
in Section 12.02 of the Agreement) such Class A Certificateholder's pro rata
share of the amounts on deposit in the Principal Funding Account or otherwise
held by the Paying Agent and which are allocated and available on such date to
pay principal of the Class A Certificates pursuant to the Supplement up to a
maximum amount on any such date equal to the Class A Investor Amount on such
date (unless there has been an optional repurchase of the Designated Series
Certificateholders' Interest pursuant to Section 10.01 of the Agreement, in
which event the foregoing limitation will not apply).
(c) On each Payment Date, the Paying Agent shall distribute to
each Class B Certificateholder of record on the related Record Date (other
than as provided in Section 12.02 of the Agreement) such Class B
Certificateholder's pro rata share of the amounts that are allocated and
available on such Payment Date to pay interest on the Class B Certificates
pursuant to the Supplement.
(d) On each Special Payment Date and on the Class B Expected
Final Payment Date, the Paying Agent shall distribute to each Class B
Certificateholder of record on the related Record Date (other than as provided
in Section 12.02 of the Agreement) such Class B Certificateholder's pro rata
share of the amounts on deposit in the Principal Funding Account or otherwise
held by the Paying Agent and which are allocated and available on such date to
pay principal of the Class B Certificates pursuant to the Supplement up to a
maximum amount on any such date equal to the Class B Investor Amount on such
date (unless there has been an optional repurchase of the Designated Series
Certificateholders' Interest pursuant to Section 10.01 of the Agreement, in
which event the foregoing limitation will not apply).
(e) The distributions to be made pursuant to this Section 5.01
are subject to the provisions of Sections 2.06,
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9.02, 10.01 and 12.02 of the Agreement and Sections 8.01 and 8.02 of the
Supplement.
(f) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution, distributions to the Designated Series
Certificateholders hereunder shall be made by check mailed to each Designated
Series Certificateholder at such Designated Series Certificateholder's address
appearing in the Certificate Register without presentation or surrender of any
Designated Series Certificate or the making of any notation thereon; provided,
however, that with respect to the Designated Series Certificates registered in
the name of a Clearing Agency, such distributions shall be made to such
Clearing Agency in immediately available funds; provided further, however, that
if the Class B Certificates were privately placed pursuant to an agreement
between the Seller and the purchaser party thereto, distributions to each Class
B Certificateholder hereunder shall be made (i) by wire transfer of immediately
available funds to an account at a bank or other depository institution located
within the United States as shall have been designated by such Class B
Certificateholder by notice in writing to the related Class B Payment Date or
(ii) in the absence of such designation, by check mailed to each such Class B
Certificateholder at such Certificateholder's address appearing in the
Certificate Register without presentation or surrender of any such Class B
Certificate or the making of any notation thereon.
Section 5.02. Reports and Statements to the Designated Series
Certificateholders. (a) On each Distribution Date, the Paying Agent, on
behalf of the Trustee, shall forward to each Designated Series
Certificateholder a statement substantially in the form of Exhibit C prepared
by the Servicer.
(b) Not later than each Determination Date, the Servicer shall
deliver to the Trustee, the Paying Agent, each Rating Agency, the Collateral
Indebtedness Holder and any Person that is the Certificate Owner of more than
50% of the aggregate unpaid principal amount of the Class A Certificates and
notifies the Servicer of such in writing
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(i) a statement substantially in the form of Exhibit C prepared by the Servicer
and (ii) a certificate of a Servicing Officer substantially in the form of
Exhibit D.
(c) A copy of each statement or certificate provided pursuant to
paragraph (a) or (b) may be obtained by any Designated Series Certificateholder
or any Certificate Owner thereof by a request in writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning with
the calendar year next succeeding the Closing Date, the Paying Agent, on behalf
of the Trustee, shall furnish or cause to be furnished to each Person who at
any time during the preceding calendar year was a Designated Series
Certificateholder, a statement prepared by the Servicer containing the
information which is required to be contained in the statement to the
Designated Series Certificateholders, as set forth in paragraph (a) or (b)
above, as applicable, aggregated for such calendar year or the applicable
portion thereof during which such Person was a Designated Series
Certificateholder, together with other information as is required to be
provided by an issuer of indebtedness under the Internal Revenue Code. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Paying Agent
pursuant to any requirements of the Internal Revenue Code as from time to time
in effect.
ARTICLE VI
Section 6.01. Additional Pay Out Events. If any one of the
following events shall occur with respect to the Designated Series
Certificates:
(a) failure on the part of the Seller (i) to make any payment or
deposit required by the terms of the Agreement or the Supplement on or
before the date occurring five Business Days after the date such payment
or deposit is required to be made therein or herein or (ii) duly to
observe or perform any other covenants or agreements of the Seller set
forth in the
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Agreement or the Supplement (including the covenants of the Seller
contained in Article IX of the Supplement), which failure has a material
adverse effect on the Designated Series Certificateholders and which
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Seller by the Trustee, or to the Seller and the
Trustee by any Holder of the Investor Certificates;
(b) any representation or warranty made by the Seller in the
Agreement or the Supplement, or any information contained in a computer
file or microfiche list required to be delivered by the Seller pursuant
to Section 2.01 or 2.08 (g) of the Agreement shall prove to have been
incorrect in any material respect when made or when delivered, which
continues to be incorrect in any material respect for a period of 60
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Seller by the
Trustee, or to the Seller and the Trustee by any Holder of the
Designated Series Certificates and as a result of which the interests
of the Investor Certificateholders are materially and adversely affected
and continue to be materially and adversely affected for such period;
provided, however, that a Pay Out Event pursuant to this Section 6.01(b)
shall not be deemed to have occurred hereunder if the Seller has
accepted reassignment of the related Receivable, or all of such
Receivables, if applicable, during such period in accordance with the
provisions of the Agreement;
(c) a failure by the Seller to convey Receivables in Additional
Accounts or Participation Interests to the Trust within five Business
Days after the day on which it is required to convey such Receivables or
Participation Interests pursuant to Section 2.08(a) of the Agreement or
Section 9.02 of the Supplement;
(d) any Servicer Default shall occur;
(e) a Transfer Restriction Event shall occur;
<PAGE> 76
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(f) the average Portfolio Yield for any three consecutive Monthly
Periods is less than the average Base Rate for such three Monthly
Periods; or
(g) the Class A Invested Amount shall not be paid in full on the
Class A Expected Final Payment Date or the Class B Invested Amount shall
not be paid in full on the Class B Expected Final Payment Date;
then, in the case of any event described in subparagraph (a), (b) or (d), after
the applicable grace period, if any, set forth in such subparagraphs, either
the Trustee or the holders of Investor Certificates (including the Collateral
Indebtedness Holder) of the Designated Series evidencing more than 50% of the
aggregate unpaid principal amount of Investor Certificates (including the
Collateral Indebtedness Interest) by notice then given in writing to the Seller
and the Servicer (and to the Trustee if given by the holders of Investor
Certificates (including the Collateral Indebtedness Holder of the Designated
Series) may declare that a Pay Out Event has occurred with respect to the
Designated Series as of the date of such notice, and, in the case of any event
described in subparagraph (c), (e), (f) or (g) a Pay Out Event shall occur with
respect to the Designated Series without any notice or other action on the part
of the Trustee or holders of Investor Certificates (including the Collateral
Indebtedness Holder) of the Designated Series immediately upon the occurrence
of such event.
ARTICLE VII
Optional Repurchase; Series Termination;
Initial Principal Payment Date
Section 7.01. Optional Repurchase. (a) On any day occurring on
or after the date on which the Invested Amount is reduced to 5% or less of the
sum of the Initial Invested Amount plus, if applicable, the amount of any
increases in the Invested Amount during the Funding Period, the Seller shall
have the option to purchase the interest of the Investor Certificateholders
(including the Collateral
<PAGE> 77
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Indebtedness Interest), at a purchase price equal to (i) if such day is a
Distribution Date, the Reassignment Amount for such Distribution Date or (ii)
if such day is not a Distribution Date, the Reassignment Amount for the
Distribution Date following such day.
(b) The Seller shall give the Servicer and the Trustee at least
30 days prior written notice of the date on which the Seller intends to
exercise such purchase option. Not later than 12:00 noon, Richmond time, on
such day the Seller shall deposit the Reassignment Amount into the Collection
Account in immediately available funds. Such purchase option is subject to
payment in full of the Reassignment Amount. Following the deposit of the
Reassignment Amount into the Collection Account in accordance with the
foregoing, the Invested Amount for the Designated Series shall each be reduced
to zero and the Designated Series Certificateholders and the Collateral
Indebtedness Holder shall have no further interest in the Receivables. The
Reassignment Amount shall be distributed as set forth in Section 8.01(b).
Section 7.02. Series Termination. (a) If, on the Distribution
Date two months prior to the Termination Date, the Invested Amount (after
giving effect to all changes therein on such date) would be greater than zero,
the Servicer, on behalf of the Trustee, shall, within the 40-day period which
begins on such Distribution Date, solicit bids for the sale of Principal
Receivables and the related Finance Charge Receivables (or interests therein)
in an amount equal to the Invested Amount at the close of business on the last
day of the Monthly Period preceding the Termination Date (after giving effect
to all distributions required to be made on the Termination Date, except
pursuant to this Section 7.02). Such bids shall require that such sale shall
(subject to Section 7.02(b)) occur on the Termination Date. The Seller and the
Collateral Indebtedness Holder shall be entitled to participate in, and to
receive from the Trustee a copy of each other bid submitted in connection with,
such bidding process.
(b) The Servicer, on behalf of the Trustee, shall sell such
Receivables (or interests therein) on the
<PAGE> 78
78
Termination Date to the bidder who made the highest cash purchase offer. The
proceeds of any such sale shall be treated as Collections on the Receivables
allocated to the Designated Series Certificateholders and the Collateral
Indebtedness Holder pursuant to the Agreement and the Supplement; provided,
however, that the Servicer shall determine conclusively the amount of such
proceeds which are allocable to Finance Charge Receivables and the amount of
such proceeds which are allocable to Principal Receivables. During the period
from the Distribution Date two months prior to the Termination Date until the
Termination Date, the Servicer shall continue to collect payments on the
Receivables and allocate and deposit such collections in accordance with the
provisions of the Agreement and the Supplements.
Section 7.03. Initial Principal Payment Date. (a) If applicable,
the "Initial Principal Payment Date" for the Designated Series shall be the
date specified as such in the attached Term Sheet; provided, however, that the
Initial Principal Payment Date shall automatically be extended to the next
succeeding Distribution Date (but not later than the Class A Expected Final
Payment Date) unless the Servicer, on or prior to the first day of the Monthly
Period immediately preceding the then-current Initial Principal Payment Date,
notifies the Trustee that the Initial Principal Payment Date shall not be
extended, in which case the Initial Principal Payment Date shall be fixed. The
Servicer will cause the Trustee to provide notice of such election to the
Seller, Designated Series Certificateholders, each Rating Agency and the
Collateral Indebtedness Holder not more than 60 days and not less than 30 days
prior to the then-current Initial Principal Payment Date. In addition, if and
so long as the Designated Series Certificates are listed on the Luxembourg
Stock Exchange, the Trustee shall publish or cause to be published in an
Authorized Newspaper of general circulation in Luxembourg a notice to the
effect that the Servicer has elected not to extend the Initial Principal
Payment Date.
<PAGE> 79
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ARTICLE VIII
Final Distributions
Section 8.01. Sale of Receivables or Certificateholders' Interest
pursuant to Section 2.06 or 10.01 of the Agreement. (a) Purchase Price. (i)
The amount to be paid by the Seller with respect to the Designated Series in
connection with a reassignment of Receivables to the Seller pursuant to Section
2.06 of the Agreement shall equal the Reassignment Amount for the first
Distribution Date following the Monthly Period in which the reassignment
obligation arises under the Agreement.
(ii) The amount to be paid by the Seller with respect to the
Designated Series in connection with a repurchase of the Certificateholders'
Interest pursuant to Section 10.01 of the Agreement shall equal the sum of (x)
the Reassignment Amount for the Distribution Date of such repurchase and (y)
the sum of (A) the excess, if any, of (I) a price equivalent to the average of
bids quoted on the Record Date preceding the date of repurchase (or, if not a
Business Day, on the next succeeding Business Day) by at least two recognized
dealers selected by the Trustee (which may be selected from the list attached
as Schedule 1), for the purchase by such dealers of a security which is similar
to the Class A Certificates with a remaining maturity approximately equal to
the remaining maturity of the Class A Certificates and rated by each Rating
Agency in the rating category originally assigned to the Class A Certificates
over (II) the Reassignment Amount attributable to the Class A Certificates and
(B) the excess, if any, of (I) a price equivalent to the average of bids quoted
on such Record Date or, if not a Business Day, on the next succeeding Business
Day by at least two recognized dealers selected by the Trustee (which may be
selected from the list attached as Schedule 1), for the purchase by such
dealers of a security which is similar to the Class B Certificates with a
remaining maturity approximately equal to the remaining maturity of the Class B
Certificates and rated by each Rating Agency in the rating category originally
assigned to the Class B Certificates over (II) the portion of the
<PAGE> 80
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Reassignment Amount attributable to the Class B Certificates.
(b) Distributions Pursuant to Section 7.01 or 7.02 of the
Supplement and Section 10.01 of the Agreement. With respect to the
Reassignment Amount deposited into the Collection Account pursuant to Section
7.01 or 8.01(a)(ii) or any amounts allocable to the Designated Series
Certificateholders' Interest deposited into the Collection Account pursuant to
Section 7.02, the Trustee shall, not later than 12:00 noon, Richmond time, on
the related Distribution Date, make deposits or distributions of the following
amounts (in the priority set forth below and, in each case, after giving effect
to any deposits and distributions otherwise to be made on such date) in
immediately available funds: (i) (x) the Class A Invested Amount on such
Distribution Date will be distributed to the Paying Agent for payment to the
Class A Certificateholders and (y) an amount equal to the sum of (A) Class A
Monthly Interest for such Distribution Date, (B) any Class A Outstanding
Monthly Interest, and (C) the amount of Class A Additional Interest, if any,
for such Distribution Date and any Class A Outstanding Additional Interest,
will be distributed to the Paying Agent for payment to the Class A
Certificateholders, (ii) (x) the Class B Invested Amount on such Distribution
Date will be distributed to the Paying Agent for payment to the Class B
Certificateholders and (y) an amount equal to the sum of (A) Class B Monthly
Interest for such Distribution Date, (B) any Class B Outstanding Monthly
Interest and (C) the amount of Class B Additional Interest, if any, for such
Distribution Date and any Class B Outstanding Additional Interest, will be
distributed to the Paying Agent for payment to the Class B Certificateholders
and (iii) the Collateral Indebtedness Amount on such date and the amount of
accrued and unpaid interest on the Collateral Indebtedness Amount (including
any unpaid Collateral Additional Interest) will be distributed to the
Collateral Indebtedness Holder for application in accordance with the
Collateral Agreement. Notwithstanding anything to the contrary contained in
the Supplement or the Agreement, the amount of any excess determined pursuant
to paragraph (a)(ii)(y) shall be distributed to the Designated Series
Certificateholders.
<PAGE> 81
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(c) Distributions Pursuant to Section 2.06 of the Agreement.
With respect to any amounts deposited into the Collection Account pursuant to
Section 8.01(a)(i), the Trustee shall, not later than 12:00 noon, Richmond
time, on the related Distribution Date, deposit the principal portion of such
amounts that are allocable to the Class A Certificateholders' Interest and the
Class B Certificateholders' Interest into the Principal Funding Account and the
principal portion of such amounts allocable to the Collateral Indebtedness
Interest shall be distributed to the Collateral Indebtedness Holder for
application in accordance with the Collateral Agreement.
(d) Notwithstanding anything to the contrary in the Supplement or
the Agreement, all amounts distributed to the Paying Agent pursuant to Section
8.01(b) for payment to the Designated Series Certificateholders shall be deemed
distributed in full to the Designated Series Certificateholders on the date on
which such funds are distributed to the Paying Agent pursuant to this Section
and shall be deemed to be a final distribution pursuant to Section 12.02 of the
Agreement.
Section 8.02. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables pursuant to Section 9.02 of the Agreement. (a)
Not later than 12:00 noon, Richmond time, on the Distribution Date following
the date on which the Insolvency Proceeds are deposited into the Collection
Account pursuant to Section 9.02(b) of the Agreement, the Trustee shall (in the
following priority and, in each case, after giving effect to any deposits and
distributions otherwise to be made on such Distribution Date) (i) deduct an
amount equal to the Class A Invested Amount on such Distribution Date from the
portion of the Insolvency Proceeds allocated to Collections of Principal
Receivables and distribute such amount to the Paying Agent for payment to the
Class A Certificateholders, provided that the amount of such distribution shall
not exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Collections of Principal Receivables and (y) the Principal Allocation
Percentage with respect to the related Monthly Period, (ii) deduct an amount
equal to the Class B Invested Amount on such Distribution Date from the portion
of the
<PAGE> 82
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Insolvency Proceeds allocated to Collections of Principal Receivables and
distribute such amount to the Paying Agent for payment to the Class B
Certificateholders, provided that the amount of such distribution shall not
exceed (x) the product of (A) the portion of such Insolvency Proceeds allocated
to Collections of Principal Receivables and (B) the Principal Allocation
Percentage with respect to the related Monthly Period minus (y) the amount
distributed to the Paying Agent pursuant to clause (i) of this sentence and
(iii) deduct an amount equal to the Collateral Indebtedness Amount, if any, on
such Distribution Date from the portion of the Insolvency Proceeds allocated to
Collections of Principal Receivables and distribute such amount to the
Collateral Indebtedness Holder for application in accordance with the
Collateral Agreement, provided that the amount of such distribution shall not
exceed (x) the product of (1) the portion of the Insolvency Proceeds allocated
to Collections of Principal Receivables and (2) the Principal Allocation
Percentage with respect to such Monthly Period minus (y) the amounts
distributed to the Paying Agent pursuant to clauses (i) and (ii) of this
sentence. To the extent that the product of (A) the portion of the Insolvency
Proceeds allocated to Collections of Principal Receivables and (B) the
Principal Allocation Percentage with respect to the related Monthly Period
exceeds the aggregate amounts distributed to the Paying Agent and the
Collateral Indebtedness Holder pursuant to the preceding sentence, the excess
shall be allocated to the Seller's Interest and shall be released to the Seller
on such Distribution Date.
(b) Not later than 12:00 noon, Richmond time, on such
Distribution Date, the Trustee shall (in the following priority and, in each
case, after giving effect to any deposits and distributions otherwise to be
made on such Distribution Date) (i) deduct an amount equal to the sum of (w)
Class A Monthly Interest for such Distribution Date, (x) any Class A
Outstanding Monthly Interest and (y) the amount of Class A Additional Interest,
if any, for such Distribution Date and any Class A Outstanding Additional
Interest, from the portion of the Insolvency Proceeds allocated to Collections
of Finance Charge Receivables and distribute such amount to the Paying Agent
for payment to the Class A Certificateholders, provided that the amount of
<PAGE> 83
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such distribution shall not exceed the product of (x) the portion of the
Insolvency Proceeds allocated to Collections of Finance Charge Receivables, (y)
the Floating Allocation Percentage with respect to the related Monthly Period
and (z) the Class A Floating Percentage with respect to such Monthly Period and
(ii) deduct an amount equal to the sum of (w) Class B Monthly Interest for such
Distribution Date, (x) Class B Outstanding Monthly Interest and (y) the amount
of Class B Additional Interest, if any, for such Distribution Date and any
Class B Outstanding Additional Interest, from the portion of the Insolvency
Proceeds allocated to Collections of Finance Charge Receivables and distribute
such amount to the Paying Agent for payment to the Class B Certificateholders,
provided that the amount of such distribution shall not exceed the product of
(x) the portion of the Insolvency Proceeds allocated to Collections of Finance
Charge Receivables, (y) the Floating Allocation Percentage with respect to the
related Monthly Period and (z) the Class B Floating Percentage with respect to
such Monthly Period. To the extent that the product of (A) the portion of the
Insolvency Proceeds allocated to Collections of Finance Charge Receivables and
(B) the Floating Allocation Percentage with respect to the related Monthly
Period exceeds the aggregate amount distributed to the Paying Agent pursuant to
the preceding sentence, the excess shall be released to the Collateral
Indebtedness Holder for application by the Collateral Indebtedness Holder in
accordance with the Collateral Agreement.
(c) Notwithstanding anything to the contrary in the Supplement or
the Agreement, all amounts distributed to the Paying Agent pursuant to this
Section for payment to the Designated Series Certificateholders shall be
distributed in full to the Designated Series Certificateholders on the date on
which funds are distributed to the Paying Agent pursuant to this Section and
shall be deemed to be a final distribution pursuant to Section 12.02 of the
Agreement.
(d) Notwithstanding any provision of the Agreement or the
Supplement, for purposes of Section 9.02(a) of the Agreement, the Holders of
the Designated Series Certificates shall not be deemed to have disapproved a
liquidation of the Receivables following an Insolvency
<PAGE> 84
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Event with respect to the Seller unless (i) holders of more than 50% of the
aggregate unpaid principal amount of each of the Class A Certificates and the
Class B Certificates and (ii) beneficial owners of more than 50% of the
Collateral Indebtedness Interest shall have disapproved of such liquidation.
ARTICLE IX
New Issuances; Addition of Accounts; Additional Issuances
Section 9.01. New Issuances. The obligation of the Trustee to
authenticate the Investor Certificates of a new Series and to execute and
deliver the related Supplement shall be subject to the conditions set forth in
Section 6.03(b) of the Agreement and to the additional condition that, as of
the Series Issuance Date and after giving effect to such issuance, the
aggregate amount of Principal Receivables equals or exceeds the Required
Principal Balance.
Section 9.02. Addition of Accounts. (i) If, as of the close of
business on the last Business Day of any Monthly Period, the aggregate amount
of Principal Receivables is less than the Required Principal Balance on such
date, the Seller shall on or prior to the close of business on the 10th
Business Day following the last Business Day of such Monthly Period (the
"Required Designation Date"), unless the aggregate amount of Principal
Receivables exceeds the Required Principal Balance as of the close of business
on any day after the last Business Day of such Monthly Period and prior to the
Required Designation Date, designate additional Eligible Accounts to be
included as Accounts as of the Required Designation Date or any earlier date in
a sufficient amount such that, after giving effect to such addition, the
aggregate amount of Principal Receivables equals or exceeds the Required
Principal Balance on such date. Each such addition shall be subject to the
same conditions applicable to any Addition required to be made pursuant to
Section 2.08(a) of the Agreement. The failure of any condition set forth in
Section 2.08(c) or (d) of the Agreement, as the case may be, shall not relieve
the Seller of its obligation pursuant to this paragraph;
<PAGE> 85
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provided, however, that the failure of the Seller to transfer Receivables to
the Trust as provided in this paragraph solely as a result of the
unavailability of a sufficient amount of Eligible Receivables shall not
constitute a breach of the Supplement; provided further, that any such failure
which has not been timely cured will nevertheless result in the occurrence of a
Pay Out Event with respect to the Designated Series.
(ii) In lieu of, or in addition to, designating Additional
Accounts pursuant to clause (i) above, the Seller may, subject to the
conditions specified in Section 2.03(d) of the Agreement, convey to the Trust
Participation Interests. The addition of Participation Interests in the Trust
pursuant to this paragraph shall be effected by an amendment to the Agreement
and the Supplement, dated the applicable Addition Date, pursuant to Section
13.01(a) of the Agreement.
Section 9.03. Additional Issuances of the Designated Series
Certificates. (a) Subject to Sections 9.03(b) and (c) below, the Seller may
at any time, or from time to time, during the Revolving Period direct the
Trustee, on behalf of the Trust, to authenticate additional Class A
Certificates (the "Additional Class A Certificates") and additional Class B
Certificates (the "Additional Class B Certificates") on the first day of any
Monthly Period (each such day, an "Additional Issuance Date"). Any such
issuance of Additional Investor Certificates is referred to herein as an
"Additional Issuance". The outstanding Investor Certificates of each Class and
the Additional Investor Certificates of that Class shall be equally and ratably
entitled as provided herein to the benefits of the Agreement and the Supplement
without preference, priority or distinction, all in accordance with the terms
and provisions of the Agreement and the Supplement.
(b) The obligation of the Trustee to authenticate Additional
Investor Certificates is subject to the satisfaction of the following
conditions:
(i) on or before the fifth Business Day immediately preceding the
Additional Issuance Date, the
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Seller shall have given the Trustee, the Servicer, each Rating Agency
and the Collateral Indebtedness Holder written notice of such Additional
Issuance and the Additional Issuance Date;
(ii) the Seller shall have delivered to the Trustee an amended
Supplement, in form satisfactory to the Trustee, executed by each party
hereto other than the Trustee;
(iii) after giving effect to the Additional Issuance, the total
amount of Principal Receivables shall be equal to, or greater than, the
Required Principal Balance;
(iv) the Seller shall have obtained additional Series Enhancement
for the benefit of the Designated Series Certificateholders; provided
that the ratio of the sum of the Collateral Indebtedness Amount and the
amount of such Series Enhancement to the Invested Amount (after giving
effect to such Additional Issuance) shall be greater than or equal to
the ratio of the Collateral Indebtedness Amount to the Invested Amount
(before giving effect to such Additional Issuance);
(v) the Seller shall have delivered to the Trustee, each Rating
Agency and the Collateral Indebtedness Holder a Tax Opinion dated the
Additional Issuance Date, with respect to such Additional Issuance;
(vi) the Seller shall have delivered to each Rating Agency (a) an
Opinion of Counsel to the effect that such Additional Issuance will not
violate applicable Federal securities laws and (b) such other documents
as the Rating Agencies may request;
(vii) the Seller shall have received written notice from each
Rating Agency that such Additional Issuance will not have a Ratings
Effect;
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(viii) the Seller shall have delivered to the Trustee a
certificate of an authorized officer to the effect that, based on the
facts known to such officer at the time, in the reasonable belief of the
Seller, such Additional Issuance will not cause a Pay Out Event or an
event that, after the giving of notice or the lapse of time, would
constitute a Pay Out Event to occur with respect to the Designated
Series;
(ix) as of the Additional Issuance Date all amounts due and owing
to the Designated Series Certificateholders on or prior to such date
shall have been paid to such Certificateholders and there shall not be
any unreimbursed Investor Charge-Offs;
(x) the excess of the principal amount of the Additional Investor
Certificates over the issue price of the Additional Investor
Certificates shall not exceed the maximum amount permitted under the
Internal Revenue Code without the creation of original issue discount;
(xi) the Seller's Interest shall not be less than 2% of the total
amount of Principal Receivables, in each case as of the Additional
Issuance Date, after giving effect to such Additional Issuance;
(xii) the ratio of the Controlled Accumulation Amount (after
giving effect to such Additional Issuance) to the Invested Amount (after
giving effect to such Additional Issuance) shall be equal to the ratio
of the Controlled Accumulation Amount (before giving effect to such
Additional Issuance) to the Invested Amount (before giving effect to
such Additional Issuance); and
(xiii) the Seller shall have delivered to the Trustee an Officer's
Certificate, dated the Additional Issuance Date, confirming that the
conditions referred to above have been satisfied.
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Upon satisfaction of the above conditions, the Trustee shall authenticate the
Additional Investor Certificates upon execution thereof by the Seller.
(c) Notwithstanding any provision of the Agreement or the
Supplement, the Supplement may be amended by the Servicer, the Seller and the
Trustee, without the consent of any of the Certificateholders, to provide for
an Additional Issuance, provided that the conditions set forth in Section
9.03(b) have been satisfied.
ARTICLE X
Miscellaneous Provisions
Section 10.01. Ratification of Agreement. As supplemented by the
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by the Supplement shall be read, taken and
construed as one and the same instrument.
Section 10.02. Counterparts. The Supplement may be executed in
two or more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.
Section 10.03. Governing Law. THE SUPPLEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE 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.
Section 10.04. Determination of Material Adverse Effect. Any
determination of material adverse effect on Investor Certificateholders under
the Agreement or the Supplement shall be made assuming the Collateral
Indebtedness Amount is zero and without regard to whether funds are available
in the Cash Collateral Account (including, without limitation, any
determination of whether
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a representation or warranty made therein is correct or whether a Seller or the
Servicer has duly performed a covenant contained therein or herein).
<PAGE> 1
EXHIBIT 7
EXECUTION COPY
SERIES 1996-3 SUPPLEMENT, dated as of
December 18, 1996 (the "Supplement"), between CAPITAL
ONE BANK, a Virginia banking corporation, as Seller
and Servicer, and THE BANK OF NEW YORK, a New York
banking corporation, as Trustee.
Pursuant to the Pooling and Servicing Agreement dated as of
September 30, 1993 (as amended and supplemented, the "Agreement"), among the
Seller, the Servicer and the Trustee, the Seller has created the Capital One
Master Trust (the "Trust"). Section 6.03 of the Agreement provides that the
Seller may from time to time direct the Trustee to authenticate one or more new
Series of Investor Certificates representing fractional undivided interests in
the Trust. The Principal Terms of any new Series are to be set forth in a
Supplement to the Agreement.
This term sheet, by and among the Seller, the Servicer and the
Trustee (the "Term Sheet"), together with the December 18, 1996 Standard
Definitions and Provisions Annex attached hereto (the "Annex") constitute the
Supplement. A copy of the Annex is maintained by the Trustee and the Servicer.
The definitions and provisions contained in the Annex are incorporated by
reference in this Supplement, except to the extent specifically modified in the
Term Sheet. In the event that any term or provision contained in the
Supplement shall conflict with or be inconsistent with any term or provision
contained in the Agreement, the terms and provisions of this Supplement shall
govern.
Pursuant to this Supplement, the Seller and the Trustee hereby
create a Series of Investor Certificates to be issued pursuant to the Agreement
and this Supplement to be known as "Capital One Master Trust, Series 1996-3".
The Series 1996-3 Certificates shall be issued in two Classes, the first of
which shall be known as the "Floating Rate Class A Asset Backed Certificates,
Series 1996-3" and the second of which shall be known as the "Floating Rate
Class B Asset Backed Certificates, Series 1996-3". In addition, there is
hereby created a third Class of uncertificated interests in the Trust which,
except as expressly provided herein, shall be deemed to be "Investor
Certificates" for all purposes under the Agreement and this Supplement and
which shall be known as the "Collateral Indebtedness Interest, Series 1996-3".
<PAGE> 2
2
ARTICLE I
Series Terms
Section 1.01. Series Terms. This Series shall be included in
Group One as a Variable Accumulation Series and as a Principal Sharing Series
that is not subordinated to any other Series; provided, however, that if this
Series is an Extendable Series, such Series shall also be a Subordinated Excess
Principal Series.
<TABLE>
<S> <C>
Title of Securities $400,000,000 Floating Rate Class A Asset Backed
Certificates, Series 1996-3 (the "Class A
Certificates") and $55,000,000 Floating Rate Class B
Asset Backed Certificates, Series 1996-3 (the
"Class B Certificates)
Extendable Series Yes
Prefunded Series No
Class A Initial Investor Amount $400,000,000
Class B Initial Investor Amount $55,000,000
Collateral Initial Investor Amount $45,000,000
Initial Prefunded Amount Not applicable
Required Funding Percentage Not applicable
Funding Dates Not applicable
Initial Funding Date Not applicable
Final Funding Date Not applicable
</TABLE>
<PAGE> 3
3
<TABLE>
<S> <C>
Initial Principal Payment Date The January 1998 Interest Payment Date
Initial Principal Distribution Date The first January Distribution Date with respect to
the Principal Payment Period
Class A Certificate Rate For each Interest Period, a per annum rate equal to
the Class A Floating Rate Index as of the Class A
Interest Determination Date plus the Class A
Certificate Rate Spread
Class A Floating Rate Index LIBOR
Class A Floating Rate Index Maturity One month
Class A Certificate Rate Spread 0.12% per annum
Class A Maximum Interest Rate Not applicable
Class A Interest Determination Date LIBOR Determination Date
Class A Expected Final Payment Date The January 2004 Distribution Date
Class A Accumulation Period Commencement The last day of the April 2002 Monthly Period
Date
Controlled Accumulation Amount $20,000,000
Class B Certificate Rate For each Interest Period, a per annum rate equal to
the Class B Floating Rate Index as of the Class B
Interest Determination Date plus the Class B
Certificate Rate Spread
Class B Floating Rate Index LIBOR
</TABLE>
<PAGE> 4
4
<TABLE>
<S> <C>
Class B Floating Rate Index Maturity One month
Class B Certificate Rate Spread 0.36% per annum
Class B Maximum Interest Rate Not applicable
Class B Interest Determination Date LIBOR Determination Date
Class B Expected Final Payment Date The March 2004 Distribution Date
Interest Payment Dates The 15th day of each month (or, if such day is not a
Business Day, the next succeeding Business Day),
commencing on the January 1997 Distribution Date
Required Cash Base Percentage 1.00%
Required Collateral Base Percentage 3.00%
Required Invested Base Percentage 9.00%
Required Reserve Base Percentage 0.50%
Closing Date December 18, 1996
Initial Distribution Date The January 1997 Distribution Date
Rating Agency Moody's, Standard & Poor's and Fitch
Net Servicing Fee Rate For (i) so long as the Seller is the Servicer, 0.75%
per annum, (ii) if the Bank of New York is the
Servicer, 1.25% per annum and (iii) if the Seller or
The Bank of New York is no
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5
<TABLE>
<S> <C>
longer the Servicer, 2.00% per annum
Servicing Fee Rate 2.00%
Cut-Off Date December 1, 1996
Termination Date The March 2007 Distribution Date
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6
IN WITNESS WHEREOF, the undersigned have caused this
Supplement to be duly executed and delivered by their respective duly
authorized officers on the day and year first above written.
CAPITAL ONE BANK,
Seller and Servicer,
by /s/ LEE J. JACOBSON
-------------------------
Name:
Title:
THE BANK OF NEW YORK,
Trustee
by /s/ JOSEPH G. ERNST
-------------------------
Name:
Title:
