<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 2000
REGISTRATION NOS. 333- AND 333- -01 AND
POST EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION
STATEMENT NOS. 333-52583 AND 333-52583-01
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FLEET CREDIT CARD MASTER TRUST II
(ISSUER OF SECURITIES)
FLEET BANK (RI), NATIONAL ASSOCIATION
(DEPOSITOR TO THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
UNITED STATES 050495490
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF ORGANIZATION) IDENTIFICATION NUMBER)
111 WESTMINSTER STREET
PROVIDENCE, RHODE ISLAND 02903
(401) 278-5451
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
LINDA MORRIS, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
FLEET BANK (RI), NATIONAL ASSOCIATION
PA HR GO1F
101 GIBRALTAR ROAD
HORSHAM, PENNSYLVANIA 19044
(215) 444-2339
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
CAMERON L. COWAN, ESQ.
ORRICK, HERRINGTON & SUTCLIFFE LLP
WASHINGTON HARBOUR
3050 K STREET, N.W.
WASHINGTON, D.C. 20007
(202) 339-8400
------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
If any of the securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. [ ]
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering. [ ]
- ---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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- ------------------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT TO BE MAXIMUM AGGREGATE MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED(2) PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset-Backed Certificates.... $4,800,000,000 100% $4,800,000,000 $1,267,200
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) In addition, $530,000,000 of unissued Asset-Backed Certificates previously
registered under Registration Statement Nos. 333-52583 and 333-52583-01 are
being carried forward. A registration fee of $156,350 was previously paid
with respect to this amount.
----------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall subsequently become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
IN ACCORDANCE WITH RULE 429 of the General Rules and Regulations under the
Securities Act of 1933, as amended, the Prospectus included herein is a combined
prospectus which also relates to $530,000,000 of unissued Asset-Backed
Certificates registered under Registration Statement Nos. 333-52583 and
333-52583-01.
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- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE
CERTIFICATES UNTIL WE DELIVER A FINAL PROSPECTUS SUPPLEMENT AND AN
ACCOMPANYING PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS ARE
NOT AN OFFER TO SELL NOR ARE THEY SEEKING AN OFFER TO BUY THESE
CERTIFICATES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
[REPRESENTATIVE FORM OF PROSPECTUS SUPPLEMENT]
SUBJECT TO COMPLETION DATED , 2000
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 2000
[FLEET LOGO]
FLEET CREDIT CARD MASTER TRUST II
ISSUER
FLEET BANK (RI), NATIONAL ASSOCIATION
SELLER AND SERVICER
$ CLASS A ASSET-BACKED CERTIFICATES, SERIES 2000-
$ CLASS B ASSET-BACKED CERTIFICATES, SERIES 2000-
<TABLE>
<CAPTION>
CLASS A CERTIFICATES CLASS B CERTIFICATES
-------------------- --------------------
<S> <C> <C>
Certificate rate One-Month LIBOR One-Month LIBOR
plus % annually plus % annually
Interest paid Monthly, beginning Monthly, beginning
, 2000 , 2000
Expected final distribution date , 2000 , 2000
Legal final maturity , 2000 , 2000
Price to public per certificate % %
Underwriting discount per % %
certificate
Proceeds to seller per certificate % %
</TABLE>
The total price to public is $ . The total amount of the underwriting
discount is $ . The total amount of proceed plus accrued interest and
before deduction of expenses is $ .
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-9 IN THIS PROSPECTUS
SUPPLEMENT AND PAGE 8 IN THE PROSPECTUS.
The certificates are not deposits and neither the certificates nor the
underlying accounts or receivables are insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency.
The certificates will represent interests in the trust only and will not
represent interests in or obligations of Fleet Bank (RI), National Association
or any of its affiliates.
CREDIT ENHANCEMENT:
- - The Class B certificates will be subordinated to the Class A certificates.
- - The trust is also issuing a collateral interest in the amount of $ .
The collateral interest will be subordinated to both the Class A certificates
and the Class B certificates.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE CERTIFICATES OR DETERMINED THAT
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriters of the Class A Certificates
A CO.
B CO.
C CO.
Underwriters of the Class B Certificates
A CO. B CO.
, 2000
<PAGE> 3
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the certificates in two separate
documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
your series and (b) this prospectus supplement, which describes the specific
terms of your series. This prospectus supplement may be used to sell the Class A
certificates and the Class B certificates only if accompanied by the prospectus.
This prospectus supplement and the prospectus relate to the offering of
Class A certificates and Class B certificates only. The collateral interest is
not offered by this prospectus supplement and prospectus.
IF THE TERMS OF YOUR CERTIFICATES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT
VARY FROM THE TERMS DESCRIBED IN THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
We include cross references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents in the accompanying prospectus provide the pages on which these
captions are located.
You can find a listing of the pages where terms used in this prospectus
supplement and the accompanying prospectus are defined under the caption "Index
of Principal Terms" beginning on page S- in this document and under the caption
"Index of Principal Terms" on page in the accompanying prospectus.
----------------------
S-2
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Terms...................... S-4
The Trust........................... S-4
The Trustee......................... S-4
Seller And Servicer................. S-4
Seller........................... S-4
Servicer......................... S-4
The Bank......................... S-4
The Receivables..................... S-4
Offered Securities.................. S-4
Certificates..................... S-4
Distribution Dates............... S-4
Interest......................... S-4
Principal........................ S-5
The Collateral Interest............. S-5
Credit Enhancement.................. S-5
Subordination of Classes......... S-5
The Sellers' Interest............... S-5
Allocations......................... S-6
Among Series..................... S-6
Among Classes.................... S-6
Application Of Collections.......... S-6
Finance Charge Collections....... S-6
Excess Spread and Excess Finance
Charges........................ S-6
Principal Collections............ S-7
Pay Out Events...................... S-7
Optional Repurchase................. S-8
Registration........................ S-8
Tax Status.......................... S-8
ERISA Considerations................ S-8
Certificate Ratings................. S-8
Exchange Listing.................... S-8
Additional Information.............. S-8
Risk Factors.......................... S-9
Ability To Resell Series 2000-
Certificates Not Assured......... S-9
Credit Enhancement May Not Be
Sufficient To Prevent Loss....... S-9
Class B Certificates Are
Subordinated To The Class A
Certificates; Trust Assets May Be
Diverted From Class B To Pay
Class A.......................... S-9
Ratings Can Be Lowered Or Withdrawn
After You Purchase Your
Certificates And The Market Value
Of Your Certificates May Be
Reduced.......................... S-10
Introduction.......................... S-11
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Bank's Credit Card Activities..... S-12
General............................. S-12
Finance Charges..................... S-12
Delinquency and Loss Experience..... S-12
Interchange......................... S-14
Litigation.......................... S-14
The Receivables....................... S-14
Maturity Assumptions.................. S-17
Receivable Yield Considerations....... S-19
Description of the Certificates....... S-21
General............................. S-21
Registration of Certificates........ S-22
Interest Payments................... S-22
Principal Payments.................. S-25
Postponement of Accumulation
Period........................... S-27
Subordination....................... S-28
Allocation Percentages.............. S-28
Reallocation of Cash Flows.......... S-32
Application of Collections.......... S-33
Principal Funding Account........... S-39
Reserve Account..................... S-39
Paired Series....................... S-40
Shared Collections of Principal
Receivables...................... S-41
Allocation of Investor Default
Amount........................... S-41
Optional Repurchase................. S-43
Pay Out Events...................... S-43
Servicing Compensation and Payment
of Expenses...................... S-45
Federal Income Tax Consequences....... S-46
ERISA Considerations.................. S-46
General............................. S-46
Class A Certificates................ S-46
Class B Certificates................ S-49
Consultation with Counsel........... S-49
Underwriting.......................... S-50
Legal Matters......................... S-51
Index of Principal Terms.............. S-52
ANNEX I: OTHER SERIES ISSUED.......... I-1
ANNEX II: RECEIVABLES IN ADDITIONAL
ACCOUNTS CONVEYED TO THE TRUST...... II-1
</TABLE>
S-3
<PAGE> 5
SUMMARY OF TERMS
This summary highlights selected information from this document and does not
contain all of the information that you need to consider in making your
investment decision. This summary provides general, simplified descriptions of
matters which, in some cases, are highly technical and complex. More detail is
provided in other sections of this document and in the prospectus.
Do not rely upon this summary for a full understanding of the matters you need
to consider in connection with any potential investment in the certificates. To
understand all of the terms of the offering of the Series 2000- certificates,
read carefully this entire document and the accompanying prospectus.
THE TRUST
Fleet Credit Card Master Trust II will issue the certificates.
The trust has issued numerous series of certificates, will issue the Series
2000- certificates and expects to issue additional series. The certificates of
each series will represent an ownership interest in the assets of the trust.
THE TRUSTEE
The trustee is Bankers Trust Company.
SELLER AND SERVICER
SELLER
Fleet Bank (RI), National Association originates and acquires credit card
accounts. As seller, the bank sells the receivables to the trust.
SERVICER
The bank also is the servicer. As the servicer, the bank collects payments on
the receivables and allocates the collections among the interests in the trust.
THE BANK
The bank is a special purpose credit card bank. Its principal offices are
located at 111 Westminster Street, Providence, Rhode Island 02903. The telephone
number is (401) 278-5451.
THE RECEIVABLES
The primary assets of the trust are receivables in MasterCard(R) and VISA(R)(1)
revolving credit card accounts. The receivables consist of principal receivables
and finance charge receivables.
- ---------------
(1) MasterCard(R) and VISA(R) are federally registered servicemarks of
MasterCard International Inc. and VISA U.S.A., Inc. respectively.
The following information is as of , 2000:
- - Principal receivables in the trust: $ .
- - Finance charge receivables in the trust: $ .
- - Accounts designated to the trust: .
See "The Receivables" in this prospectus
supplement.
OFFERED SECURITIES
CERTIFICATES
Fleet Credit Card Master Trust II is offering:
- - $ of Class A certificates; and
- - $ of Class B certificates.
The Series 2000- certificates include both Class A and Class B.
Beneficial interests in these certificates may be purchased in minimum
denominations of $1,000 and integral multiples of $1,000.
The seller expects that the trust will issue the Series 2000- certificates on
, 2000.
DISTRIBUTION DATES
The first distribution date will be , 2000.
Distribution dates for the Series 2000- certificates will be the 15th day of
each month if the 15th day is a business day. If the 15th is not a business day,
the distribution date will be the following business day.
INTEREST
Interest on the Series 2000- certificates will be paid on each distribution
date.
You may obtain the interest rates for the current interest period and the
immediately preceding interest period by telephoning the trustee at (800)
735-7777.
S-4
<PAGE> 6
Class A
The Class A certificates will bear interest at LIBOR as determined each month
plus % per annum.
Class B
The Class B certificates will bear interest at LIBOR as determined each month
plus % per annum.
See "Description of the Certificates--Interest Payments" in this prospectus
supplement for a description of how and when LIBOR will be determined.
PRINCIPAL
The seller expects that principal on the Series 2000- certificates will be
distributed on the date noted below; however, principal may, in fact, be
distributed earlier or later. You will not be entitled to any premium for early
or late payment of principal.
If certain adverse events known as pay out events occur, principal may be
distributed earlier than expected.
If collections of the credit card receivables are less than expected or are
collected more slowly than expected, then principal repayment may be delayed.
Class A
The seller expects that principal of the Class A certificates will be
distributed on the 200 distribution date.
Class B
The seller expects that principal of the Class B certificates will be
distributed on the 200 distribution date; however, no principal
will be paid on the Class B certificates unless the Class A certificates are
paid in full.
Accumulation Period
We are scheduled to begin accumulating collections of principal receivables on
, 200 for later distribution to you. The servicer may, however,
elect to delay the beginning of the accumulation period to a date not later than
, 200 .
See "Description of the Certificates--Principal Payments," and "--Postponement
of Accumulation Period" in this prospectus supplement.
Legal Final Maturity
If the Series 2000- certificates are not paid on their expected final
distribution dates, collections of receivables will continue to be used to pay
principal on the Series 2000- certificates until the certificates are paid or
until 200 , whichever occurs first. 200 is the legal final maturity date for
Series 2000- .
See "Maturity Assumptions," and "Description of the Certificates--Allocation
Percentages," and "--Principal Payments" in this prospectus supplement.
THE COLLATERAL INTEREST
At the same time as the Series 2000- certificates are issued, the trust will
issue an undivided interest in the trust called a collateral interest in the
amount of $ as part of Series 2000- . The holder of the collateral
interest will have voting and certain other rights as if the collateral interest
were a subordinated class of certificates. The collateral interest is not
offered by this document.
CREDIT ENHANCEMENT
SUBORDINATION OF CLASSES
The collateral interest and the Class B certificates are subordinated to the
Class A certificates.
The collateral interest is also subordinated to the Class B certificates.
See "Description of the Certificates--Reallocation of Cash Flow" and
"--Allocation of Investor Default Amount" in this prospectus supplement.
THE SELLERS' INTEREST
The interest in the trust not represented by your series or by any other series
is the sellers' interest. The sellers' interest is represented by the seller
certificates, including the bank certificate and any supplemental certificates.
The bank certificate is held by the bank. The bank may sell a portion of the
sellers' interest to other investors. If a portion of the sellers' interest is
sold to anyone other than the seller or its affiliates, the interest will be
represented by a supplemental certificate. No supplemental certificates are
currently outstanding.
The sellers' interest does not provide credit enhancement for your series or any
other series.
S-5
<PAGE> 7
ALLOCATIONS
AMONG SERIES
Each month the bank, as servicer, will allocate collections received among:
- - Series 2000- ;
- - other outstanding series; and
- - the sellers' interest in the trust.
The amount allocated to your series will be determined based mainly upon the
ratio of the invested amount of your series to the total amount of principal
receivables in the trust.
You are entitled to receive payments of interest and principal only from
collections and other trust assets allocated to your series.
The invested amount is the primary basis for allocations to your series. The
invested amount is the sum of the Class A invested amount, the Class B invested
amount and the collateral invested amount.
At the time of issuance of the Series 2000- certificates, the invested amount
for Series 2000- will be $ .
AMONG CLASSES
From the amounts allocated to your series, the servicer will further allocate
among the Class A certificates, the Class B certificates and the collateral
interest on the basis of the invested amount of each class and the invested
amount of the collateral interest. Initially the invested amount of each class
will be equal to the original principal amount of that class and the initial
invested amount of the collateral interest will be equal to the original
principal amount of the collateral interest.
See "Description of the Certificates--Allocation Percentages" in this prospectus
supplement.
The invested amount of a series or a class will decline as a result of the
accumulation of principal collections in the principal funding account or
principal payments. The invested amount also may decline if collections of
receivables allocated to your series are not sufficient to make certain required
payments. If the invested amount of your series or class declines, there may be
a reduction in amounts allocated and available for payment to you.
For a description of the events which may lead to these reductions, see
"Description of the Certificates--Reallocation of Cash Flows" in this prospectus
supplement.
APPLICATION OF COLLECTIONS
FINANCE CHARGE COLLECTIONS
- - Collections of finance charge receivables and certain other amounts allocated
to the Class A certificates will be used to pay interest on the Class A
certificates, to pay Class A's portion of the servicing fee and to cover Class
A's portion of receivables that are written off as uncollectible. Any
remaining amount will become excess spread and be applied as described below.
- - Collections of finance charge receivables allocated to the Class B
certificates will be used to pay interest on the Class B certificates and to
pay Class B's portion of the servicing fee. Any remaining amount will become
excess spread and be applied as described below.
- - Collections of finance charge receivables allocated to the collateral interest
will be used to pay the collateral interest's portion of the servicing fee if
the bank or the trustee is no longer the servicer. Any remaining amount will
become excess spread and be applied as described below.
See "Description of the Certificates--Application of Collections--Payment of
Interest, Fees and Other Items" in this prospectus supplement.
EXCESS SPREAD AND EXCESS FINANCE CHARGES
Each month the excess spread and excess finance charges will be used in the
following order of priority:
- - first to make up deficiencies for Class A,
- - then to make up deficiencies for Class B, including covering Class B's portion
of receivables written off as uncollectible,
- - then to pay interest on the collateral interest at the collateral minimum
interest rate,
- - then to pay the collateral interest's portion of the servicing fee, or, if the
bank or the trustee is no longer the servicer, then to pay any portion of the
collateral interest's servicing fee not paid as described above under
"--Finance Charge Collections,"
- - then to cover the collateral interest's portion of receivables that are
written off as uncollectible,
S-6
<PAGE> 8
- - then to reimburse any previous reductions in the collateral invested amount,
- - then, in limited circumstances, to fund a reserve account to cover interest
payment shortfalls for Class A, and
- - finally to make payments to the holder of the collateral interest.
See "Description of the Certificates--Application of Collections--Excess Spread;
Excess Finance Charges" in this prospectus supplement.
PRINCIPAL COLLECTIONS
So long as no pay out event has occurred, your series' share of principal
collections, including shared principal collections from other series, will be
applied each month as follows:
- - First, principal collections allocated to the collateral interest and the
Class B certificates may be reallocated, if necessary, to make required
payments on the Class A certificates and the Class B certificates which were
not made from finance charge collections, excess spread or excess finance
charges.
- - During the revolving period, no principal will be paid to you or accumulated
in a trust account.
- - During the accumulation period, principal collections allocated or available
to the Class A certificates and the Class B certificates will be deposited in
the principal funding account, up to a controlled deposit amount, for payment
first to the Class A certificateholders and then to the Class B
certificateholders on the expected final distribution date.
- - Upon payment in full of the Class A certificates and the Class B certificates,
principal collections allocated or available to the collateral interest, up to
the collateral invested amount, will be paid to the collateral interest
holder.
- - Any remaining principal collections will be first made available to other
series and then paid to the holders of the seller certificates or deposited in
the excess funding account.
If a pay out event occurs, the rapid amortization period will begin and all of
the principal collections allocated or available to the Class A certificates and
the Class B certificates, except amounts required to be reallocated, will be
applied each month to pay principal on your series. Class A will be paid first,
and then Class B.
See "Description of the Certificates--Principal Payments," "--Application of
Collections" and "--Shared Collections of Principal Receivables" in this
prospectus supplement.
PAY OUT EVENTS
Pay out events are adverse events that result in the end of the revolving period
or the accumulation period and the beginning of a rapid amortization period.
The following are pay out events:
- - the seller fails to make required payments, fails to make required deposits,
or violates other covenants and agreements;
- - the representations and warranties of the seller are materially incorrect;
- - the seller does not transfer additional assets to the trust when required;
- - the percentage obtained from your series allocation of the yield on the trust
portfolio and investment earnings from the principal funding account and
withdrawals from the reserve account, after taking into account the amount of
the receivables that are written off as uncollectible allocated to Series
2000- , averaged over any three consecutive months is less than the weighted
average interest rate for Series 2000- , calculated by taking into account
the interest rate for Class A, Class B and the collateral minimum interest
rate, plus the servicing fee rate for Series 2000- averaged over the same
three months;
- - certain defaults of the servicer;
- - the Class A certificates, the Class B certificates or the collateral interest
are not paid in full on their expected final distribution date;
- - the occurrence of certain events of insolvency or receivership relating to the
seller, including any additional sellers;
- - the seller is unable to transfer receivables to the trust as required under
the pooling and servicing agreement; or
- - the trust becomes an "investment company" under the Investment Company Act of
1940.
For a more detailed discussion of the pay out events, see "Description of the
Certificates--Pay Out Events" in this prospectus supplement. In addition, see
"Description of the
S-7
<PAGE> 9
Certificates--Trust Pay Out Events" in the accompanying prospectus.
OPTIONAL REPURCHASE
The bank has the option to repurchase your certificates when the investor amount
for your series has been reduced to 5% or less of the initial invested amount.
See "Description of the Certificates--Optional Repurchase" in this prospectus
supplement and "Risk Factors--If Optional Repurchase Occurs, it Will Result in
an Early Return of Principal and a Reinvestment Risk" in the accompanying
prospectus.
REGISTRATION
The Series 2000- certificates will be in book-entry form and will be registered
in the name of Cede & Co., as the nominee of The Depository Trust Company.
Except in certain limited circumstances, you will not receive a definitive
certificate representing your interest.
See "Description of the Certificates--Definitive Certificates" in the
accompanying prospectus.
You may elect to hold your certificates through DTC in the United States, or
Cedelbank, societe anonyme or the Euroclear System in Europe.
See "Description of the Certificates--Book-Entry Registration" and "--Definitive
Certificates" in the accompanying prospectus.
TAX STATUS
Orrick, Herrington & Sutcliffe LLP, as special tax counsel to the bank, is of
the opinion that under existing law your certificates will be characterized as
debt for federal income tax purposes. By your acceptance of a Series
2000- certificate, you will agree to treat your certificates as debt for
federal, state and local income and franchise tax purposes.
See "Federal Income Tax Consequences" in the accompanying prospectus for
additional information concerning the application of federal income tax laws.
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this prospectus supplement and in the accompanying prospectus, the Class A
certificates are eligible for purchase by persons investing assets of employee
benefit plans or individual retirement accounts.
For the reasons discussed under "ERISA Considerations" in this prospectus
supplement and the accompanying prospectus, the Class B certificates are not
eligible for purchase by persons investing assets of employee benefit plans or
individual retirement accounts other than an insurance company investing assets
of its general account.
CERTIFICATE RATINGS
The Class A certificates will be rated in the highest rating category by at
least one nationally recognized rating organization and the Class B certificates
will be rated in one of the three highest rating categories by at least one
nationally recognized rating organization.
See "Risk Factors--Ratings Can Be Lowered or Withdrawn After You Purchase Your
Certificates And The Market Value Of Your Certificates May Be Reduced" in this
prospectus supplement.
EXCHANGE LISTING
We will apply to list the Class A certificates and the Class B certificates on
the Luxembourg Stock Exchange. We cannot guaranty that the application for the
listing will be accepted. You should consult with Bankers Trust Luxembourg S.A.,
the Luxembourg listing agent for the certificates, 14 Boulevard F.D. Roosevelt,
L-2450 Luxembourg, phone number (352) 46 02 41, to determine whether or not the
Series 2000- certificates are listed on the Luxembourg Stock Exchange.
ADDITIONAL INFORMATION
For more information, you can call (215) 444-6800 and direct your inquiries to
the Fleet Credit Card Securitization Department.
S-8
<PAGE> 10
RISK FACTORS
In the accompanying prospectus you will find a section called "Risk
Factors." The information in that section applies generally to all series,
including yours. The information in this section applies more specifically to
your series.
You should consider the risk factors discussed under the caption "Risk
Factors" in the prospectus and the risk factors discussed below in this section
before deciding whether to purchase any of the Series 2000- certificates.
<TABLE>
<S> <C>
ABILITY TO RESELL SERIES 2000- If you purchase Series 2000- certificates, you may not
CERTIFICATES NOT ASSURED be able to sell them. There is currently no secondary
market for the certificates. A secondary market for your
certificates may not develop. If a secondary market does
develop, it may not continue or it may not provide
sufficient liquidity to allow you to resell all or a
part of your certificates if you want to do so. The
underwriters of the Class A certificates and the
underwriter of the Class B certificates may assist in
resales of the certificates, but they are not required
to do so.
CREDIT ENHANCEMENT MAY NOT BE SUFFICIENT Credit enhancement provided for your series of
TO PREVENT LOSS certificates is limited. The only sources of payment for
your certificates are the assets of the trust allocated
to your series. If problems develop with the
receivables, such as an increase in losses on the
receivables or if there are problems in the collection
and transfer of the receivables to the trust, it is
possible that you may not receive the full amount of
interest and principal that you would otherwise receive.
See "Description of the Certificates--Subordination,"
"--Allocation Percentages," "--Reallocation of Cash
Flows" and "--Allocation of Investor Default Amount" in
this prospectus supplement.
CLASS B CERTIFICATES ARE SUBORDINATED TO If you purchase a Class B certificate, your right to
THE CLASS A CERTIFICATES; TRUST ASSETS MAY receive principal payments is subordinated to the
BE DIVERTED FROM CLASS B TO PAY CLASS A payment in full of the Class A certificates. No
principal will be paid to you until the full amount of
principal has been paid on the Class A certificates.
In addition, if Class A's share of collections of
finance charge receivables and certain other amounts
allocated to Series 2000- , excess spread, excess
finance charges and the collateral interest's share of
principal collections are not sufficient to make all
required payments for the Class A certificates,
collections of principal receivables allocated to Class
B may be diverted to Class A. If this occurs, the Class
B invested amount and future allocations to Class B
would be reduced.
Also, if Class A's share of losses on the receivables
exceeds the collections and credit enhancement available
to cover those losses, and the collateral invested
amount is reduced to zero, the Class B invested amount
will be reduced to avoid reducing the Class A invested
amount. If this occurs, the Class B invested amount and
future allocations to Class B would be reduced.
</TABLE>
S-9
<PAGE> 11
<TABLE>
<S> <C>
As a result of the subordination, you may receive
payments of interest or principal later than you expect
or you may not receive the full amount of expected
principal and interest.
RATINGS CAN BE LOWERED OR WITHDRAWN AFTER The ratings assigned to the Series 2000- certificates
YOU PURCHASE YOUR CERTIFICATES AND THE are based upon many factors, including the credit
MARKET VALUE OF YOUR CERTIFICATES MAY BE quality of the receivables and the amount of credit
REDUCED enhancement provided. The ratings are not a
recommendation to purchase, hold or sell any of the
Series 2000- certificates. The ratings also are not
intended and should not be relied upon to determine the
marketability of the Series 2000- certificates, the
market value of the Series 2000-certificates or whether
the Series 2000- certificates are a suitable investment
for you.
Any rating agency may lower its rating or withdraw its
rating entirely if, in the sole judgment of the rating
agency, the credit quality of the certificates has
declined or is in question. If any rating assigned to
your certificates is lowered or withdrawn, the market
value of your certificates may be reduced.
</TABLE>
S-10
<PAGE> 12
INTRODUCTION
The following provisions of this prospectus supplement contain more
detailed information concerning the asset backed certificates offered hereby.
The certificates will be issued by Fleet Credit Card Master Trust II (the
"TRUST") pursuant to the terms of a Pooling and Servicing Agreement dated as of
December 1, 1993. The Pooling and Servicing Agreement was amended and restated
as of May 23, 1994 and has been amended four times since that date. The Pooling
and Servicing Agreement, as amended, is in this prospectus supplement called the
"MASTER POOLING AND SERVICING AGREEMENT." The Master Pooling and Servicing
Agreement is between Fleet Bank (RI), National Association, as seller and
servicer, and Bankers Trust Company, as trustee. Fleet Bank (RI), National
Association (the "BANK"), in its capacity as seller under the Master Pooling and
Servicing Agreement and the series supplement, is referred to as the seller,
and, in its capacity as servicer, the bank is referred to as the servicer. The
term "seller" also includes any additional sellers as described under the
caption "Description of the Certificates--The Bank Certificate; Additional
Sellers" in the prospectus. The term "servicer" also refers to any successor to
the bank, as servicer.
The bank is an indirect, wholly-owned subsidiary of Fleet Boston
Corporation, doing business as FleetBoston Financial Corporation ("FLEET").
Fleet is the bank holding company which came into existence on October 1, 1999
as a result of the merger of Fleet Financial Group, Inc. and BankBoston
Corporation. Prior to the merger of Fleet Financial Group, Inc. and the
BankBoston Corporation, the bank was an indirect wholly-owned subsidiary of
Fleet Financial Group, Inc. See "The Bank and Fleet Boston Corporation" in the
accompanying prospectus.
The trust will issue $ of its Class A Floating Rate Asset-Backed
Certificates, Series 2000- (the "CLASS A CERTIFICATES") and $ of its
Class B Floating Rate-Asset Backed Certificates, Series 2000- (the "CLASS B
CERTIFICATES"). There will also be created, as part of Series 2000- , a third
class of interests in the trust which shall be in the amount of $ and
be known as the Collateral Interest, Series 2000- ("COLLATERAL INTEREST").
The Class A Certificates and the Class B Certificates are, collectively,
the "SERIES 2000- CERTIFICATES." The registered holders of the Class A
Certificates are referred to as the "CLASS A CERTIFICATEHOLDERS." The registered
holders of the Class B Certificates are referred to as the "CLASS B
CERTIFICATEHOLDERS." The registered holder of the Collateral Interest is the
"COLLATERAL INTEREST HOLDER." The Class A Certificateholders and the Class B
Certificateholders, together with the Collateral Interest Holder are,
collectively, the "SERIES 2000- HOLDERS." The Series 2000- Certificates and
the Collateral Interest are, collectively, the "SERIES 2000- INTERESTS." The
series in which the Series 2000- Interests are issued is known as "SERIES
2000- ." The closing date on which the Series 2000- Interests will be issued
is expected to be , 2000.
The Series 2000- Interests will be issued pursuant to the Master Pooling
and Servicing Agreement and a series supplement designated as the Series 2000-
Supplement. The Master Pooling and Servicing Agreement together with the series
supplement is, in this prospectus supplement, the "POOLING AND SERVICING
AGREEMENT."
Series 2000- will be the series issued by the trust. Of
these series, , including Series 2000- , will be outstanding on
the closing date. Series 2000- will be the series outstanding
included in the group of series issued by the trust from time to time and
designated as Group One. See Annex I. Annex I is hereby incorporated into this
prospectus supplement by reference. Additional series are expected to be issued
from time to time by the trust.
The certificates offered by this prospectus supplement and the accompanying
prospectus are investment grade asset backed securities within the meaning of
the Securities Exchange Act of 1933, as amended and the rules promulgated under
it.
S-11
<PAGE> 13
THE BANK'S CREDIT CARD ACTIVITIES
GENERAL
The bank was the survivor of a merger on November 14, 1997 between the bank
and Fleet Bank (Delaware), National Association. The bank's credit card
portfolio at that time consisted of credit card accounts originated or acquired
by the bank or its predecessor. As discussed in the prospectus under the caption
"Transfer and Assignment" and "The Bank's Credit Card Activities," on February
20, 1998, Advanta National Bank transferred to the bank the ownership interest
in substantially all of the accounts in the Advanta consumer credit card
portfolio. The bank's credit card portfolio existing at the time of the transfer
plus the consumer credit card portfolio acquired from Advanta National Bank plus
new originations or acquisitions made since February 20, 1998 constitute the
"FLEET CREDIT CARD PORTFOLIO."
Accounts have been designated for inclusion in the trust from time to time
as set forth in Annex II. Annex II is hereby incorporated into this prospectus
supplement by reference.
The bank is a member of VISA U.S.A. Inc. and MasterCard International
Incorporated.
FINANCE CHARGES
The majority of the accounts in the Fleet Credit Card Portfolio are subject
to finance charges at London interbank offered rate indexed variable rates
ranging from 3.9% to 22.9% for purchases, balance transfers and cash advances.
There is also a portion of the portfolio subject to finance charges set at a
fixed rate for purchases only. For more information, see "The Bank's Credit Card
Activities--Billing and Payments" in the accompanying prospectus.
DELINQUENCY AND LOSS EXPERIENCE
The following tables show the delinquency and loss experience for the Fleet
Credit Card Portfolio beginning on February 20, 1998. Information prior to
February 20, 1998 is shown pro forma as if the bank had purchased the Advanta
consumer credit card portfolio as of the beginning of 1997.
The trust portfolio is made up of the accounts which have been designated
to the trust and the receivables in these accounts as of any date of
determination. In each case, the accounts designated to the trust must be
Eligible Accounts. See "Description of the Certificates--Representations,
Warranties and Covenants" and "--Addition of Accounts" in the accompanying
prospectus. See also "The Receivables" in this prospectus supplement.
The trust portfolio is only a portion of the Fleet Credit Card Portfolio;
therefore, actual delinquency and gross charge-off experience for the
receivables in the trust may be different from that shown in the following
tables which include information for the entire Fleet Credit Card Portfolio.
There can be no assurance that the delinquency and loss experience for the
receivables in the trust will be similar to the historical experience shown in
the following tables.
S-12
<PAGE> 14
DELINQUENCY EXPERIENCE
FLEET CREDIT CARD PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------
AS OF , 1999 1998 1997
--------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Receivables Outstanding(1)(2)....... $ $14,278,212 $14,524,541 $13,937,589
Receivables Contractually Delinquent
as a Percentage of Receivables
Outstanding(1):
30-59 days........................ % 1.44% 1.58% 1.77%
60-89 days........................ % 1.09% 1.07% 1.13%
90 or more days................... % 2.35% 2.29% 2.39%
----------- ----------- ----------- -----------
Total............................... % 4.88% 4.94% 5.29%
=========== =========== =========== ===========
</TABLE>
- ------------
(1) Information prior to February 20, 1998 is shown pro forma as if the bank had
purchased the Advanta consumer credit card portfolio as of the beginning of
1997. Receivables Outstanding and Receivables Contractually Delinquent
related to the credit card portfolio acquired by Fleet Financial Group, Inc.
as a result of the purchase of NatWest Bank, N.A. are included beginning in
June, 1997.
(2) Receivables Outstanding consists of all amounts due from cardholders as
posted to the accounts.
LOSS EXPERIENCE
FLEET CREDIT CARD PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MONTHS, YEAR ENDED DECEMBER 31,
ENDED -------------------------------------------
, 1999 1998 1997
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Average Receivables
Outstanding(1)(2)............. $ $13,065,414 $14,380,316 $13,950,913
Gross Losses(1)(3).............. $ $ 967,611 $ 1,034,996 $ 1,052,527
Recoveries(1)................... $ $ 75,883 $ 91,664 $ 84,439
Net Losses...................... $ $ 891,728 $ 943,332 $ 968,088
Net Losses as a Percentage of
Average Receivables
Outstanding................... %(4)(5) 6.83%(5) 6.56%(5) 6.94%
</TABLE>
- ------------
(1) Information prior to February 20, 1998 is shown pro forma as if the bank had
purchased the Advanta consumer credit card portfolio as of the beginning of
1997. Average Receivables Outstanding, Gross Losses and Recoveries related
to the credit card portfolio acquired by Fleet Financial Group, Inc. as a
result of the purchase of NatWest Bank, N.A. are included beginning in June,
1997.
(2) Average Receivables Outstanding is the sum of receivables outstanding at the
beginning and end of each month during the period indicated, divided by
twice the number of months in the period indicated.
(3) Gross Losses are presented net of adjustments made pursuant to the bank's
normal servicing procedures, including removal of incorrect or disputed
finance charges and reversal of annual cardholder fees on cardholder
accounts which have been closed. Losses do not include accrued finance
charges that have been charged-off or fraud losses.
(4) Annualized.
(5) As, of October 1, 1998, the bank implemented a revised policy relating to
the charge-off of bankrupt credit card accounts and the charge-off of
delinquent accounts. See "The Bank's Credit Card Activities--Delinquencies"
in the accompanying prospectus.
S-13
<PAGE> 15
INTERCHANGE
In respect of interchange attributed to the cardholder charges for
merchandise and services in those accounts included in the trust, the bank is
required to transfer to the trust each month prior to the distribution date an
amount equal to one-twelfth of 1.25% of the outstanding balance of the principal
receivables allocable to Series 2000- at the end of the preceding month.
LITIGATION
On January 22, 1999, Fleet Financial Group, Inc. (the predecessor to
FleetBoston Financial Corporation), Fleet National Bank, Fleet Bank (RI),
National Association, Fleet Credit Card Services, L.P. and Fleet Credit Card
Holdings, Inc. brought suit against Advanta Corp., and certain of its
subsidiaries. The action arose out of a February 1998 transaction in which Fleet
Financial Group, Inc. and Fleet Credit Card LLC, the predecessor in interest to
Fleet Credit Card Services, L.P., acquired most of the consumer credit card
business of Advanta National Bank. The Advanta entities answered the Fleet
entities' complaint, denying the principal allegations and asserting a variety
of counterclaims.
The litigation is presently in the discovery process. Due to the nature of
the Advanta entities' pleadings, the limited discovery that has occurred to date
concerning the Advanta entities' claims, and the general unpredictability of the
litigation process, it is impossible, at this time, to predict the ultimate
outcome of the litigation. However, the Fleet entities' intend to vigorously
pursue their claims and contest the claims asserted by the Advanta entities.
Fleet does not expect this action to have any material adverse impact on its
business.
THE RECEIVABLES
The receivables in the initial accounts designated to the trust were
conveyed to the trust on December 3, 1993. Since that date, accounts have been
added to the trust from time to time as set forth in Annex II. The additional
accounts were selected from the Advanta consumer credit card portfolio prior to
February 20, 1998, and from the Fleet Credit Card Portfolio on and after
February 20, 1998.
The bank has broad discretion in selecting accounts that will be designated
as additional accounts; however, each additional account must, as of the
relevant cut-off date for those accounts, qualify as an Eligible Account. In
order to be an Eligible Account, each account must on the relevant cut-off date,
among other things, be in existence and maintained by the bank, have a
cardholder with a billing address in the United States, its territories or
possessions or a military address, and, except under limited circumstances, not
be an account the credit card or cards for which have been reported as having
been lost or stolen. See "Description of the Certificates--Representations,
Warranties and Covenants" in the accompanying prospectus.
Cardholders whose accounts are included in the Fleet Credit Card Portfolio
have billing addresses in all 50 states, the District of Columbia, Puerto Rico,
Guam, the Virgin Islands and certain foreign countries. As noted above, Eligible
Accounts must, as of the relevant cut-off date, have a billing address in the
United States, its territories or possessions or a military address and, as
shown in this section in the table captioned "Geographic Distribution of
Accounts and Receivables--Trust Portfolio," as of , % of the
accounts designated to the trust and % of the receivables in the trust had
billing addresses in one of the 50 states or the District of Columbia.
Pursuant to the Pooling and Servicing Agreement, the seller may be
obligated to designate additional accounts to the trust and to convey all
receivables of these additional accounts to the trust. Also, the seller may in
its discretion, from time to time, designate additional accounts to the trust.
In each case, all of the receivables in the designated accounts are conveyed to
the trust whether these receivables are then existing or are subsequently
created. See "Description of the Certificates--General" and "--Addition of
Accounts" in the accompanying prospectus. As of the relevant cut-off date and on
the date any new receivables are created, the seller represents and warrants
that the receivables in the accounts are Eligible Receivables.
S-14
<PAGE> 16
See "Description of Certificates--Representations, Warranties and Covenants" in
the accompanying prospectus.
As of the date of this prospectus supplement, the accounts from which the
receivables in the trust arise are the existing MasterCard and VISA accounts.
However, any new accounts designated to the trust are not required to be
MasterCard and VISA accounts.
The receivables in the trust, including receivables in the additional
accounts which have been or are expected to be conveyed to the trust during the
period from , through the date of issuance of Series 2000- , as
of , , totaled $ in accounts. The accounts had
an average credit limit of $ . The percentage of the aggregate total
receivables balance to the aggregate total credit limit was %. The average age
of the accounts designated to the trust was approximately months.
The receivables balance in the trust as of , , totaled
$ . The receivables balance in the trust as of
, totaled $ . As of , ,
the balance of receivables in the trust which were 30 days or more contractually
delinquent was $ .
The following tables summarize the trust portfolio, including receivables
in the additional accounts the receivables of which have been or are expected to
be conveyed to the trust during the period from
through the closing date, by various criteria as of the close of business on
. Because the future composition of the trust
portfolio may change over time, these tables are not necessarily indicative of
future results.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- --------------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Credit balance.............................. % $ %
$0.00.......................................
$0.01 to $1,000.00..........................
$1,000.01 to $2,500.00......................
$2,500.01 to $5,000.00......................
$5,000.01 to $7,500.00......................
Over $7,500.00..............................
--------- ----- ----------- -----
Total....................................... % $ %
========= ===== =========== =====
</TABLE>
S-15
<PAGE> 17
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
CREDIT LIMIT BALANCE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- -------------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
$0.00 to $1,000.00.......................... % $ %
$1,000.01 to $2,500.00......................
$2,500.01 to $5,000.00......................
$5,000.01 to $7,500.00......................
Over $7,500.00..............................
--------- ----- ----------- -----
Total....................................... % $ %
========= ===== =========== =====
</TABLE>
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF OF TOTAL
(DAYS CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ------------------------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Not Delinquent................................. % $ %
1 to 29 days...................................
30 to 59 days..................................
60 to 89 days..................................
90 to 119 days.................................
120 to 149 days................................
150 to 179 days................................
180 or more....................................
-------- ---- -------- ----
Total.......................................... % $ %
======== ==== ======== ====
</TABLE>
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
AGE (IN MONTHS) ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- --------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Not more than 6 Months......................... % $ %
Over 6 to 12 Months............................
Over 12 to 24 Months...........................
Over 24 to 36 Months...........................
Over 36 to 48 Months...........................
Over 48 to 60 Months...........................
Over 60 to 84 Months...........................
Over 84 Months.................................
-------- ---- -------- ----
Total.......................................... % $ %
======== ==== ======== ====
</TABLE>
S-16
<PAGE> 18
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS AND RECEIVABLES
TRUST PORTFOLIO(1)
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL PERCENTAGE
NUMBER OF NUMBER OF OF TOTAL
STATE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
- ----- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
California.....................................
New York.......................................
Texas..........................................
Florida........................................
Pennsylvania...................................
Massachusetts..................................
Ohio...........................................
New Jersey.....................................
Illinois.......................................
Michigan.......................................
Others.........................................
-------- ------- -------- -------
Total.......................................... % $ %
======== ======= ======== =======
</TABLE>
- ---------------
(1) All data as of , (including receivables then in the trust and
receivables in additional accounts to be added in the future through the
date of issuance of Series 2000- ).
MATURITY ASSUMPTIONS
The Pooling and Servicing Agreement provides that, unless a Pay Out Event
occurs, the Class A Certificateholders will not receive payments of principal
until the , 200 distribution date (the "CLASS A EXPECTED FINAL
DISTRIBUTION DATE"). The bank expects that the full principal amount of the
Class A Certificates will be paid on the Class A Expected Final Distribution
Date. However, if a Pay Out Event occurs, principal payments may begin prior to
that date.
The Pooling and Servicing Agreement also provides that the Class B
Certificateholders will not receive payments of principal until the ,
200 distribution date (the "CLASS B EXPECTED FINAL DISTRIBUTION DATE"). The bank
expects that the full principal amount of the Class B Certificates will be paid
on the Class B Expected Final Distribution Date. However, if a Pay Out Event
occurs, principal payments may begin prior to that date.
No principal payments will be made to the Class B Certificateholders unless
the Class A Investor Amount is paid in full.
Series 2000- will have a period of time called the "ACCUMULATION PERIOD"
when monthly deposits are made into the principal funding account. During the
accumulation period, amounts deposited in the principal funding account will
accumulate in an amount calculated to be sufficient to pay the Class A
Certificates on the Class A Expected Final Distribution Date and to pay the
Class B Certificates on the Class B Expected Final Distribution Date. Unless and
until a Pay Out Event occurs, on each distribution date for the accumulation
period, monthly deposits of principal will be made into the principal funding
account in an amount equal to the least of:
(a) Available Investor Principal Collections;
(b) the sum of:
(1) the Controlled Accumulation Amount for that distribution date;
and
(2) any Deficit Controlled Accumulation Amount for the immediately
preceding distribution date; or
S-17
<PAGE> 19
(c) the Invested Amount.
It is anticipated that a single principal payment will be made to Class A
Certificateholders in an amount equal to the Class A Investor Amount on the
Class A Expected Final Distribution Date and that a single principal payment
will also be made to Class B Certificateholders in an amount equal to the Class
B Investor Amount on the Class B Expected Final Distribution Date. However,
payment rates vary and we cannot assure you that Available Investor Principal
Collections will always be sufficient to make required payments to the principal
funding account or to make payments on your certificates when you expect.
On the other hand, the occurrence of a Pay Out Event may result in
principal being paid to you earlier than expected. Pay Out Events which apply to
all series are described in the prospectus. See "Description of the
Certificates--Trust Pay Out Events" in the accompanying Prospectus. Series Pay
Out Events for Series 2000- are described in this prospectus supplement
under the caption "Description of the Certificates--Pay Out Events."
A Pay Out Event occurs, with respect to Series 2000- and all other
series, automatically upon:
(a) the occurrence of an insolvency event relating to the seller,
including any additional seller;
(b) the trust becoming an "investment company" within the meaning of
the Investment Company Act of 1940, as amended; or
(c) the inability of the seller, including any additional seller, to
transfer receivables to the trust in accordance with the Pooling
and Servicing Agreement.
There can be no assurance that a Pay Out Event will not occur. See
"Description of the Certificates--Pay Out Events" in this Prospectus Supplement.
Upon the occurrence of a Pay Out Event which applies to Series 2000- or
to all series, a "RAPID AMORTIZATION PERIOD" will begin. The rapid amortization
period means the period beginning with the occurrence of a Pay Out Event and
ending on the earlier of:
(a) the payment in full of the Class A Investor Amount, the Class B
Investor Amount and the Collateral Invested Amount; and
(b) the Series 2000- Termination Date.
During the rapid amortization period, first the Class A Certificateholders
and then, following the payment in full of the Class A Investor Amount, the
Class B Certificateholders will be entitled to receive monthly payments of
principal. The monthly payments will be equal to the Available Investor
Principal Collections received by the trust during the related monthly period,
plus the principal amount on deposit in the principal funding account, until the
Class A Investor Amount or Class B Investor Amount, as applicable, is paid in
full.
Allocations of collections of principal receivables will be made to Series
2000- based on the Principal Allocation Percentage. See "Description of the
Certificates--Allocation Percentages" in this Prospectus Supplement.
The following table shows the highest and lowest cardholder monthly payment
rates and the average of the cardholder monthly payment rates for the Fleet
Credit Card Portfolio. Information prior to February 20, 1998 is pro forma as if
the bank had purchased the Advanta consumer credit card portfolio as of the
beginning of 1997. The rates are calculated as a percentage of the total opening
monthly account balances during the periods shown. Payments shown in the table
include amounts which would be deemed payments of principal receivables and
finance charge receivables on the accounts.
S-18
<PAGE> 20
MONTHLY PAYMENT RATES
FLEET CREDIT CARD PORTFOLIO (1)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
MONTHS ENDED -----------------------------
, 1999 1998 1997
-------------- ------- ------- -------
<S> <C> <C> <C> <C>
Lowest........................................... % 11.20% 10.84% 9.93%
Highest.......................................... % 13.64% 12.36% 12.29%
Monthly Average.................................. % 12.06% 11.57% 11.09%
</TABLE>
- ---------------
(1) Information prior to February 20, 1998 is shown pro forma as if the bank had
purchased the Advanta consumer credit card portfolio as of the beginning of
1997. Collections related to the credit card portfolio acquired by Fleet
Financial Group, Inc. as a result of the purchase of NatWest Bank, N.A. are
included beginning in June, 1997.
The amount of collections on receivables from the trust may vary from month
to month due to seasonal variations, general economic conditions, changes in tax
law and payment habits of individual cardholders. There can be no assurance that
collections of principal receivables from the trust portfolio, and thus the rate
at which you can expect to accumulate or receive payments of principal on your
certificates during the accumulation period or the rapid amortization period,
will be similar to the historical experience set forth above. In addition, the
ability to pay the Class A Investor Amount or the Class B Investor Amount on the
Class A Expected Final Distribution Date and the Class B Expected Final
Distribution Date, respectively, may be dependent upon the availability of
Shared Principal Collections.
Since the trust, as a master trust, may issue additional series from time
to time, there can be no assurance that the issuance of additional series or the
terms of any additional series might not have an impact on the timing of
payments made to you. Further, if a Pay Out Event occurs, the average life and
maturity of the Series 2000- Certificates could be significantly reduced.
RECEIVABLE YIELD CONSIDERATIONS
The following table provides yield information for the months ended
, and each of the years ended December 31, 1999, 1998 and 1997.
Information prior to February 20, 1998 is shown pro forma as if the bank had
purchased the Advanta consumer credit card portfolio as of the beginning of
1997.
The historical yield figures in the table are calculated on an accrual
basis. Collections on the receivables in the trust will be on a cash basis and
may not reflect the historical yield experience in the table. For example,
during periods of increasing delinquencies accrual yields may exceed cash yields
as amounts collected on credit card receivables lag behind amounts accrued and
billed to cardholders. Conversely, as delinquencies decrease, cash yields may
exceed accrual yields as amounts collected in a current period may include
amounts accrued during prior periods. Yield on both an accrual and a cash basis
will be affected by numerous factors, including the finance charges on the
receivables in the trust, the amount of the annual cardholder fees and other
fees and charges, changes in the delinquency rate on the receivables in the
trust, the percentage of cardholders who pay their balances in full each month
and do not incur finance charges and any restrictions which may be imposed by
future legislation or regulations. There can be no assurance that the revenue
from finance charges and fees for the receivables in the trust will be similar
to the historical experience set forth below. See "Risk Factors" in the
accompanying Prospectus.
S-19
<PAGE> 21
REVENUE FROM FINANCE CHARGES AND FEES
FLEET CREDIT CARD PORTFOLIO
<TABLE>
<CAPTION>
MONTHS
ENDED , YEAR ENDED DECEMBER 31,
----------- ------------------------------
1999 1998 1997
----------- ------ ------ ------
<S> <C> <C> <C> <C>
Average Monthly Accrued Fees and
Charges(2)(3)(4)............................. $ --(6) $42.76(6) $36.07(1) $36.99(1)
Average Account Balance(2)(5).................. -- $2,699 $2,798 $2,783
Yield From Fees and Charges(3)(4).............. --%(6) 19.01%(6) 15.47%(1) 15.95%(1)
</TABLE>
- ---------------
(1) The amounts shown for the years ended December 31, 1998 and 1997 do not
include revenue attributed to Interchange.
(2) Information prior to February 20, 1998 is shown pro forma as if the bank had
purchased the Advanta consumer credit card portfolio as of the beginning of
1997. Fees, charges and account balances related to the credit card
portfolio acquired by Fleet Financial Group, Inc. as a result of the
purchase of NatWest Bank, N.A. are included beginning in June, 1997.
(3) Fees and Charges for each of the years ended December 31, 1997, 1998 and
1999 are comprised of finance charges, annual cardholder fees and certain
other service charges. Fees and Charges for the year ended December 31, 1999
and for the months ended , are comprised of finance charges,
annual cardholder fees and all other service charges plus revenue attributed
to Interchange.
(4) Average Monthly Accrued Fees and Charges and Yield from Fees and Charges are
presented net of adjustments made pursuant to normal servicing procedures,
including removal of incorrect or disputed finance charges and reversal of
finance charges accrued on charged-off accounts.
(5) Average Account Balance includes purchases, cash advances and billed and
unpaid finance and other charges, and is calculated based on the average of
the opening monthly account balances for accounts with balances during the
periods shown.
(6) Beginning January 1, 1999 revenue from Interchange and fees not previously
included have been included in fees and charges and in calculating the yield
from fees and charges. For the year ended December 31, 1999 and for months
ended , , if fees and charges had not included revenue
attributed to Interchange and the additional fees, the average monthly
accrued fees and charges would have been $36.84 and $ , respectively,
and the yield from fees and charges would have been 16.38% and %,
respectively.
The yields shown in the above table are comprised of three components:
finance charges, annual cardholder fees and other service charges, such as late
charges. In addition, for the year ended December 31, 1999 and for the months
ended , the yield includes interchange and fees not previously
included. The yield related to annual cardholder fees, on those accounts that
assess annual fees, and other service charges varies with the type and volume of
activity in and the balance of each account. The bank currently assesses annual
cardholder fees of $10 to $50 for some of its credit card accounts. Most
accounts included in the Fleet Credit Card Portfolio and originated since March
1987 do not carry an annual cardholder fee. See "The Bank's Credit Card
Activities" in the accompanying Prospectus. As account balances increase, an
annual cardholder fee, which remains constant, represents a smaller percentage
of the aggregate account balance.
[The increase in yields demonstrated in the above table from December 31,
1998 to December 31, 1999 is the result of several changes implemented by the
bank. As of January 1, 1999, the bank, in calculating fees and charges has
included Interchange and service charges not previously included. Other factors
affecting the increase include the bank's continued use of risk based
repricing.]
S-20
<PAGE> 22
DESCRIPTION OF THE CERTIFICATES
The following summary, together with information contained elsewhere in
this Prospectus Supplement and the Prospectus, describes the material terms of
the certificates contained in the Pooling and Servicing Agreement. The following
summary is qualified in its entirety by reference to the Pooling and Servicing
Agreement.
GENERAL
The Series 2000- Certificates and the Collateral Interest
will represent undivided interests in the assets of the Fleet Credit Card Master
Trust II. See "--Allocation Percentages" in this Prospectus Supplement. The
rights represented by the Series 2000- Certificates and the
Collateral Interest include the right to a percentage of the collections of the
receivables in the trust. The percentage used to allocate collections to Series
2000- is the "SERIES PERCENTAGE." When allocating finance change receivables
and defaulted receivables, the Series Percentage is the Floating Allocation
Percentage. When allocating principal receivables, the Series Percentage is the
Principal Allocation Percentage.
For any monthly period, the portion of the principal receivables and any
amounts in the excess funding account represented by the Series
2000- Certificates and the Collateral Interest will be equal to:
- $ , which will be the "INITIAL INVESTED AMOUNT" of the
certificates and the Collateral Interest on the date of issuance of
Series 2000- ; minus
- the principal amount on deposit in the principal funding account; minus
- the amount of principal payments paid to the certificateholders and the
Collateral Interest Holder; and minus
- any unreimbursed reductions in the Invested Amount.
See "Description of the Certificates--Defaulted Receivables; Rebates and
Fraudulent Charges" in the accompanying Prospectus and "Description of the
Certificates--Allocation of Investor Default Amount" in this Prospectus
Supplement.
Each Series 2000- Certificate represents the right to receive monthly
payments of interest at the Class A Certificate Rate or Class B Certificate
Rate, as applicable, from:
- collections of finance charge receivables;
- amounts withdrawn from the reserve account; provided that amounts from
the reserve account will be available only to the Class A Certificates;
and
- reallocated principal collections.
The Series 2000- Certificates also represent the right to deposits or
payments of principal during the Accumulation Period or the Rapid Amortization
Period. Deposits to the Principal Funding Account to be used to pay principal on
the Class A Certificates and the Class B Certificates or amounts otherwise used
to pay principal on the Class A Certificates or the Class B Certificates will be
funded from Available Investor Principal Collections. During the Accumulation
Period, Available Investor Principal Collections will include collections of
principal receivables otherwise allocable to other series, but which are not
needed by the other series.
The seller holds the interest in the principal receivables and the amounts
in the excess funding account not represented by the Series
2000- Certificates, the Collateral Interest or the certificates and
uncertificated interests represented by other series. The interest held by the
seller is the "SELLERS' INTEREST." The sellers' interest includes an undivided
interest in the assets of the trust including the right to a
S-21
<PAGE> 23
percentage of collections of receivables. The seller percentage of receivables
is 100% minus both the Series Percentage for Series 2000- and the series
percentage for all other series.
During the Revolving Period, the Invested Amount will remain constant
except in limited circumstances. See "Description of the Certificates--Defaulted
Receivables; Rebates and Fraudulent Charges" in the accompanying Prospectus and
"Description of the Certificates--Allocation of Investor Default Amount" in this
prospectus supplement. The amount of principal receivables, however, will vary
each day as new principal receivables are created and others are paid. The
"SELLER AMOUNT," being the amount of principal receivables and amounts in the
excess funding account not represented by the investor certificates of any
series, will fluctuate daily to reflect the changes in the amount of the
principal receivables. During the accumulation period or the rapid amortization
period, the Invested Amount will decline for each monthly period as cardholder
payments of principal receivables are collected and deposited in the principal
funding account or paid to the certificateholders or the Collateral Interest
Holder.
The interest of the certificateholders in the trust will terminate
following the "SERIES 2000- TERMINATION DATE," which is the earliest of:
- the day after the distribution date on which the Investor Amount is paid
in full;
- the 200 distribution date; and
- the termination of the trust.
All principal and interest on your certificates will be due and payable no later
than the Series 2000- Termination Date. See "Description of the
Certificates--Final Payment of Principal and Interest; Termination" in the
accompanying prospectus.
REGISTRATION OF CERTIFICATES
The certificates initially will be represented by certificates registered
in the name of Cede & Co., as the nominee of The Depository Trust Company. No
person acquiring a beneficial interest in the certificates--called a
"CERTIFICATE OWNER"--will be entitled to receive a "DEFINITIVE CERTIFICATE"
representing the person's interest, except in the event that definitive
certificates are issued to certificate owners under the limited circumstances
described in the prospectus. Investor certificateholders may elect to hold their
investor certificates through The Depository Trust Company, in the United States
or Cedelbank or Euroclear, in Europe. See "Description of the
Certificates--Definitive Certificates" in the accompanying prospectus.
INTEREST PAYMENTS
Interest will accrue on the certificates at the applicable Class A
Certificate Rate or Class B Certificate Rate from the date of the initial
issuance of the certificates. Interest payments on the certificates will be made
on distribution dates. The "DISTRIBUTION DATES" will be , 2000
and the subsequent 15th day of each month, or if the 15th day is not a business
day, on the next succeeding business day.
Interest payments on the certificates on any distribution date will be
calculated on the outstanding principal amount of the Class A Certificates or
the Class B Certificates, as applicable, as of the preceding record date or, in
the case of the first distribution date, as of the date of issuance of Series
2000- . Interest payments will be based upon the applicable certificate rate
for the related interest period. Class A Monthly Interest and Class B Monthly
Interest due but not paid on any distribution date will be payable on the next
succeeding distribution date together with additional interest on the due and
unpaid amount at the Class A Certificate Rate or Class B Certificate Rate, as
applicable, plus %.
Interest on the Class A Certificates and the Class B Certificates will be
calculated on the basis of the actual number of days in the related interest
period and a 360-day year. The Class A Certificates will bear interest at the
rate of % per annum above the London interbank offered quotations for
United States
S-22
<PAGE> 24
dollar deposits ("LIBOR") for a period of the Designated Maturity determined as
set forth below (the "CLASS A CERTIFICATE RATE"). The Class B Certificates will
bear interest at the rate of % per annum above LIBOR for a period of the
Designated Maturity determined as set forth below (the "CLASS B CERTIFICATE
RATE").
The "INTEREST PERIOD" for any distribution date will be the period from the
previous distribution date through the day preceding that distribution date,
except that the initial interest period will be the period from the date of
issuance of Series 2000- through , 2000, the day preceding the
initial distribution date.
The term "BUSINESS DAY" means any day other than a Saturday, Sunday or day
on which banking institutions in New York, New York, Providence, Rhode Island or
any other state where the principal executive offices of the bank or any
additional seller or the trustee are located, are authorized or obligated by
law, executive order or governmental decree to be closed.
The "MONTHLY PERIOD" for any distribution date will be the immediately
preceding calendar month, except for the initial monthly period, which will
begin on the date of issuance of Series 2000- and end on , 2000.
The "RECORD DATE" for any distribution date will be the last business day
of the month preceding that distribution date.
The trustee will determine LIBOR on , 2000 for the period from
the date of issuance of Series 2000- through , 2000, and for each
future interest period, on the second business day prior to the distribution
date on which the interest period begins (each a "LIBOR DETERMINATION DATE")
commencing with the , 2000 distribution date. The determination of
LIBOR by the trustee and the trustee's subsequent calculation of the applicable
certificate rate for the relevant interest periods shall, in the absence of
manifest error, be final and binding on each certificateholder.
"LIBOR" means, as of any LIBOR determination date, the rate for deposits in
United States dollars for a period of the Designated Maturity which appears on
Telerate Page 3750 as of 11:00 a.m., London time on that date. If the rate does
not appear on Telerate Page 3750, the rate for that LIBOR determination date
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 Designated Maturity. The trustee will request the principal London office of
each of the reference banks to provide a quotation of its rate. If at least two
such quotations are provided, the rate for that LIBOR determination date will be
the arithmetic mean of the quotations. If fewer than two quotations are provided
as requested, the rate for that LIBOR determination date will be the arithmetic
mean of the rates quoted by the reference banks, selected by the servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a period of the Designated
Maturity.
For purposes of calculating LIBOR, the "DESIGNATED MATURITY" means, as of
any LIBOR determination date, one month; provided, that LIBOR for the initial
interest period will be determined by straight-line interpolation, based on the
actual number of days in the period from the date of issuance of Series
2000- through , 2000, between two rates determined in accordance
with the definition of LIBOR, one of which will be determined for a Designated
Maturity of one month and the other of which will be determined for a Designated
Maturity of two months.
"TELERATE PAGE 3750" means the display page currently so designated on the
Bridge Telerate Markets Report or a page that may replace that page on that
service for the purpose of displaying comparable rates or prices.
"REFERENCE BANKS" means three major banks in the London interbank market
selected by the servicer.
The Class A Certificate Rate or Class B Certificate Rate applicable to the
then current and the immediately preceding interest periods may be obtained by
telephoning the trustee at (800) 735-7777.
S-23
<PAGE> 25
On each distribution date, Class A Monthly Interest and Class A Monthly
Interest previously due but not distributed to the Class A Certificateholders
will be paid to the Class A Certificateholders from Class A Available Funds for
the related monthly period. To the extent Class A Available Funds for the
related monthly period are insufficient to pay the interest, then one or all of
the following will be used to make the interest payments due on the Class A
Certificates:
- Excess Spread; and
- if necessary, Excess Finance Charges; and
- if necessary, Reallocated Principal Collections first from amounts
allocated to the collateral invested amount and then from amounts
allocated to the Class B Invested Amount.
"CLASS A AVAILABLE FUNDS" means, for any monthly period, the sum of:
- the Class A Floating Percentage of collections of finance charge
receivables allocated to the Series 2000- Certificates for the related
monthly period, including other amounts that are to be treated as
collections of finance charge receivables in accordance with the Pooling
and Servicing Agreement;
- the amount of earnings on the principal funding account, if any, for the
related distribution date; and
- the amount of funds, if any, to be withdrawn from the reserve account and
included in Class A Available Funds for the distribution date.
"CLASS A MONTHLY INTEREST" means, for any distribution date, 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 that distribution date and the denominator of which is 360;
times
(b) the Class A Certificate Rate; and
- the outstanding principal amount of the Class A Certificates as of the
preceding record date;
provided however, for the first distribution date, Class A Monthly Interest
shall be equal to the interest accrued on the outstanding principal amount of
the Class A Certificates at the applicable Class A Certificate Rate for the
period from the date of issuance of Series 2000- through , 2000
calculated on the basis of the actual number of days in the period and a year of
360 days.
On each distribution date, Class B Monthly Interest and Class B Monthly
Interest previously due but not distributed to the Class B Certificateholders
will be paid to Class B Certificateholders from Class B Available Funds for the
related monthly period. To the extent Class B Available Funds for the related
monthly period are insufficient to pay the interest, then one or all of the
following, to the extent not used to make distributions for the Class A
Certificates, will be used to make the interest payments due on the Class B
Certificates:
- Excess Spread; and
- if necessary, Excess Finance Charges allocated to Series 2000- ; and
- if necessary, Reallocated Principal Collections allocable to the
collateral invested amount.
"CLASS B AVAILABLE FUNDS" means, for any monthly period, an amount equal to
the Class B Floating Percentage of collections of finance charge receivables
allocated to the Series 2000- Certificates for the related monthly period,
including other amounts that are to be treated as collections of finance charge
receivables in accordance with the Pooling and Servicing Agreement.
S-24
<PAGE> 26
"CLASS B MONTHLY INTEREST" means, for any distribution date, an 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 the preceding distribution date to but
excluding that distribution date and the denominator of which is 360;
times
(b) the Class B Certificate Rate; and
- the outstanding principal amount of the Class B Certificates as of the
preceding record date;
provided however, for the first distribution date, Class B Monthly Interest
shall be equal to the interest accrued on the outstanding principal amount of
the Class B Certificates at the applicable Class B Certificate Rate for the
period from the date of issuance of Series 2000- through , 2000
calculated on the basis of the actual number of days in the period and a year of
360 days.
"COLLATERAL AVAILABLE FUNDS" means, for any monthly period, an amount equal
to the Collateral Floating Percentage of the collections of finance charge
receivables allocated to Series 2000- including any amounts that are to be
treated as collections of finance charge receivables in accordance with the
Pooling and Servicing Agreement.
"COLLATERAL MINIMUM MONTHLY INTEREST" means, for any distribution date, an
amount equal to one-twelfth of the product of:
- the Collateral Minimum Interest Rate; and
- the outstanding principal amount of the Collateral Interest as of the
preceding record date; provided, however, for the first distribution
date, Collateral Minimum Monthly Interest will be equal to the interest
accrued on the initial principal amount of the Collateral Interest at the
Collateral Minimum Interest Rate for the period from and including the
date issuance of Series 2000- through , 2000.
"COLLATERAL MINIMUM INTEREST RATE" means a rate specified in the agreement
between the bank and the Collateral Interest Holder relating to the transfer of
the Collateral Interest to the Collateral Interest Holder not to exceed %
per annum.
"EXCESS FINANCE CHARGES" are collections of finance charge receivables for
a monthly period which are allocated to series in Group One other than Series
2000- and are, under the documents governing the other series, designated as
Excess Finance Charges.
PRINCIPAL PAYMENTS
During the Series 2000- revolving period no principal payments will be
made to or for the benefit of the certificateholders or deposited into the
principal funding account to be accumulated and subsequently paid to the
certificateholders. During the revolving period, collections of principal
receivables allocable to Series 2000- will, except to the extent used as
Reallocated Principal Collections, be treated as Shared Principal Collections.
Any Shared Principal Collections will be made available to other series in Group
One which are in an amortization period. If the collections of principal
receivables allocable to Series 2000- during the revolving period are not
needed by other series, the collections will be paid to the holders of the
seller's certificates or, if required by the Pooling and Servicing Agreement,
retained in the excess funding account.
See "Description of the Certificates--Shared Principal Collections" in the
accompanying prospectus.
The accumulation period for the Series 2000- Interests is scheduled to
begin at the close of business on , 200 . The beginning of the
accumulation period may, however, be delayed to no later than the close of
business on , 200 . The first principal payment will be made to
the Class A Certificateholders on the earlier of the (i)
200 distribution date, the "CLASS A EXPECTED FINAL DISTRIBUTION
DATE" or (ii) the distribution date in the month following the month in which
the rapid amortization period begins. Principal is also expected to be paid to
the Class B
S-25
<PAGE> 27
Certificateholders on the 200 distribution date, the "CLASS B
EXPECTED FINAL DISTRIBUTION DATE"; however, if the amount on deposit in the
principal funding account is not sufficient to pay the certificates in full, it
will be applied first to pay the Class A Certificates. No principal will be
payable to the Class B Certificateholders unless the Class A Investor Amount is
paid in full or funds are available to make full payment.
On each distribution date for the accumulation period, prior to the date on
which the Class A Investor Amount and the Class B Investor Amount are paid in
full, an amount equal to the least of one of the following will be deposited in
the principal funding account:
- Available Investor Principal Collections on deposit in the collection
account for the distribution date;
- the applicable Controlled Deposit Amount for the distribution date; and
- the sum of the Class A Invested Amount and the Class B Invested Amount.
Amounts deposited into the principal funding account during the accumulation
period will be paid first to the Class A Certificateholders and then Class B
Certificateholders, on the Class A Expected Final Distribution Date and the
Class B Expected Final Distribution Date or, if earlier, the first distribution
date for the rapid amortization period.
"AVAILABLE INVESTOR PRINCIPAL COLLECTIONS" means, for any monthly period,
an amount equal to the sum of:
- (a) an amount equal to the Principal Allocation Percentage of all
collections of principal receivables received during the related
monthly period; minus
(b) the amount of Reallocated Principal Collections for the related
monthly period used to fund the Class A Required Amount or the Class
B Required Amount; plus
- any Shared Principal Collections from other series in Group One that are
allocated to Series 2000- ; plus
- any other amounts which pursuant to the series supplement are to be
treated as Available Investor Principal Collections for the related
distribution date.
On each distribution date for the rapid amortization period until the Class
A Investor Amount is paid in full or the Series 2000- Termination Date occurs,
the Class A Certificateholders will be entitled to receive Available Investor
Principal Collections in an amount up to the Class A Investor Amount. After
payment in full of the Class A Investor Amount, the Class B Certificateholders
will be entitled to receive, on each distribution date, Available Investor
Principal Collections until the earlier of the date the Class B Investor Amount
is paid in full and the Series 2000- Termination Date.
"CLASS A MONTHLY PRINCIPAL" for any distribution date for the accumulation
period or the rapid amortization period will equal the least of:
- the Available Investor Principal Collections on deposit in the collection
account for that distribution date;
- for each distribution date for the accumulation period, on or prior to
the Class A Expected Final Distribution Date, the Controlled Deposit
Amount for that distribution date; and
- the Class A Invested Amount on the related distribution date.
"CLASS B MONTHLY PRINCIPAL" for any distribution date, beginning with the
first distribution date for the accumulation period on which the full amount of
the Class A Investor Amount is on deposit in the
S-26
<PAGE> 28
principal funding account or has been paid to the Class A Certificateholders or,
if earlier, the first distribution date in the rapid amortization period, will
equal the least of:
- the Available Investor Principal Collections on deposit in the collection
account for that distribution date, minus the portion of the Available
Investor Principal Collections applied to Class A Monthly Principal on
that distribution date;
- for each distribution date with respect to the accumulation period, the
Controlled Deposit Amount for that distribution date, minus the portion
of the Controlled Deposit Amount for that distribution date applied to
Class A Monthly Principal; and
- the Class B Invested Amount on that distribution date.
"COLLATERAL MONTHLY PRINCIPAL" means beginning with the later of the
Collateral Expected Final Distribution Date and the distribution date on which
the Class B Investor Amount is paid in full, or, if earlier, the first
distribution date in the rapid amortization period, an amount equal to the
lesser of:
- that Available Investor Principal Collections for that distribution date,
minus the portion of the Available Investor Principal Collections applied
to Class A Monthly Principal and Class B Monthly Principal on that
distribution date; and
- the Collateral Invested Amount for that distribution date.
"CONTROLLED ACCUMULATION AMOUNT" means for any distribution date for the
accumulation period, the sum of the Class A Initial Invested Amount and the
Class B Initial Invested Amount divided by nine, subject to adjustment if the
beginning of the accumulation period is postponed.
"DEFICIT CONTROLLED ACCUMULATION AMOUNT" means:
- on the first distribution date for the accumulation period the excess, if
any, of the Controlled Accumulation Amount for that distribution date
over the amount distributed from the collection account as Class A
Monthly Principal and Class B Monthly Principal for that distribution
date; and
- on each subsequent distribution date for the accumulation period the
excess, if any, of the Controlled Deposit Amount for the subsequent
distribution date over the amount distributed from the collection account
as Class A Monthly Principal and Class B Monthly Principal for the
subsequent distribution date.
"CONTROLLED DEPOSIT AMOUNT" means, for any distribution date relating to
the accumulation period, an amount equal to the sum of:
- the Controlled Accumulation Amount on that distribution date; and
- any Deficit Controlled Accumulation Amount for the immediately preceding
distribution date.
POSTPONEMENT OF ACCUMULATION PERIOD
The servicer may elect to postpone the start of the accumulation period and
extend the length of the revolving period. The servicer may make this election
only if the length of the accumulation period is less than nine months. On each
determination date, until the accumulation period begins, the servicer will
determine the number of months expected to be required to fully fund the
principal funding account and be able to pay the Class A Investor Amount no
later than the Class A Expected Final Distribution Date and the Class B Investor
Amount no later than the Class B Expected Final Distribution Date. The servicer
will determine the length of the period required on the basis of:
- the monthly collections of principal receivables expected to be
distributable to the certificateholders of all principal sharing series
in Group One, assuming a principal payment rate no greater than the
lowest monthly principal payment rate on the receivables for the
preceding 12 months; and
S-27
<PAGE> 29
- the amount of principal expected to be distributable to
certificateholders of principal sharing series in Group One which are not
expected to be in their revolving periods during the accumulation period.
If the servicer determines that the period needed to fund the accumulation
period is less than nine months, the servicer may, at its option, postpone the
start of the accumulation period so that the number of months included in the
accumulation period will be equal to or exceed the period needed. The effect of
the foregoing calculation is to permit the reduction of the length of the
accumulation period based on the investor interest of certain other principal
sharing series in Group One that are scheduled to be in their revolving periods
during the accumulation period and on increases in the principal payment rate
occurring after the date of issuance of Series 2000- . The length of the
accumulation period will not be less than one month.
SUBORDINATION
The Class B Certificateholders' interest and the Collateral Interest will
be subordinated to the extent necessary to fund certain payments for the Class A
Certificates. In addition, the Collateral Interest will be subordinated to the
extent necessary to fund certain payments for the Class B Certificates. Also
collections of principal receivables otherwise allocable to the Class B
Certificateholders may be reallocated to the Class A Certificateholders and the
Class B Invested Amount may be reduced. Similarly, collections of principal
receivables allocable to the Collateral Interest may be reallocated to the Class
A Certificateholders and the Class B Certificateholders and the Collateral
Invested Amount may be reduced. To the extent the Class B Invested Amount is
reduced, the percentage of collections of finance charge receivables allocated
to the Class B Certificateholders in subsequent monthly periods will be reduced.
Moreover, to the extent the amount of this reduction in the Class B Invested
Amount is not reimbursed, the amount of principal distributable to the Class B
Certificateholders will be reduced. See "--Allocation Percentages,"
"--Reallocation of Cash Flows," and "--Application of Collections--Excess
Spread; Excess Finance Charges" in this prospectus supplement.
ALLOCATION PERCENTAGES
The servicer will allocate among the Class A Certificates, the Class B
Certificates, the Collateral Interest, the Certificateholders' interest for all
other outstanding series and the sellers' interest, all collections of finance
charge receivables, principal receivables and the defaulted amount for each
monthly period.
Collections of finance charge receivables and the defaulted amount for any
monthly period will be allocated to Series 2000- based on the Floating
Allocation Percentage. The "FLOATING ALLOCATION PERCENTAGE" means, for any
monthly period, the percentage equivalent, which shall never exceed 100%, of a
fraction, the numerator of which is the Invested Amount as of the last day of
the preceding monthly period, or for the first monthly period, the Initial
Invested Amount as of the date of issuance of Series 2000- , and the denominator
of which is the greater of:
(1) the sum of:
- the total amount of principal receivables in the trust as of the last
day of the monthly period, or, for the first monthly period, the total
amount of principal receivables in the trust on the date of issuance
of Series 2000- ; and
- the principal amount on deposit in the excess funding account as of
the last day of the monthly period; and
(2) the sum of the numerators used to calculate the series percentages
for finance charge receivables or defaulted receivables, for all
series of certificates then outstanding;
provided however, that this ratio is subject to adjustment to give effect to
designations of additional accounts.
S-28
<PAGE> 30
These amounts will be further allocated among the Class A
Certificateholders, the Class B Certificateholders and the Collateral Interest
Holder in accordance with the Class A Floating Percentage, the Class B Floating
Percentage and the Collateral Floating Percentage, respectively.
The "CLASS A FLOATING PERCENTAGE" means, for any monthly period, the
percentage equivalent, which percentage shall never exceed 100%, of a fraction
the numerator of which is equal to the Class A Invested Amount as of the close
of business on the last day of the preceding monthly period, or with respect to
the first monthly period, the Class A Initial Invested Amount and the
denominator of which is equal to the Invested Amount as of the close of business
on that day or for the first monthly period, the Initial Invested Amount.
The "CLASS B FLOATING PERCENTAGE" means, for 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 Invested Amount as of the close
of business on the last day of the preceding monthly period, or with respect to
the first monthly period, the Class B Initial Invested Amount and the
denominator of which is equal to the Invested Amount as of the close of business
on that day or for the first monthly period, the Initial Invested Amount.
The "COLLATERAL FLOATING PERCENTAGE" means, for any monthly period, the
percentage equivalent, which percentage shall never exceed 100%, of a fraction
the numerator of which is equal to the Collateral Invested Amount as of the
close of business on the last day of the preceding monthly period or with
respect to the first monthly period, the Collateral Initial Invested Amount and
the denominator of which is equal to the Invested Amount as of the close of
business on that day, or for the first monthly period, the Initial Invested
Amount.
Collections of principal receivables will be allocated to Series 2000-
based on a percentage equivalent to a fraction, for any monthly period, called
the "PRINCIPAL ALLOCATION PERCENTAGE."
(a) The numerator of the fraction is:
- during the revolving period, the Invested Amount as of the last day of
the immediately preceding monthly period, or, if it is first monthly
period, then the date of issuance of Series 2000- ; and
- during the accumulation period or the rapid amortization period, the
invested amount as of the last day of the revolving period or if the
numerator has been reduced during an accumulation period as described
in the following paragraph and a rapid amortization period begins, the
Invested Amount as of the last day of the accumulation period; and
(b) the denominator of the fraction is the greater of:
- 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 the
same day, or, if it is the first monthly period, as of the date of
issuance of Series 2000- ; and
- the sum of the numerators used to calculate the series percentage
applicable to principal receivables for all series outstanding as of
the date for which the determination is being made.
During the accumulation period, on any date, at the option of the servicer,
the numerator of the Principal Allocation Percentage may be reduced below the
numerator used in the previous monthly period, to an amount not less than the
greater of:
- the Invested Amount as of the last day of the immediately preceding
monthly period, less the amount of any distributions of principal
deposited in the principal funding account since the last day of the
immediately preceding monthly period; and
- an amount that if used as the numerator of the Principal Allocation
Percentage for the remainder of the accumulation period, based on
assumptions set forth in the series supplement, would assure
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that Available Investor Principal Collections for Series 2000- would
equal at least 125% of the Controlled Accumulation Amount for each
monthly period for so long as the Invested Amount is greater than zero.
The Principal Floating Percentage is also subject to adjustment to give
effect to designations of additional accounts.
Amounts allocated to Series 2000- on the basis of the Principal Allocation
Percentage will be further allocated among the Class A Certificates, the Class B
Certificates and the Collateral Interest based on the Class A Principal
Percentage, the Class B Principal Percentage and the Collateral Interest
Percentage.
The "CLASS A PRINCIPAL PERCENTAGE" means, for any monthly period:
(1) during the revolving period, the percentage equivalent 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, if
it is the first monthly period, as of the date of issuance of
Series 2000- , and the denominator of which is the Invested Amount
as of the last day of the preceding monthly period, or, if it is
the first monthly period, the date of issuance of Series 2000- ;
and
(2) after the revolving period, the percentage equivalent 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 that last day.
The "CLASS B PRINCIPAL PERCENTAGE" means, for any monthly period:
(1) during the revolving period, the percentage equivalent 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, if
it is the first monthly period, the date of issuance of Series
2000- and the denominator of which is the Invested Amount as of
the last day of the preceding monthly period, or, in the case of
the first monthly period, the date of issuance of Series 2000- ;
and
(2) after the revolving period, the percentage equivalent 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 the same day.
"COLLATERAL PRINCIPAL PERCENTAGE" means, for any monthly period:
(1) during the revolving period, the percentage equivalent of a
fraction, the numerator of which is the Collateral Invested Amount
as of the last day of the immediately preceding monthly period and
the denominator of which is the Invested Amount as of the last day
of the preceding monthly period; and
(2) after the revolving period, the percentage equivalent of a
fraction, the numerator of which is the Collateral Invested Amount
as of the last day of the revolving period, and the denominator of
which is the Invested Amount as of the same day.
As used in this prospectus supplement, the following terms have the
meanings indicated:
"CLASS A INVESTED AMOUNT" for any date means:
(1) $ , the "CLASS A INITIAL INVESTED AMOUNT;" minus
(2) the aggregate amount of principal payments made to the Class A
Certificateholders on or prior to the date; minus
(3) the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs for all prior dates over the aggregate amount of any
reimbursements of Class A Investor Charge-Offs for all
distribution dates prior to the date; and minus
(4) the principal amount on deposit in the principal funding account
on the date, but not in excess of the Initial Invested Amount.
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"CLASS B INVESTED AMOUNT" for any date means:
(1) $ , the "CLASS B INITIAL INVESTED AMOUNT;" minus
(2) the aggregate amount of principal payments made to Class B
Certificateholders on or prior to the date; minus
(3) the excess, if any, of the aggregate amount of Class B Investor
Charge-Offs for all prior distribution dates over the aggregate
amount of reimbursement of Class B Investor Charge-Offs for all
distribution dates prior to the date; minus
(4) the aggregate amount of Reallocated Principal Collections for all
prior distribution dates which have been used to fund the Class A
Required Amount for prior distribution dates, excluding any
Reallocated Principal Collections that have resulted in a
reduction of the Collateral Invested Amount; minus
(5) the amount by which the Class B Invested Amount has been reduced
to fund the Class A Investor Default Amount on all prior
distribution dates as described under "--Allocation of Investor
Default Amount," in this prospectus supplement; plus
(6) the aggregate amount of Excess Spread and Excess Finance Charges
allocated to Series 2000- and applied on all prior distribution
dates for the purpose of reimbursing amounts deducted pursuant to
the foregoing clauses (3), (4) and (5); and minus
(7) the positive difference, if any, between the principal funding
account balance and the Class A Investor Amount on the date;
provided however, that the Class B Invested Amount may not be reduced below
zero.
"COLLATERAL INVESTED AMOUNT" for any date means:
(1) $ , the "COLLATERAL INITIAL INVESTED AMOUNT;" minus
(2) the aggregate amount of principal payments made on the Collateral
Interest prior to the date; minus
(3) the aggregate amount of Reallocated Principal Collections
allocable to the Collateral Invested Amount for all prior
distribution dates which have been used to fund the Class A
Required Amount or the Class B Required Amount; minus
(4) the aggregate amount by which the Collateral Invested Amount has
been reduced to fund the Class A Investor Default Amount and the
Class B Investor Default Amount on all prior distribution dates as
described under "--Allocation of Investor Default Amount," in this
prospectus supplement; minus
(5) an amount equal to the product of the Collateral Floating
Percentage and the Investor Default Amount (the "COLLATERAL
DEFAULT AMOUNT") for any distribution date that is not funded out
of Excess Spread and Excess Finance Charges allocated to Series
2000- and available for this purpose on the related distribution
date; and plus
(6) the aggregate amount of Excess Spread and Excess Finance Charges
allocated and available to reimburse amounts deducted pursuant to
the foregoing clauses (3), (4) and (5);
provided however, that the Collateral Invested Amount may not be reduced below
zero.
The "INVESTED AMOUNT," for any date means the sum of the Class A Invested
Amount, the Class B Invested Amount and the Collateral Invested Amount.
The "INITIAL INVESTED AMOUNT," means $ the Invested Amount on the
date of issuance of Series 2000- .
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"CLASS A INVESTOR AMOUNT" for any date means the sum of the Class A
Invested Amount plus the principal amount on deposit in the principal funding
account, but not in excess of the Class A Initial Invested Amount.
"CLASS B INVESTOR AMOUNT" for any date means the sum of the Class B
Invested Amount plus the positive difference, if any, between the principal
amount on deposit in the principal funding account, and the Class A Investor
Amount on that date but not in excess of the Class B Initial Invested Amount.
"INVESTOR AMOUNT," for any date means the sum of the Class A Investor
Amount, the Class B Investor Amount and the Collateral Invested Amount.
"SERIES INVESTOR AMOUNT," for any date means the numerator of the Principal
Allocation Percentage on that date.
REALLOCATION OF CASH FLOWS
On each determination date, the servicer will determine the "CLASS A
REQUIRED AMOUNT" which will be the amount, if any, by which the sum of the
following exceeds the Class A Available Funds for the distribution date:
- Class A Monthly Interest for the distribution date;
- any Class A Monthly Interest previously due but not paid to the Class A
Certificateholders on a prior distribution date;
- any Class A Additional Interest and any Class A Additional Interest
previously due but not paid to the Class A Certificateholders on a prior
distribution date;
- the Class A Servicing Fee for the distribution date and any unpaid Class
A Servicing Fee; and
- the Class A Investor Default Amount, if any, for the distribution date.
If the Class A Required Amount is greater than zero, Excess Spread and Excess
Finance Charges allocated to Series 2000- and available for this purpose will
be used to fund the Class A Required Amount for the distribution date. If the
Excess Spread and Excess Finance Charges are insufficient to fund the Class A
Required Amount, collections of principal receivables allocable first to the
Collateral Interest and then to the Class B Certificates for the related monthly
period will then be used to fund the remaining Class A Required Amount.
"REALLOCATED PRINCIPAL COLLECTIONS" means an amount of collections of
principal receivables with respect to any monthly period equal to the product
of:
- the Principal Allocation Percentage for the monthly period;
- the aggregate amount of collections of principal receivables for the
monthly period; and
- the sum of the Class B Principal Percentage and the Collateral Principal
Percentage for the monthly period.
If Reallocated Principal Collections for a related monthly period together
with Excess Spread and Excess Finance Charges allocated to Series 2000- are
insufficient to fund the Class A Required Amount for the related monthly period,
then the Collateral Invested Amount will be reduced by the amount of this
excess, but not by more than the Class A Investor Default Amount for the
distribution date. In the event that this reduction would cause the Collateral
Invested Amount to be a negative number, the Collateral Invested Amount will be
reduced to zero and the Class B Invested Amount will be reduced by the amount by
which the Collateral Invested Amount would have been reduced below zero.
However, the Class B Invested Amount cannot be reduced by more than the excess
of the Class A Investor Default Amount, if any, for the distribution date over
the amount of the reduction, if any, of the Collateral Invested Amount on the
distribution date. In the event that the reduction would cause the Class B
Invested Amount to be a negative number, the Class B Invested Amount will be
reduced to zero, and the Class A Invested Amount
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will be reduced by the amount by which the Class B Invested Amount would have
been reduced below zero. However, the Class A Invested Amount cannot be reduced
by more than the excess, if any, of the Class A Investor Default Amount for the
distribution date over the amount of the reductions, if any, of the Collateral
Invested Amount and the Class B Invested Amount with respect to the distribution
date as described above. Any such reduction in the Class A Invested Amount may
have the effect of slowing or reducing the return of principal and interest to
the Class A Certificateholders. In this case, the Class A Certificateholders
will bear directly the credit and other risks associated with their interest in
the trust. See "--Allocation of Investor Default Amount" in this prospectus
supplement.
On each determination date, the servicer will determine the "CLASS B
REQUIRED AMOUNT," which will be the sum of the Class B Investor Default Amount
for the distribution date plus the amount by which, if any, following amounts
exceed the Class B Available Funds for the distribution date:
- Class B Monthly Interest for the distribution date;
- any Class B Monthly Interest previously due but not paid to the Class B
Certificateholders on a prior distribution date;
- any Class B Additional Interest and any Class B Additional Interest
previously due but not paid to the Class B Certificateholders on a prior
distribution date; and
- the Class B Servicing Fee for the distribution date and any unpaid Class
B Servicing Fee.
If the Class B Required Amount is greater than zero, Excess Spread and
Excess Finance Charges allocated to Series 2000- not required to pay the Class
A Required Amount or reimburse Class A Investor Charge-Offs will be used to fund
the Class B Required Amount for that distribution date.
If the Excess Spread and Excess Finance Charges available to fund the
remaining Class B Required Amount for that distribution date are insufficient to
pay the Class B Required Amount, then Reallocated Principal Collections
allocable to the Collateral Interest and not required to pay the Class A
Required Amount will be used to fund the remaining Class B Required Amount.
If the Reallocated Principal Collections allocable to the Collateral
Interest are insufficient to fund the remaining Class B Required Amount, then
the Collateral Invested Amount remaining after any adjustments made for the
benefit of the Class A Certificateholders will be reduced by the amount of the
insufficiency, but not by more than the Class B Investor Default Amount for the
distribution date. In the event that this reduction would cause the Collateral
Invested Amount to be a negative number, the Collateral Invested Amount will be
reduced to zero, and the Class B Invested Amount will be reduced by the amount
by which the Collateral Invested Amount would have been reduced below zero.
However the Collateral Invested Amount cannot be reduced by more than the excess
of the Class B Investor Default Amount for the distribution date over the amount
of the reduction of the Collateral Invested Amount. Any reduction in the Class B
Invested Amount may have the effect of slowing or reducing the return of
principal and interest to the Class B Certificateholders. In this case, the
Class B Certificateholders will bear directly the credit and other risks
associated with their interests in the trust. See "--Allocation of Investor
Default Amount" in this prospectus supplement.
Reductions of the Class A Invested Amount or Class B Invested Amount will
then be reimbursed and the Class A Invested Amount or Class B Invested Amount
increased to the extent of Excess Spread and Excess Finance Charges available
for these purposes on each distribution date. See "--Application of
Collections--Excess Spread; Excess Finance Charges" in this prospectus
supplement. When these reductions of the Class A Invested Amount and Class B
Invested Amount have been fully reimbursed, reductions of the Collateral
Invested Amount will be reimbursed until reimbursed in full in a similar manner.
APPLICATION OF COLLECTIONS
Application of Collections to the Collection Account. Except under the
conditions described in the accompanying prospectus under "Description of the
Certificates--Application of Collections," the servicer
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will apply, or will instruct the trustee to apply, on or prior to the close of
business on the second business day following the date of processing of any
collections, all collections and other funds to be deposited into the collection
account that are allocated to the Series 2000- Certificates and the Collateral
Interest as follows:
(1) during the revolving period, an amount equal to the Floating
Allocation Percentage of the collections of finance charge
receivables processed on that date will be allocated to the Series
2000- Holders, and of that allocation, the following amounts will
be deposited and retained in the collection account:
(a) prior to the LIBOR determination date occurring in the current
monthly period, the entire amount of the allocation; and
(b) on and after the LIBOR determination date, the difference
between:
- monthly interest for the related distribution date plus, if the
bank is not the servicer, the Monthly Servicing Fee for the
monthly period; and
- the amounts previously deposited in the collection account for
the monthly period pursuant to this clause (1);
(2) during the accumulation period or rapid amortization period, an
amount equal to the Floating Allocation Percentage of the
collections of finance charge receivables processed on this date
will be allocated to the Series 2000- Holders and deposited and
retained in the collection account;
(3) during the revolving period, an amount equal to the Principal
Allocation Percentage of collections of principal receivables
processed on that date will be allocated to the Series 2000-
Holders. If any other principal sharing series in Group One is
outstanding and in its amortization period or accumulation period,
then it will be retained in the collection account for application,
to the extent necessary, to other series in Group One on the related
distribution date. Any remaining funds will be paid to the holders
of the Seller Certificates. However, these remaining funds will be
paid to the holders of the Seller Certificates only if the Seller
Amount is greater than the Required Seller Amount and the aggregate
amount of principal receivables in the trust is greater than the
Required Principal Balance. If this is not the case, these remaining
funds be will be deposited in the excess funding account until the
Seller Amount is greater than the Required Seller Amount and the
aggregate amount of principal receivables is greater than the
required principal balance and any remaining funds will be paid to
the holders of the Seller Certificates;
(4) during the accumulation period, an amount, called a "PERCENTAGE
ALLOCATION" for any date, equal to the Principal Allocation
Percentage of collections of principal receivables processed on that
date will be allocated to the Series 2000- Holders and deposited
and retained in the collection account. However, if the sum of
Percentage Allocations for the same monthly period exceeds the
Controlled Deposit Amount for the related distribution date, or the
Collateral Invested Amount on the Collateral Expected Final
Distribution Date, then this excess shall not be treated as a
Percentage Allocation and shall be:
(a) retained in the collection account for application, as necessary,
as Shared Principal Collections to other series in Group One on
the related distribution date, if any other principal sharing
series in Group One is outstanding and in its amortization period
or accumulation period; and
(b) paid to the holders of the Seller Certificates only if the Seller
Amount, on the date of processing, is greater than the Required
Seller Amount and the aggregate amount of principal receivables
in the trust is greater than the Required Principal Balance and
otherwise will be deposited in the excess funding account until
the Seller Amount is greater than the Required Seller Amount and
the aggregate amount of principal
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<PAGE> 36
receivables in the trust is greater than the Required Principal
Balance and the remainder will be paid to the holders of the
Seller Certificates; and
(5) during the rapid amortization period, an amount equal to the
Principal Allocation Percentage of the collections of principal
receivables processed on that date will be allocated to the Series
2000- Holders and deposited and retained in the collection account.
However, after the date on which an amount of the collections equal
to the Invested Amount has been deposited into the Collection
Account and allocated to the Series 2000- Holders, the amount in
excess of the Invested Amount will be:
(a) retained in the collection account for application, as necessary,
as Shared Principal Collections to other series in Group One on
the related distribution date, if any other principal sharing
series in Group One is outstanding and in its amortization period
or accumulation period; and
(b) paid to the holders of the Seller Certificates only if the Seller
Amount is greater than the Required Seller Amount and the
aggregate amount of principal receivables in the trust is greater
than the Required Principal Balance and otherwise will be
deposited in the excess funding account until the Seller Amount
is greater than the Required Seller Amount and the aggregate
amount of principal receivables in the trust is greater than the
Required Principal Balance and the remainder will be paid to the
holders of the Seller Certificates.
Withdrawals from Series Accounts. On or before each distribution date, the
servicer will direct the trustee to make the following withdrawals from the
following series accounts:
(1) on each distribution date all principal funding account investment
proceeds then on deposit in the principal funding account will be
withdrawn and deposited into the collection account for distribution
as a portion of Class A Available Funds for that distribution date;
(2) on each distribution date after the reserve account funding date,
all net investment income accrued since the preceding distribution
date on the reserve account will be retained in the reserve account
to the extent that the amount on deposit in the reserve account is
less than the required reserve account amount and the balance, if
any, will be deposited in the collection account for distribution as
collections of finance charge receivables allocable to the
certificateholders and the Collateral Interest Holder; and
(3) on or before each distribution date for the accumulation period and
on the first distribution date for the rapid amortization period, if
applicable, an amount equal to the lesser of:
(a) the available reserve account amount for such distribution date;
and
(b) the excess, if any, of a portion of the Class A Monthly Interest
determined in accordance with the series supplement over the
principal funding account investment proceeds for that
distribution date will be withdrawn from the reserve account and
deposited in the collection account for distribution as a portion
of Class A Available Funds for that distribution date;
provided, that the amount of the withdrawal from the reserve account
under this clause (3) will be reduced to the extent that funds otherwise
would be available to be deposited in the reserve account on such
distribution date.
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<PAGE> 37
Payment of Interest, Fees and Other Items. On each distribution date, the
trustee, acting pursuant to the servicer's instructions, will apply the Class A
Available Funds, Class B Available Funds and Collateral Available Funds in the
following priority:
(1) On each distribution date, an amount equal to the Class A Available
Funds for the distribution date will be withdrawn from the
collection account and distributed in the following priority:
(a) the Class A Monthly Interest for the distribution date, plus the
amount of any Class A Monthly Interest previously due but not
paid to the Class A Certificateholders on a prior distribution
date, plus any additional interest with respect to Class A
Monthly Interest that was due but not paid to the Class A
Certificateholders on a prior distribution date at a rate equal
to the Class A Certificate Rate plus 2% per annum (the "CLASS A
ADDITIONAL INTEREST") and any Class A Additional Interest
previously due but not distributed to the Class A
Certificateholders on a prior distribution date will be
distributed to the Class A Certificateholders;
(b) the Class A Servicing Fee for the distribution date, plus the
amount of any Class A Servicing Fee previously due but not
distributed to the servicer on a prior distribution date, will be
distributed to the servicer;
(c) the Class A Investor Default Amount for the distribution date
will be treated as a portion of Available Investor Principal
Collections for the distribution date; and
(d) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "--Excess Spread;
Excess Finance Charges" below.
(2) On each distribution date, an amount equal to the Class B Available
Funds for the distribution date will be withdrawn from the
collection account and distributed in the following priority:
(a) the Class B Monthly Interest for the distribution date, plus the
amount of any Class B Monthly Interest previously due but not
paid to the Class B Certificateholders on a prior distribution
date, plus any additional interest with respect to Class B
Monthly Interest that was due but not paid to the Class B
Certificateholders on a prior distribution date at a rate equal
to the Class B Certificate Rate plus 2% per annum (the "CLASS B
ADDITIONAL INTEREST") and any Class B Additional Interest
previously due but not distributed to the Class B
Certificateholders on a prior distribution date will be
distributed to the Class B Certificateholders;
(b) the Class B Servicing Fee for the distribution date, plus the
amount of any Class B Servicing Fee previously due but not
distributed to the servicer on a prior distribution date, will be
distributed to the servicer; and
(c) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "--Excess Spread;
Excess Finance Charges" below.
(3) On each distribution date, an amount equal to the Collateral
Available Funds for the distribution date will be withdrawn from the
collection account and distributed in the following priority:
(a) if the bank or the trustee is no longer the servicer, the
Collateral Servicing Fee for the distribution date, plus the
amount of any Collateral Servicing Fee previously due but not
distributed to the servicer on a prior distribution date, will be
distributed to the servicer; and
(b) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed as described under "--Excess Spread;
Excess Finance Charges" below.
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<PAGE> 38
"EXCESS SPREAD" means, for any distribution date, the sum of the amounts
described in clause (2)(c) above, clause (2)(c) above and clause (3)(b)
immediately above.
Excess Spread; Excess Finance Charges. On each distribution date, the
trustee, acting pursuant to the servicer's instructions, will apply Excess
Spread and Excess Finance Charges allocated to Series 2000- for the related
monthly period to make the following distributions in the following priority:
(1) an amount equal to any deficiency pursuant to clauses (1)(a), (b)
and (c) above under "--Payment of Interest, Fees and Other Items" will be
used to fund the deficiency, provided, that in the event the deficiency
exceeds the amount of Excess Spread and Excess Finance Charges allocated to
Series 2000- , the Excess Spread and Excess Finance Charges shall be
applied:
(a) first, to pay amounts due on the distribution date pursuant to
clause (1)(a) above under "--Payment of Interest, Fees and Other
Items;"
(b) second, to pay the Class A Servicing Fee pursuant to clause
(1)(b) above under "--Payment of Interest, Fees and Other Items;"
and
(c) third, to pay the Class A Investor Default Amount for the
distribution date pursuant to clause (1)(c) above under
"--Payment of Interest, Fees and Other Items;"
(2) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be
treated as a portion of Available Investor Principal Collections
for the distribution date as described under "--Payments of
Principal" below;
(3) an amount equal to any deficiency pursuant to clauses (2)(a) and
(b) above under "--Payment of Interest, Fees and Other Items" will
be used to fund this deficiency, provided, that in the event the
deficiency for this distribution date exceeds the remaining amount
of Excess Spread and Excess Finance Charges allocated to Series
2000- , the Excess Spread and Excess Finance Charges will be
applied first to pay amounts due on the distribution date pursuant
to clause (2)(a) above under "--Payment of Interest, Fees and Other
Items," and second to pay the Class B Servicing Fee pursuant to
clause (2)(b) above under "--Payment of Interest, Fees and Other
Items;"
(4) an amount equal to the Class B Investor Default Amount for the
distribution date will be treated as a portion of Available
Investor Principal Collections for the distribution date as
described under "--Payments of Principal" below;
(5) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (3), (4) and
(5) of the definition of "Class B Invested Amount" under
"--Allocation Percentages" above, (but not in excess of the
aggregate amount of the reductions which have not been previously
reimbursed, will be treated as a portion of Available Investor
Principal Collections for the distribution date;
(6) an amount equal to the Collateral Minimum Monthly Interest for the
distribution date, plus the amount of any Collateral Minimum
Monthly Interest previously due but not paid to the Collateral
Interest Holder on a prior Distribution Date, plus any additional
interest with respect to Collateral Minimum Monthly Interest that
was due but not paid to the Collateral Interest Holder on a prior
distribution date at a rate equal to the Collateral Minimum
Interest Rate (the "COLLATERAL ADDITIONAL INTEREST") and any
Collateral Additional Interest previously due but not distributed
to the Collateral Interest Holder on a prior distribution date will
be distributed to the Collateral Interest Holder;
(7) an amount equal to the Collateral Servicing Fee for the
distribution date or if neither the bank nor the trustee is the
servicer, the amount of any Collateral Servicing Fee due but not
paid from Collateral Available Funds and the amount of any
Collateral Servicing Fee due but not paid to the servicer on a
prior distribution date will be paid to the servicer;
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(8) an amount equal to the Collateral Default Amount for the
distribution date will be treated as a portion of Available
Investor Principal Collections for the distribution date;
(9) an amount equal to the aggregate amount by which the Collateral
Invested Amount has been reduced pursuant to clauses (3), (4) and
(5) of the definition of "Collateral Invested Amount" under
"--Allocation Percentages" above, but not in excess of the
aggregate amount of those reductions which have not been previously
reimbursed, will be treated as a portion of Available Investor
Principal Collections for the distribution date;
(10) an amount up to the excess, if any, of the Required Reserve Account
Amount over the principal amount on deposit in the reserve account
will be deposited in the reserve account; and
(11) the balance, if any, will be distributed to the Collateral Interest
Holder.
Reallocated Principal Collections. On or before each distribution date
after giving effect to the distributions above under "--Excess Spread; Excess
Finance Charges," the trustee, acting pursuant to the servicer's instructions,
will apply Reallocated Principal Collections for the related monthly period to
make the following distributions in the following priority:
(1) if the amount of Excess Spread and Excess Finance Charges allocated
to Series 2000- for the related monthly period is less than the
Class A Required Amount, Reallocated Principal Collections, up to
the amount of the deficiency, will be withdrawn from the collection
account and distributed to fund the deficiency in the order of
priority set forth in clause (1) above under "--Excess Spread;
Excess Finance Charges;"
(2) if the amount of Excess Spread and Excess Finance Charges allocated
to Series 2000- for the related monthly period and not required to
fund the Class A Required Amount or reimburse Class A Investor
Charge-Offs is less than the Class B Required Amount, Reallocated
Principal Collections allocable to the Collateral Interest not
required to fund the Class A Required Amount, up to the amount of
the deficiency, will be withdrawn from the collection account and
distributed to fund the deficiency in the order of priority set
forth in clauses (3) and (4) above under "--Excess Spread; Excess
Finance Charges."
Payments of Principal. On each distribution date, the trustee, acting
pursuant to the servicer's instructions, will distribute Available Investor
Principal Collections in the following priority:
(1) on each distribution date for the revolving period, all the
Available Investor Principal Collections will be treated as Shared
Principal Collections and applied as described under "Description of
the Certificates--Shared Principal Collections" in the accompanying
prospectus;
(2) on each distribution date for the accumulation period or the rapid
amortization period, all Available Investor Principal Collections
will be distributed or deposited in the following priority:
(a) an amount equal to Class A Monthly Principal will, during the
accumulation period, be deposited in the principal funding
account for payment to the Class A Certificateholders on each
distribution date beginning on the earlier of the Class A
Expected Final distribution date and the first distribution date
for the rapid amortization period and, will, during the rapid
amortization period, be paid to the Class A Certificateholders;
(b) after giving effect to the distribution referred to in clause (a)
above, an amount equal to the Class B Monthly Principal will,
during the accumulation period, be deposited in the principal
funding account for payment to the Class B Certificateholders on
each distribution date beginning on the earlier of the Class B
Expected Final Payment Date, but only if the Class A Investor
Amount is paid in full on that date, and the first distribution
date for the rapid amortization period on which the Class A
Investor
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Amount is paid in full and, will during the rapid amortization period, be paid
to the Class B Certificateholders;
(c) after giving effect to the distributions referred to in clauses
(a) and (b) above, an amount equal to Collateral Monthly
Principal will be paid to the Collateral Interest Holder on each
distribution date beginning on the earlier of the Collateral
Expected Final Distribution Date, but only if the Class B
Investor Amount is paid in full on or prior to that date, and the
first distribution date for the rapid amortization period on
which the Class B Investor Amount is paid in full; and
(d) the balance, if any, will be treated as Shared Principal
Collections and applied as described under "Description of the
Certificates--Shared Principal Collections" in the accompanying
prospectus.
The "COLLATERAL EXPECTED FINAL DISTRIBUTION DATE" is ,
200 .
PRINCIPAL FUNDING ACCOUNT
Pursuant to the series supplement, the servicer will establish and maintain
the "PRINCIPAL FUNDING ACCOUNT" as a segregated trust account held for the
benefit of the Class A Certificateholders and the Class B Certificateholders.
During the accumulation period, the trustee at the direction of the servicer
will transfer Available Investor Principal Collections to the principal funding
account as described under "--Application of Collections--Payments of Principal"
in this prospectus supplement.
Funds on deposit in the principal funding account will be invested by the
trustee at the direction of the servicer in eligible investments. Investment
earnings, net of investment losses and expenses, on the principal funding
account, referred to as the "PRINCIPAL FUNDING ACCOUNT INVESTMENT PROCEEDS" will
be included in Class A Available Funds for each distribution date.
RESERVE ACCOUNT
Pursuant to the series supplement, the servicer will establish and maintain
the "RESERVE ACCOUNT" as a segregated trust account held for the benefit of the
Class A Certificateholders. The reserve account is established to assist with
the distribution of interest on the Class A Certificates during the accumulation
period. For each distribution date from and after the reserve account funding
date, but prior to the termination of the reserve account, the trustee, acting
pursuant to the servicer's instructions, will apply Excess Spread and Excess
Finance Charges allocated to Series 2000- , as described above under
"--Application of Collections--Excess Spread; Excess Finance Charges," to
increase the amount on deposit in the reserve account, to the extent this amount
is less than the Required Reserve Account Amount.
The "RESERVE ACCOUNT FUNDING DATE" will be the distribution date for the
monthly period which begins no later than three months prior to the monthly
period in which, as of the related determination date, the accumulation period
is scheduled to begin.
The "REQUIRED RESERVE ACCOUNT AMOUNT" for any distribution date on or after
the reserve account funding date will be
(1) the product of:
- % of the Class A Investor Amount as of the preceding distribution
date after giving effect to all applicable changes in the Class A
Investor Amount on that date; and
- a fraction, the numerator of which is the number of monthly periods
schedule to be included in the accumulation period as of that date,
and the denominator of which is nine, provided, that if this numerator
is one, the Required Reserve Account Amount will be zero; or
(2) any other amount designated by the seller, provided, that if the
designation is of a lesser amount, the seller shall have provided
the servicer and the trustee with evidence that each
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rating agency rating the certificates or the Collateral Interest has
notified the seller that such action will not result in a reduction
or withdrawal of its rating of any outstanding series or class 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
the officer at that time, in the reasonable belief of the seller,
the 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.
On each distribution date, after giving effect to any deposit to be made to
and any withdrawal to be made from the reserve account, the trustee will
withdraw from the reserve account to the excess, if any, of the amount on
deposit in the reserve account over the Required Reserve Account Amount and will
pay that amount to the Collateral Interest Holder.
Provided that the reserve account has not terminated as described below,
all amounts on deposit in the reserve account with respect to any distribution
date, after giving effect to any deposits to, or withdrawals from, the reserve
account to be made on the distribution date will be invested by the trustee at
the direction of the servicer in eligible investments. The interest and other
investment income, net of investment expenses and losses, earned on the
investments will be retained in the reserve account, to the extent the amount on
deposit is less than the required Reserve Account Amount, or deposited in the
collection account and treated as collections of finance charge receivables
allocable to Series 2000- .
On the determination date before each distribution date for the
accumulation period and on the first distribution date for the rapid
amortization period, a withdrawal will be made from the reserve account, and the
amount of this withdrawal will be deposited in the collection account and
included in Class A Available Funds in an amount equal to the lesser of:
- the available reserve account amount for the distribution date; and
- the excess, if any, of a portion of the Class A Monthly Interest
determined in accordance with the Pooling and Servicing Agreement over
the principal funding account investment proceeds for the distribution
date;
provided, that the amount of the withdrawal shall be reduced to the extent that
funds otherwise would be available to be deposited in the reserve account on the
distribution date. On each distribution date, the "AVAILABLE RESERVE ACCOUNT
AMOUNT" will be the lesser of the amount on deposit in the reserve account,
before giving effect to any deposit to be made to the reserve account on the
distribution date, and the Required Reserve Account Amount for the distribution
date.
The reserve account will be terminated following the earliest of:
- the termination of the trust pursuant to the Pooling and Servicing
Agreement;
- the date on which the Class A Investor Amount is paid in full; and
- if the accumulation period has not begun, the occurrence of a Pay Out
Event or, if the accumulation period has begun, the earlier of the first
distribution date with respect to the rapid amortization period and the
Class A Expected Final Distribution Date.
Upon the termination of the reserve account, all amounts on deposit after
giving effect to any withdrawal from the reserve account on that date as
described above will be distributed to the Collateral Interest Holder. Any
amounts withdrawn from the reserve account and distributed to the Collateral
Interest Holder will not be available for distribution to the
certificateholders.
PAIRED SERIES
The Series 2000- Certificates are subject to being paired on or after the
beginning of the accumulation period or the rapid amortization period with one
or more later issued series. Any later series which is paired with Series 2000-
is called a "PAIRED SERIES." A paired series may be pre-funded with an initial
deposit to a funding account or may have a variable principal amount. Any
funding account created in connection with a paired series will be held for the
benefit of the paired series and not for the benefit of
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the holders of the Series 2000- Certificates. Upon payment in full of the Series
2000- Certificates, assuming that there have been no unreimbursed charge-offs
for any related paired series, the aggregate Investor Amount of the paired
series will have been increased by an amount up to an aggregate amount equal to
the Investor Amount. The issuance of a paired series will be subject to the
conditions described under "Description of the Certificates--New Issuances" in
the accompanying prospectus.
There can be no assurance that the terms of any paired series might not
have an impact on the calculation of the Series Percentage or the timing or
amount of payments received by a certificateholder. The full extent by which the
timing or amount of payments received by a holder of a Series 2000-Certificate
may be affected will be dependent on a number of factors and will not be readily
determinable by the change that may occur in the Series Percentage.
SHARED COLLECTIONS OF PRINCIPAL RECEIVABLES
To the extent that collections of principal receivables allocated to the
Series 2000- are not needed to make payments to or for the benefit of the
certificateholders or the Collateral Interest Holder, the collections may be
applied to cover principal payments due to or for the benefit of other principal
sharing series in Group One. Any application of principal collections to other
series will not result in a reduction of the Invested Amount of the Series
2000- Certificates or the Collateral Interest.
Similarly, collections of principal receivables allocated to other
principal sharing series in Group One, to the extent these collections, are not
needed to make payments to or for the benefit of the holders of the certificates
and other interests of the other series, will be applied, if necessary, to cover
payments of principal due to holders of the Series 2000- Certificates during
the accumulation period. The collections of principal receivables allocated to
other series and not needed by other series are "SHARED PRINCIPAL COLLECTIONS."
There can be no assurance that Shared Principal Collections will be available to
cover payments of principal or deposits due on any distribution date for the
accumulation period. If no Shared Principal Collections were available to the
certificates, the Class A Investor Amount might not be paid in full by the Class
A Expected Final Distribution Date and the Class B Investor Amount might not be
paid in full by the Class B Expected Final Distribution Date. These Shared
Principal Collections may also be allocated to other series either currently
outstanding or to be issued by the trust in the future. To the extent the Shared
Principal Collections are allocated to other series, the pro rata share of the
Shared Principal Collections allocated to Series 2000- will be reduced.
Series 2000- will be included in a group of series designated as "GROUP
ONE." Series 2000- will be the series outstanding and included in Group
One.
ALLOCATION OF INVESTOR DEFAULT AMOUNT
On each determination date, the servicer will calculate the Investor
Default Amount for the preceding monthly period. The term "INVESTOR DEFAULT
AMOUNT" means, for any distribution date, the product of:
(1) the defaulted amount for the related monthly period; and
(2) the Floating Allocation Percentage for the related monthly period.
For a description of the defaulted amount, see "Description of the
Certificates--Defaulted Receivables; Rebates and Fraudulent Charges" in the
accompanying prospectus.
A portion of the Investor Default Amount will be allocated to the Class A
Certificateholders on each distribution date. The amount to be allocated to the
Class A Certificateholders is the "CLASS A INVESTOR DEFAULT AMOUNT" and for each
distribution date is an amount equal to the product of the Class A Floating
Percentage applicable during the related monthly period and the Investor Default
Amount for the related monthly period. A portion of the Investor Default Amount
will also be allocated to the Class B Certificateholders. The amount to be
allocated to the Class B Certificateholders is the "CLASS B INVESTOR DEFAULT
AMOUNT" and for each distribution date is an amount equal to the product of the
Class B Floating Percentage applicable during the related monthly period and the
Investor Default Amount for that
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monthly period. A portion of the Investor Default Amount will be allocated to
the Collateral Interest Holder on each distribution date. The amount to be
allocated to the Collateral Interest is the "COLLATERAL DEFAULT AMOUNT" and for
each distribution date is an amount equal to the product of the Collateral
Floating Percentage applicable during the related monthly period and the
Investor Default Amount for the related monthly period.
An amount equal to the Class A Investor Default Amount for each monthly
period will be paid from Class A Available Funds, Excess Spread and Excess
Finance Charges allocated to Series 2000- and Reallocated Principal Collections
and applied as described above under "--application of collections--payment of
interest, fees and other Items," "--Application of Collections--Excess Spread;
Excess Finance Charges" and "--Reallocation of Cash Flows."
An amount equal to the Class B Investor Default Amount for each monthly
period will be paid from Excess Spread and Excess Finance Charges allocated to
Series 2000- and Reallocated Principal Collections allocable to the Collateral
Invested Amount and applied as described above under "--Application of
Collections--Excess Spread; Excess Finance Charges" and "--Reallocation of Cash
Flows."
An amount equal to the Collateral Default Amount for each monthly period
will be paid from Excess Spread and Excess Finance Charges allocated to Series
2000- as described above under "--Application of Collections--Excess Spread;
Excess Finance Charges."
On each distribution date, if the Class A Required Amount for the
distribution date exceeds the sum of Excess Spread and Excess Finance Charges
allocable to Series 2000- and Reallocated Principal Collections, the Collateral
Invested Amount will be reduced by the amount of that excess, but not by more
than the Class A Investor Default Amount for the distribution date. In the event
that this reduction would cause the Collateral Invested Amount to be a negative
number, the Collateral Invested Amount will be reduced to zero, and the Class B
Invested Amount will be reduced by the amount by which the Collateral 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 the distribution date over the
amount of the reduction, if any, of the Collateral Invested Amount for the
distribution date. In the event that this reduction would cause the Class B
Invested Amount to be a negative number, the Class B Invested Amount will be
reduced to zero, and the Class A Invested Amount will be reduced by the amount
by which the Class B Invested Amount would have been reduced below zero, but not
by more than the excess, if any, of the Class A Investor Default Amount for the
distribution date over the amount of the reductions, if any, of the Collateral
Invested Amount and the Class B Invested Amount for the distribution date as
described above. A reduction in the Class A Invested Amount occurring as
described in the preceding sentence is a "CLASS A INVESTOR CHARGE-OFF."
If a Class A Investor Charge-Off occurs this may have the effect of slowing
or reducing the return of principal to the Class A Certificateholders. If the
Class A Invested Amount has been reduced by Class A Investor Charge-Offs, it
will subsequently be increased on any distribution date, but not by an amount in
excess of the aggregate Class A Investor Charge-Offs by the amount of Excess
Spread and Excess Finance Charges allocated to Series 2000- and available to
reimburse Class A Investor Charge-Offs as described above under "--Application
of Collections--Excess Spread; Excess Finance Charges."
On each distribution date, if the Class B Required Amount for the
distribution date exceeds the sum of Excess Spread and Excess Finance Charges
allocable to Series 2000- and not required to pay the Class A Required Amount
and Reallocated Principal Collections allocable to the Collateral Interest and
not required to pay the Class A Required Amount, then the Collateral Invested
Amount will be reduced by the amount of that excess. If this reduction would
cause the Collateral Invested Amount to be a negative number, the Collateral
Invested Amount will be reduced to zero, and the Class B Invested Amount will be
reduced by the amount by which the Collateral Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class B
Investor Default Amount for the distribution date over the amount of such
reduction, if any, of the Collateral Invested Amount. A
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reduction in the Class B Invested Amount occurring as described in the preceding
sentence is a "CLASS B INVESTOR CHARGE-OFF."
If a Class B Investor Charge-Off occurs this may have the effect of slowing
or reducing the return of principal to the Class B Certificateholders. If the
Class B Invested Amount has been reduced by the Class B Investor Charge-Offs, it
will thereafter be increased on any distribution date, but not by an amount in
excess of the aggregate Class B Investor Charge-Offs, by the amount of Excess
Spread and Excess Finance Charges allocated to Series 2000- and available to
reimburse Class B Investor Charge-Offs as described above under "--Application
of Collections--Excess Spread; Excess Finance Charges."
OPTIONAL REPURCHASE
On any date occurring on or after the date that the Investor Amount is
reduced to 5% or less of the Initial Invested Amount, the seller will have the
option, to be exercised in its sole discretion, to repurchase the certificates.
The purchase price of the certificates and the Collateral Interest will be equal
to the Invested Amount on the distribution date on which the purchase occurs, if
the purchase is on a distribution date and, if not, the invested amount for the
distribution date following the repurchase. Plus, in each case, accrued and
unpaid interest on the certificates plus accrued and unpaid interest on the
Collateral Interest. Following a repurchase, the certificateholders will have no
further rights to the receivables; provided, however, that the repurchase in no
way impacts the certificateholders' rights under the federal securities law.
Any optional repurchase may result in an early repayment of your investment
without any prepayment penalty and there can be no assurance that you will be
able to invest the early repayment amount at a similar rate of return.
PAY OUT EVENTS
The revolving period for Series 2000- will continue through the close of
business on , 200 , or a later date resulting from the postponement
of the accumulation period, unless a Pay Out Event occurs prior to that date. A
"PAY OUT EVENT" for Series 2000- refers to any of the following events, which
are applicable only to Series 2000- although other series may have similar or
identical Pay Out Events:
(a) failure of the seller:
- to make any payment or deposit on the date required under the Pooling
and Servicing Agreement on or before the date occurring five business
days after the date the payment or deposit is required to be made; or
- duly to observe or perform in any material respect any other covenants
or agreements of the seller in the Pooling and Servicing Agreement,
which failure has a material adverse effect on the Series 2000-
Holders which determination will be made without reference to whether
any funds are available pursuant to any credit enhancement and
provided that the failure continues unremedied for 60 days after
written notice has been given to the seller by the trustee, or to the
seller and the trustee by Series 2000- Holders aggregating not less
than 50% of the outstanding principal balance of the Series 2000-
Interests;
(b) any representation or warranty made by the seller in the Pooling and
Servicing Agreement or any information required to be given by the
servicer on behalf of the seller to identify the accounts proves to
have been incorrect in any material respect when made or delivered
and continues to be incorrect in any material respect for 60 days
after written notice has been given to the seller by the trustee, or
to the seller and the trustee by holders of the certificates
aggregating not less than 50% of the outstanding principal balance
of the Series 2000- Certificates and as a result the interests of
the certificateholders are materially and adversely affected, which
determination shall be made without reference to whether any funds
are available pursuant to any credit enhancement; provided, however,
that
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a Pay Out Event shall not be deemed to have occurred under this
subparagraph (b) if the seller has accepted reassignment of the
related receivable or all such receivables, if applicable, during
the 60 day period after notice, or a longer period if specified by
the trustee, in accordance with the provisions of the Pooling and
Servicing Agreement;
(c) with respect to the end of any monthly period:
- for which the Seller Amount is less than the Required Seller Amount,
the failure of the seller to convey receivables in additional accounts
to the trust on or prior to the tenth business day following the
related determination date so that the Seller Amount is at least equal
to the Required Seller Amount; or
- for which the aggregate principal receivables in the trust are less
than the Required Principal Balance, the failure of the seller to
convey receivables in additional accounts to the trust on or prior to
the tenth business day following the related determination date so
that the aggregate principal receivables in the trust are at least
equal to the Required Principal Balance;
(d) the Net Portfolio Yield averaged over three consecutive monthly
periods is less than the Base Rate averaged over the same period;
(e) any servicer default occurs which would have a material adverse
effect on the certificateholders, which determination shall be
made without reference to whether any funds are available pursuant
to any credit enhancement; or
(f) the Class A Investor Amount is not paid in full on the Class A
Expected Final Distribution Date or the Class B Investor Amount is
not paid in full on the Class B Expected Final Distribution Date
or the Collateral Invested Amount shall not be paid in full on the
Collateral Expected Final Distribution Date.
The term "NET PORTFOLIO YIELD" for any month, means the annualized
percentage equivalent of a fraction:
(a) the numerator of which is the sum of:
(1) the amount of collections of finance charge receivables during
the month allocable to the Series 2000- Certificates and to
the Collateral Interest, including any other amounts that are
to be treated as collections of finance charge receivables
under the Pooling and Servicing Agreement, after subtracting
therefrom the Investor Default Amount for the related month;
plus
(2) the amount of any net earnings on the principal funding account
for the related distribution date; plus
(3) the amount of funds, if any, to be withdrawn from the reserve
account and included in Class A Available Funds for the related
distribution date; and
(b) and the denominator of which is the Investor Amount as of the last
day of the prior calendar month.
For any month, the "BASE RATE" will be equal to the annualized percentage
equivalent of a fraction:
(a) the numerator of which is equal to the sum of the following, each
for the related distribution date:
(1) the Class A Monthly Interest;
(2) the Class B Monthly Interest;
(3) the Collateral Minimum Monthly Interest; and
(4) the Monthly Servicing Fee, and
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(b) the denominator of which is the Investor Amount as of the last day
of the preceding month.
A Pay Out Event for all series refers to any of the following events, which
are applicable to Series 2000- and other series:
(g) an insolvency event relating to any seller or additional seller;
(h) the trust becomes an "investment company" within the meaning of
the Investment Company Act of 1940, as amended; or
(i) the inability of any seller or additional seller for any reason to
transfer receivables to the trust in accordance with the
provisions of the Pooling and Servicing Agreement.
In the case of any event described in subparagraphs (a), (b) or (e), a Pay
Out Event will be deemed to have occurred only if, after any applicable grace
period described in these clauses, the trustee or Series 2000- Holders
evidencing undivided interests aggregating more than 50% of the aggregate unpaid
principal amount of the Series 2000- Interests, by written notice to the seller
and the servicer, and to the trustee if given by the Series 2000- Holders,
declare that a Pay Out Event has occurred with respect to Series 2000- . In the
case of any event described in subparagraphs (c), (d), (f), (g), (h), or (i), a
Pay Out Event will be deemed to have occurred immediately upon the occurrence of
the event without any notice or other action on the part of the trustee, or the
Series 2000- Holders.
Upon the occurrence of a Pay Out Event, the rapid amortization period will
begin. In this event, distributions of principal to the certificateholders will
begin on the first distribution date following the month in which the Pay Out
Event occurred.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the fee payable to the servicer allocable to the Series
2000- Interests for any distribution date (the "MONTHLY SERVICING FEE") will be
equal to one-twelfth of the product of (a) 2% and (b) the Invested Amount as of
the last day of the monthly period preceding the distribution date; provided,
however, with respect to the first distribution date, the Monthly Servicing Fee
will be $ .
The share of the Monthly Servicing Fee allocable to the Class A
Certificateholders for any distribution date, called the "CLASS A SERVICING
FEE," will be one-twelfth of the product of:
(1) the Class A Floating Percentage;
(2) 2%; and
(3) the Invested Amount as of the last day of the monthly period
preceding the distribution date;
provided, however, that for the first distribution date, the Class A Servicing
Fee will be $ .
The share of the Monthly Servicing Fee allocable to the Class B
Certificateholders for any distribution date, called the "CLASS B SERVICING
FEE," will be equal to one-twelfth of the product of:
(1) the Class B Floating Percentage;
(2) 2%; and
(3) the Invested Amount as of the last day of the monthly period
preceding the distribution date;
provided, however, that for first distribution date, the Class B Servicing Fee
will be $ .
The share of the Monthly Servicing Fee allocable to the Collateral Interest
Holder for any distribution date, called the "Collateral Servicing Fee," will be
equal to one-twelfth of the product of:
(1) the Collateral Floating Percentage;
(2) 2%; and
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(3) the Invested Amount as of the last day of the monthly period
preceding the distribution date;
provided, however, that for the first distribution date, the Collateral
Servicing Fee will be $ .
The Class A Servicing Fee, the Class B Servicing Fee and the Collateral
Servicing Fee shall be payable to the servicer solely to the extent amounts are
available for distribution as described under "--Application
Collections--Payment of Interest, Fees and Other Items" and "Excess Spread;
Excess Finance Charges" in this prospectus supplement.
FEDERAL INCOME TAX CONSEQUENCES
Based on the application of existing law to the facts as set forth in the
Pooling and Servicing Agreement and other relevant documents, special tax
counsel to the bank, Orrick, Herrington & Sutcliffe LLP, is of the opinion that
the certificates will properly be treated as indebtedness for federal income tax
purposes. See "Federal Income Tax Consequences" in the accompanying prospectus.
ERISA CONSIDERATIONS
GENERAL
Subject to the considerations described below and in the accompanying
prospectus, the Class A Certificates may be purchased by, on behalf of, or with
"plan assets" of any employee benefit or other plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended or Section 4975 of
the Internal Revenue Code of 1986, as amended. Any plan fiduciary that proposes
to cause a plan to acquire any of the certificates should consult with its
counsel with respect to the potential consequences under ERISA and the Internal
Revenue Code of the plan's acquisition and ownership of the certificates. See
"ERISA Considerations" in the accompanying prospectus.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code prohibit
plans from engaging in certain transactions involving "plan assets" with persons
that are parties in interest with respect to the plan. A violation of these
"prohibited transaction" rules may generate excise tax and other liabilities
under ERISA and Section 4975 of the Internal Revenue Code for these persons,
unless a statutory, regulatory or administrative exemption is available. Plans
that are governmental plans, as defined in Section 3(32) of ERISA, and some
church plans, as defined in Section 3(33) of ERISA, are not subject to ERISA
requirements.
CLASS A CERTIFICATES
The U.S. Department of Labor has issued an individual exemption, Prohibited
Transaction Exemption 99-39 (Exemption Application No. D-10643), 64 Fed. Reg.
53,736 (October 4, 1999), to the seller relating to (1) the initial purchase,
the holding and the subsequent resale by plans of senior certificates
representing an undivided interest in a credit card trust with respect to which
the seller is the sponsor; and (2) the servicing, operation and management of
the trust, provided that the general conditions and certain other conditions set
forth in this exemption are satisfied. This exemption will apply to the
acquisition, holding and resale of the Class A Certificates by, on behalf of, or
with "plan assets" of a plan, provided that the conditions specified in the
exemption, some of which are described below, are met.
Among the conditions which must be satisfied for this exemption to apply
are the following:
(1) The acquisition of the Class A Certificates by a plan is on
terms, including the price for the Class A Certificates, that are
at least as favorable to the investing plan as they would be in
an arm's-length transaction with an unrelated party;
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(2) The rights and interests evidenced by the Class A Certificates
acquired by the plan are not subordinated to the rights and
interests evidenced by other certificates of the trust;
(3) The Class A Certificates acquired by the plan have received a
rating at the time of the acquisition in one of the two highest
generic rating categories from a rating agency, provided that,
notwithstanding such rating, credit support is provided to the
Class A Certificates through a senior- subordinated structure or
other form of third-party credit support which, at a minimum,
represents 5% of the outstanding principal balance of the Class A
Certificates at the time of the acquisition;
(4) The trustee is not an affiliate of a restricted group including
the underwriters, the seller, the servicer, any obligor whose
receivables constitute more than 0.5% of the fair market value of
the aggregate undivided interest in the trust allocated to Series
2000- , or any of their respective affiliates;
(5) The sum of all payments made to and retained by the underwriters
in connection with the distribution of the Class A Certificates
represents not more than reasonable compensation for underwriting
the Class A Certificates; the consideration received by the
seller as a consequence of the assignment of receivables to the
trust, to the extent allocable to the Class A Certificates,
represents not more than the fair market value of the
receivables; and the sum of all payments made to and retained by
the servicer, to the extent allocable to the Class A
Certificates, represents not more than reasonable compensation
for the servicer's services under the agreement and reimbursement
of the servicer's reasonable expenses in connection therewith;
(6) The plan investing in the Class A Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of
1933, as amended;
(7) The trustee is a substantial financial institution or trust
company experienced in trust activities, is familiar with its
duties, responsibilities and liabilities as a fiduciary under
ERISA and, as the legal owner of, or holder of a perfected
security interest in, the receivables, enforces all the rights
created in favor of the certificateholders, including plans;
(8) Prior to the issuance of any new series, confirmation is received
from the rating agencies that the issuance will not result in the
reduction or withdrawal of the then current rating of the Class A
Certificates held by any plan pursuant to the Fleet exemption;
(9) To protect against fraud, chargebacks or other dilution of the
receivables, the Pooling and Servicing Agreement and the rating
agencies require the seller to maintain a sellers' interest of
not less than 2% of the principal balance of the receivables
contained in the trust;
(10) Each receivable is an eligible receivable, based on criteria of
the rating agencies and as specified in the Pooling and Servicing
Agreement, and the Pooling and Servicing Agreement requires that
any change in the terms of the cardholder agreements must be made
applicable to the comparable segment of accounts owned or
serviced by the seller which are part of the same program or have
the same or substantially similar characteristics;
(11) The Pooling and Servicing Agreement limits the number of newly
originated accounts to be designated to the trust, unless the
rating agencies otherwise consent in writing, to the following:
(a) with respect to any three-month period commencing in January,
April, July and October of each calendar year, 15% of the
number of existing accounts designated to the trust as of the
first day of the calendar year during which the monthly period
commenced; and
S-47
<PAGE> 49
(b) with respect to any calendar year, 20% of the number of
existing accounts designated to the trust as of the first day
of the calendar year;
(12) The Pooling and Servicing Agreement requires the seller to
deliver an opinion of counsel confirming the validity and
perfection of the transfer of receivables in newly originated
accounts to the trust for each interim addition; and
(13) The Pooling and Servicing Agreement requires the seller and the
trustee to receive confirmation from each rating agency that the
rating agency will not reduce or withdraw its then current rating
of the Class A Certificates as a result of:
(a) an addition of accounts that is required to be made because
either the Seller Amount is less than the Required Seller
Amount or the principal receivables are less than the Required
Principal Balance, and the addition exceeds the limits set
forth in paragraph (11) above; or
(b) a restricted addition of accounts made at the discretion of the
seller as described in the accompanying prospectus under the
caption "Description of the Certificates--Addition of
Accounts--Conditions to Required and Restricted Additions".
The trust also must meet the following requirements:
(1) The corpus of the trust must consist only of receivables of the
type which have been included in other investment pools;
(2) Certificates evidencing interests in other investment pools have
been rated in one of the two highest generic rating categories by
at least one of the rating agencies for at least one year prior to
the plan's acquisition of the Class A Certificates; and
(3) Certificates evidencing an interest in such other investment pools
have been purchased by investors other than plans for at least one
year prior to any plan's acquisition of the Class A Certificates.
Moreover, the Prohibition Transaction Exemption provides relief from
certain self-dealing/conflict of interest prohibited transactions that may occur
when a plan fiduciary causes a plan to acquire the Class A Certificates if the
fiduciary or its affiliate is an obligor on the receivables held in the trust,
provided that, among other requirements:
(1) in the case of an acquisition in connection with the initial
issuance of the Class A Certificates, at least 50% of each class
of certificates in which plans have invested is acquired by
persons independent of the restricted group and at least 50% of
the aggregate interest in the trust is acquired by persons
independent of the restricted group;
(2) the fiduciary, or its affiliate, is an obligor with respect to
0.5% or less of the fair market value of the obligations contained
in the trust;
(3) the plan's investment in the Class A Certificates does not exceed
25% of all of the Class A Certificates outstanding after the
acquisition; and
(4) no more than 25% of the asset of the plan are invested in
securities representing an interest in one or more trusts
containing assets sold or serviced by the same entity.
The seller believes that the Fleet exemption will apply to the acquisition
and holding of the Class A Certificates by plans and that all conditions of the
Fleet exemption, other than those within the control of the investors, will be
met.
S-48
<PAGE> 50
CLASS B CERTIFICATES
The U.S. Department of Labor has designated the Fleet exemption an
"underwriter exemption." As a result, an insurance company investing solely
assets of its general account may be able to acquire and hold the Class B
Certificates, provided that:
(1) Class A Certificates are eligible for relief under the Fleet
exemption; and
(2) the acquisition and holding satisfies the conditions applicable
under Sections I and III of U.S. Department of Labor Prohibition
Exemption 95-60.
Accordingly, the Class B Certificates may not be acquired or held by, on behalf
of, or with "plan assets" of any plan, other than an insurance company investing
assets of its general account. By its acceptance of a Class B certificate, each
Class B certificateholder will be deemed to have represented and warranted that
either:
(1) it is not and will not be a plan; or
(2) it is an insurance company, it acquired and will hold the Class B
Certificates solely with assets of its general account, and such
acquisition and holding satisfies the conditions applicable under
Sections I and III of PTCE 95-60. See "--Class A Certificates"
above and "ERISA Considerations" in the accompanying prospectus.
CONSULTATION WITH COUNSEL
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the certificates on behalf of or with "plan assets" of any plan
should consult their own counsel regarding whether the trust assets represented
by the certificates would be considered "plan assets," the consequences that
would apply if the trust's assets were considered "plan assets," and the
availability of exemptive relief from the prohibited transaction rules, in the
case of the Class A Certificates, under the Fleet exemption or, in the case of
the Class B Certificates and only with respect to an insurance company general
account investor, the Fleet exemption and Sections I and III of PTCE 95-60.
Finally, plan fiduciaries and other plan investors should consider the
fiduciary standards under ERISA or other applicable law in the context of the
plan's particular circumstances before authorizing an investment of a portion of
the plan's assets in the certificates. Accordingly, among other factors, plan
fiduciaries and other plan investors should consider whether the investment:
(1) satisfies the diversification requirement of ERISA or other
applicable law;
(2) is in accordance with the plan's governing instruments; and
(3) is prudent in light of the "Risk Factors" and other factors
discussed in the accompanying prospectus.
S-49
<PAGE> 51
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
relating to the Class A Certificates and the Class B Certificates, the bank has
agreed to sell to the underwriters named below and each of the "CLASS A
UNDERWRITERS" has agreed to purchase from the bank, the principal amount of
Class A Certificates set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
CLASS A
CLASS A UNDERWRITERS CERTIFICATES
- -------------------- ------------
<S> <C>
A Co. ...................................................... $
B Co. ...................................................... $
C Co. ...................................................... $
Total....................................................... $
======
</TABLE>
The seller has been advised by the Class A Underwriters that the Class A
Underwriters propose initially to offer the Class A Certificates to the public
at the price set forth on the cover page of this prospectus supplement and to
certain dealers at such price less a concession not in excess of % of the
principal amount of the Class A Certificates. The Class A Underwriters may allow
and the dealers may reallow a concession not in excess of % of the
principal amount of the Class A Certificates to certain other dealers. After the
initial public offering, the public offering price and the concessions may be
changed.
Subject to the terms and conditions set forth in the underwriting
agreement, the bank has agreed to sell to the "CLASS B UNDERWRITERS" named below
and each of the Class B Underwriters has agreed to purchase from the bank, the
principal amount of Class B Certificates set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
CLASS B
CLASS B UNDERWRITERS CERTIFICATES
- -------------------- ------------
<S> <C>
A Co........................................................ $
B Co........................................................ $
Total....................................................... $
======
</TABLE>
The seller has been advised by the Class B Underwriters that the Class B
Underwriters propose initially to offer the Class B Certificates to the public
at the price set forth on the cover page of this prospectus supplement and to
certain dealers at this price less a concession not in excess of % of the
principal amount of the Class B Certificates. The Class B Underwriters may allow
and the dealers may reallow a concession not in excess of % of the
principal amount of the Class B Certificates to certain other dealers. After the
initial public offering, the public offering price and such concessions may be
changed.
The underwriters will be compensated as set forth in the following table:
<TABLE>
<CAPTION>
UNDERWRITERS' AMOUNT
DISCOUNTS AND PER $1,000
COMMISSIONS OF PRINCIPAL TOTAL AMOUNT
------------- ------------ ------------
<S> <C> <C> <C>
Class A Certificates.......................... % $ $
Class B Certificates.......................... % $ $
$
======
</TABLE>
Additional offering expenses are estimated to be $ . The underwriters
have agreed to reimburse the seller for certain expenses of the issuance and
distribution of the certificates.
S-50
<PAGE> 52
The seller has agreed that it will indemnify the underwriters against
certain liabilities, including liabilities under the Securities Exchange Act of
1933, or contribute to payments the underwriters may be required to make.
Each underwriter has represented and agreed that:
(a) it has complied and will comply with all applicable provisions of
the Financial Services Act of 1986 and the Public Offers of Securities
Regulations 1995 with respect to anything done by it in relation to the
certificates in, from or otherwise involving the United Kingdom;
(b) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issue
of the certificates to a person who is of a kind described in Article 11(3)
of the Financial Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on;
(c) if it is an authorized person under Chapter III of part I of the
Financial Services Act 1986, it has only promoted and will only promote (as
that term is defined in Regulation 1.02(2) of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991) to any person in the
United Kingdom the scheme described in this prospectus supplement and the
prospectus if that person is of a kind described either in Section 76(2) of
the Financial Services Act 1986 or in Regulation 1.04 of the Financial
Services (Promotion of Unregulated Schemes) Regulations 1991; and
(d) it is a person of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996.
The underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the certificates in accordance with Regulation M under the Securities Exchange
Act of 1934. Over-allotment transactions involve syndicate sales in excess of
the offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the certificates so long as the stabilizing
bids do not exceed a specified maximum. Syndicate covering transactions involve
purchases of the certificates in the open market after the distribution has been
completed in order to cover syndicate short positions. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when the
certificates originally sold by such syndicate member are purchased in a
syndicate covering transaction. This over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids may cause the
price of the certificates to be higher than they would otherwise be in the
absence of the transactions. Neither the bank nor the underwriters represents
that the underwriters will engage in any such transactions or that these
transactions, once commenced, will not be discontinued without notice at any
time.
LEGAL MATTERS
Certain legal matters relating to the issuance of the certificates will be
passed upon for the seller by Linda Morris, Esq., Vice President, Secretary and
General Counsel, Fleet Bank (RI), National Association, and by Orrick,
Herrington & Sutcliffe LLP, Washington, D.C., special counsel to the seller. In
addition certain legal matters, including matters related to Rhode Island law,
will be passed upon for the seller by Edwards & Angell, Boston, Massachusetts.
Certain legal matters relating to the federal tax consequences of such issuance
will be passed upon for the seller by Orrick, Herrington & Sutcliffe LLP,
Washington, D.C. Certain matters relating to the issuance of the certificates
will be passed upon for the underwriters by Mayer, Brown & Platt, Chicago,
Illinois.
S-51
<PAGE> 53
INDEX OF PRINCIPAL TERMS
<TABLE>
<S> <C>
A
accumulation period............... S-17
Available Investor Principal
Collections..................... S-26
Available Reserve Account
Amount.......................... S-40
B
bank.............................. S-11
Base Rate......................... S-44
business day...................... S-23
C
Certificate Owner................. S-22
Class A Additional Interest....... S-36
Class A Available Funds........... S-24
Class A Certificate Rate.......... S-23
Class A Certificateholders........ S-11
Class A Certificates.............. S-11
Class A Expected Final
Distribution Date............... S-17, S-25
Class A Floating Percentage....... S-29
Class A Initial Invested Amount... S-30
Class A Invested Amount........... S-30
Class A Investor Amount........... S-32
Class A Investor Charge-Off....... S-42
Class A Investor Default Amount... S-41
Class A Monthly Interest.......... S-24
Class A Monthly Principal......... S-26
Class A Principal Percentage...... S-30
Class A Required Amount........... S-32
Class A Servicing Fee............. S-45
Class A Underwriters.............. S-50
Class B Additional Interest....... S-36
Class B Available Funds........... S-24
Class B Certificate Rate.......... S-23
Class B Certificateholders........ S-11
Class B Certificates.............. S-11
Class B Expected Final
Distribution Date............... S-17, S-26
Class B Floating Percentage....... S-29
Class B Initial Invested Amount... S-31
Class B Invested Amount........... S-31
Class B Investor Amount........... S-32
Class B Investor Charge-Off....... S-43
Class B Investor Default Amount... S-41
Class B Monthly Interest.......... S-25
Class B Monthly Principal......... S-26
Class B Principal Percentage...... S-30
Class B Required Amount........... S-33
Class B Servicing Fee............. S-45
Class B Underwriters.............. S-50
Collateral Additional Interest.... S-37
Collateral Available Funds........ S-25
Collateral Default Amount......... S-31, S-42
Collateral Expected Final
Distribution Date............... S-39
Collateral Floating Percentage.... S-29
Collateral Initial Invested
Amount.......................... S-31
Collateral Interest............... S-11
Collateral Interest Holder........ S-11
Collateral Invested Amount........ S-31
Collateral Minimum Interest
Rate............................ S-25
Collateral Minimum Monthly
Interest........................ S-25
Collateral Monthly Principal...... S-27
Collateral Principal Percentage... S-30
Controlled Accumulation Amount.... S-27
Controlled Deposit Amount......... S-27
D
Deficit Controlled Accumulation
Amount.......................... S-27
definitive certificate............ S-22
Designated Maturity............... S-23
distribution dates................ S-22
E
Excess Finance Charges............ S-25
Excess Spread..................... S-37
F
Fleet............................. S-11
Fleet Credit Card Portfolio....... S-12
Floating Allocation Percentage.... S-28
G
Group One......................... S-41
I
Initial Invested Amount........... S-21, S-31
interest period................... S-23
Invested Amount................... S-31
Investor Amount................... S-32
Investor Default Amount........... S-41
L
LIBOR............................. S-23
LIBOR determination date.......... S-23
M
Master Pooling and Servicing
Agreement....................... S-11
monthly period.................... S-23
Monthly Servicing Fee............. S-45
</TABLE>
S-52
<PAGE> 54
<TABLE>
<S> <C>
N
Net Portfolio Yield....................... S-44
P
paired series............................. S-40
Pay Out Event............................. S-43
Percentage Allocation..................... S-34
Pooling and Servicing Agreement........... S-11
Principal Allocation Percentage........... S-29
principal funding account................. S-39
principal funding account investment
proceeds................................ S-39
R
rapid amortization period................. S-18
Reallocated Principal Collections......... S-32
record date............................... S-23
Reference Banks........................... S-23
Required Reserve Account Amount........... S-39
reserve account........................... S-39
reserve account funding date.............. S-39
S
Seller Amount............................. S-22
sellers' interest......................... S-21
Series 2000 - --- ........................ S-11
Series 2000 - --- Certificates............ S-11
Series 2000 - --- Holders................. S-11
Series 2000 - --- Interests............... S-11
Series 2000 - --- Termination Date........ S-22
Series Investor Amount.................... S-32
Series Percentage......................... S-21
Shared Principal Collections.............. S-41
T
Telerate Page 3750........................ S-23
trust..................................... S-11
</TABLE>
S-53
<PAGE> 55
ANNEX I
OTHER SERIES ISSUED
The certificates will be the series to be issued by the
trust. The table below sets forth the principal characteristics of the
other series heretofore issued by the trust and currently
outstanding. These series are the Series 1995-A Certificates, the Series 1995-C
Certificates, the Series 1995-D Certificates, the Series 1995-F Certificates,
the Series 1996-A Certificates, the Series 1996-B Certificates, the Series
1996-C Certificates, the Series 1996-D Certificates, the Series 1996-E
Certificates, the Series 1998-A Certificates, the Series 1999-A Certificates,
the Series 1999-B Certificates, the Series 1999-C Certificates, the Series
1999-D Certificates and the Series 2000-A Certificates. Solely for purposes of
this Annex I, "LIBOR" shall mean London interbank offered quotations for United
States dollar deposits determined as set forth in the related series
supplements.
<TABLE>
<S> <C>
SERIES 1995-A
Initial Invested Amount.............................. $600,000,000
Initial Pre-Funded Amount............................ $100,000,000
Invested Amount as of December 31, 1999.............. $700,000,000
Class A Certificate Rate............................. One Month LIBOR plus .180% per annum
Class B Certificate Rate............................. One Month LIBOR plus .375% per annum
Collateral Rate...................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $73,500,000
Series Servicing Fee Rate............................ 2% per annum
Stated Series 1995-A Termination Date................ January 1, 2003
Series Issuance Date................................. January 18, 1995
SERIES 1995-C
Initial Invested Amount.............................. $375,000,000
Initial Pre-Funded Amount............................ $200,000,000
Investor Amount as of December 31, 1999.............. $575,000,000
Class A Certificate Rate............................. Three Month LIBOR plus .20% per annum
Class B Certificate Rate............................. Three Month LIBOR plus .34% per annum
Collateral Rate...................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $60,375,000
Series Servicing Fee Rate............................ 2% per annum
</TABLE>
I-1
<PAGE> 56
<TABLE>
<S> <C>
Stated Series 1995-C Termination Date................. January 1, 2005
Series Issuance Date.................................. April 27, 1995
SERIES 1995-D
Initial Invested Amount............................... $450,000,000
Initial Pre-Funded Amount............................. $150,000,000
Investor Amount as of December 31, 1999............... $600,000,000
Class A Certificate Rate.............................. One Month LIBOR plus .19% per annum
Class B Certificate Rate.............................. One Month LIBOR plus .32% per annum
Initial Enhancement Amount............................ $63,000,000
Series Servicing Fee Rate............................. 2% per annum
Stated Series 1995-D Termination Date................. February 1, 2004
Series Issuance Date.................................. July 25, 1995
SERIES 1995-F
Initial Invested Amount............................... $750,000,000
Initial Pre-Funded Amount............................. $100,000,000
Investor Amount as of December 31, 1999............... $850,000,000
Class A-1 Certificate Rate............................ 6.05% per annum
Class A-2 Certificate Rate............................ One Month LIBOR plus .19% per annum
Class B Certificate Rate.............................. One Month LIBOR plus .30% per annum
Initial Enhancement Amount............................ $65,875,000
Series Servicing Fee Rate............................. 2% per annum
Series 1995-F Termination Date........................ August 1, 2003
Series Issuance Date.................................. November 21, 1995
SERIES 1996-A
Initial Invested Amount............................... $400,000,000
Initial Pre-Funded Amount............................. $100,000,000
Investor Amount as of December 31, 1999............... $500,000,000
Class A-1 Certificate Rate............................ 6.0% per annum
Class A-2 Certificate Rate............................ One Month LIBOR plus .23% per annum
Class B Certificate Rate.............................. One Month LIBOR plus .35% per annum
Collateral Rate....................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount............................ $43,750,000
Series Servicing Fee Rate............................. 2% per annum
Series 1996-A Termination Date........................ November 2005 Distribution Date
Series Issuance Date.................................. January 18, 1996
SERIES 1996-B
Initial Invested Amount............................... $750,000,000
Investor Amount as of December 31, 1999............... $750,000,000
Class A Certificate Rate.............................. Three Month LIBOR plus .230% per annum
Class B Certificate Rate.............................. Three Month LIBOR plus .375% per annum
Collateral Rate....................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount............................ $75,000,000
Series Servicing Fee Rate............................. 2% per annum
Series 1996-B Termination Date........................ January 2007 Distribution Date
Series Issuance Date.................................. March 26, 1996
SERIES 1996-C
Initial Invested Amount............................... $700,000,000
Investor Amount as of December 31, 1999............... $700,000,000
</TABLE>
I-2
<PAGE> 57
<TABLE>
<CAPTION>
<S> <C>
Class A Certificate Rate............................. Three Month LIBOR plus .120% per annum
Class B Certificate Rate............................. Three Month LIBOR plus .250% per annum
Collateral Rate...................................... No higher than Three Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $70,000,000
Series Servicing Fee Rate............................ 2% per annum
Series 1996-C Termination Date....................... November 2003 Distribution Date
Series Issuance Date................................. May 13, 1996
SERIES 1996-D
Initial Invested Amount.............................. $575,000,000
Initial Pre-Funded Amount............................ $125,000,000
Investor Amount as of December 31, 1999.............. $700,000,000
Class A Certificate Rate............................. One Month LIBOR plus .15% per annum
Class B Certificate Rate............................. One Month LIBOR plus .30% per annum
Collateral Rate...................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $70,000,000
Series Servicing Fee Rate............................ 2% per annum
Series 1996-D Termination Date....................... June 2005 Distribution Date
Series Issuance Date................................. June 18, 1996
SERIES 1996-E
Initial Invested Amount.............................. $450,000,000
Initial Pre-Funded Amount............................ $50,000,000
Investor Amount as of December 31, 1999.............. $500,000,000
Class A Certificate Rate............................. One Month LIBOR plus .10% per annum
Class B Certificate Rate............................. One Month LIBOR plus .33% per annum
Collateral Rate...................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $50,000,000
Series Servicing Fee rate............................ 2% per annum
Series 1996-E Termination Date....................... May 2004 Distribution Date
Series Issuance Date................................. November 1, 1996
SERIES 1998-A
Initial Invested Amount.............................. $862,500,000
Initial Pre-Funded Amount............................ $287,500,000
Investor Amount as of December 31, 1999.............. $1,150,000,000
Class A Certificate Rate............................. One Month LIBOR plus .04% per annum
Class B Certificate Rate............................. One Month LIBOR plus .24% per annum
Collateral Rate...................................... No higher than One Month LIBOR
plus 1.00% per annum
Initial Enhancement Amount........................... $120,750,000
Series Servicing Fee Rate............................ 2% per annum
Series 1998-A Termination Date....................... July 2003 Distribution Date
Series Issuance Date................................. February 6, 1998
SERIES 1999-A
Initial Invested Amount.............................. $600,000,000
Investor Amount as of December 31, 1999.............. $600,000,000
Class A Certificate Rate............................. One Month LIBOR plus .11% per annum
Class B Certificate Rate............................. One Month LIBOR plus .33% per annum
Class C Interest..................................... No higher than One Month LIBOR
plus 2.00% per annum
Initial Enhancement Amount........................... $66,000,000
</TABLE>
I-3
<PAGE> 58
<TABLE>
<S> <C>
Series Servicing Fee Rate............................. 2% per annum
Series 1999-A Termination Date........................ September 2004 Distribution Date
Series Issuance Date.................................. March 23, 1999
SERIES 1999-B
Initial Invested Amount............................... $500,000,000
Investor Amount as of December 31, 1999............... $500,000,000
Class A Certificate Rate.............................. One Month LIBOR plus .20% per annum
Class B Certificate Rate.............................. One Month LIBOR plus .39% per annum
Collateral Rate....................................... No higher than One Month LIBOR
plus 2.00% per annum
Initial Enhancement Amount............................ $55,000,000
Series Servicing Fee Rate............................. 2% per annum
Series 1999-B Termination Date........................ January 2007 Distribution Date
Series Issuance Date.................................. July 22, 1999
SERIES 1999-C
Initial Invested Amount............................... $300,000,000
Investor Amount as of December 31, 1999............... $300,000,000
Class A Certificate Rate.............................. 6.90% per annum
Class B Certificate Rate.............................. 7.20% per annum
Collateral Minimum Interest Rate...................... No higher than One Month LIBOR
plus 2.00% per annum
Initial Enhancement Amount............................ $27,000,000
Series Servicing Fee Rate............................. 2% per annum
Series 1999-C Termination Date........................ April 2007 Distribution Date
Series Issuance Date.................................. November 3, 1999
SERIES 1999-D
Initial Invested Amount............................... $600,000,000
Investor Amount as of December 31, 1999............... $600,000,000
Class A Certificate Rate.............................. One Month LIBOR plus 0.22% per annum
Class B Certificate Rate.............................. One Month LIBOR plus 0.50% per annum
Collateral Minimum Interest Rate...................... Not to exceed 9.5% per annum
Initial Enhancement Amount............................ $66,000,000
Series Servicing Fee Rate............................. 2% per annum
Series 1999-D Termination Date........................ April 2007 Distribution Date
Series Issuance Date.................................. November 3, 1999
SERIES 2000-A
Initial Invested Amount............................... $750,000,000
Class A Certificate Rate.............................. One Month LIBOR plus 0.13% per annum
Class B Certificate Rate.............................. One Month LIBOR plus 0.33% per annum
Collateral Minimum Interest Rate...................... Not to exceed 9.5% per annum
Initial Enhancement Amount............................ $82,500,000
Series Servicing Fee Rate............................. 2% per annum
Series 2000-A Termination Date........................ July 2005 Distribution Date
Series Issuance Date.................................. February 2, 2000
</TABLE>
I-4
<PAGE> 59
ANNEX II
RECEIVABLES IN ADDITIONAL ACCOUNTS
CONVEYED TO THE TRUST
<TABLE>
<CAPTION>
NUMBER OF RECEIVABLES
ASSIGNMENT DATE RECEIVABLES ADDITIONAL IN ADDITIONAL
NUMBER TRANSFERRED TO TRUST RELEVANT CUT-OFF DATE ACCOUNTS(1) ACCOUNTS(1)
- ---------- -------------------- --------------------- ----------- --------------
<C> <S> <C> <C> <C>
1 May 16, 1994 March 31, 1994 276,371 $ 367,091,261
2 July 1, 1994 May 31, 1994 157,629 $ 202,859,562
3 August 17, 1994 July 31, 1994 226,342 $ 351,961,171
4 September 23, 1994 August 31, 1994 192,815 $ 299,924,106
5 November 18, 1994 October 31, 1994 332,866 $ 406,625,727
6 January 6, 1995 November 30, 1994 217,320 $ 316,458,944
7 March 15, 1995 February 28, 1995 291,057 $ 348,693,399
8 April 18, 1995 March 31, 1995 143,714 $ 168,739,171
9 May 23, 1995 April 30, 1995 98,330 $ 137,485,579
10 July 18, 1995 June 30, 1995 322,271 $ 432,984,240
11 August 15, 1995 July 31, 1995 126,338 $ 188,302,827
12 August 31, 1995 August 11, 1995 67,968 $ 94,548,321
13 November 21, 1995 October 25, 1995 285,122 $ 491,863,655
14 December 15, 1995 November 26, 1995 265,376 $ 369,389,253
15 January 18, 1996 December 26, 1995 182,985 $ 330,263,251
16 February 19, 1996 January 31, 1996 269,467 $ 560,543,656
17 March 26, 1996 February 29, 1996 150,460 $ 330,531,723
18 May 1, 1996 March 31, 1996 68,056 $ 251,797,517
19 May 13, 1996 March 31, 1996 219,150 $ 499,241,938
20 June 18, 1996 April 30, 1996 244,770 $ 636,632,670
21 June 30, 1996 May 31, 1996 73,771 $ 200,155,226
22 September 1, 1996 July 31, 1996 217,130 $ 640,152,919
23 November 1, 1996 September 30, 1996 151,051 $ 500,113,079
24 November 1, 1996 September 30, 1996 30,631 $ 100,564,456
25 November 15, 1996 October 31, 1996 100,603 $ 250,370,356
26 January 17, 1997 December 31, 1996 118,232 $ 368,278,729
27 February 14, 1997 January 31, 1997 111,777 $ 307,635,708
28 March 14, 1997 February 28, 1997 169,598 $ 400,826,266
29 April 18, 1997 March 31, 1997 204,546 $ 450,500,767
30 May 14, 1997 April 30, 1997 155,299 $ 450,053,037
31 June 13, 1997 May 31, 1997 148,940 $ 241,091,790
32 June 29, 1997 May 31, 1997 5,757 $ 10,065,454
33 September 12, 1997 August 31, 1997 250,570 $ 499,607,860
34 September 30, 1997 August 31, 1997 218,401 $ 301,830,170
35 November 14, 1997 October 31, 1997 167,351 $ 322,443,973
36 December 12, 1997 November 30, 1997 228,234 $ 203,845,007
37 January 30, 1998 December 31, 1997 492,821 $ 729,961,299
38 February 13, 1998 January 31, 1998 246,990 $ 363,909,199
39 April 14, 1998 March 31, 1998 227,285 $ 907,447,235
40 May 14, 1998 April 30, 1998 249,490 $ 602,772,032
41 July 1, 1998 May 31, 1998 284,855 $ 582,539,789
42 September 1, 1998 July 31, 1998 209,559 $ 500,442,550
</TABLE>
II-1
<PAGE> 60
<TABLE>
<CAPTION>
NUMBER OF RECEIVABLES
ASSIGNMENT DATE RECEIVABLES ADDITIONAL IN ADDITIONAL
NUMBER TRANSFERRED TO TRUST RELEVANT CUT-OFF DATE ACCOUNTS(1) ACCOUNTS(1)
- ---------- -------------------- --------------------- ----------- --------------
<C> <S> <C> <C> <C>
43 October 1, 1998 August 31, 1998 126,098 $ 364,789,653
44 November 13, 1998 October 31, 1998 276,577 $ 648,197,959
45 December 14, 1998 November 30, 1998 65,326 $ 166,800,025
46 December 31, 1998 November 30, 1998 79,855 $ 210,815,757
47 January 28, 1999 December 31, 1998 77,427 $ 197,913,305
48 January 31, 1999 December 31, 1998 312,662 $ 704,718,352
49 February 16, 1999 January 31, 1999 189,409 $ 393,818,299
50 March 10, 1999 January 31, 1999 145,162 $ 248,815,264
51 March 24, 1999 February 28, 1999 152,894 $ 206,886,377
52 April 14, 1999 March 31, 1999 56,776 $ 105,666,192
53 April 16, 1999 March 31, 1999 124,643 $ 304,064,904
54 May 14, 1999 April 30, 1999 95,437 $ 123,248,542
55 June 1, 1999 April 30, 1999 400,682 $ 925,598,651
56 July 19, 1999 May 31, 1999 89,208 $ 118,401,838
57 July 23, 1999 June 30, 1999 182,395 $ 332,801,715
58 September 21, 1999 August 31, 1999 399,265 $ 920,892,601
59 October 15, 1999 September 30, 1999 147,493 $ 300,519,356
60 January 17, 2000 December 31, 1999 495,186 $1,345,216,825
</TABLE>
- ------------
(1) The amounts shown are as of the Relevant Cut-Off Date.
II-2
<PAGE> 61
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEET CREDIT CARD MASTER TRUST II
ISSUER
[FLEET LOGO]
FLEET BANK (RI), NATIONAL ASSOCIATION
SELLER AND SERVICER
SERIES 2000-
$
CLASS A ASSET-BACKED CERTIFICATES
$
CLASS B ASSET-BACKED CERTIFICATES
------------------------
PROSPECTUS SUPPLEMENT
------------------------
Underwriters of the Class A certificates
A CO.
B CO.
C CO.
Underwriters of the Class B certificates
A CO. B CO.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
We are not offering the Series 2000- certificates in any state where the
offer is not permitted.
The delivery of this prospectus supplement and the accompanying prospectus
at any time does not imply that the information in this prospectus supplement
and the accompanying prospectus is correct as of any date after the dates on
their covers. We note that if any material change occurs while this prospectus
supplement and the accompanying prospectus are required by law to be delivered,
we will update the relevant information in this prospectus supplement and the
accompanying prospectus to incorporate the material change.
Until , 200 , all dealers that effect transactions in the
Class A certificates or the Class B certificates, whether or not participating
in this offering, may be required to deliver a prospectus. This is in addition
to the dealers' obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 62
THE INFORMATION IN THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS
SUPPLEMENT IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE
CERTIFICATES UNTIL WE DELIVER A FINAL PROSPECTUS AND ACCOMPANYING
PROSPECTUS SUPPLEMENT. THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS
SUPPLEMENT ARE NOT AN OFFER TO SELL NOR ARE THEY SEEKING AN OFFER TO BUY
THESE CERTIFICATES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED FEBRUARY 4, 2000
Prospectus
[FLEET LOGO]
FLEET CREDIT CARD MASTER TRUST II
ISSUER
FLEET BANK (RI), NATIONAL ASSOCIATION
SELLER AND SERVICER
ASSET-BACKED CERTIFICATES
THE TRUST--
- - may periodically issue asset-backed certificates in one or more series with
one or more classes; and
- - will own--
- receivables in a portfolio of revolving credit card accounts;
- payments due on those receivables; and
- other property described in this prospectus and in the accompanying
prospectus supplement.
THE CERTIFICATES--
- - will represent interests in the trust and will be paid only from the trust
assets;
- - offered with this prospectus will be rated in one of the four highest rating
categories by at least one nationally recognized rating organization;
- - may have one or more forms of enhancement; and
- - will be issued as part of a designated series which may include one or more
classes of certificates and enhancement.
THE CERTIFICATEHOLDERS--
- - will receive interest and principal payments from a varying percentage of
credit card account collections.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 8 IN THIS PROSPECTUS.
A certificate is not a deposit and neither the certificates nor the underlying
accounts or receivables are insured or guaranteed by the Federal Deposit
Insurance Corporation or any other governmental agency.
The certificates will represent interests in the trust only and will not
represent interests in or obligations of Fleet Bank (RI), National Association
or any of its affiliates.
This prospectus may be used to offer and sell certificates of a series only if
accompanied by the prospectus supplement for that series.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS OR
THE PROSPECTUS SUPPLEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
, 2000
<PAGE> 63
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two separate
documents that progressively provide more detail: (a) this prospectus, which
provides general information, some of which may not apply to a particular series
of certificates, including your series, and (b) the accompanying prospectus
supplement, which will describe the specific terms of your series of
certificates, including:
- the terms, including interest rates, for each class;
- the timing of interest and principal payments;
- information about the receivables;
- information about credit enhancement, if any, for each class; and
- the method for selling the certificates.
IF THE DESCRIPTION OF THE TERMS OF A PARTICULAR SERIES OF CERTIFICATES
VARIES BETWEEN THE DESCRIPTION CONTAINED IN THIS PROSPECTUS AND THE DESCRIPTION
IN THE ACCOMPANYING PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN
THE ACCOMPANYING PROSPECTUS SUPPLEMENT.
We include cross references in this prospectus and the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following table of contents and the table of contents
included in the accompanying prospectus supplement provide the pages on which
these captions are located.
You can find a listing of the pages where terms used in this prospectus are
defined under the caption "Index of Principal Terms," on page 71 in this
prospectus.
2
<PAGE> 64
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................... 5
The Trust............................. 5
Trust Assets.......................... 5
Servicer.............................. 5
Allocation of Trust Assets............ 6
Interest Payments On The
Certificates....................... 6
Principal Payments On The
Certificates....................... 6
Revolving Period................... 6
Accumulation and Amortization
Periods.......................... 6
Effect of Pay Out Event............ 6
Shared Excess Finance Charge
Collections........................ 7
Shared Principal Collections.......... 7
Credit Enhancement.................... 7
Certificate Ratings................... 7
Risk Factors............................ 8
Competition in the Credit Card
Industry Could Lead to Early
Payment of Your Certificates....... 8
A Change in the Terms of the
Receivables May Adversely Affect
the Amount or Timing of Collections
and May Cause an Early Payment of
Your Certificates or a Downgrade... 8
If the Transfer of Receivables Were
Held to Be Merely a Grant of a
Security Interest, Other Interests
May Have Priority Over Your
Certificates....................... 8
If a Conservator or Receiver Is
Appointed for the Bank, Assets
Could Be Sold At a Loss, Payment
May Be Accelerated, Delayed or
Reduced and Protections Provided to
Certificateholders May Be
Overridden......................... 9
Consumer Protection Laws May Restrict
the Bank's Ability to Collect
Receivables and Maintain Yield on
the Portfolio and May Lead to an
Early Pay Out or Inability to Pay
Certificates in Full............... 10
Principal May Be Paid Earlier Than
Expected Creating a Reinvestment
Risk to Certificateholders or Later
Than Expected Resulting in a
Failure to Receive Payment When
Expected........................... 11
Social, Economic and Geographic
Factors Affect Credit Card Payments
and Are Unpredictable and May Cause
a Delay or Default in Payment...... 12
Credit Ratings Assigned to Your
Certificates are Limited in
Nature............................. 12
Credit Quality of Trust Assets May Be
Eroded By the Addition of New
Assets............................. 12
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Credit Card Rates May Decline or
Certificate Rates May Increase
Without a Corresponding Change in
Amounts Needed to Pay
Certificates....................... 13
Issuance of Additional Series by the
Trust May Adversely Affect Your
Payments or Rights................. 13
If Optional Repurchase Occurs, It May
Result in an Early Return of
Principal and a Reinvestment
Risk............................... 14
If Credit Card Account Holders Are
Concentrated in One State or
Geographic Location, Laws, Economic
Downturn or Natural Disasters in
that Area May Adversely Affect
Collections of Receivables......... 14
If the Bank Elects to Treat a Portion
of Principal Receivables as Finance
Charge Receivables, Principal
Payments Could Be Delayed.......... 14
Amounts In Prefunding Account Not
Invested in Receivables May Result
in Early Return of Principal and
Reinvestment Risk.................. 14
You Will Not Be Recognized as the
Owner of Certificates on the
Records of the Trustee and Will Not
Be Able to Exercise Rights Directly
as a Certificateholder............. 15
Trust Assets May Be Allocated to One
or More Specific Series or Groups
and Not Be Available to Your
Series............................. 15
Formation of the Trust.................. 16
Transfer and Assignment................. 17
The Transfer.......................... 17
Amendment to Pooling and Servicing
Agreement.......................... 17
Assignment and Assumption Agreement... 18
Rights Agreement...................... 18
The Bank's Credit Card Activities....... 18
General............................... 18
Supplemental Information.............. 19
Acquisition and Use of Credit Cards... 19
Billing and Payments.................. 20
Description of First Data Resources,
Inc................................ 21
Delinquencies......................... 21
Interchange........................... 22
Use of Proceeds......................... 22
The Bank and FleetBoston Financial
Corporation........................... 22
</TABLE>
3
<PAGE> 65
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Transfer of Receivables............... 23
Matters Relating to Conservatorship
and Receivership................... 24
Consumer Protection Laws.............. 25
Description of the Certificates......... 26
General............................... 26
Book-Entry Registration............... 28
Definitive Certificates............... 31
The Bank Certificate; Additional
Sellers............................ 32
Interest Payments..................... 33
Principal Payments.................... 33
Shared Principal Collections.......... 34
Sharing of Excess Finance Charge
Collections........................ 34
Companion Series...................... 35
New Issuances......................... 35
Transfer and Assignment of
Receivables........................ 37
Liquidation of Receivables............ 37
Representations, Warranties and
Covenants.......................... 38
Addition of Accounts.................. 43
Acquisition of Participation
Interest........................... 45
Automatic Account Additions........... 45
Removal of Accounts................... 46
Servicing Procedures.................. 47
Discount Option....................... 47
Trust Accounts........................ 48
Series Percentage and Seller
Percentage......................... 49
Application of Collections............ 49
Operation of Excess Funding Account... 49
Defaulted Receivables; Rebates and
Fraudulent Charges................. 50
Final Payment of Principal and
Interest; Termination.............. 51
Trust Pay Out Events.................. 51
Servicing Compensation and Payment of
Expenses........................... 52
Matters Regarding the Servicer........ 53
Indemnification....................... 53
Servicer Default...................... 54
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report to Certificateholders.......... 56
Evidence as to Compliance............. 56
Amendments............................ 57
Defeasance............................ 58
List of Certificateholders............ 58
The Trustee........................... 58
Enhancement............................. 59
General............................... 59
Subordination......................... 59
Letter of Credit...................... 60
Cash Collateral Guaranty or Account... 60
Collateral Interest................... 60
Swap Agreements....................... 60
Surety Bond or Insurance Policy....... 60
Spread Account........................ 61
Certificate Rating...................... 61
Federal Income Tax Consequences......... 61
General............................... 61
Treatment of the Certificate as
Debt............................... 62
Treatment of the Trust................ 63
Taxation of Interest Income of U.S.
Certificate Owners................. 64
Sale or Exchange of Certificates...... 65
Non-U.S. Certificate Owners........... 65
Information Reporting and Backup
Withholding........................ 66
State and Local Taxation.............. 67
ERISA Considerations.................... 67
Plan of Distribution.................... 69
Underwriting............................ 69
Legal Matters........................... 70
Reports to Certificateholders........... 70
Where You Can Find More Information..... 70
Global Clearance, Settlement and Tax
Documentation Procedures.............. A-1
</TABLE>
4
<PAGE> 66
PROSPECTUS SUMMARY
This summary highlights selected information from this document and does not
contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of an offering of the
certificates, read carefully this entire document and the accompanying
prospectus supplement.
This summary provides an overview of the trust assets including, in particular,
the receivables and how these receivables will be allocated and other
information to aid your understanding and is qualified by the full description
of such information in this prospectus and the accompanying prospectus
supplement.
THE TRUST
Fleet Credit Card Master Trust II was formed in 1993 pursuant to a pooling and
servicing agreement. The pooling and servicing agreement is between Fleet Bank
(RI), National Association, as seller and servicer, and Bankers Trust Company,
as trustee.
- - The trust is a master trust in which multiple series of certificates may be
issued. Each series is issued pursuant to a supplement to the pooling and
servicing agreement. The terms of a series are described in the series
supplement.
- - Some classes or series may not be offered by this prospectus; for example,
they may be offered in a private placement.
See "Formation of the Trust" and "Transfer and Assignment" in this prospectus.
TRUST ASSETS
The bank and its predecessors have transferred to the trust the receivables in
designated MasterCard(R) and VISA(R)(1) revolving credit card accounts. All new
receivables generated in those accounts will be transferred automatically to the
trust. The receivables transferred to the trust are the primary trust assets.
The bank will periodically designate additional accounts to the trust.
Receivables in these additional accounts will be transferred to the trust and
receivables generated in the new accounts will be transferred automatically to
the trust. The total amount of receivables in the trust will fluctuate daily as
new receivables are generated and payments are received on accounts. Additional
assets may be transferred to the trust.
See "The Bank's Credit Card Activities" and "Description of the
Certificates--Addition of Accounts" in this prospectus.
Additional trust assets may include:
- - monies and investments in the trust's bank accounts;
- - revolving credit card accounts affiliated with programs other than MasterCard
and VISA or credit card accounts in programs created for a specific company;
- - participations in other pools of revolving credit card receivables or consumer
loan receivables, secured and unsecured arising as a result of advances made
on bank cards, private label cards, corporate cards and unsecured revolving
lines of credit; and
- - instruments and rights providing credit enhancement to a series or class.
SERVICER
The bank services the receivables under the terms of the pooling and servicing
agreement. In limited cases, the bank may resign or be removed and either the
trustee or a third party may be appointed as the new servicer. The servicer
receives a servicing fee from the trust. Each series is obligated to pay a
portion of the servicing fee.
See "Description of the Certificates--Servicing Compensation and Payment of
Expenses" and "--Matters Regarding the Servicer" in this prospectus.
- ---------------
(1) MasterCard(R) and VISA(R) are federally registered servicemarks of
MasterCard International Inc. and VISA U.S.A., Inc., respectively.
5
<PAGE> 67
ALLOCATION OF TRUST ASSETS
The trust assets are allocated among the series of certificates outstanding and
the interest of the bank represented by the seller certificates. The seller
certificates represent the remaining interest in the assets of the trust not
represented by the certificates and other interests issued by the trust to
investors.
Certificateholders are only entitled to amounts allocated to their series and
only to the extent of interest and principal payments due on their certificates.
See "Description of the Certificates--Series Percentage and Seller Percentage"
in this prospectus.
INTEREST PAYMENTS ON THE CERTIFICATES
Each certificate of a series will represent the right to receive payments of
interest as described in the prospectus supplement for that series. If a series
of certificates consists of more than one class, each class may differ in, among
other things, priority of payments, payment dates, interest rates, method for
computing interest and rights to credit enhancement.
Each class of certificates may have fixed, floating or any other type of
interest rate. Generally, interest will be paid monthly, quarterly or on other
scheduled dates over the life of the certificates.
See "Description of the Certificates--Interest Payments" and "Enhancement" in
this prospectus.
PRINCIPAL PAYMENTS ON THE CERTIFICATES
Each certificate of a series will represent the right to receive payments of
principal as described in the prospectus supplement prepared for that series. If
a series of certificates consists of more than one class, each class may differ
in, among other things, the amounts allocated for principal payments, priority
of payments, payment dates, maturity, and rights to series enhancement.
REVOLVING PERIOD
Each series of certificates will begin with a period during which the trust will
not pay or accumulate principal for payment to the certificateholders. The
period when no principal is paid or accumulated is known as the revolving
period. The trust, during the revolving period, will usually pay available
principal to the bank as holder of the sellers' interest, but may pay amounts
due to holders of certificates of other series.
ACCUMULATION AND AMORTIZATION PERIODS
Following the revolving period, each class of certificates will have one or a
combination of the following periods in which:
- - principal is accumulated in specified amounts per month and paid on a
scheduled date;
- - principal is paid in fixed amounts at scheduled intervals;
- - principal is paid in varying amounts at scheduled intervals;
- - principal is paid, at the option of the bank, in amounts and on dates
designated by the bank;
- - principal is accumulated in varying amounts each month based on the amount of
principal receivables collected following a series pay out event; or
- - principal is paid in varying amounts each month based on the amount of
principal receivables collected following a series pay out event or a trust
pay out event.
The time at which principal payments or principal accumulation will begin and
the period over which principal payments or principal accumulation will occur
will vary from one series to another and within a series from one class to
another. The principal payment provisions for each series and class will be
included in the prospectus supplement prepared for the related series.
EFFECT OF PAY OUT EVENT
If any pay out event occurs, then for each affected series, the revolving period
will end and either a rapid amortization period or a rapid accumulation period
will begin. Within a series, the rapid amortization period may apply to one or
more classes of the series and a rapid accumulation period may apply to another
class or classes of the series. In a rapid amortization period, the trust will
pay all available principal to the certificateholders of that series or class on
each distribution date. In a rapid accumulation period, the trust will place all
available principal for that series or class into an account to be held until
the expected final distribution date for that series or
6
<PAGE> 68
class. Principal accumulated during a rapid accumulation period will, in most
cases, be paid to the certificateholders of the series or class for which it was
accumulated on the expected final distribution date. For both a rapid
amortization period and a rapid accumulation period, if the series has more than
one class, then each class may have a different priority for payment or
accumulation.
A pay out event may affect one or more series.
See "Description of Certificates--Trust Pay Out Events" in this prospectus for a
discussion of the events that might lead to a rapid amortization period.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Any series may be included in a group of series. If specified in the related
prospectus supplement, amounts designated as excess spread for a series and not
needed for that series, will be excess finance collections which may be applied
to cover shortfalls of other series in the same group.
See "Description of the Certificates--Sharing of Excess Finance Charge
Collections" "--Applications of Collections" and "--Defaulted Receivables;
Rebates and Fraudulent Charges" in this prospectus.
SHARED PRINCIPAL COLLECTIONS
If specified in the accompanying prospectus supplement, collections of principal
receivables allocated to a series and not needed for that series, may be applied
to cover principal needs for other series in the same group.
See "Description of the Certificates--Shared Principal Collections" in this
prospectus.
CREDIT ENHANCEMENT
Each class of a series may be entitled to credit enhancement.
Credit enhancement for the certificates of any class may take the form of one or
more of the following:
- - subordination
- - collateral interest
- - insurance policy
- - cash collateral guaranty or account
- - letter of credit
- - surety bond
- - spread account
- - reserve account
- - swap arrangements
The type, characteristics and amount of any credit enhancement will be:
- - based on several factors, including the characteristics of the receivables and
accounts at the time a series of certificates is issued and the structure of
the series; and
- - established based on the requirements of the rating agencies.
See "Enhancement" in this prospectus.
CERTIFICATE RATINGS
Any certificate offered by this prospectus and an accompanying prospectus
supplement will be rated in one of the four highest rating categories by at
least one nationally recognized rating organization.
A rating is not a recommendation to buy, sell or hold securities and may be
revised or withdrawn at any time by the assigning agency. Each rating should be
evaluated independently of any other rating.
See "Risk Factors--Credit Ratings Assigned to Your Certificates Are Limited in
Nature" in this prospectus.
7
<PAGE> 69
RISK FACTORS
You should consider the following factors before you decide whether or not to
purchase the certificates.
COMPETITION IN THE CREDIT
CARD
INDUSTRY COULD LEAD TO EARLY
PAYMENT OF YOUR CERTIFICATES The bank credit card industry is highly
competitive. As the bank's competitors strive to
expand their market share, the bank's use of
effective advertising, target marketing and
pricing strategies becomes extremely important.
The bank has remained competitive by offering low
rate balance transfer options, lower fixed annual
percentage rate cards, no-annual-fee cards, and
other cards that offer savings or other rewards
to the borrower.
In light of recent mergers and consolidations of
banking and financial services companies, there
are fewer card issuers with greater economies of
scale and brand recognition. Also, the use of
debit cards associated with the VISA or
MasterCard logo competes with traditional credit
card usage.
The increase in competition and the use of lower
annual percentage rate offers may lead to a
reduction in yield on the bank's portfolio. The
lower rates also may reduce the amount of finance
charge collections available to pay interest on
the certificates. Increased competition resulting
from consolidations and mergers may also impact
the bank's ability to originate new accounts and
generate new receivables. If the origination of
new accounts or the generation of new receivables
decreases significantly, the bank may not be able
to designate additional accounts to the trust
when required and a pay out event and early
amortization may occur. If your series provides
for rapid amortization upon the occurrence of a
series pay out event, these events may cause your
principal to be paid back earlier than expected.
A CHANGE IN THE TERMS OF THE
RECEIVABLES MAY ADVERSELY
AFFECT
THE AMOUNT OR TIMING OF
COLLECTIONS AND MAY CAUSE AN
EARLY PAYMENT OF YOUR
CERTIFICATES
OR A DOWNGRADE As owner of the accounts, the bank retains the
right to change various account terms including
finance charges, other fees and the required
monthly minimum payment. The changes may be
voluntary on the part of the bank or may be
forced by law or market conditions. Changes in
interest and fees could decrease the effective
yield on the accounts. If your series provides
for rapid amortization upon the occurrence of a
series pay out event, this could result in an
early amortization of your certificates. Changes
could also cause a reduction in the credit
ratings on your certificates.
See "Description of the
Certificates--Representations, Warranties and
Covenants" in this prospectus.
IF THE TRANSFER OF
RECEIVABLES WERE
HELD TO BE MERELY A GRANT OF
A
SECURITY INTEREST, OTHER
INTERESTS
MAY HAVE PRIORITY OVER YOUR
CERTIFICATES The bank has represented in the pooling and
servicing agreement that the transfer of the
receivables to the trust is either a sale or the
grant of a security interest in the receivables.
In order to protect the purchasers of the
certificates, the bank has taken and will take
the necessary actions to ensure that, if the
transfer is determined by a court to be a grant
of a security interest and not a sale of the
receivables to the trust, the trust will have a
"first-priority perfected security interest" in
the receivables. Regardless of these actions to
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ensure the trust a first-priority perfected
security interest, your interests could be
impaired:
- by a tax, governmental or other nonconsensual
lien on the bank's property arising before
receivables come into existence which may have
priority over the trust's interests in the
receivables;
- if the FDIC were appointed as conservator or
receiver for the bank, the FDIC's
administrative expenses may be paid before the
certificateholders are paid; or
- if insolvency or similar proceedings were
commenced by or against the bank or, in certain
circumstances, if certain time periods were to
pass, then the trust may not have a
first-priority perfected security interest in
amounts held by the bank and not deposited into
the collection account; this may result in a
loss to the certificateholders.
See "Material Legal Aspects of the
Receivables--Transfer of Receivables" in this
prospectus.
IF A CONSERVATOR OR RECEIVER
IS APPOINTED FOR THE BANK,
ASSETS COULD BE SOLD AT A
LOSS, PAYMENT MAY BE
ACCELERATED, DELAYED OR
REDUCED AND PROTECTIONS
PROVIDED TO
CERTIFICATEHOLDERS MAY BE
OVERRIDDEN The Federal Deposit Insurance Act, as amended by
the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, provides that a security
interest granted by the bank in the receivables
would be respected to the extent that:
- the pooling and servicing agreement complies
with the regulatory requirements of the FDIA;
- the security interest granted under the pooling
and servicing agreement is perfected before the
FDIC is appointed as conservator or receiver
for the bank; and
- the security interest is not taken in
contemplation of the bank's insolvency or with
the intent to hinder, delay or defraud the bank
or its creditors.
Opinions and policy statements issued by the FDIC
suggest that, because of the manner in which
these transactions are structured, the FDIC would
respect the security interest granted by the bank
in the receivables. If the FDIC were to assert a
contrary position, however, payments of principal
and interest on the certificates could be delayed
and possibly reduced. Furthermore, the FDIC
could:
- require the trustee to go through the
administrative claims procedure established by
the FDIC in order to obtain payments on the
certificates;
- request a stay of any actions by the trustee to
enforce the pooling and servicing agreement or
the certificates against the bank; and
- repudiate the pooling and servicing agreement
and limit the claims of the holders of the
certificates to their "actual direct
compensatory damages."
If the FDIC were to take any of these actions,
the amount payable to you could be lower than the
outstanding principal and accrued interest on the
certificates, thus resulting in losses to you.
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<PAGE> 71
The appointment of a conservator or receiver for
the bank could cause an early amortization of
principal on all outstanding series. Under the
terms of the pooling and servicing agreement, new
principal receivables would not be transferred to
the trust. The trustee would sell the receivables
unless a sufficient amount of the holders of
certificates, and anyone else authorized to vote
on those matters, gave the trustee other
instructions. The trust would then terminate
earlier than was planned and you could have a
loss if the sale of the receivables produced
insufficient amounts to pay you in full. However,
the conservator or receiver for the bank may have
the power:
- regardless of the terms of the pooling and
servicing agreement, (a) to delay any such
procedure, (b) to prevent the early
amortization, (c) to prevent the early sale of
the receivables and termination of the trust or
(d) to require new principal receivables to
continue being transferred to the trust; or
- regardless of the instructions of those
authorized to direct the trustee's actions
under the pooling and servicing agreement, (a)
to require the early sale of the receivables,
(b) to require termination of the trust and
retirement of the certificates or (c) to
prohibit the continued transfer of principal
receivables to the trust.
In addition, if a conservator or receiver were
appointed for the servicer, the conservator or
receiver may have the power to prevent either the
trustee or the certificateholders from appointing
a new servicer.
See "Material Legal Aspects of the
Receivables--Matters Relating to Conservatorship
and Receivership."
CONSUMER PROTECTION LAWS MAY
RESTRICT THE BANK'S ABILITY
TO COLLECT RECEIVABLES AND
MAINTAIN YIELD ON THE
PORTFOLIO AND MAY LEAD TO AN
EARLY PAY OUT OR INABILITY
TO PAY CERTIFICATES IN FULL Federal and state consumer protection laws
regulate the creation and enforcement of consumer
loans, including credit card accounts and
receivables. New legislation and regulatory
changes affecting consumer loans and, in many
cases, specifically aimed at the credit card
industry, are always under consideration both at
the federal and state levels.
If implemented, some of the legislative changes
under consideration would:
- limit the bank's ability to increase finance
charges;
- restrict or cap interest rates on credit card
accounts;
- limit the bank's ability to impose or increase
fees; and
- require increased disclosure and reporting to
cardholders and applicants for credit cards.
- It is not clear whether any of these proposals
will become law or, if they are enacted, what
final form they will take. However, you should
be aware that legislative and regulatory
changes can be expected from time to time.
These changes may make it more difficult for
the servicer to collect the receivables or may
restrict the finance charges and fees that the
bank can charge.
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<PAGE> 72
If, as a result of legislative or regulatory
changes, the bank were required to reduce its
finance charges and fees, or, if the bank were
not permitted to increase finance charges and
fees when needed, this could cause a pay out
event to occur.
The bank makes representations and warranties
relating to compliance with the requirements of
law. The bank also makes representations and
warranties in the pooling and servicing agreement
relating to the validity and enforceability of
the accounts and the receivables and agrees to
indemnify the trust for, among other things, any
liability arising from the violation of laws.
However, the trustee will not make any
examination of the receivables or the records
relating to the receivables for the purpose of
establishing the presence or absence of defects,
compliance with the representations and
warranties, or for any other purpose. If a
representation or warranty is breached, the only
remedy is that the seller or the servicer must
accept the transfer and reassignment of
receivables affected by the violation.
See "Description of the
Certificates--Representation, Warranties and
Covenants" and "Material Legal Aspects of the
Receivables--Consumer Protection Laws" in this
prospectus.
PRINCIPAL MAY BE PAID EARLIER
THAN EXPECTED CREATING A
REINVESTMENT RISK TO
CERTIFICATEHOLDERS OR LATER
THAN EXPECTED RESULTING IN A
FAILURE TO RECEIVE PAYMENT
WHEN EXPECTED The receivables in the trust may be paid at any
time and there is no assurance that new
receivables will be generated or will be
generated at levels needed to maintain the trust.
To prevent the occurrence of a pay out event, new
receivables must be generated and added to the
trust. The trust is required to maintain a
certain minimum amount of receivables. The
generation of new receivables is affected in
part, by the bank's ability to compete in the
current industry environment and by customers'
changing borrowing and payment patterns. If there
is a decline in the generation of new receivables
you may be repaid your principal prior to the
expected date.
One development which affects the level of
finance charge collections is the increased
convenience use of credit cards. Convenience use
means that the customers pay their account
balances in full on or prior to the due date. The
customer, therefore, avoids all finance charges
on his account. This decreases the effective
yield on the accounts and could cause the
occurrence of a pay out event. Convenience use is
more common among cardholders who are not
assessed an annual fee than among those who pay
these fees. A substantial majority of the
cardholders on the accounts designated to the
trust are not charged an annual cardholder fee.
The pooling and servicing agreement requires that
the balance of principal receivables in the trust
not fall below a specified level. If the level of
principal receivables does fall below the
required level, a pay out event will occur. To
maintain the level of principal receivables in
the trust, the bank periodically adds receivables
through the designation of additional accounts
for inclusion in the trust. If the bank is not
able to add additional accounts when required, a
pay out event will occur.
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<PAGE> 73
See "Description of the Certificates--Trust Pay
Out Events" in this prospectus and "Description
of the Certificates--Pay Out Events" in the
accompanying prospectus supplement.
Changes in finance charges also will affect
payment patterns on the receivables and thus may
result in a decline in yield. During the
amortization periods, this may adversely affect
the repayment of principal.
See "Receivable Yield Considerations" in the
accompanying prospectus supplement.
SOCIAL, ECONOMIC AND
GEOGRAPHIC FACTORS AFFECT
CREDIT CARD PAYMENTS AND
ARE UNPREDICTABLE AND MAY
CAUSE A DELAY OR DEFAULT
IN PAYMENT Changes in credit card use, payment patterns and
the rate of defaults by cardholders may result
from a variety of social, economic and geographic
factors. Social factors include changes in
consumer confidence levels and attitude toward
incurring debt, the public's perception of the
use of credit cards and changing attitudes
regarding the stigma of personal bankruptcy.
Economic factors include the rate of inflation,
the unemployment rates and relative interest
rates offered for various types of loans.
Moreover, adverse changes in economic conditions
in states where cardholders are located could
have a direct impact on the timing and amount of
payments on the certificates of any series.
See "The Bank's Credit Card Activities" in this
prospectus and the accompanying prospectus
supplement.
CREDIT RATINGS ASSIGNED TO
YOUR CERTIFICATES ARE
LIMITED IN NATURE Each credit rating assigned to your certificates
reflects the rating agency's assessment only of
the likelihood that interest and principal will
be paid when required under the pooling and
servicing agreement, not when expected. These
ratings are based on the rating agencies'
determination of the value of receivables in the
trust and the availability of any credit
enhancement.
The ratings do not address the following:
- the likelihood that the principal or interest
on your certificate will be prepaid, paid on a
scheduled date or paid on any particular date
before the termination date of your series;
- the possibility that your certificates will be
paid early or the possibility of the imposition
of United States withholding tax for non-U.S.
Certificateholders;
- the marketability of the certificates, or any
market price; or
- that an investment in the certificates is a
suitable investment for you.
A rating is not a recommendation to purchase,
hold or sell certificates of a series or class of
a series.
CREDIT QUALITY OF TRUST
ASSETS MAY BE ERODED BY THE
ADDITION OF NEW ASSETS The bank expects that it will periodically add
additional accounts to the trust and may at times
be obligated to add additional accounts.
Additional accounts may include accounts which
were originated using criteria that are different
than those applicable to the accounts currently
designated to the trust. There are many reasons
which could cause these differences, including
the fact that the additional accounts were
originated at a different date or were
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<PAGE> 74
acquired from an institution which used different
underwriting standards or procedures.
Consequently, there is no assurance that future
additional accounts will have the same credit
quality as those currently designated to the
trust.
In addition, the pooling and servicing agreement
allows the bank to add participation interests in
other assets to the trust. The addition of these
participation interests and of additional
accounts will be subject to the satisfaction of
conditions described in this prospectus under
"Description of the Certificates--Addition of
Accounts" and "--Automatic Account Additions."
CREDIT CARD RATES MAY DECLINE
OR
CERTIFICATE RATES MAY
INCREASE
WITHOUT A CORRESPONDING
CHANGE
IN AMOUNTS NEEDED TO PAY
CERTIFICATES The majority of accounts have finance charges set
at a rate above the London interbank offered rate
or the prime rate. Certificates may bear interest
at a fixed-rate or at a floating-rate based on
another specified index. Thus, if the London
interbank offered rate or other specified rate
declines, finance charge collections will
decline; however, there may not be a
corresponding decrease in the interest rates on
the certificates. The effect of lower finance
charges without a corresponding reduction in the
rates on the certificates could cause a pay out
event to occur which may cause your certificates
to be paid early.
On the other hand, a portion of the accounts have
finance charges set at a fixed rate.
If the rates on the certificates increase there
will be no corresponding increase in the finance
charges on the fixed-rate accounts. If a
significant portion of the accounts have
fixed-rate finance charges in the future, an
increase in interest rates on the certificates
could cause a pay out event to occur which may
cause your certificates to be paid early.
ISSUANCE OF ADDITIONAL SERIES
BY THE
TRUST MAY ADVERSELY AFFECT
YOUR
PAYMENTS OR RIGHTS The trust is a master trust and has issued other
series of certificates and is expected to issue
additional series from time to time. All
certificates are payable from the receivables in
the trust. The trust may issue additional series
with terms that are different from your series
without the prior review or consent of any
certificateholders. It is a condition to the
issuance of each new series that each rating
agency that has rated an outstanding series,
confirms in writing that the issuance of the new
series will not result in a reduction or
withdrawal of its rating. However, the terms of a
new series could affect the timing and amounts of
payments on any other outstanding series,
including your series. The owners of the
certificates of any new series will have voting
rights which will reduce the percentage interest
represented by your series. The affected voting
rights may relate to the ability to approve
waivers and give consents. The actions which may
be affected include directing the appointment of
a successor servicer following a servicer
default, amending the pooling and servicing
agreement and directing a reassignment of the
entire portfolio of accounts.
See "Description of the Certificates--New
Issuances" in this prospectus.
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<PAGE> 75
IF OPTIONAL REPURCHASE
OCCURS, IT
MAY RESULT IN AN EARLY RETURN
OF
PRINCIPAL AND A REINVESTMENT
RISK When the amount of certificates of a series is
reduced to a stated percentage of that series'
original amount, the bank may repurchase the
remaining certificates of the series. It is
possible, if so provided in the applicable series
supplement, that the repurchase option could be
exercised when 10% or more of the principal
amount of the series remains outstanding. A
repurchase may result in an early return of your
investment. It is not expected that any premium
will be paid in the event of the exercise of the
repurchase option and there can be no assurance
that you will be able to invest any early
repayment amount at a similar rate of return.
IF CREDIT CARD ACCOUNT
HOLDERS ARE
CONCENTRATED IN ONE STATE OR
GEOGRAPHIC LOCATION, LAWS,
ECONOMIC DOWNTURN OR NATURAL
DISASTERS IN THAT AREA MAY
ADVERSELY AFFECT COLLECTIONS
OF
RECEIVABLES If the trust contains a high concentration of
receivables relating to cardholders located
within a single state or region of the United
States, events in that state or region may have a
magnified effect on the trust due to the
concentration. The prospectus supplement of a
series will contain a then-current detailed
geographic breakdown of the number of accounts
and the amount of receivables relating to
cardholders with addresses in each applicable
state.
See "The Receivables--Geographic Distribution of
Accounts and Receivables" in the accompanying
prospectus supplement.
The bank has no way of predicting how a future
geographic event or a change in the geographic
distribution of the receivables may affect the
certificates.
IF THE BANK ELECTS TO TREAT A
PORTION OF PRINCIPAL
RECEIVABLES AS
FINANCE CHARGE RECEIVABLES,
PRINCIPAL PAYMENTS COULD BE
DELAYED The documents relating to the certificates permit
the bank to cause a percentage of principal
receivables to be discounted as principal
receivables and treated as finance charge
receivables. The bank may elect to use the
discount and may decide, without notice to or the
consent of any holders of certificates, to reduce
the discount or discontinue the use of the
discount. Any election by the bank to discount
the principal receivables will result in an
increase in the amount of finance charge
receivables and a reduction in the amount of
principal receivables and the collection of
principal receivables from that which would
otherwise occur. This may result in delayed
principal payments on the certificates. Use of
the discount will also reduce the sellers'
interest in the trust, thereby making pay out
events based in part on the amount of collections
of finance charge receivables less likely to
occur and increasing the likelihood that the bank
will have to designate more accounts to the trust
or that a pay out event will occur based on the
sellers' interest or the amount of principal
receivables in the trust. Any subsequent
reduction or withdrawal of the percent used in
discounting the principal receivables would have
the opposite effect.
AMOUNTS IN PREFUNDING ACCOUNT
NOT INVESTED IN RECEIVABLES
MAY
RESULT IN EARLY RETURN OF
PRINCIPAL
AND REINVESTMENT RISK The bank may, in connection with any series,
create a prefunding account and deposit a portion
of the proceeds of the series into the account.
Moneys in the account will be invested in
additional principal receivables. However, any
money in the prefunding account not used by a
specific date must be paid to the holders of the
certificates of that series. This will result in
an early return of principal. The bank does not
expect to pay a prepayment penalty or premium in
that event. If you receive an early payment you
may
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<PAGE> 76
not be able to reinvest at a rate equivalent to
the rate on the certificates which were paid
early.
YOU WILL NOT BE RECOGNIZED AS
THE OWNER OF CERTIFICATES
ON THE RECORDS OF THE TRUSTEE
AND WILL NOT BE ABLE TO
EXERCISE RIGHTS DIRECTLY AS A
CERTIFICATEHOLDER If so stated in the accompanying prospectus
supplement, the certificates of that series
initially will be represented by one or more
certificates registered in the name of Cede, the
nominee for DTC, and will not be registered in
the names of the certificate owners or their
nominees. Unless definitive certificates are
issued for a series, certificate owners of that
series will not be recognized by the trustee as
certificateholders, as that term is used in the
governing documents. As a result you will only be
able to exercise the rights of certificateholders
indirectly through DTC, Cedelbank or Euroclear
and their participating organizations.
See "Description of Certificates--Book-Entry
Registration" and "--Definitive Certificates" in
this prospectus.
TRUST ASSETS MAY BE ALLOCATED
TO ONE OR MORE SPECIFIC
SERIES OR GROUPS AND NOT BE
AVAILABLE TO YOUR SERIES A series supplement or an amendment to the
pooling and servicing agreement may provide that
portions of the receivables or participation
interests in the trust be allocated to one or
more series or groups. If such an allocation were
to occur, and if the allocation was not to your
series or a group in which your series is
included, your series would not be able to
benefit from such receivables or participation
interests. Such an allocation is dependent upon:
- satisfying the rating agency condition, and
- delivering an officer's certificate to the
trustee by the servicer that states that the
servicer reasonably believes that the
allocation will not have an adverse effect.
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<PAGE> 77
FORMATION OF THE TRUST
Fleet Credit Card Master Trust II was formed, in accordance with the laws
of the State of New York, pursuant to a Pooling and Servicing Agreement dated as
of December 1, 1993. The Pooling and Servicing Agreement was amended and
restated on May 23, 1994, and the amended and restated agreement was amended by
amendments dated July 1, 1994, October 6, 1995, February 20, 1998, and May 14,
1999. The Pooling and Servicing Agreement is between Fleet Bank (RI), National
Association (the "BANK"), as seller and servicer, and Bankers Trust Company, as
trustee. The Pooling and Servicing Agreement, as originally executed, was
between Colonial National Bank USA and the trustee. Colonial National Bank USA
subsequently changed its name to Advanta National Bank USA and following a
merger into it by Advanta National Bank, Advanta National Bank USA changed its
name to Advanta National Bank. Advanta National Bank was replaced, as described
in this prospectus, as seller and servicer on February 20, 1998 by Fleet Bank
(RI), National Association.
The trust, from time to time, issues series of asset-backed securities.
Each series is issued pursuant to the terms of a series supplement to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement and any
series supplement are sometimes collectively referred to as the "POOLING AND
SERVICING AGREEMENT."
All of the asset-backed securities which have been issued and which will be
issued under the Pooling and Servicing Agreement represent undivided interests
in the assets of the Fleet Credit Card Master Trust II. The assets of the trust
consist primarily of receivables in consumer revolving credit card accounts
designated to the trust. The "RECEIVABLES" represent the amounts outstanding on
the accounts and owed by the credit card holders.
When the trust was created in 1993, the original seller designated the
initial accounts to the trust and transferred to the trust the receivables in
those initial accounts, including future receivables arising in those accounts
after the designation. Since the initial designation, the seller or sellers
under the Pooling and Servicing Agreement have, from time to time, designated
additional accounts and transferred to the trust the receivables in the
additional accounts and the receivables arising in the accounts after the
designation.
The receivables include principal receivables and finance charge
receivables.
The "PRINCIPAL RECEIVABLES" are the amounts charged by cardholders for
merchandise, services and cash advances. The "FINANCE CHARGE RECEIVABLES" are
the periodic finance charges, annual membership fees and annual service charges,
late fees, overlimit fees, cash advances fees, all other fees and charges for an
account. Finance charge receivables also include other amounts which the seller
designates to be included as finance charge receivables and also include amounts
recovered as a result of efforts to collect amounts which were owed as principal
receivables and which were charged-off as defaulted receivables.
The trust assets consist of and will consist of:
- the receivables in those accounts designated to the trust;
- all monies due or to become due on the receivables and all amounts
received as collections of the receivables and all proceeds of the
receivables;
- "RECOVERIES," meaning the net amounts subsequently recovered with respect
to principal receivables after the principal receivables have been
charged-off;
- the right to receive a portion of the "INTERCHANGE," meaning specified
fees received by the bank as a creditor participating in the VISA and
MasterCard International associations as partial compensation for taking
credit risk, absorbing fraud losses and funding receivables for a limited
period prior to initial billing, attributed to charges for merchandise
and services in the accounts; the amount of the interchange included in
the trust assets for a series will be designated in the respective series
supplement;
- proceeds of credit insurance policies relating to the receivables;
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<PAGE> 78
- all monies and other property constituting eligible investments in bank
accounts of the trust; and
- the benefits of any series enhancements issued for any series; the series
enhancement will, however, only be available to certificateholders of the
series for which it is provided.
The trust assets may also include participations, including 100%
participations, representing undivided interests in a pool of assets consisting
of revolving credit card receivables or consumer loan receivables, secured or
unsecured, arising as a result of advances made on bank cards, private label
cards, corporate cards and unsecured revolving lines of credit.
The investor certificates and interests in the trust which are treated as
investor certificates, including the certificates offered by this prospectus and
the accompanying prospectus supplement, represent undivided interests in the
trust. Certificates of a series represent the right to receive, to the extent
necessary to make the required payments on the certificates, the following:
- a portion of collections allocable to the certificateholders of that
series;
- funds on deposit in the collection account and in the excess funding
account allocable to certificateholders of that series;
- funds on deposit in any deposit, trust, escrow or similar account
maintained for the benefit of that series or any class of that series;
and
- funds available pursuant to any enhancement for that series.
The rights and interests of the certificateholders listed above for all
series are collectively the "CERTIFICATEHOLDERS' INTEREST."
"CERTIFICATEHOLDERS" are the registered owners of the certificates or the
bearer of any certificates in bearer form. See "Description of the Certificates"
in this prospectus.
The trust has not and will not engage in any activity other than acquiring
and holding the receivables, issuing and making payments on certificates and
certain uncertificated interests with respect to each series issued by the
trust, the Bank Certificate and Supplemental Certificates, obtaining series
enhancement applicable to any series and other related activities. As a
consequence, the trust is not expected to have any need for, or sources of,
capital resources other than the assets of the trust.
TRANSFER AND ASSIGNMENT
THE TRANSFER
The trust was created in 1993 and from this formation until February 20,
1998 was known as ADVANTA Credit Card Master Trust II and Advanta National Bank
was seller and servicer under the Pooling and Servicing Agreement. On February
20, 1998, Fleet Financial Group Inc. and some of its subsidiaries and Advanta
Corp. and some of its subsidiaries including Advanta National Bank, transferred
to Fleet Bank (RI), National Association, certain assets and liabilities
relating to their respective credit card businesses including their credit card
accounts and the assets and liabilities of Advanta National Bank relating to the
trust.
AMENDMENT TO POOLING AND SERVICING AGREEMENT
Immediately prior to the transfer described in the preceding paragraph, the
Pooling and Servicing Agreement was amended to provide, among other things,
that:
- Advanta National Bank could assign and delegate to the bank all of
Advanta National Bank's rights and obligations as seller and servicer
under the Pooling and Servicing Agreement and each series supplement; and
- the name of the trust would be changed to Fleet Credit Card Master Trust
II.
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<PAGE> 79
ASSIGNMENT AND ASSUMPTION AGREEMENT
Under the terms of an assignment and assumption agreement also dated
February 20, 1998, the bank accepted and assumed all of Advanta National Bank's
liabilities under the Pooling and Servicing Agreement and the series
supplements. The bank also assumed and agreed to perform each and every covenant
and obligation of the seller and of the servicer contained in the Pooling and
Servicing Agreement and the series supplements. Pursuant to the assignment and
assumption agreement, the bank certificate was assigned and transferred to the
bank, Advanta National Bank was released as seller and servicer and has no
further obligations or liabilities under the Pooling and Servicing Agreement or
the series supplements and the bank became the sole seller and servicer.
In addition, under the assignment and assumption agreement, ownership of
the accounts in the trust was transferred to the bank, and the bank transferred
to the trustee on behalf of the trust, for the benefit of the
certificateholders, all of the bank's right, title and interest in and to the
receivables in those accounts. The bank has also granted to the trustee on
behalf of the trust for the benefit of the certificateholders, a first priority
perfected security interest in all of the bank's right, title and interest in
and to the receivables in the accounts designated to the trust.
RIGHTS AGREEMENT
In connection with the transfer, the bank and Fleet Credit Card, LLC
entered into a rights agreement dated as of February 20, 1998. Under the rights
agreement, the bank assigned and transferred to Fleet Credit Card, LLC all
economic rights and interests in the assets of the bank acquired as a result of
the transfer. Also under the rights agreement, the bank transferred to Fleet
Credit Card, LLC an economic interest in all liabilities assumed by the bank as
a result of the transfer. The rights agreement states that the economic
interests thereby transferred is the transfer of contractual rights between the
bank and Fleet Credit Card, LLC to receive payments or to pay obligations and
not an ownership interest in or a lien on any of the assets of the trust. The
rights agreement states that the transfer of economic interest is subject to any
and all rights, liens and security interests granted to the trustee pursuant to
the Pooling and Servicing Agreement.
Subsequent to the transfer, Fleet Credit Card, LLC converted into a limited
partnership which is known as the Fleet Credit Card Services, L.P. A subsidiary
of the bank is the general partner of Fleet Credit Card Services, L.P.
THE BANK'S CREDIT CARD ACTIVITIES
GENERAL
The bank currently is the seller and the servicer under the Pooling and
Servicing Agreement.
The bank was the survivor of a merger on November 14, 1997 between the bank
and Fleet Bank (Delaware), National Association. The bank's credit card
portfolio at that time consisted of credit card accounts originated or acquired
by the bank or its predecessor. As discussed in this prospectus under "Transfer
and Assignment," on February 20, 1998, Advanta National Bank transferred to the
bank the ownership interest in substantially all of the accounts in the Advanta
consumer credit card portfolio. This Advanta consumer credit card portfolio and
the accounts owned by the bank prior to the February 20, 1998 transfer, in
addition to originations or acquisitions made since the transfer, constitute the
"FLEET CREDIT CARD PORTFOLIO."
The accounts in the Fleet Credit Card Portfolio include premium and
standard accounts. Both premium and standard accounts undergo the same credit
analysis, but premium accounts have higher initial credit limits because of the
higher incomes and better credit quality of the cardholders. In addition,
premium accounts generally offer a wider variety of services to the cardholders
and those that charge
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annual cardholder fees generally have higher annual cardholder fees than
standard accounts that have annual cardholder fees.
Servicing of the Fleet Credit Card Portfolio is performed primarily by the
bank through its subsidiary Fleet Credit Card Services, L.P. However, certain
data processing and administrative functions associated with the servicing of
the Fleet Credit Card Portfolio are currently performed on behalf of the bank by
First Data Resources, Inc. See "--Description of First Data Resources, Inc." in
this prospectus.
SUPPLEMENTAL INFORMATION
Information relating to the credit card activities of the bank is described
in this prospectus. In addition, the accompanying prospectus supplement may
update or supplement this information.
To the extent the trust assets include any participation interests or
receivables other than those of the type described in this prospectus, the
accompanying prospectus supplement will describe the nature and characteristics
of these participation interests or receivables.
ACQUISITION AND USE OF CREDIT CARDS
Growth Strategy and Origination. The bank acquires credit card accounts
through several programs. The programs include balance transfer programs,
partnership programs, value added programs and the acquisition of credit card
portfolios from other financial institutions. These programs, excluding
portfolio acquisitions, target desirable consumers based on pre-established
criteria and use national direct mail, telemarketing and the internet as
channels to market the bank's products. The bank carefully targets consumers
through various data-mining methods and targeting models in its direct mail and
telemarketing solicitations. The bank aligns the product offering with the
target customer segment along with the number and sequence of offers in order to
maximize market penetration, response rates and usage.
The bank's products include standard and premium credit cards with either
the VISA or MasterCard affiliation.
Management of the bank believes that these account origination programs and
varied products help to create and maintain a balanced portfolio and provide a
process to sustain growth for the bank.
Substantially all new accounts are generated through direct mail and
telemarketing solicitation of potential cardholders. Solicitations are either
prequalified or non-prequalified. All of the credit cards originated are
unsecured. For prequalified solicitations, the bank engages a third-party
service to identify those individuals who meet the bank's credit and demographic
criteria. Once a list of these individuals is obtained, the bank delivers the
list to third party vendors who prepare the solicitation materials. If an
individual responds to a prequalified solicitation, the bank obtains a second
credit bureau report and offers a credit card to the applicant only if that
second report confirms the applicant's eligibility. For responses to
non-prequalified solicitations, credit bureau reports are obtained for all
applicants.
Underwriting Procedures. The bank uses internally developed credit scoring
models as well as proprietary scoring models developed by the Fair, Isaacs
Companies, an independent firm experienced in developing credit scoring models,
in evaluating the credit risk of each applicant. Credit scoring models are
developed by statistically evaluating common characteristics and their
correlation with credit risk. Application of a credit scoring system is intended
to provide a general indication, based on the information available, of an
applicant's willingness and ability to repay his or her obligations, and an
estimate of the credit risk associated with the applicant. The bank uses
proprietary scoring models as a supplement to the credit scoring models.
Most applications are scored on the basis of information received from an
independent credit reporting agency. In some cases, in accordance with criteria
established by bank management, employment and earnings are verified by
telephone. Credit limits are determined from various credit and profitability
models.
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For prequalified solicitations, the bank generally purchases the names of
potential cardholders who meet established credit criteria from credit bureaus.
These lists are matched against internal and external sources and edited to
ensure optimal quality and accuracy. The bank then mails prequalified
solicitation packages requiring only the signature and brief amount of
information from the potential cardholder. Notwithstanding the
prequalifications, some applications are rejected upon receipt of information
from the applicant and the results of the applicant's credit scores.
For non-prequalified solicitations, the bank purchases the names of
potential cardholders from a variety of sources and then edits the list using
internal and external sources to ensure quality and accuracy. The potential
cardholders on the final list are mailed solicitation packages which include
full applications. Respondents to these solicitations are approved or declined
based on criteria which are substantially similar to the criteria used to
approve or decline respondents to prequalified solicitations.
Potential cardholders must meet minimum credit standards established by the
bank to receive a specific credit limit. Cardholders not meeting the minimum
standards for the initial product offering are offered a reduced credit limit
for which they qualify. The bank generally offers an initial credit line of
$3,500 for standard cards and $7,500 for premium cards although higher and lower
limits are also offered for these cards. Generally, platinum card accounts have
credit lines which are not significantly different than the credit lines offered
on other premium accounts with similar credit quality. Since 1997, substantially
higher credit lines have been offered for platinum card accounts.
Cardholders may request to have their credit line increased upon completion
of a full application. After a review of the full application and credit bureau
report, the bank decides whether to extend additional credit. Also, the bank may
initiate credit line increases for cardholders meeting minimum standards for
usage and payment history established by the bank. Credit line increases are
granted to accountholders who have demonstrated good credit behavior and
appropriate usage patterns.
Accounts are opened with an initial term of one to two years. At the
anniversary date, accounts which meet certain criteria for usage and payment
history are reissued for one- to three-year terms.
Terms and Uses of Credit Cards. Each cardholder is subject to an agreement
governing the terms and conditions of the related MasterCard or VISA account.
Under the agreements with MasterCard and VISA, the bank reserves the right, upon
advance notice to the cardholder, to change or terminate any terms, conditions,
services or features of its MasterCard and VISA accounts at any time. Changes
may include increasing or decreasing finance charges, other fees and charges and
minimum payment terms. The agreement with each cardholder provides that the bank
may apply changes, when applicable, to current outstanding balances as well as
to future transactions. See "Risk Factors--Consumer Protection Laws May Restrict
the Bank's Ability to Collect Receivables and Maintain Yield on the Portfolio
and May Lead to an Early Pay Out or Inability to Pay Certificates in Full" and
"Material Legal Aspects of the Receivables--Consumer Protection Laws" in this
prospectus.
A cardholder may use the credit card for purchases, balance transfers and
cash advances. Cardholders make purchases when using the credit card to buy
goods or services. Balance transfers result when cardholders request to move
balances from other credit cards or loans to the credit card account held with
the bank. A cash advance is made when a credit card is used to obtain cash from
a financial institution or an automated teller machine or when the cardholder
uses special drafts issued by the bank to draw against the cardholder's credit
line. The bank generally limits the amount of credit available for cash advances
on new accounts to 30% to 50% of the total credit line.
BILLING AND PAYMENTS
The bank, using First Data Resources, Inc., as its service bureau,
generates and mails to cardholders monthly statements summarizing account
activity. For the majority of accounts, cardholders receive a 25-day grace
period on purchases. Currently, a majority of the cardholders are required to
make a monthly payment equal to 2% of their total balance.
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<PAGE> 82
All fees, charges and credit insurance premiums assessed by the bank are
automatically charged to an account and are included in the account balance at
the end of each billing cycle. The accrued and unpaid periodic finance charges
assessed by the bank are calculated by multiplying the average daily balances of
purchases and cash advances in an account by the applicable daily periodic rate,
then multiplying the resulting product by the number of days in the billing
cycle. Most accounts are also subject to daily compounding of interest. Finance
charges are not assessed in most circumstances on purchases if all balances
shown in the billing statement are paid by the due date. Under certain
conditions related to customer performance, the bank may immediately convert the
annual percentage rate applicable to existing and future balances to a higher
rate.
The bank primarily offers cards to customers without an annual fee. The
bank assesses miscellaneous transaction fees, including cash advance and draft
fees, late and overlimit charges, and returned check, returned draft, and draft
stop payment charges. Prior to June 1997, miscellaneous fees did not constitute
a material portion of finance charge receivables. However, since June 1997,
these fees have represented a greater portion of finance charge receivables.
DESCRIPTION OF FIRST DATA RESOURCES, INC.
Certain data processing and administrative functions associated with the
servicing of the Fleet Credit Card Portfolio are currently being performed on
behalf of the bank by First Data Resources, Inc. First Data Resources, Inc. was
established in 1969 as the data processing unit of Mid-America Bankcard
Association. In 1980, American Express acquired First Data Resources, Inc. and
in 1992, First Data Resources, Inc. became an independent company as a
subsidiary of First Data Corp. According to First Data Resources, Inc., it is a
leading global provider of comprehensive transaction processing products and
services to credit, debit, commercial, private label and oil card issuers.
First Data Resources, Inc.'s home office in the United States is located in
Omaha, Nebraska.
DELINQUENCIES
The discussion set forth under this caption "--Delinquencies" relates to
the policies currently in effect for accounts designated to the trust. The bank
may, from time to time, further revise its policies relating to the accounts
including its policies concerning delinquencies.
Currently, for accounts designated to the trust, each account is billed
monthly on or about the same day of the month. An account is "contractually
delinquent" if the minimum payment indicated on the cardholder's statement is
not received by the due date. For purposes of determining the delinquency of an
account, the period from one monthly billing statement to the next is considered
a period of 30 days, regardless of the actual number of days elapsed.
Efforts to collect contractually delinquent credit card receivables
currently are made by the bank's service center personnel or the bank's
designees. Collections activities include statement messages, formal collection
letters and telephone calls. The intensity at which collection activity is
pursued depends on the risk the account presents to the bank, which is
determined by behavioral scoring and adaptive control techniques. In the event
that initial telephone contact fails to resolve the delinquency, the bank
continues to contact the cardholder by telephone and by mail. Although these
arrangements are made infrequently, the bank may also enter into arrangements
with cardholders to extend or otherwise change payment schedules. Delinquency
levels are monitored by management of both the collections and credit policy
departments of the bank and information is reported daily to senior management.
The following chart summarizes the bank's charge-off policy for delinquent
accounts:
<TABLE>
<CAPTION>
PERIOD IN EFFECT CHARGE-OFF POLICY
- ---------------- -----------------
<S> <C>
October 1, 1998 to Present.................................. 180 days delinquent
Prior to October 1, 1998.................................... 186 days delinquent
</TABLE>
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When accounts are charged-off as delinquent, the charged-off accounts which
are non-bankrupt accounts are generally sold to outside third parties.
Accounts are also charged-off due to death of the accountholder or fraud in
the account. Accounts which are charged-off due to death of the accountholder
are charged-off within 30 days of notice of the death. Accounts which are
charged-off due to fraud are charged-off within a 90-day investigative period
following notice of fraudulent activity in the account.
The following chart summarizes the bank's charge-off policy for accounts of
bankrupt cardholders:
<TABLE>
<CAPTION>
PERIOD IN EFFECT CHARGE-OFF POLICY
- ---------------- -----------------
<S> <C>
October 1, 1998 to Present.................................. 60 days after notice
From August 1996 to October 1, 1998......................... 90 days after notice
</TABLE>
The credit evaluation, servicing and charge-off policies and collection
practices of the bank may change from time to time in accordance with the bank's
business judgment and applicable laws and regulations.
Information concerning the delinquency and loss experience of the Fleet
Credit Card Portfolio is contained in the accompanying prospectus supplement.
This information shows delinquencies grouped by the number of days the
receivables are delinquent and the percentage of the portfolio which is
delinquent. The loss experience information shows the receivables outstanding,
the charge-offs in dollars and as a percentage of the receivables outstanding.
In addition, the accompanying prospectus supplement will include information on
the composition of the trust portfolio by period of delinquency.
INTERCHANGE
Creditors, including the bank, participating in the VISA and MasterCard
International associations receive fees, called "INTERCHANGE," as partial
compensation for taking credit risk, absorbing fraud losses and funding
receivables for a limited period prior to initial billing. Under the VISA and
MasterCard International systems, a portion of the interchange attributed to
cardholder charges for merchandise and services is passed from banks which clear
the transactions for merchants to credit card-issuing banks. Interchange
approximates 1.4% of the transaction amount. VISA and MasterCard International
may from time to time change the amount of interchange reimbursed to banks
issuing their credit cards. Collections of finance charge receivables will be
deemed to include interchange attributed to the cardholder charges for
merchandise and services in the accounts, as calculated pursuant to the related
series supplement for any series.
USE OF PROCEEDS
The net proceeds from the sale of each series offered by this prospectus
and the related prospectus supplement will be paid to the seller. The seller
will use these proceeds for general corporate purposes which will include
issuing more credit card loans.
THE BANK AND FLEET BOSTON CORPORATION
The bank is the surviving bank of a merger consummated on November 14,
1997, between the bank and Fleet Bank (Delaware), National Association. The bank
is a limited purpose credit card bank chartered under the laws of the United
States. The bank is a wholly-owned subsidiary of Fleet National Bank. Fleet
National Bank is a wholly-owned subsidiary of Fleet Boston Corporation, doing
business ad FleetBoston Financial Corporation ("FLEET"). Fleet is the bank
holding company which came into existence on October 1, 1999 as a result of the
merger of Fleet Financial Group, Inc. and BankBoston Corporation. Prior to the
merger of Fleet Financial Group, Inc. and the BankBoston Corporation, the bank
was an indirect wholly-owned subsidiary of Fleet Financial Group, Inc.
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<PAGE> 84
The bank is subject to the supervision and regulation of the Office of the
Comptroller of the Currency. The bank's deposits are insured by FDIC and the
bank is a member of the Federal Reserve Bank of Boston.
Fleet is a $190.7 billion diversified financial services company. The
company's lines of business include commercial and consumer banking,
institutional and investment banking, cash management, trade services, export
finance, mortgage banking, commercial finance, asset-based lending, commercial
real estate lending, equipment leasing, government banking, investment
management services, private equity investments, credit cards, discount
brokerage services, student loan processing, and full-service banking in Latin
America. Through 5,750 outlets, Fleet serves approximately 20 million customers.
Fleet is headquartered in Boston and listed on the New York Stock Exchange
(NYSE: FBF).
The principal executive office of the bank is located at 111 Westminster
Street, Providence, Rhode Island 02093.
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
The seller represents and warrants in the Pooling and Servicing Agreement
that its transfer of the receivables to the trust is either a sale to the trust
of all right, title and interest of the seller in and to the receivables or the
grant to the trust of a first-priority, perfected security interest in the
bank's rights in receivables. In either case, the seller represents and warrants
that the transfer and the grant will be free and clear of liens arising from or
through the seller except for:
- certain potential tax, governmental and other nonconsensual liens;
- the interests of the holders of the Bank Certificate and any Supplemental
Certificates; and
- the seller's right to receive interest and investment earnings, net of
losses and investment expenses, in respect of the collection account or
any series account.
See "Description of the Certificates--Representations, Warranties and
Covenants" for a discussion of the trust's rights arising from a breach of these
warranties.
The seller represents and warrants that the receivables are "accounts" or
"general intangibles" for purposes of the Uniform Commercial Code. Both the sale
of accounts and the transfer of accounts as security for an obligation are
subject to the provisions of Article 9 of the UCC. In addition, a transfer of
general intangibles as security for an obligation is subject to the provisions
of Article 9 of the UCC. Therefore, the bank will file appropriate UCC financing
statements to perfect the trust's security interest in the receivables. Article
9 of the UCC, however, does not apply to the sale of general intangibles. As a
consequence, some other action under applicable state law may be required in
order to perfect this type of sale against the interests of third parties.
There are limited circumstances in which a prior or subsequent transferee
of receivables coming into existence after the date a series is issued could
have an interest in the receivables with priority over the trust's interest.
Under the Pooling and Servicing Agreement, however, the seller represents and
warrants that the receivables were transferred to the trust free and clear of
the lien of any third party, except for certain tax, governmental and other
nonconsensual liens. In addition, the seller covenants that, except as permitted
by the Pooling and Servicing Agreement, it will not sell, pledge, assign,
transfer or grant any lien on any receivable, or any related interest, other
than to the trust. Nevertheless, a tax, governmental or other nonconsensual lien
on property of the seller arising prior to the time a receivable comes into
existence may have priority over the interest of the trust in this receivable.
Furthermore, if the FDIC were appointed as receiver or conservator of the
seller, certain administrative expenses of the receiver or conservator may have
priority over the interest of the trust in the receivables arising from the
accounts owned by the seller.
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<PAGE> 85
In addition, while the bank is the servicer and subject to certain
conditions, cash collections held by the bank may be commingled and used for the
benefit of the bank prior to the date on which these collections must be
deposited in the collection account. If insolvency or similar proceedings were
commenced by or against the bank or, in certain circumstances, if certain time
period were to pass, the trust may not have a first-priority perfected security
interest in these collections. In this event, the amount payable to you could be
lower than the outstanding principal and accrued interest on the certificates,
thus resulting in losses to you.
MATTERS RELATING TO CONSERVATORSHIP AND RECEIVERSHIP
The bank is chartered as a national banking association and is regulated
and supervised by the Office of the Comptroller of the Currency, which is
authorized to appoint the FDIC as conservator or receiver for the bank if
certain events occur relating to the bank's financial condition or the propriety
of its actions. In addition, the FDIC could appoint itself as conservator or
receiver for the bank.
The Federal Deposit Insurance Act, as amended by the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FDIA") provides that the security
interest should be respected to the extent that:
- the Pooling and Servicing Agreement complies with the regulatory
requirements of the FDIA;
- the security interest granted under the Pooling and Servicing Agreement
is perfected before the FDIC is appointed as conservator or receiver for
the bank; and
- the security interest was not taken in contemplation of the bank's
insolvency or with the intent to hinder, delay or defraud the bank or its
creditors,
In addition, opinions and policy statements issued by the FDIC suggest that,
because of the manner in which these transactions are structured, the FDIC would
respect the security interest granted by the bank in the receivables.
Nevertheless, delays or reductions in payments on outstanding series of
certificates could occur if the FDIC were:
- to assert a contrary position;
- to require the trustee to go through the administrative claims procedure
established by the FDIC in order to obtain payments on the certificates;
or
- to request a stay of any actions by the trustee to enforce the Pooling
and Servicing Agreement or the certificates against the bank.
In addition, the FDIC as conservator or receiver for the bank could
repudiate the Pooling and Servicing Agreement. The FDIA would limit the damages
for this form of repudiation to the trust's "actual direct compensatory damages"
determined as of the date that the FDIC is appointed as conservator or receiver
for the bank. The FDIC, moreover, could delay its decision whether to repudiate
the Pooling and Servicing Agreement for a reasonable period following its
appointment as conservator or receiver for the bank. Therefore, if the FDIC as
conservator or receiver for the bank were to repudiate the Pooling and Servicing
Agreement, the amount payable to you could be lower than the outstanding
principal and accrued interest on the certificates, thus resulting in losses to
you.
The Pooling and Servicing Agreement provides that, upon the commencement of
an insolvency event with respect to the seller, a trust Pay Out Event will
occur, an early amortization will begin and no new principal receivables will be
transferred to the trust. Also, as a result of the insolvency event involving
the seller, unless the trustee receives other instructions from the
certificateholders and other parties described in the Pooling and Servicing
Agreement, the trustee will be required to liquidate the receivables. See
"Description of the Certificates--Liquidation of Receivables." However, the
FDIC, as conservator or
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<PAGE> 86
receiver for the bank, may have the power, notwithstanding the terms of the
Pooling and Servicing Agreement, the decisions of the trustee or the
instructions of the certificateholders to:
- delay the procedure for the liquidation of the receivables;
- prevent the commencement of an early amortization;
- prevent or limit the early liquidation of the receivables and the
termination of the trust; or
- require the continued transfer of new principal receivables to the trust.
On the other hand, regardless of the terms of the Pooling and Servicing
Agreement and any instructions of those authorized to direct the trustee's
action, the FDIC as conservator or receiver for the bank may have the power to:
- require the early liquidation of the receivables,
- require the early termination of the trust and the retirement of the
certificates, or
- prohibit or limit the continued transfer of new principal receivables to
the trust.
In addition, the FDIC as conservator or receiver for the bank may have the
power to prevent either the trustee or the certificateholders from appointing a
successor servicer under the Pooling and Servicing Agreement.
CONSUMER PROTECTION LAWS
The relationship of the cardholder and credit card issuer is extensively
regulated by Federal and state consumer protection laws. With respect to credit
cards issued by the bank, the most significant of these laws include the Federal
Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act,
Fair Debt Collection Practice Act, Electronic Funds Transfer Act and National
Bank Act, as well as any relevant Rhode Island laws and comparable statutes in
the states in which cardholders reside. These statutes impose disclosure
requirements when a credit card account is advertised, when it is opened, at the
end of monthly billing cycles, upon account renewal for accounts on which annual
fees are assessed and at year end. The statutes also limit cardholder liability
for unauthorized use, prohibit specified discriminatory practices in extending
credit and impose limitations on the type of account-related charges that may be
assessed. Federal legislation requires credit card issuers to disclose to
consumers the interest rates, annual cardholder fees, grace periods and balance
calculation methods associated with their credit card accounts. Cardholders are
entitled under current law to have payments and credits applied to the credit
card account promptly, to receive prescribed notices and to have billing errors
resolved promptly.
The trust may be liable for certain violations of consumer protection laws
that apply to the receivables, either as assignee of the seller with respect to
obligations arising before transfer of the receivables to the trust or as a
party directly responsible for obligations arising after the transfer. In
addition, a cardholder may be entitled to assert these violations by way of
set-off against his obligation to pay the amount of receivables owing. The
seller covenants in the Pooling and Servicing Agreement to accept the transfer
of all receivables in an account, under certain circumstances, if any receivable
in the account has not been created in compliance with the requirements of the
consumer protection laws. The seller has also agreed in the Pooling and
Servicing Agreement to indemnify the trust for, among other things, any
liability arising from these violations. See "Description of the
Certificates--Representations, Warranties and Covenants" in this prospectus.
Application of federal and state bankruptcy and debtor relief laws would
adversely affect the interests of the certificateholders if these laws result in
any receivables being charged-off as uncollectible. See "Description of the
Certificates--Defaulted Receivables; Rebates and Fraudulent Charges" and "Risk
Factors--Consumer Protection Laws May Restrict the Bank's Ability to Collect
Receivables and Maintain Yield on the Portfolio and May Lead to an Early Pay Out
or Inability to Pay Certificates in Full" in this prospectus.
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<PAGE> 87
DESCRIPTION OF THE CERTIFICATES
The certificates will be issued in series pursuant to the Pooling and
Servicing Agreement and series supplements to the Pooling and Servicing
Agreement. Under the Pooling and Servicing Agreement, the seller may execute
further series supplements among the seller, the servicer and the trustee in
order to issue additional series. See "--New Issuances" in this prospectus. The
trustee will provide a copy of the Pooling and Servicing Agreement, without
exhibits or schedules, including any series supplement for a series, to
certificateholders of that series without charge upon written request. A copy of
the form of Pooling and Servicing Agreement has been filed with the Securities
and Exchange Commission as an exhibit to the registration statement of which
this prospectus is a part.
The following summaries describe provisions common to all series of
certificates. Information specific to a series will be contained in the related
prospectus supplement.
GENERAL
There is no limit to the amount of certificates that can be issued under
the Pooling and Servicing Agreement. The aggregate principal amount of each
series of certificates issued by the trust will be described by the series
supplement for that series.
Each series of certificates may consist of one or more classes, one or more
of which may be floating or fixed rate certificates or other type of
certificates as specified in the related prospectus supplement. A series may
include a class or classes which are subordinated in right of payment of
principal and/or interest to another class or other classes in the same series
or in any other series. Each series will be issued in the minimum denominations
for each class specified in the related prospectus supplement.
For each series, the investor certificates issued by the trust represent
the right to receive, to the extent necessary to make payments on the
certificates of that series:
- the portion of the collections allocable to that series;
- funds and other property constituting eligible investments in the
collection account and the excess funding account allocable to that
series;
- funds and other property constituting eligible investments in any
deposit, trust, escrow or similar account maintained for the benefit of
that series; and
- funds available pursuant to any related series enhancement.
The collections of receivables will be allocated to each series on the
basis of the percentages described in the related prospectus supplement.
The trust assets will be allocated among:
- the certificateholders' interest of each series, including providers of
series enhancement holding uncertificated subordinated interests; and
- the interest of the holders of the Seller Certificates which include the
Bank Certificate and any Supplemental Certificate, and collectively
represent the sellers' interest.
The sellers' interest represents the right to the assets of the trust not
allocated to the certificateholders' interest. The term "SELLER AMOUNT" refers
to an amount equal to:
- the aggregate amount of principal receivables in the trust at the time of
determination; plus
- the principal amount on deposit in the excess funding account at the same
time, minus
- the sum of the amount of principal receivables and the amount on deposit
in the excess funding account allocated to each outstanding series.
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<PAGE> 88
The Seller Amount will fluctuate as the amount of principal receivables in
the trust changes from time to time.
The term "INVESTOR AMOUNT" for a series, as described in that series
supplement and the related prospectus supplement, generally refers to the
principal amount of the certificateholders' interest in the assets of the trust.
The term "INVESTED AMOUNT" for a series, as described in that series supplement
and the related prospectus supplement, generally refers to the investor amount
less, to the extent provided in the series supplement, amounts held in a
principal funding account, prefunding account or other account specified in the
series supplement.
Each series will commence with a period of time called a "REVOLVING PERIOD"
which begins on the date that series is issued and continues to the day
immediately preceding the commencement of an amortization period for that
series. During the revolving period, no principal will be paid on the
certificates of that series and no amounts will be accumulated to pay principal
on that series. The revolving period for a series shall end, and an amortization
period shall begin, either as scheduled or upon the occurrence of a "PAY OUT
EVENT," meaning a trust Pay Out Event or a series Pay Out Event for that series.
The term "AMORTIZATION PERIOD" refers to the period during which
collections of principal receivables are to be used to pay principal on the
certificates of any series or are to be accumulated in an account to be used at
a future date to pay principal on the certificates of that series. An
amortization period includes an accumulation period as well as any controlled
amortization period, principal amortization period, rapid amortization period,
optional amortization period, limited amortization period or, for a series, any
other amortization period provided in the related series supplement.
An "ACCUMULATION PERIOD" is a period during which collections of principal
receivables are deposited into an account to be used at a future date to make
payments on the certificates.
A "RAPID AMORTIZATION PERIOD" begins upon the occurrence of a Pay Out Event
and means the resulting period during which available collections of principal
receivables are used, on a monthly basis, to pay principal on the certificates
of those series affected by the Pay Out Event. A rapid amortization period
continues until the earlier of the payment in full of the certificates of the
series affected by the Pay Out Event or the occurrence of the series termination
date.
A "RAPID ACCUMULATION PERIOD" means a period during which available
collections of principal receivables are, on a monthly basis, placed in a
principal funding account and accumulated to be used to pay the certificates of
the affected class or series on their expected final distribution date. A rapid
accumulation period is not a feature of all series. For those series in which a
rapid accumulation period may occur, it may occur for one or more classes only
for all classes of the series. If a series or a class is subject to the
occurrence of a rapid accumulation period, that feature of the series will be
described in the applicable prospectus supplement. A rapid accumulation period
occurs in lieu of a rapid amortization period and begins upon the occurrence of
a series Pay Out Event. During the rapid accumulation period, the funds in the
principal funding account may be invested in permitted investments, subject to a
guaranteed rate agreement or placed in some other arrangement that assures a
minimum return on the investment of the funds. Investment earnings on the funds
in the principal funding account may be used to pay the interest on the related
series certificates. On the expected final distribution date of the affected
class or series, distributions of principal from the principal funding account
will be made to the certificateholders in the manner described in the related
prospectus supplement. In order to enhance the likelihood of payment in full of
principal at the end of the rapid accumulation period for a series, the series
may be subject to a principal guaranty or some other similar arrangement.
A "SCHEDULED AMORTIZATION DATE" means, for any series, the date on which
principal payments on the certificates are scheduled to begin or the date on
which deposits are scheduled to begin to be made into an account to be
accumulated and used to pay principal on the certificates in the future.
During the revolving period for any series, the invested amount for that
series will generally remain constant except in certain limited circumstances or
unless otherwise specified in the related prospectus supplement. See
"--Defaulted Receivables; Rebates and Fraudulent Charges" in this prospectus.
The
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amount of principal receivables, however, will vary each day as new principal
receivables are created and others are paid. The Seller Amount will fluctuate
daily to reflect the changes in the amount of the principal receivables.
When a series is amortizing, the invested amount for the series will
generally decline for each monthly period as principal receivables allocated to
the series are collected and distributed to the certificateholders or deposited
in a series account for the benefit of the series or a class of the series for
payment to the applicable certificateholders when due. As a result, the Seller
Amount will generally increase each month to reflect the reductions in the
invested amount of a series and will also change to reflect the variations in
the amount of principal receivables.
Interest on the certificates for each interest period for a series will be
distributed as set forth in the related prospectus supplement. Interest payments
of a series will generally be funded from the portion of finance charge
receivables collected during the related monthly period allocable to a series
and, if necessary and if specified in the related prospectus supplement, from
any series enhancement available for that series. The terms "INTEREST PERIOD"
and "MONTHLY PERIOD" for a series have the meanings specified in the related
prospectus supplement. See "--Interest Payments" in this prospectus.
If referred to in the related prospectus supplement, certificates of that
series initially will be represented by certificates registered in the name of
the nominee of The Depository Trust Company, or any other depository or any
successor depository selected by the seller. The Depository Trust Company or any
other depository selected for a series by the seller is a "DEPOSITORY." If
referred to in the related prospectus supplement, beneficial interests in the
certificates of that series will be available for purchase in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof in
book-entry form only.
The seller has been informed by DTC that DTC's nominee will be Cede & Co.
Accordingly, Cede is expected to be the holder of record of each series of
certificates and will therefore, be the only certificateholder for purposes of
the Pooling and Servicing Agreement. Those entities, including most or all
investors in the certificates, will acquire only a beneficial interest in the
certificates and will not be the registered holders of the certificates. A
beneficial owner is called a "CERTIFICATE OWNER." You, as a beneficial owner,
will not be entitled to receive a certificate representing your interest in the
certificates.
Unless and until, under the limited circumstances described in this
prospectus, certificates in fully registered, certificated form are issued:
- all references in this prospectus to actions by certificateholders shall
refer to actions taken by DTC upon instructions from its participants;
and
- the trustee will not consider a Certificate Owner to be a
certificateholder, as defined in the Pooling and Servicing Agreement, and
all references in this prospectus to distributions, notices, reports and
statements to certificateholders shall refer to distributions, notices,
reports and statements to DTC or Cede, as the registered holder of the
certificates, as the case may be, for distribution to Certificate Owners
in accordance with DTC procedure.
See "--Book-Entry Registration" and "--Definitive Certificates" in this
prospectus. Distributions will be made to DTC in immediately available funds.
If so specified in the related prospectus supplement application will be
made to list the certificates of the related series, or all or a portion of any
class thereof, on the Luxembourg Stock Exchange or any other specified exchange.
BOOK-ENTRY REGISTRATION
If specified in the related prospectus supplement, certificateholders of a
series may hold their certificates through DTC, in the United States, or
Cedelbank or Euroclear, in Europe, if they are participants of these systems.
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Cede, as nominee for DTC, will hold the global certificates. Cedelbank and
Euroclear will hold omnibus positions on behalf of the Cedelbank customers and
the Euroclear participants, respectively, through customers' securities accounts
in Cedelbank's and Euroclear's names on the books of their respective
depositaries, collectively, the "DEPOSITARIES," which in turn will hold these
positions in customers' securities accounts in the depositaries' names on the
books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC was created to hold securities
for its participating organizations and facilitate the clearance and settlement
of securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, who may include the underwriters of any series of certificates, banks,
trust companies and clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with participants either directly or
indirectly.
Transfers between DTC participants will occur in accordance with DTC rules.
Transfers between Cedelbank customers and Euroclear participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, other than Cedelbank customers and Euroclear participants, on the
one hand, and directly or indirectly through Cedelbank customers or Euroclear
participants, on the other, will be effected in DTC in accordance with DTC rules
on behalf of the relevant European international clearing system by its
depositary. However, these cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in the system in accordance with its rules and procedures and
within its established European time deadline. The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Cedelbank customers and Euroclear
participants may not deliver instructions directly to the depositaries.
Because of time-zone differences, credits of securities in Cedelbank or
Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and these credits or any transactions in the
securities settled during this processing will be reported to the relevant
Cedelbank customer or Euroclear participant on that business day. Cash received
in Cedelbank or Euroclear as a result of sales of securities by or through a
Cedelbank customer or a Euroclear participant to a DTC participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
Certificate Owners that are not participants or indirect participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, certificates may do so only through participants and indirect participants.
In addition, Certificate Owners of a series will receive all distributions of
principal of and interest on the certificates from the paying agent through the
participants who in turn will receive them from DTC. Under a book-entry system,
Certificate Owners of a series may experience some delay in their receipt of
payments, since these payments will be forwarded by the trustee to Cede, as
nominee for DTC. DTC will forward these payments to its participants, who,
afterwards, will forward the payments to indirect participants or Certificate
Owners of the related series.
It is anticipated that the only certificateholder of any series will be
Cede, as nominee of DTC. Certificate Owners of a series will not be recognized
by the trustee as certificateholders of that series for purposes of the Pooling
and Servicing Agreement. Certificate Owners of a series will only be permitted
to
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exercise the rights of certificateholders indirectly through DTC and its
participants, who in turn will exercise the rights of certificateholders through
DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among participants
on whose behalf it acts with respect to the certificates of a series and is
required to receive and transmit distributions of principal of and interest on
the certificates of the series. Participants and indirect participants with
which Certificate Owners of a series have accounts similarly are required to
make book-entry transfers and receive and transmit these payments on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess certificates, Certificate Owners will receive payments and will
be able to transfer their interests.
Because DTC may only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a Certificate
Owner to pledge certificates to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of the certificates, may be
limited due to the lack of a physical certificate for the certificates.
DTC has advised the servicer that it will take any action permitted to be
taken by a certificateholder of a series under the Pooling and Servicing
Agreement only at the direction of one or more participants to whose account
with DTC the certificates are credited. Additionally, DTC has advised the
servicer that DTC will take these actions with respect to specified percentages
of the applicable investor amount only at the direction of and on behalf of
participants whose holdings include undivided interests that constitute these
specified percentages. DTC may take conflicting actions with respect to other
undivided interests to the extent that these actions are taken on behalf of
participants whose holdings include these undivided interests.
Cedelbank, societe anonyme is incorporated under the laws of Luxembourg as
a professional depository. Cedelbank holds securities for its participating
organizations and facilitates the clearance and settlement of securities
transactions between Cedelbank customers through electronic book-entry changes
in accounts of Cedelbank customers, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedelbank in any of 34
currencies, including United States dollars. Cedelbank provides to its Cedelbank
customers, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedelbank interfaces with domestic markets in several
countries. As a registered bank in Luxembourg, Cedelbank is subject to
regulation by the Luxembourg Commission for the Supervision of the Financial
Sector. Cedelbank customers are world-wide financial institutions, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations and may include the underwriters of
any series of certificates. Indirect access to Cedelbank is also available to
other institutions, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Cedelbank customer,
either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System and to clear and settle transactions
between Euroclear participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 34 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in more
than 25 countries generally similar to the arrangements for cross-market
transfers with DTC described above.
The Euroclear System is operated by Morgan Guaranty Trust Company of New
York, Brussels, Belgium office, as the Euroclear operator, under contract with
Euroclear Clearance System, Societe Cooperative., a Belgian cooperative
corporation. All operations are conducted by the Euroclear operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear operator, not the cooperative. The cooperative establishes
policy for the Euroclear System. Euroclear participants include banks, including
central banks, securities brokers and dealers and other professional financial
intermediaries and may include the underwriters of any series of certificates.
Indirect
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access to the Euroclear System is also available to other firms that maintain a
custodial relationship with a Euroclear participant, either directly or
indirectly.
The Euroclear operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As a result,
it is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System. These terms and conditions
govern transfers of securities and cash within the Euroclear System, withdrawal
of securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear operator acts under the
terms and conditions only on behalf of Euroclear participants and has no record
of or relationship with persons holding through Euroclear participants.
Distributions with respect to certificates held through Cedelbank or
Euroclear will be credited to the cash accounts of Cedelbank customers or
Euroclear participants in accordance with the relevant system's rules and
procedures, to the extent received by its depositary. These distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. See "Federal Income Tax Consequences" in this prospectus.
Cedelbank or the Euroclear operator, as the case may be, will take any other
action permitted to be taken by a certificateholder under the Pooling and
Servicing Agreement on behalf of a Cedelbank customer or Euroclear participant
only in accordance with its relevant rules and procedures and subject to its
depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of certificates among participants
of DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform those procedures and may discontinue the procedures at any
time.
See Annex I for additional information concerning global clearance,
settlement and tax documentation procedures. Annex I is hereby incorporated into
this prospectus by reference.
In the event that any of DTC, Cedelbank or Euroclear should discontinue its
services, the seller would seek an alternative depository, if available, or
cause the issuance of definitive certificates to Certificate Owners or their
nominees in the manner described under "--Definitive Certificates" in this
prospectus.
DEFINITIVE CERTIFICATES
We refer to certificates issued in fully registered, certificated form as
"DEFINITIVE CERTIFICATES." Definitive certificates will be issued to you as a
Certificate Owner or your nominee rather than to DTC or its nominee, only if:
(1) the seller advises the trustee in writing that DTC is no longer
willing or able properly to discharge its responsibilities as
depository for the certificates of your series or your class, and
the trustee or the seller is unable to locate a qualified
successor;
(2) the seller, at its option, advises the trustee that it elects to
terminate the book-entry system with respect to your series or
class through DTC; or
(3) after the occurrence of a Servicer Default, Certificate Owners of
your series or class evidencing more than 50% of the aggregate
unpaid principal amount of your series or class advise the trustee
and DTC through participants in writing that the continuation of a
book-entry system through DTC, or its successor, is no longer in
the best interest of the Certificate Owners of the certificates.
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Upon the occurrence of any of the events described in clauses (1), (2) or
(3) above, DTC is required to notify all participants of the availability
through DTC of definitive certificates of the affected series. Upon surrender by
DTC of the definitive certificates and instructions for re-registration, the
seller will execute and the trustee will authenticate and deliver the definitive
certificates to the Certificate Owners. Subsequently, the trustee will recognize
the holders of the definitive certificates as holders under the Pooling and
Servicing Agreement.
If definitive certificates have been issued to you and you are recognized
by the trustee as a register certificateholder, then distributions of principal
and interest on the definitive certificates will be made by the paying agent
directly to you in accordance with the procedures described in this prospectus
and in the Pooling and Servicing Agreement. Interest payments and any principal
payments on each distribution date will be made to holders in whose names the
definitive certificates were registered at the close of business on the related
record date. If you hold a definitive certificate, distributions will be made by
check mailed to your address as it appears on the register maintained by the
trustee. However, the final payment on any definitive certificate, will be made
only upon presentation and surrender of the certificate at the office or agency
specified in the notice of final distribution to respective certificateholders.
The trustee will provide this notice to registered certificateholders of the
series not later than the fifth day of the month of the related final
distribution.
Definitive certificates will be transferable and exchangeable at the
offices of the transfer agent and registrar for the related series. No service
charge will be imposed for any registration of transfer or exchange, but the
transfer agent and registrar of the series may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
THE BANK CERTIFICATE; ADDITIONAL SELLERS
The sellers' interest in the trust is, as of the date of this prospectus,
held by the bank, as the seller, and is represented by a single certificate
known as the "BANK CERTIFICATE."
The Pooling and Servicing Agreement provides that the seller may surrender
the Bank Certificate to the trustee in exchange for a newly issued Bank
Certificate and one or more additional certificates. Each certificate, other
than the Bank Certificate, representing a portion of the sellers' interest is
called a "SUPPLEMENTAL CERTIFICATE." The seller may transfer or assign a
Supplemental Certificate to a person designated by the seller by the execution
and delivery of a supplement to the Pooling and Servicing Agreement. A
supplement to the Pooling and Servicing Agreement entered into for this purpose
must meet the amendment requirements of the Pooling and Servicing Agreement; see
"--Amendments" in this prospectus. In addition, the issuance of a Supplemental
Certificate, requires that:
(1) the seller shall have given written notice to each rating agency
of the exchange;
(2) the Seller Amount, excluding the interest represented by any
Supplemental Certificate, shall not be less than 2% of the total
amount of principal receivables in the trust as of the date of,
and after giving effect to, the exchange; and
(3) if any series of certificates are outstanding that were
characterized as debt at the time of their issuance, the seller
shall deliver to the trustee and each rating agency a tax opinion
addressing matters specified in the Pooling and Servicing
Agreement.
Any subsequent transfer or exchange of a Supplemental Certificate is subject to
the condition set forth in clause (2) above.
The Bank Certificate, or any interest in the Bank Certificate, may be
transferred to an entity that is a member of the "affiliated group" of which
Fleet is the "common parent," as these terms are defined in Section 1504(a) of
the Internal Revenue Code of 1986; provided, that:
- if any series of certificates are outstanding that were characterize as
debt at their time of issuance, the seller shall have delivered to the
trustee and each rating agency a tax opinion to the effect that
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the transfer will not adversely affect the tax characterization of any
certificates which were characterized as debt; and
- any transferee will be deemed to be a "seller" for purposes of the
provisions of the Pooling and Servicing Agreement regarding the seller
indemnification and liquidation of the receivables upon the occurrence of
an insolvency event.
See "--Liquidation of Receivables" and "--Indemnification" in this prospectus.
The bank may designate affiliates of the bank to be included as a seller,
called "ADDITIONAL SELLERS," under the Pooling and Servicing Agreement by means
of an amendment to the Pooling and Servicing Agreement. An amendment made to
name an additional seller will not require the consent of any certificateholder.
See "--Amendments" in this prospectus. In connection with the designation of an
additional seller, the seller shall surrender the Bank Certificate to the
trustee in exchange for a newly issued Bank Certificate modified to reflect the
additional seller's interest in the sellers' interest; provided, however, that:
- the conditions set forth above with respect to the issuance of a
Supplemental Certificate or the transfer of the Bank Certificate, as
applicable, shall have been satisfied prior to the designation and
exchange; and
- any applicable conditions described in "--Addition of Accounts" in this
prospectus shall have been satisfied with respect to the transfer of
receivables or participation interests by any additional seller to the
trust.
Following the inclusion of an additional seller, the additional seller will
be treated in the same manner as the seller and will have the same obligations
and rights as the seller.
INTEREST PAYMENTS
Each class of a series will accrue interest at the rate per annum specified
in, or in the manner described in, the related prospectus supplement. Interest
on all certificates will be due and payable on the distribution dates. The
"DISTRIBUTION DATE" for a series will be the fifteenth day of each month or, if
the fifteenth is not a business day, the next business day, or another date
specified in the series supplement for the series. If so specified in the
related prospectus supplement, interest for a class of a series will be
calculated based on the outstanding principal amount of the class at the end of
the rate determination period preceding the applicable distribution date.
To the extent provided in the related prospectus supplement, a series may
include one or more classes of floating rate certificates. The interest rate on
floating rate certificates will be a variable or adjustable rate. It is the
bank's present intention, subject to changing market conditions, that the
floating interest rate formula or index be based on an established financial
index in the national or international financial markets. The distribution dates
for floating rate certificates will be set forth in the related prospectus
supplement and need not be the same as the distribution dates for the other
certificates of the related series, but may be either more or less frequent. For
each class of floating rate certificates, the related prospectus supplement will
describe:
- the initial floating rate certificate interest rate, or the method of
determining it;
- the dates or the method of determining the dates on which the floating
rate certificate interest rate is adjusted; and
- the formula, index or other method by which the interest rate is
determined.
PRINCIPAL PAYMENTS
The revolving period for a series of certificates begins on the date of
issuance of the series, and ends on the day before an amortization period begins
for that series. On each distribution date for the revolving period, collections
of principal receivables allocable to the certificateholders' interest of a
series will,
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subject to permitted uses provided in the series supplement, be paid to the
holders of the Seller Certificates or to amortizing or accumulating series or
deposited in the excess funding account. See "Description of the
Certificates--Principal Payments" in the accompany prospectus supplement.
After an amortization period, which term includes any applicable
accumulation period, begins for any class of a series, collections of principal
receivables allocable to the class will no longer be paid to the holders of the
Seller Certificates, to other amortizing or accumulating series or deposited in
the excess funding account. When an amortization period begins for a class,
collections of principal receivables allocable to the class will generally
either be deposited in the collection account or a series account to be
distributed to certificateholders on a date or dates specified in the related
prospectus supplement or paid to the certificateholders on the distribution
dates specified in the related prospectus supplement.
To the extent that collections of principal receivables are available,
subject to any controlled distribution amount or controlled deposit amount or
other limitation set forth in the related prospectus supplement, payments of
principal will be paid to certificateholders of a class until the investor
amount of the related class has been paid in full or accumulated in an account
until the full amount of the investor amount is on deposit in that account.
However, if one or more classes is subordinated in right of payment of principal
to another class or classes, payment to or accumulation of accounts for payment
to certificateholders of the subordinated class or classes will occur only after
the investor amount of the senior class or classes has been paid in part or in
full or has been accumulated. The extent of subordination of a class of
subordinated certificates may be limited as described in the related prospectus
supplement.
Funds on deposit in the collection account, series account including any
principal funding account or other accumulation account, may be subject to a
guaranteed rate agreement or guaranteed investment contract or other mechanism
specified in the related prospectus supplement intended to assure a minimum rate
of return on the investment of these funds. In order to enhance the likelihood
of the payment in full of the principal amount of a class of certificates at the
end of an accumulation period, the related class of certificates may be subject
to a maturity guaranty or other similar mechanism specified in the applicable
prospectus supplement.
SHARED PRINCIPAL COLLECTIONS
Each series may include provisions which allow collections of principal
receivables allocated to that series but not needed for that series to be shared
with other series. Each series may also contain provisions for determining if a
principal shortfall exist for that series. On each distribution date the shared
principal collections from all series will be combined and used to cover
principal shortfalls or otherwise distributed as described in the following
provisions.
On each distribution date:
- the servicer will allocate shared principal collections among the series
entitled to shared principal collections, pro rata, in proportion to the
principal shortfalls, if any, of each series; and
- the servicer will withdraw from the collection account and pay to the
holders of the Seller Certificates the amount of the shared principal
collections not used to cover principal shortfalls;
provided however, that if on any distribution date the Seller Amount is less
than or equal to the Required Seller Amount, the servicer will not distribute
any shared principal collections to the holders of the Seller Certificates, but
will deposit these funds in the excess funding account.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS
Collections of finance charge receivables allocable to any series in a
group in excess of the amounts necessary to make required payments on that
series may, if specified in the related series supplement, be applied to cover
shortfalls in amounts payable from collections of finance charge receivables
allocable to any other series in the group.
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COMPANION SERIES
If specified in the prospectus supplement relating to a series, one series
of certificates may be paired with one or more other series or a portion of one
or more other series previously issued by the trust, so that a reduction in the
invested amount of one series results in an increase in the invested amount of
the other series. In general, a series may be issued as a paired series or
companion series to an existing prior series to enable the trust to fund the
amount by which the prior series has amortized and will amortize in the future.
If a Pay Out Event occurs which affects the prior series or the new series
issued as the companion series when the prior series is in an amortization
period, the series percentage for the allocation of collections of principal
receivables for the prior series may be reset to a lower percentage and the
amortization period for the prior series may be lengthened. The full extent by
which the amortization period for the prior series may be lengthened will be
dependent on a variety of factors and will not be readily determinable by the
extent by which the series percentage has been changed. See "Risk
Factors--Principal May Be Paid Earlier Than Expected Creating a Reinvestment
Risk to Certificateholders or Later Than Expected Resulting in a Failure to
Receive Payment When Expected" in this prospectus and "Maturity Assumptions" in
the accompanying prospectus supplement for a discussion of these factors.
NEW ISSUANCES
The Pooling and Servicing Agreement authorizes three types of certificates:
- one or more series of investor certificates and interests which are
treated as investor certificates which are transferable and have the
characteristics described below;
- a Bank Certificate, evidencing the bank's interest as seller, which will
initially be held by the bank and which is transferable in certain
circumstances to members of the affiliated group of which Fleet is the
common parent; and
- Supplemental Certificates delivered in exchange for a portion of the Bank
Certificate under circumstances described in the Pooling and Servicing
Agreement.
The Bank Certificate and the Supplemental Certificates, if any, are,
collectively, the "SELLER CERTIFICATES."
The Bank Certificate and the Supplemental Certificates represent the
ownership interest in the remainder of the trust assets not allocated pursuant
to the Pooling and Servicing Agreement to the certificateholders' interest. This
remaining interest is the "SELLERS' INTEREST."
For each new series, the series supplement for that series will specify:
- the name or designation of the series;
- the initial investor amount and series investor amount, or method for
calculating these amounts;
- the certificate rate, or method for its determination;
- the payment date or dates and the date or dates from which interest shall
accrue;
- the method for allocating collections to certificateholders of the
series;
- the designation of any series accounts to be used by the series and the
terms governing the operation of any of these series accounts;
- the method of calculating the servicing fee;
- the terms of any form of series enhancement;
- the terms on which the certificates of the series may be exchanged for
certificates of another series, repurchased by the seller or remarketed
to other investors;
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- the stated series termination date of the series;
- the number of classes of the series and, if the series consists of more
than one class, the rights and priorities of each class;
- the extent to which the certificates of the series will be issuable in
temporary or permanent global form and the depositary for any global
certificate or certificates, the terms and conditions, if any, upon which
the global certificate may be exchanged, in whole or in part, for
definitive certificates, and the manner in which any interest payable on
a temporary or global certificate will be paid;
- whether the certificates may be issued as bearer certificates and any
limitations imposed on them;
- the priority of the series with respect to any other series;
- the group, if any, to which the series belongs;
- whether or not the series is a principal sharing series; and
- any other terms of the series.
Neither the seller, the servicer, the trustee nor the trust is required or
intends to obtain the consent of any certificateholder of any outstanding series
to issue any additional series.
The seller may offer any series under a prospectus or other disclosure
document in transactions either registered under the Securities Act of 1933, as
amended, or exempt from registration thereunder, directly, through one or more
underwriters or placement agents, in fixed-price offerings or in negotiated
transactions or otherwise. A series may be issued in fully registered or
book-entry form in minimum denominations determined by the seller.
The Pooling and Servicing Agreement permits each new series to have a
period during which amortization or accumulation of the principal amount is
intended to occur but which may have a different length and begin on a different
date than periods for any other series. Further, one or more series may be in an
amortization period while other series are not. Thus, certain series may not be
amortizing or accumulating, while other series are amortizing or accumulating.
Moreover, one or more series, or classes of a series, may have the benefits of
series enhancement different from the forms of series enhancement available to
another class or classes of any other series. Under the Pooling and Servicing
Agreement, the trustee will hold any form of series enhancement only on behalf
of the certificateholders of the series, or class, to which it relates.
Collections allocated to finance charge receivables not used to pay
interest on the certificates of a series will be allocated as provided in the
related series supplement.
There is no limit to the number of new issuances that the seller may
perform under the Pooling and Servicing Agreement. The trust will terminate only
as provided in the Pooling and Servicing Agreement.
The following are conditions to the issuance of a new series:
(1) on or before the fifth day immediately preceding the relevant
closing date, the seller shall give the trustee and the servicer
notice of a new issuance and its date; and on or before the tenth
day immediately preceding the relevant closing date, the seller
shall give each rating agency notice of a new issuance and its
date; and
(2) the seller shall deliver to the trustee:
- a related series supplement specifying the principal terms of the new
series;
- any agreement relating to series enhancement for the series;
- written confirmation from each rating agency rating any outstanding
series that the new issuance will not result in that rating agency
reducing or withdrawing its rating of any outstanding series or class of
certificates;
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- an officer's certificate from the seller stating that the seller
reasonably believes that a new issuance will not cause a Pay Out Event to
occur for any series; and
- if any series of certificates are outstanding that were characterized as
debt at the time of their issuance, an opinion of counsel to the effect
that for federal tax purposes, the new issuance will not adversely affect
that characterization and that the trust will not be deemed to be an
association or publicly traded partnership taxable as a corporation and
that the new issuance will not cause an event in which gain or loss would
be recognized by any certificateholders of the trust.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
The seller has transferred and assigned to the trust all of its right,
title and interest in and to specifically identified receivables existing in the
accounts owned by the seller on the day of the relevant transfer and assignment
and in and to all receivables created in future accounts and all future
proceeds.
In connection with a transfer of the receivables to the trust, the seller
annotates and indicates in its computer files that the receivables have been
conveyed to the trust for the benefit of the certificateholders. In addition,
the seller provides to the trustee a computer file or a microfiche list
containing a true and complete list of all accounts owned by the seller, the
receivables of which have been assigned to the trust. The list specifies for
each account, its account number, the aggregate amount outstanding and the
aggregate amount of principal receivables outstanding as of the cut-off date
selected by the seller. The seller will not deliver to the trustee any other
records or agreements relating to the accounts or the receivables.
The records and agreements maintained by the seller or servicer relating to
the accounts designated to the trust and the receivables in the trust will not
be segregated by the seller or the servicer from other documents and agreements
relating to other credit card accounts and receivables and will not be stamped
or marked to reflect the transfer of the receivables to the trust. The seller
has filed and will file UCC financing statements meeting the requirements of
applicable state law with respect to the receivables. See "Material Legal
Aspects of the Receivables" in this prospectus.
LIQUIDATION OF RECEIVABLES
If an insolvency event occurs which involves the seller, the Pooling and
Servicing Agreement requires that the seller will immediately cease to transfer
principal receivables to the trust and promptly notify the trustee.
Notwithstanding any cessation of the transfer of additional principal
receivables to the trust, principal receivables transferred to the trust prior
to the occurrence of the insolvency event, collections of the principal
receivables transferred prior to the insolvency event and collections of finance
charge receivables whenever created, accrued in respect of the principal
receivables in the trust, shall continue to be a part of the trust. Within 15
days after receipt of the notice by the trustee of the occurrence of the
insolvency event, the trustee shall:
- publish a notice in an authorized newspaper that an insolvency event has
occurred and that the trustee intends to liquidate the receivables; and
- give notice to the certificateholders and request instructions from the
certificateholders.
The trustee shall promptly liquidate the receivables in a commercially
reasonable manner and on commercially reasonable terms, unless the trustee has
received instructions within 90 days from the date notice is first published:
- from certificateholders evidencing more than 50% of the investor amount
of each series or, for any series with two or more classes, of each
class, to the effect that the certificateholders disapprove of the
liquidation of the receivables and wish to continue having principal
receivables transferred to the trust; and
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- if at that time there is more than one seller, from any seller which is
not the subject of the insolvency event, and from any holder of a
Supplemental Certificate and any other parties specified in the series
supplements, also disapproving the liquidation.
The trustee may obtain a prior determination from any applicable
conservator, receiver or liquidator that the terms and manner of any proposed
liquidation are commercially reasonable.
If a conservator or receiver is appointed for the seller and no Pay Out
Event other than the conservatorship or receivership or insolvency of the seller
exists, the conservator or receiver may have the power to prevent the early
liquidation of the receivables.
The proceeds from the liquidation of the receivables shall be immediately
deposited in the collection account. The trustee shall determine conclusively
the amount of the proceeds which are deemed to be finance charge receivables and
which are deemed to be principal receivables.
The proceeds shall be allocated and distributed to certificateholders in
accordance with the terms of each series supplement, and the trust shall then
terminate immediately.
REPRESENTATIONS, WARRANTIES AND COVENANTS
The seller makes representations and warranties as of each date on which
certificates are issued and, with respect to receivables in additional accounts,
as of the related addition date, to the effect, among other things, that:
(1) the Pooling and Servicing Agreement, each series supplement and, in
the case of additional accounts, the related assignment document,
constitute legal, valid and binding obligations of the seller
enforceable against the seller in accordance with their terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting the
enforcement of creditors' rights in general and the rights of
creditors of national banks under United States law and except as
this enforceability may be limited by general principles of equity,
whether considered in a suit at law or in equity;
(2) the schedule of accounts referred to in the Pooling and Servicing
Agreement is an accurate and complete listing in all material
respects of the accounts owned by the seller and designated to the
trust as of the related cut-off date and the information contained
in the schedule concerning the identity of these accounts and the
receivables existing in the accounts is true and correct in all
material respects as of the related cut-off date;
(3) each receivable conveyed to the trust by the seller has been
conveyed to the trust free and clear of any lien other than liens
permitted by the Pooling and Servicing Agreement;
(4) all authorizations, consents, orders or approvals of or
registrations or declarations with any governmental authority
required to be obtained, effected or given by the seller in
connection with the conveyance by the seller of receivables to the
trust have been duly obtained, effected or given and are in full
force and effect;
(5) either the Pooling and Servicing Agreement or, in the case of
additional accounts, the related assignment document, constitutes a
valid sale, transfer and assignment to the trust of all right,
title and interest of the seller in the receivables conveyed to the
trust by the seller and the proceeds thereof or, if the Pooling and
Servicing Agreement or the related assignment document does not
constitute a sale of the property, it constitutes a grant of a
"security interest," as defined in the UCC, in the property to the
trust, which, in the case of receivables then existing and the
proceeds of the receivables, is enforceable upon execution and
delivery of the Pooling and Servicing Agreement or the related
assignment document as of the applicable date and which will be
enforceable with respect to receivables created in future accounts
in the future and the related future proceeds and that upon the
filing of financing statements required by the Pooling and
Servicing Agreement,
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the trust shall have a first priority perfected security or
ownership interest in the property and proceeds except for:
- liens permitted under the Pooling and Servicing Agreement;
- the interest of the seller as holder of the Bank Certificate or any
Supplemental Certificate; and
- the seller's right to receive interest accruing on and investment
earnings, if any, in respect of the collection account or any series
account, as provided in the Pooling and Servicing Agreement or the
related series supplement;
(6) except as otherwise expressly provided in the Pooling and Servicing
Agreement or the related series supplement, neither the seller nor
any person claiming through or under the seller has any claim to or
interest in the collection account, the excess funding account, any
series account or any series enhancement;
(7) as of the related cut-off date, each initial account or additional
account is an Eligible Account;
(8) as of the related cut-off date, each receivable contained in the
accounts being added to the trust is an Eligible Receivable;
(9) as of the date of the creation of any new receivable in an account
designated to the trust, the new receivable is an Eligible
Receivable; and
(10) no selection procedure has been used by the seller which it
reasonably believes would result in the selection of an account
that would be materially adverse to the interests of
certificateholders of any series.
The seller shall accept reassignment of the receivable in the event:
(a) any representation or warranty of the seller contained in clause
(2), (3), (4), (7), (8), (9) or (10) above is not true and correct
in any material respect as of the specified date with respect to any
receivable transferred to the trust or an account and, as a result
of the breach, any receivables in the related account become
defaulted receivables, or the trust's rights in, to or under the
receivables or the proceeds of the receivable are impaired or the
proceeds are for any reason not available to the trust free and
clear of any lien, unless the breach is cured within 60 days or a
longer period not in excess of 150 days agreed to by the trustee
after the earlier to occur of the discovery of the breach by the
seller or receipt by the seller of notice of the breach given by the
trustee; or
(b) a receivable in the trust is determined to be ineligible because it
is evidenced by an instrument or chattel paper.
The receivables subject to reassignment will be "INELIGIBLE RECEIVABLES."
The receivables will not, however, be deemed ineligible receivables and will not
be reassigned to the seller if, on any day prior to the end of the 60-day or
longer cure period:
(1) either (A) in the case of an event described in clause (a) above the
relevant representation and warranty shall be true and correct in
all material respects as if made on that day or (B) in the case of
an event described in clause (b) above the circumstances causing the
receivable to become an ineligible receivable shall no longer exist;
and
(2) the seller shall have delivered to the trustee an officer's
certificate describing the nature of the breach and the manner in
which the relevant representation and warranty became true and
correct.
Ineligible receivables which are to be removed from the trust shall be
automatically removed from the trust by the servicer deducting the portion of
the ineligible receivables reassigned to the seller which are principal
receivables from the aggregate amount of principal receivables used to calculate
the Seller
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Amount, the series percentages and any other percentage used to allocate within
or among series. If following the exclusion of the principal receivables from
the calculation of the Seller Amount, the Seller Amount would be less than the
Required Seller Amount, then on the first distribution date following the
monthly period in which the reassignment obligation arises, the seller shall
make a deposit into the excess funding account. The amount deposited shall be an
amount equal to the amount by which the Seller Amount would be reduced below the
Required Seller Amount, but, not in an amount greater than the amount of the
principal receivables reassigned to the seller.
Upon the deposit, if any, required to be made to the excess funding account
and the reassignment of ineligible receivables, the trustee shall automatically
be deemed to convey to the seller or its designee, without recourse,
representation or warranty, all the right, title and interest of the trust in
and to the ineligible receivables, all moneys due or to become due and all
amounts and proceeds received.
The obligation of the seller to accept reassignment of any ineligible
receivables, and to make the deposits, if any, required to be made to the excess
funding account shall constitute the sole remedy respecting the event giving
rise to the obligation available to certificateholders, or the trustee on behalf
of the certificateholders. The obligations of the seller or any additional
seller to accept reassignment of the receivables will be several and not joint
with respect to the receivables transferred by the seller to the trust.
The seller also makes representations and warranties to the trust to the
effect, among other things, that as of each date on which certificates are
issued:
(1) it is a national banking association or corporation duly organized
and validly existing in good standing under the laws of the
jurisdiction of its organization or incorporation;
(2) it is duly qualified or is exempt from the requirements to do
business and is in good standing as a foreign corporation, and has
obtained all necessary licenses and approvals in each jurisdiction
in which failure to so qualify or to obtain such licenses and
approvals would render any cardholder agreement relating to an
account owned by it or any receivable transferred to the trust by it
unenforceable by the seller, the servicer or the trustee or would
have a material adverse effect on the certificateholders of any
series;
(3) the execution and delivery of the Pooling and Servicing Agreement
and each series supplement by the seller and the execution and
delivery to the trustee of the certificates by the bank and the
consummation by the seller of the transactions provided for in the
Pooling and Servicing Agreement and each series supplement have been
duly authorized by the seller;
(4) the execution and delivery by the seller of the Pooling and
Servicing Agreement, each series supplement and the certificates,
the performance by the seller of the transactions contemplated by
the Pooling and Servicing Agreement and each series supplement and
the fulfillment by the seller of their terms, will not conflict
with, result in any breach of any of the material terms and
provisions of any instrument to which the seller is a party or by
which it or any of its properties are bound;
(5) the execution and delivery by it of the Pooling and Servicing
Agreement, each series supplement and the certificates, the
performance by the seller of the transactions contemplated by the
Pooling and Servicing Agreement and each series supplement and the
fulfillment by the seller of their terms will not conflict with or
violate any requirements of law applicable to the seller;
(6) there are no proceedings or investigations, pending or, to the best
knowledge of the seller, threatened against it, before any court,
regulatory body, administrative agency, or other tribunal or
governmental instrumentality seeking any determination or ruling
that, in the reasonable judgment of the seller, would materially and
adversely affect the performance by
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it of its obligations with respect to any series under the Pooling
and Servicing Agreement or any series supplement;
(7) no insolvency event with respect to the seller has occurred and the
transfer of the receivables by the seller to the trust has not been
made in contemplation of the occurrence of an insolvency event; and
(8) the seller is either an insured institution for the purposes of the
Federal Deposit Insurance Act or is a bankruptcy-remote entity.
Upon discovery by the seller, the servicer or the trustee of a breach of
any of the representations and warranties by the seller described above, the
party discovering the breach will give prompt written notice to the others and
the seller will cooperate with the servicer and the trustee in attempting to
cure the breach.
An "ELIGIBLE ACCOUNT" is defined in the Pooling and Servicing Agreement to
mean a revolving credit card account owned by the seller and which account is
identified by the seller as of the related cut-off date as having the following
characteristics:
- is in existence and maintained by the seller;
- is payable in United States dollars;
- except as provided below, has not been identified as an account the
credit card or cards with respect to which have been reported to the
seller as having been lost or stolen;
- the obligor of which has provided as his or her billing address an
address located in the United States, or its territories or possessions
or a military address;
- the obligor of which has not been identified by the seller as an employee
of the seller or any affiliate of the seller;
- except as provided below, does not include any receivables which are
defaulted receivables; and
- except as provided below, does not include any receivables which have
been identified by the seller or the relevant obligor as having been
incurred as a result of fraudulent use of a credit card.
The Pooling and Servicing Agreement provides that an Eligible Account may
include receivables which have been charged-off, or may be an account with an
obligor which the seller believes is bankrupt, or may include accounts
containing receivables have been identified by the obligor as having been
incurred as a result of fraudulent use of a credit card, or as to which any
credit cards have been reported to the seller as lost or stolen, in each case as
of the related cut-off date; provided, that:
- the balance of all receivables included in those accounts is reflected on
the books and records of the seller, and is treated for purposes of the
Pooling and Servicing Agreement, as "zero"; and
- charging privileges with respect to those accounts have been canceled.
An "ELIGIBLE RECEIVABLE" is defined in the Pooling and Servicing Agreement
to mean each receivable:
- which has arisen under an Eligible Account;
- which was created in compliance with all requirements of law applicable
to the seller, the failure to comply with which would have a material
adverse effect upon certificateholders, and under a credit card agreement
which complies with all requirements of law applicable to the seller, the
failure to comply with which would have a material adverse effect upon
certificateholders;
- with respect to which all material consents, licenses, approvals or
authorizations of, or registrations or declarations with, any
governmental authority required to be obtained or given by the seller in
connection with the creation of such receivable or the execution,
delivery and performance by the seller of its obligations, if any, under
the related credit card agreement have been duly obtained or given and
are in full force and effect as of the date of creation of the
receivable;
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- as to which, at the time of its transfer to the trust, the seller or the
trust will have good and marketable title, free and clear of all liens,
encumbrances, charges and security interests, except for certain tax
liens permitted by the Pooling and Servicing Agreement;
- which has been the subject of either:
(a) a valid transfer and assignment from the seller to the trust of
all of the seller's right, title and interest in the receivable;
or
(b) the grant of a first priority perfected security interest in the
receivable and in the proceeds of the receivable;
- which at and after the time of transfer to the trust is the legal, valid
and binding payment obligation of the obligor thereon, legally
enforceable against the obligor in accordance with its terms, except as
the enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and except as the
enforceability may be limited by general principles of equity;
- which constitutes either an "account" or a "general intangible" under and
as defined in Article 9 of the UCC;
- which, at the time of its transfer to the trust, has not been waived or
modified except as permitted in accordance with the credit card
guidelines and which waiver or modification is reflected in the
servicer's computer file of revolving credit card accounts;
- which, at the time of its transfer to the trust, is not subject to any
right of rescission, setoff, counterclaim or any other defense of the
obligor, including the defense of usury, other than defenses arising out
of applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights in general
and except as the enforceability may be limited by general principles of
equity, or as to which the servicer is required by the Pooling and
Servicing Agreement to make an adjustment;
- as to which, at the time of its transfer to the trust, the seller has
satisfied all obligations to be fulfilled by the seller at that time; and
- as to which, at the time of its transfer to the trust, the seller has not
taken any action which, or failed to take any action the omission of
which, would, at the time of its transfer to the trust, impair the rights
of the trust or the certificateholders.
The trustee will not make any initial or periodic general examination of
the receivables or any records relating to the receivables for the purpose of
establishing the presence or absence of defects, compliance with the seller's
representations and warranties or for any other purpose. The servicer, however,
has agreed to deliver to the trustee on or before March 31 of each year an
opinion of counsel with respect to the validity of the security interest of the
trust in and to the receivables and other matters related to the trust.
The seller covenants in the Pooling and Servicing Agreement that, except as
otherwise required by law, or as is deemed by the seller in its sole discretion
to be necessary in order for the seller to maintain its lending business on a
competitive basis, based on a good faith assessment by the seller of the nature
of the competition in the lending business, it will not at any time reduce the
annual percentage rate at which periodic finance charges are assessed on any
receivable or the other fees and charges assessed on the accounts owned by it
if, as a result of the reduction, either:
- the seller's reasonable expectation is that the reduction would cause a
series Pay Out Event to occur; or
- the reduction is not also applied to any comparable segments of consumer
revolving credit card accounts owned by the seller which have
characteristics the same as, or substantially similar to, the accounts
designated to the trust.
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The seller also covenants that it may only change the terms relating to any
of the accounts owned by it and designated to the trust if in the reasonable
judgment of the seller the change is also made applicable to the comparable
segment of the other consumer revolving credit card accounts which have not been
designated to the trust but are owned by the seller and have characteristics the
same as, or substantially similar to, the accounts in the trust, subject to
compliance with all requirements of law.
ADDITION OF ACCOUNTS
The seller may from time to time designate additional accounts to the
trust. Also, if specified tests are not met, the seller will be required to
designate additional accounts. In each case, the seller will convey to the trust
all receivables in the additional accounts, whether these receivables are then
existing or later created. The date on which additional accounts are transferred
to the trust is an "ADDITION DATE."
Each additional account must be an Eligible Account as of the related
cut-off date. No selection procedures believed by the seller to be adverse to
the interests of the certificateholders are to be used in selecting additional
accounts from the available Eligible Accounts in the Fleet Credit Card
Portfolio. Nevertheless, there is no assurance that additional accounts will be
of the same credit quality as the accounts in the trust as of the date of this
prospectus. Additional accounts may have been originated at a different time or
using different credit criteria or may have been acquired from another credit
card issuer that had different credit criteria.
Required Additions. Generally, the seller will be required to designate
additional Eligible Accounts to the trust in a sufficient amount so that, after
giving effect to the addition, the Seller Amount is at least equal to the
Required Seller Amount and the aggregate amount of principal receivables in the
trust exceeds the Required Principal Balance, if either:
(1) the Seller Amount is less than the Required Seller Amount; or
(2) the aggregate amount of principal receivables in the trust is less
than the Required Principal Balance.
In lieu of, or in addition to, designating additional accounts, the seller
may, subject to the conditions specified below and in the Pooling and Servicing
Agreement, convey to the trust participations, including 100% participations,
representing undivided interests in a pool of assets consisting of revolving
credit card receivables or consumer secured and unsecured loan receivables
arising as a result of advances made on bank cards, private label cards,
corporate cards, and unsecured revolving lines of credit, and any interests in
the receivables.
"REQUIRED SELLER AMOUNT" means, as of any date, the product of the Required
Seller Percentage and the aggregate amount of principal receivables in the
trust.
"REQUIRED SELLER PERCENTAGE" currently means 5%; however, the Required
Seller Percentage may be reduced to as low as 2% if the seller delivers an
officer's certificate stating that the reduction will not result in the
occurrence of a Pay Out Event or materially adversely affect the amount or
timing of distributions to be made to any series or class and the rating
agencies have notified the seller that the reduction will not result in a
reduction or withdrawal of any outstanding rating on a series or class of
certificates.
"REQUIRED PRINCIPAL BALANCE" means, as of any date, the sum of the Series
Investor Amounts for all series minus the amount on deposit in the excess
funding account.
"SERIES INVESTOR AMOUNT" means, for any series, the amount stated in the
related series supplement and, in the prospectus supplement for that series,
but, generally, will be an amount equal to the numerator used in the calculation
of the Series Percentage used in allocating collections of principal receivables
to that series.
Restricted Additions. The seller may from time to time, at its sole
discretion, subject to the conditions specified below, designate additional
Eligible Accounts to the trust or designate participation interests to be
included as trust assets.
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Conditions to Required and Restricted Additions. The following are
conditions to the addition of accounts or participation interests to the trust
under the required addition provisions and the restricted addition provisions:
(1) on or before the tenth business day immediately preceding the
addition date, the seller shall give the trustee, the servicer and
each rating agency written notice of the addition;
(2) the seller shall deliver to the trustee copies of UCC-1 financing
statements covering the additional accounts, if necessary to perfect
the trust's interest in the receivables;
(3) as of each of the related cut-off date and the addition date, no
insolvency event affecting the seller shall have occurred nor shall
the transfer to the trust be made in contemplation of the occurrence
of an insolvency event;
(4) except in the case of a limited amount of required additions, the
rating agencies have notified the seller that the addition will not
result in a reduction or withdrawal of any outstanding rating in a
series or class of certificates shall have been satisfied;
(5) the seller shall deliver to the trustee an officer's certificate,
dated the addition date, stating that:
(a) as of the applicable related cut-off, any additional accounts are
Eligible Accounts;
(b) to the extent applicable, the conditions set forth in clauses (2)
through (4) above have been satisfied; and
(c) the seller reasonably believes that:
- the addition of the receivables arising in the additional accounts
to the trust or of the interests in the trust participations will
not, based on the facts known to the officer at the time of the
addition, then or in the future cause a Pay Out Event to occur with
respect to any series; and
- no procedure was used in selecting additional accounts that would
be materially adverse to the interests of the certificateholders of
any series as of the addition date;
(6) the seller shall deliver to the trustee and each rating agency an
opinion of counsel stating the validity and perfection of the
transfer of the receivables created in the additional accounts to
the trustee;
(7) in the case of designation of additional accounts, the seller shall
deliver to the trustee:
(a) the computer file or microfiche list containing a true and
complete list of the additional accounts; and
(b) a duly executed, written assignment; and
(8) unless each rating agency otherwise consents, the number of
additional accounts designated as required additions during any of
the three consecutive monthly periods commencing in January, April,
July and October of each calendar year, shall not exceed 15% of the
number of accounts designated to the trust as of the first day of
the calendar year during which the monthly periods begin and the
number of additional accounts designated as required additions
during any calendar year shall not exceed 20% of the number of
accounts designated to the trust as of the first day of the calendar
year.
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ACQUISITION OF PARTICIPATION INTEREST
If the seller designates a participation interest to be included in the
trust and these interests are issued by an entity other than the seller or any
affiliate of the seller, then these interests will:
(1) either:
(a) have been previously registered under the Securities Act of
1933, as amended; or
(b) are eligible for sale under Rule 144(k); and
(2) will be acquired in bona fide secondary market transactions not
from the seller or an affiliate.
AUTOMATIC ACCOUNT ADDITIONS
(1) The seller may from time to time, at its sole discretion, subject to
and in compliance with the limitations specified in clause (2) below
and the applicable conditions specified in clauses (3) through (7)
below, designate additional Eligible Accounts to the trust without
meeting some of the conditions applicable to other additions. These
additions are "AUTOMATIC ADDITIONS." Under the automatic addition
provisions, accounts to be added will be deemed to be Eligible
Accounts only if the accounts are consumer revolving credit card
accounts originated by the seller or any affiliate of the seller.
(2) Unless each rating agency then rating any series of certificates
otherwise consents, the number of accounts designated under the
automatic addition provisions shall be limited as follows:
- in any three consecutive monthly periods commencing in January, April,
July and October of a calendar year, the number of accounts added
shall not exceed 15% of the number of accounts as of the first day of
the calendar year during which the monthly periods commence; and
- in any calendar year, the number of accounts designated under the
automatic additional provisions will not exceed 20% of the number of
accounts as of the first day of the calendar year.
(3) Within 30 days after the addition date for the automatic addition
the seller will deliver to the trustee and each rating agency an
opinion of counsel, confirming the validity and perfection of the
transfer of the accounts. If the opinion of counsel is not received,
the ability of the seller to designate automatic additional accounts
will be suspended until each rating agency otherwise consents in
writing. If the seller is unable to deliver an opinion of counsel
for any automatic additional account, that inability shall be deemed
to be a breach of the representations with respect to the
receivables in the additional accounts, and the cure period for such
breach will not exceed 30 days.
(4) The seller shall deliver to the trustee copies of UCC-1 financing
statements covering the additional accounts, if necessary to perfect
the trust's interest in the arising receivables.
(5) As of each of the related cut-off date and the addition date, no
insolvency event with respect to the seller shall have occurred nor
shall the transfer of the receivables arising in the additional
accounts to the trust be made in contemplation of the occurrence of
an insolvency event.
(6) The seller shall deliver to the trustee an officer's certificate,
dated the addition date, stating that:
- as of the applicable related cut-off date, the automatic additional
accounts are all Eligible Accounts;
- to the extent applicable, the conditions described in clauses (2)
through (5) above have been satisfied; and
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- the seller reasonably believes that (a) the addition of the
receivables arising in the automatic additional accounts will not,
based on the facts known to the officer at the time of the addition,
then or in the future cause a Pay Out Event to occur with respect to
any series, and (b) no selection procedure was used in selecting
automatic additional accounts that would be materially adverse to the
interests of the certificateholders of any series as of the addition
date.
(7) The seller shall deliver to the trustee:
- a computer file or microfiche list containing a true and complete list
of the accounts being added; and
- a duly executed assignment of the receivables arising in the
additional accounts.
REMOVAL OF ACCOUNTS
During any monthly period the seller shall have the right to require the
reassignment to it or its designee of all the trust's right, title and interest
in, to and under the receivables then existing and in the future created, all
moneys due or to become due and all amounts and proceeds received in or with
respect to specified accounts or participation interests, upon satisfaction of
the following conditions:
(1) on or before the fifth business day immediately preceding the
removal date, the seller shall give the trustee, the servicer, each
rating agency then rating any series of certificates and the
provider of any series enhancement written notice of the removal;
(2) with respect to the accounts being removed, on or prior to the date
that is ten business days after the removal date, the seller will
deliver to the trustee a computer file or microfiche list containing
a true and complete list of the removed accounts specifying for each
account, its account number, the aggregate amount outstanding in the
account and the aggregate amount of principal receivables
outstanding in the account;
(3) the seller shall represent and warrant as of the removal date that
the list of removed accounts delivered pursuant to clause (2) above,
as of the removal cut-off date, is true and complete in all material
respects;
(4) the rating agencies shall have notified the seller that the removal
will not result in a reduction or withdrawal of any outstanding
rating on a series or class of certificates;
(5) the seller shall deliver to the trustee an officer's certificate to
the effect that the seller reasonably believes that:
- this removal will not, based on the facts known to the officer at the
time of the certification, then or in the future cause a Pay Out Event
to occur with respect to any series; and
- no selection procedure was used in selecting the accounts or interests
in the trust participations to be removed that would be materially
adverse to the interests of the certificateholders of any series as of
the removal date; and
(6) as of the removal cut-off date, no more than 10% of the receivables
in the trust are more than thirty days contractually delinquent.
Upon satisfaction of the above conditions, the trustee will execute and
deliver to the seller or its designee a written reassignment and will be deemed
to sell, transfer, assign, set over and otherwise convey to the seller or its
designee, effective as of the removal date, without recourse, representation or
warranty, all the right, title and interest of the trust in and to the interests
in the trust participations removed from the trust or receivables arising in the
removed accounts, all moneys due and to become due and all amounts and proceeds
received.
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SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the servicer will be
responsible for servicing and administering the receivables in the trust in
accordance with the servicer's customary and usual servicing procedures for
servicing credit card receivables comparable to the receivables in the trust and
in accordance with its credit card guidelines.
DISCOUNT OPTION
The Pooling and Servicing Agreement provides that the seller may designate
a "DISCOUNT PERCENTAGE" at any time and from time to time. A discount percentage
may be a fixed percentage or a variable percentage based on a formula. If the
seller specifies a discount percentage, then that percentage of all of the
principal receivables or of any specified portion of principal receivables
created after the date designated by the seller will be treated as finance
charge receivables, rather than principal receivables. If this option is
exercised by the seller, the principal receivables will be treated as having
been transferred to the trust at a discount. The seller also has the option of
reducing or discontinuing the discount percentage, at any time and from time to
time. The Pooling and Servicing Agreement requires the seller to provide to the
servicer, the trustee and any rating agency then rating any series of
certificates 30 days' prior written notice that the discount percentage is to be
applied to the principal receivables. If this notice is provided, then the
discount will become effective:
- unless such designation, in the reasonable belief of the seller, would
cause a Pay Out Event for any series to occur or would cause the
occurrence of an event which, with notice or the lapse of time or both,
would constitute a Pay Out Event for any series; and
- if the rating agencies then rating any series of certificates notify the
seller that the implementation of the discount will not result in a
reduction or withdrawal of any outstanding rating on a series or class of
certificates.
On the date of processing of any collections, on or after the discount
becomes effective, the product of the discount percentage and collections of
receivables, which receivables arose on or after the effective date and which
would otherwise be principal receivables, will be deemed "DISCOUNT OPTION
RECEIVABLE COLLECTIONS." An amount equal to the product of the Series Percentage
with respect to finance charge receivables for each series of certificates and
the amount of the discount option receivables collections will be deposited by
the servicer into the collection account. The amount of discount option
receivable collections deposited into the collection account will be applied as
finance charge receivables. An amount equal to the product of the Seller
Percentage and the amount of the discount option receivable collections will be
paid to the holders of the Seller Certificates.
The seller may have different reasons to designate a discount percentage.
For example, since the majority of the accounts have finance charges indexed to
specific variable rates, the finance charges on the accounts, and the
collections of finance charge receivables on the accounts, may decline as
interest rates decline. The certificates of a series may have interest rates
that are fixed or that are indexed to a different variable rate. If the finance
charges on the accounts are significantly reduced without a corresponding
reduction in the interest rate on a series of certificates, a series Pay Out
Event based in part on the amount of collections of finance charge receivables
and the interest rate on the certificates could occur. The seller could avoid
the occurrence of a series Pay Out Event by designating a discount percentage,
thereby causing an increase in the amount of collections of finance charge
receivables.
The seller, however, is under no obligation to designate a discount
percentage at any time, and there can be no assurance that the seller would
designate a discount percentage to avoid the occurrence of a Pay Out Event.
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TRUST ACCOUNTS
The servicer has caused to be established and maintained, in the name of
the trustee, for the benefit of certificateholders of all series, an account
designated as the "COLLECTION ACCOUNT," which at all times is required to be
either:
(a) a segregated account with an eligible institution; or
(b) a segregated trust account with the corporate trust department of a
depository institution organized under the laws of the United States
or any one of the states thereof, including the District of Columbia
or any domestic branch of a foreign bank, and acting as a trustee
for funds deposited in the account, so long as any of the securities
of the depository institution shall have an investment grade credit
rating.
An account satisfying the requirements of (a) or (b) above is an "ELIGIBLE
DEPOSIT ACCOUNT."
The servicer has also caused to be established and maintained, in the name
of the trustee, an account designated as the "EXCESS FUNDING ACCOUNT," which
also is required to be an eligible deposit account.
An "ELIGIBLE INSTITUTION" is defined as:
(a) a depository institution, which may be the trustee, organized under
the state or federal laws of the United States, including the
District of Columbia, or any domestic branch of a foreign bank,
which at all times:
- has either (1) a long-term unsecured debt rating of A1 or better by
Moody's Investors Service Inc. or (2) a certificate of deposit rating
of P-1 by Moody's;
- has either (1) a long-term unsecured debt rating of AAA by Standard &
Poor's Ratings Group or (2) a certificate of deposit rating of A-1+ by
Standard & Poor's; and
- is a member of the FDIC; or
(b) any other institution that is acceptable to each rating agency then
rating a series of certificates.
If so qualified, the trustee or the servicer may be considered an eligible
institution.
Other accounts may also be created in connection with any series and for
the benefit of that series. Accounts created for a specific series are "SERIES
ACCOUNTS."
Funds in the collection account and the excess funding account will be
invested, at the direction of the servicer, in "ELIGIBLE INVESTMENTS" consisting
of book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit, having
original maturities of no more than 365 days, of depository
institutions or trust companies incorporated under the state or
federal laws of the United States of America, or domestic branches
of foreign banks, and subject to supervision and examination by
federal or state banking or depository institution authorities;
provided, that at the time of the trust's investment or contractual
commitment to invest, the short-term debt rating of the depository
institution or trust company shall be in the highest investment
category of each rating agency then rating a series of certificates;
(c) commercial paper or other short-term obligations having, at the time
of the trust's investment or contractual commitment to invest, a
rating from each rating agency in its highest investment category;
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(d) notes or bankers' acceptances, having original maturities of no more
than 365 days, issued by any depository institution or trust company
described in clause (b) above;
(e) investments in money market funds rated in the highest investment
category by each rating agency then rating a series of certificates
or otherwise approved in writing by each rating agency then rating a
series of certificates;
(f) time deposits, other than as referred to in the preceding clause (e)
with a person the commercial paper of which has a credit rating in
the highest investment category from each rating agency then rating
a series of certificates; or
(g) any other investments approved in writing by each rating agency then
rating a series of certificates.
The trustee together with any successor or any entity specified in a series
supplement, acting as the "PAYING AGENT," shall have the revocable power to
withdraw funds from the collection account for the purpose of making
distributions to the certificateholders of any series pursuant to the related
series supplement.
SERIES PERCENTAGE AND SELLER PERCENTAGE
Pursuant to the Pooling and Servicing Agreement, the servicer will allocate
among the series, including each class of each series, and the sellers' interest
the collections of finance charge receivables, the collections of principal
receivables and the defaulted receivables. The servicer will make each
allocation by reference to the applicable Series Percentage for each series and
the Seller Percentage in each case. The "SERIES PERCENTAGE" for each series
means that percentage specified in the series supplement as the percentage to be
used in making allocations to that series. Generally, the Series Percentage
specified in the series supplement is a floating percentage for purposes of
allocating collections of finance charge receivables at all times, for purposes
of allocating defaulted receivables at all times and for purposes of allocating
principal receivables during the revolving period. Generally, the Series
Percentage specified in the series supplement is a fixed percentage for purposes
of allocating collections of principal receivables during the amortization
period for that series.
The "SELLER PERCENTAGE" in all cases means the excess of 100% over the sum
of the Series Percentages of all series then outstanding.
APPLICATION OF COLLECTIONS
Except as provided below or in a series supplement, the servicer will
deposit into the collection account, no later than the second business day
following the date of processing, any payment collected by the servicer on the
receivables; provided, however, that the servicer need not deposit into the
collection account amounts allocated to the Seller Certificates and various
amounts allocated to certificateholders of a series, as specified in the related
series supplement. In addition, for so long as the bank remains the servicer and
(1) maintains a certificate of deposit rating of A-1 or better by Standard &
Poor's and P-1 by Moody's, or such other rating below A-1 or P-1, as the case
may be, that is satisfactory to each rating agency then rating a series of
certificates, or (2) the bank has provided to the trustee a letter of credit
covering the collection risk of the servicer acceptable to each rating agency
then rating a series of certificates, the servicer need not make daily deposits
of collections into the collection account, but may make a single monthly
deposit into the collection account in immediately available funds.
OPERATION OF EXCESS FUNDING ACCOUNT
On any distribution date on which the Seller Amount is less than the
Required Seller Amount, the servicer will deposit any shared principal
collections that would otherwise be distributed to the holders of the Seller
Certificates into the excess funding account. The seller may also cause deposits
to be made to the excess funding account on any business day. The servicer will
determine, for each distribution date on which no series is in an amortization
period, the amount by which the Seller Amount exceeds the
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Required Seller Amount and will instruct the trustee to withdraw that amount
from the excess funding account, to the extent of the principal amount of funds
on deposit, and pay the amount to the holders of the Seller Certificates. The
servicer will determine, for each distribution date on which one or more series
is in an amortization period, the aggregate amount of principal shortfalls, if
any, for each series and will instruct the trustee to withdraw that amount from
the excess funding account, to the extent of the principal amount of funds on
deposit in the account, and allocate the amount among those series with a
principal shortfall as shared principal collections.
So long as the bank remains the servicer and maintains a certificate of
deposit rating of P-1 or better by Moody's and the seller makes deposits into
the excess funding account on each business day if the Seller Amount on that
date is less than the Required Seller Amount, then the servicer will, as
described in the next sentence, direct the distribution of the excess amount
from the excess funding account on any business day when an excess exists. If
the conditions in the previous sentence are met, then the servicer will, on each
business day, whether or not a distribution date, determine the amount, if any,
by which the Seller Amount exceeds the Required Seller Amount and instruct the
trustee to withdraw the excess amount from the excess funding account, to the
extent of the principal amount of funds on deposit in the account, and pay the
amount to the holders of the Seller Certificates on the next business day.
Before directing a distribution on a date other than a distribution date, if any
series is in an amortization period, the servicer is required to determine, on
the basis of collections received prior to that business day, that no principal
shortfall will exist for any principal sharing series on the next distribution
date.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES
The term "DEFAULTED RECEIVABLES" means, for any monthly period, all
principal receivables which are charged-off as uncollectible in the monthly
period in accordance with the servicer's credit card guidelines and customary
and usual servicing procedures for servicing consumer revolving credit card and
other revolving credit account receivables comparable to the receivables.
A principal receivable shall become a defaulted receivable on the day on
which the principal receivable is recorded as charged-off on the servicer's
computer master file of consumer revolving credit card accounts but, in any
event, shall be deemed a defaulted receivable no later than the day the related
account becomes 186 days contractually delinquent unless the obligor cures the
default by making a partial payment which satisfies the criteria for curing
delinquencies under the servicer's applicable credit card guidelines.
The term "DEFAULTED AMOUNT" means, for any monthly period, an amount, not
less than zero, equal to (a) the amount of principal receivables which became
defaulted receivables in the monthly period, minus (b), unless an insolvency
event involving the seller or the servicer has occurred, the amount of any
defaulted receivables included in any account the receivables of which the
seller or the servicer became obligated to accept reassignment or assignment in
accordance with the terms of the Pooling and Servicing Agreement during such
monthly period. If an insolvency event occurs with respect to the seller, the
amount of the defaulted receivables which are subject to reassignment to the
seller shall not be added to the sum so subtracted. If events involving
insolvency occur with respect to the servicer, the amount of the defaulted
receivables which are subject to reassignment or assignment to the servicer
shall not be added to the sum so subtracted.
The servicer may adjust downward the amount of any receivable for a number
of reasons including adjustments related to rebates, refunds, unauthorized
charges or billing errors to an account holder or because the receivables was
created in respect of merchandise which was refused or returned by an account
holder. On each day when the servicer adjusts downward any receivable without
receiving collections or charging-off the amount as uncollectible, then, the
amount of principal receivables used to calculate the Seller Amount, the Series
Percentages and any other percentages used to allocate within or among series
will be reduced by the amount of the adjustment. Similarly, the amount of
principal receivables used to calculate the Seller Amount, the Series
Percentages and any other percentage used to allocate within or among series
will be reduced by the amount of any receivable discovered to have been
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created through a fraudulent or counterfeit charge. Furthermore, in the event
that the exclusion of the principal receivables from the calculation of the
Seller Amount at that time would cause the Seller Amount to be less than the
Required Seller Amount, the seller shall be required to pay an amount equal to
the deficiency into the excess funding account, up to the amount of the
reduction in principal receivables.
FINAL PAYMENT OF PRINCIPAL AND INTEREST; TERMINATION
Subject to any prior termination, the interest of the certificateholders of
a series in the trust will terminate following the earliest of:
- the day after the distribution date on which the final payment of
principal and interest is made to the certificateholders of that series;
- the date specified for termination in the applicable series supplement,
called the "STATED SERIES TERMINATION DATE" for the series; and
- the trust termination date.
In the event the investor amount of any series would be greater than zero
on the stated series termination date for that series or an earlier date
specified in the related series supplement, the trustee will sell or cause to be
sold principal receivables and the related finance charge receivables or
interests, in an amount equal to 100% of the investor amount of the certificates
of the series and accrued and unpaid interest thereon, but not more than the
applicable Series Percentages of receivables on the stated series termination
date or earlier date specified in the series supplement. The proceeds of the
sale will be allocated and distributed in accordance with the applicable series
supplement.
The "TRUST TERMINATION DATE" will be the earliest to occur of:
- the day following the payment date on which the aggregate investor amount
and series enhancement investor amounts, if any, of each series is zero,
provided that the seller has delivered a written notice to the trustee
electing to terminate the trust;
- December 31, 2044; or
- if the receivables are liquidated following the occurrence of an
insolvency event as described under "--Liquidation of Receivables,"
immediately following that liquidation.
Upon termination of the trust, all right, title and interest in the
receivables and other funds of the trust other than amounts in accounts
maintained by the trust for the final payment of principal and interest to
certificateholders, will be conveyed and transferred to the seller.
TRUST PAY OUT EVENTS
If a Pay Out Event occurs under the terms of a series supplement, it will
be a series Pay Out Event although the same event may result in a series Pay Out
Event occurring under multiple series supplements. The occurrence of a series
Pay Out Event will terminate the revolving period or any amortization period
then in effect for affected series and the rapid amortization period of, if
applicable, a rapid accumulation period, will begin.
If a Pay Out Event occurs under the base Pooling and Servicing Agreement,
it will be a trust Pay Out Event and affect all series and cause the rapid
amortization period to begin for all series.
A trust Pay Out Event will occur with respect to all series upon the
occurrence of any of the following:
- an insolvency event relating to the seller or any additional seller;
- the trust shall become subject to regulation by the SEC as an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended; or
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- the seller or any additional seller is unable for any reason to transfer
receivables to the trust in accordance with the provisions of the Pooling
and Servicing Agreement.
When a rapid amortization period or a rapid accumulation period begins,
distributions or deposits of principal will be made to the certificateholders or
into an account for the certificateholders of the affected series in the
priority provided in the related series supplement.
If, because of the occurrence of a Pay Out Event, a rapid amortization
period begins earlier than the scheduled amortization date or the expected final
payment date of the series, certificateholders of the series will begin
receiving distributions of principal earlier than they otherwise would have,
which may shorten the final maturity of the certificates of the series.
When a rapid accumulation period begins, the principal receivables will be
deposited into a principal funding account, as described in the related
prospectus supplement. Unlike in a rapid amortization period, if, because of the
occurrence of a Pay Out Event, a rapid accumulation period begins earlier than
the scheduled amortization date or the expected final payment date of the
series, then certificateholders of the series or class affected by the rapid
accumulation period will not, unless a trust Pay Out Event occurs, receive
distributions of principal until the final expected distribution date of the
series or class.
An "INSOLVENCY EVENT" shall occur if:
- the seller and/or any additional seller shall consent to the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings relating to the seller or relating to all or substantially
all of its property;
- a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings or for the
winding-up or liquidation of the affairs of the seller, shall have been
entered against the seller; or
- the seller shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make any assignment for
the benefit of its creditors or voluntarily suspend payment of its
obligations.
See "Description of the Certificates--Liquidation of Receivables" in this
prospectus for a description of the consequences of the occurrence of an
insolvency event.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer's compensation for its servicing activities and reimbursement
for its expenses for any monthly period will be a servicing fee payable monthly
on the related distribution date in an amount equal to one-twelfth of the
product of:
- the weighted average of the applicable servicing fee rates for each
series outstanding, based upon the applicable servicing fee rate for each
series and the investor amount of the series or other amount specified in
the applicable series supplement; and
- the amount of principal receivables outstanding on the last day of the
prior monthly period.
The servicing fee will be allocated among the sellers' interest and the
certificateholders' interests of all series. The share of the servicing fee
allocable to the certificateholders' interest of a particular series, the
"MONTHLY SERVICING FEE," will be determined in accordance with the applicable
series supplement. The remainder of the servicing fee shall be paid by the
certificateholders of other series and by the holders of the Seller
Certificates. In no event shall the trust, the trustee or the certificateholders
of any series be liable for the share of the servicing fee to be paid by the
holders of the Seller Certificates. Unless otherwise provided in any series
supplement, in the case of the first monthly period for a series, the monthly
servicing fee shall accrue from the date of issuance of that series.
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The servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the receivables including, without
limitation, payment of the fees and disbursements of the trustee, any paying
agent and transfer agent and registrar and independent accountants and other
fees which are not expressly stated in the Pooling and Servicing Agreement to be
payable by the trust or the certificateholders of a series other than federal,
state, local and foreign income, franchise or other taxes, if any, or any
interest or penalties imposed upon the trust.
MATTERS REGARDING THE SERVICER
The servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that:
- the performance of its duties under the Pooling and Servicing Agreement
is no longer permissible under applicable law; and
- there is no reasonable action which the servicer could take to make the
performance of its duties thereunder permissible under applicable law.
Any determination permitting the resignation of the servicer will be
evidenced by an opinion of counsel delivered to the trustee. No resignation will
become effective until the trustee or a successor servicer that is an eligible
servicer shall have assumed the responsibilities and obligations of the servicer
in accordance with the Pooling and Servicing Agreement.
An "ELIGIBLE SERVICER" means the trustee, or an entity which is acting as
servicer and:
- is servicing a portfolio of revolving credit card accounts;
- is legally qualified and has the capacity to service the accounts;
- has demonstrated the ability to professionally and completely service a
portfolio of similar accounts in accordance with high standards of skill
and care;
- is qualified to use the software that is then being used to service the
accounts or obtains the right to use, or has its own software, which is
adequate to perform its duties under the Pooling and Servicing Agreement;
and
- has a net worth of at least $50,000,000 as of the end of its most recent
fiscal quarter.
Pursuant to the Pooling and Servicing Agreement, the bank, as servicer, has
the right to delegate any of its responsibilities and obligations as servicer to
any entity that agrees to conduct the duties in accordance with the Pooling and
Servicing Agreement and the seller's credit card guidelines; provided, that in
the case of a significant delegation to an entity other than Fleet, the seller,
any affiliate of the seller, or First Data Resources, Inc.:
- at least 30 days' prior written notice must be given to the trustee and
each rating agency then rating a series of certificates of the
delegation; and
- at or prior to the end of the 30 day period the servicer must determine
that the rating agencies then rating a series of certificates have
notified the seller that such action will not result in a reduction or
withdrawal of the rating of any outstanding series or class of
certificates.
For information concerning entities currently involved in the bank's
servicing operations see "The Bank's Credit Card Activities--General,"
"--Billing and Payments" and "--Description of First Data Resource, Inc." in
this prospectus.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that the seller will indemnify
and hold harmless the trust and the trustee, its officers, directors, employees
and agents from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of any acts, omissions or alleged acts or
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omissions or otherwise arising out of or based upon the arrangement created by
the Pooling and Servicing Agreement or any series supplement, as though the
Pooling and Servicing Agreement or the series supplement created a general
partnership under the Delaware Uniform Partnership Law in which the seller is
the general partner; provided, however, that:
- the seller will not indemnify the trustee if the acts, omissions or
alleged acts or omissions constitute or are caused by fraud, negligence,
or willful misconduct by the trustee;
- without limiting the claims of third parties, that the seller will not
indemnify the trust, the certificateholders or the Certificate Owners for
any liabilities, costs or expenses of the trust with respect to any
action taken by the trustee at the request of the certificateholders;
- the seller will not indemnify the trust, the certificateholders or the
Certificate Owners for any losses, claims or damages incurred by any of
them in their capacities as investors, including, without limitation,
losses incurred as a result of defaulted receivables; and
- the seller will not indemnify certificateholders or the Certificate
Owners for any liabilities, costs or expenses of the certificateholders
or the Certificate Owners arising under any tax law relating to any
federal, state, local or foreign income or franchise taxes or any other
tax imposed on or measured by income, or any interest or penalties
arising from a failure to comply with the tax law, required to be paid by
or for the account of the certificateholders or the Certificate Owners in
connection to any taxing authority.
The Pooling and Servicing Agreement states that the indemnification
provided by the seller will not be payable from the trust assets.
The Pooling and Servicing Agreement also provides that the servicer will
indemnify and hold harmless the trust and the trustee from and against any loss,
liability, expense, damage or injury suffered or sustained by reason of any acts
or omissions of the servicer with respect to the trust, including any judgment,
award, settlement, reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any action, proceeding or claim;
provided, however, that the servicer will not indemnify:
- the trustee if the acts or omissions constitute or are caused by fraud,
negligence, or willful misconduct by the trustee;
- the trust, the certificateholders or the Certificate Owners for any
liabilities, costs or expenses of the trust resulting from any action
taken by the trustee at the request of the certificateholders;
- the trust, the certificateholders or the Certificate Owners for any
losses, claims or damages incurred by any of them in their capacities as
investors, including without limitation losses incurred as a result of
defaulted receivables; or
- the trust, certificateholders or Certificate Owners for any liabilities,
costs or expenses of the trust, the certificateholders or the Certificate
Owners arising under any tax law, including without limitation, any
federal, state, local or foreign income or franchise taxes or any other
tax imposed on or measured by income or any related interest or penalty
required to be paid by the trust, the certificateholders or the
Certificate Owners to any taxing authority.
The Pooling and Servicing Agreement states that the indemnification
provided by the servicer will not be payable from the trust assets.
SERVICER DEFAULT
If a Servicer Default occurs and has not been remedied, the trustee, or
certificateholders evidencing more than 50% of the aggregate investor amount of
the certificates of all series, may terminate all but not less than all of the
rights and obligations of the servicer, as servicer under the Pooling and
Servicing Agreement, and in and to the related receivables and proceeds of the
receivables.
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The rights and interest of the seller under the Pooling and Servicing
Agreement and in the Seller Certificates will not be affected by the termination
of the servicer; provided, however, if within 60 days of receipt of a notice of
termination, the trustee does not receive any bids from eligible servicers to
act as a successor servicer and receives an officer's certificate of the
servicer to the effect that the servicer cannot in good faith cure the Servicer
Default which gave rise to the termination notice, then the trustee will offer
the seller the right, at its option, to purchase the certificateholders'
interest on the next succeeding distribution date. The purchase price for the
certificateholders' interest will be equal to the sum of the amounts specified
in the related series supplements. The seller will notify the trustee in writing
prior to the record date for the distribution date of the purchase if it is
exercising this option. If the seller exercises this option, the seller will:
(1) if the seller's short-term deposits or long-term unsecured debt
obligations are not rated at the time at least P-3 or Baa3,
respectively, by Moody's, deliver to the trustee an opinion of
independent outside counsel to the effect that the purchase would
not be considered a fraudulent conveyance; and
(2) deposit the purchase price into the collection account on the
distribution date in immediately available funds.
A "SERVICER DEFAULT" refers to any of the following events:
(1) Any failure by the servicer to make any payment, transfer or deposit
or to give instructions or notice to the trustee pursuant to the
Pooling and Servicing Agreement or any series supplement on or
before the date occurring five business days after the date the
payment, transfer, deposit or such instruction or notice is required
to be made or given.
(2) Failure of the servicer duly to observe or perform in any material
respect any other covenants or agreements of the servicer described
in the Pooling and Servicing Agreement or any series supplement,
which has a material adverse effect on the certificateholders of any
series or class and the failure continues unremedied for 60 days
after notice is given to the servicer by the trustee, or to the
servicer and the trustee by certificateholders evidencing more than
50% of the aggregate investor amount of all series then outstanding
or, if the failure does not related to all series, more than 50% of
the investor amount of those series to which the failure relates.
(3) The servicer delegates its duties under the Pooling and Servicing
Agreement except as permitted by the Pooling and Servicing
Agreement, a responsible officer of the trustee has actual knowledge
of the delegation and the delegation continues unremedied for 15
days after notice is given to the servicer by the trustee, or to the
servicer and the trustee by certificateholders evidencing more than
50% of the aggregate investor amount of all series.
(4) Any representation, warranty or certification made by the servicer
shall prove to have been incorrect when made, has a material adverse
effect on the certificateholders of any series or class and
continues to be incorrect in any material respect for a period of 60
days after the date on which written notice of the failure,
requiring the same to be remedied, shall have been given to the
servicer by the trustee, or to the servicer and the trustee by
certificateholders evidencing more than 50% of the aggregate
investor amount of all series then outstanding or if the
representation, warranty or certification does not relate to all
series, 50% of the investor amount of the affected series.
(5) Certain events of bankruptcy, conservatorship, or receivership occur
with respect to the servicer.
Notwithstanding the foregoing, a delay in or failure of performance under
clauses (1), (2), (3) or (4), will not, for certain limited periods, constitute
a Servicer Default if the delay or failure (a) could not be prevented by the
exercise of reasonable diligence by the servicer and (b) was caused by an act of
God or the public enemy, acts of declared or undeclared war, terrorism, public
disorder, rebellion or sabotage,
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epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods or
similar causes. The preceding sentence will not relieve the servicer from using
its best efforts to perform its respective obligations in a timely manner in
accordance with the terms of the Pooling and Servicing Agreement and any series
supplement and the servicer will provide the trustee, each rating agency, the
holders of the Seller Certificates and the certificateholders of all series with
an officer's certificate giving prompt notice of the failure or delay by it,
together with a description of its efforts to so perform its obligations.
REPORT TO CERTIFICATEHOLDERS
The seller expects that on each distribution date of a series, the paying
agent will forward to each certificateholder of record a statement prepared by
the servicer describing, among other things:
- the total amount distributed to certificateholders of each class of the
series;
- the amount of any distribution allocable to principal on the
certificates;
- the amount of the distribution allocable to interest on the certificates;
- the aggregate amount of collections processed during the prior monthly
period and allocated in respect of the certificates;
- the amount of collections of principal receivables processed during the
prior monthly period and allocated in respect of the certificates;
- the amount of collections of finance charge receivables processed during
the prior monthly period and allocated in respect of the certificates;
- the Series Percentage for each class of certificates with respect to
principal receivables and finance charge receivables, each as of the end
of the last day of the prior monthly period;
- the aggregate outstanding balance of accounts designated to the trust
which are 30 or more days contractually delinquent, by class of
delinquency, as of the end of the last day of the prior monthly period;
- the defaulted amount for the prior monthly period;
- the amount of the monthly servicing fee for each class for the prior
monthly period; and
- the amount of any series enhancement, available for each class as of the
close of business on the distribution date.
Each year the paying agent will furnish to each person who at any time
during the preceding calendar year was a certificateholder of record of a
series, a statement prepared by the servicer containing the information required
to be contained in the regular monthly servicing report aggregated for the
calendar year or the applicable portion of the year during which the person was
a certificateholder, together with the other customary information consistent
with the treatment of the certificates as debt, as the trustee or the servicer
deems necessary or desirable to enable the certificateholders to prepare their
tax returns.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before November 30
of each calendar year, the servicer will cause a firm of nationally recognized
independent public accountants, who may also render other services to the
servicer or the seller, to furnish a report to the trustee. The report will
state that the firm has applied agreed-upon procedures to documents and records
relating to the servicing of the receivables and, based upon the agreed-upon
procedures, no matters came to their attention that caused them to believe that
the servicing, including the allocations of collections, was not conducted in
compliance with the applicable terms and conditions described in the Pooling and
Servicing Agreement and any series supplements except for those exceptions the
firm believes to be immaterial and except for exceptions described in the
statement. In addition, on or before November 30 of each calendar year, the
accountants will compare the mathematical calculations of certain amounts
contained in the monthly
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servicer's certificates delivered during the period covered by the report with
the computer reports of the servicer which were the source of the amounts and
deliver a report to the trustee confirming that these amounts are in agreement
except for those exceptions as they believe to be immaterial and except for
other exceptions described in the report.
The Pooling and Servicing Agreement provides for delivery to the trustee on
or before November 30 of each calendar year of a statement signed by an
authorized officer of the servicer to the effect that the servicer has, or has
caused to be, fully performed its obligations in all material respects under the
Pooling and Servicing Agreement and any series supplements throughout the
preceding year or, if there has been a default in the performance of any of
these obligations, specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the trustee
may be obtained by a request in writing delivered to the trustee.
AMENDMENTS
The Pooling and Servicing Agreement or any series supplement may be amended
from time to time without certificateholder consent if:
- the seller delivers to the trustee an officer's certificate to the effect
that the seller reasonably believes the amendment will not result in the
occurrence of a Pay Out Event for any series and will not materially
adversely affect the amount or timing of distributions to be made to any
class or series; and
- each rating agency then rating any series of certificates has notified
the seller that the amendment will not result in a reduction or
withdrawal of any rating on any series or class of certificates.
Amendments which may be made without the consent of the certificateholders
include, but are not limited to, amendments which provide additional series
enhancement for the benefit of the certificateholders of any series or which
reduce the series enhancement and amendments in connection with the addition of
a participation interest to the trust or the designation of an additional
seller.
The Pooling and Servicing Agreement or any series supplement may also be
amended if the holders of certificates evidencing not less than 66 2/3% of the
aggregate investor amount of all adversely affected series consent. An amendment
made with 66 2/3% consent may change or eliminate any of the provisions of the
Pooling and Servicing Agreement or any series supplement or modify in any manner
the rights of certificateholders. No amendment, however, may:
- reduce in any manner the amount of or delay the timing of distributions
to be made to certificateholders or deposits of amounts to be so
distributed or the amount available under any series enhancement without
the consent of each affected certificateholder;
- change the definition of or the manner of calculating the interest of any
certificateholder without the consent of each affected certificateholder;
- reduce the percentage required to consent to any amendment without the
consent of each certificateholder; or
- adversely affect the rating of any series or class without the consent of
certificateholders of the related series or class evidencing not less
than 66 2/3% of the aggregate investor amount of the related series or
class.
Any amendment shall be deemed not to adversely affect any outstanding
series for which the seller delivers an opinion of counsel that the amendment
will not have an adverse effect on that series.
Promptly following the execution of any amendment, except amendments that
do not require the consent of any certificateholders, the servicer will provide
written notice of the substance of the amendment to the trustee and, the trustee
will furnish that written notice to each certificateholder.
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DEFEASANCE
Pursuant to the Pooling and Servicing Agreement, the seller may terminate
its substantive obligations in respect of any series or all outstanding series
by depositing with the trustee under the terms of an irrevocable trust
agreement, monies and/or eligible investments which monies or investments do not
come from funds of the seller on an affiliate of the seller and are sufficient
to make all remaining scheduled interest and principal payments on the
designated series on the dates scheduled for the payments and to pay all amounts
owing to any provider of series enhancement with respect to that series.
Each series for which a deposit is made will be a "DEFEASED SERIES." To
provide for a defeasance of a series, the seller has the right to use
collections of receivables allocated to the defeased series and otherwise
available to purchase additional receivables to be applied to purchase eligible
investments rather than additional receivables. Prior to its first exercise of
its right to substitute monies or eligible investments for receivables, the
seller shall deliver to the trustee a tax opinion with respect to the deposit
and termination of obligations and shall deliver to the servicer and the trustee
written notice from each rating agency then rating a series of certificates that
the defeasance will not result in a reduction on withdrawal of the rating of any
outstanding series or class of certificates. In addition, the seller must comply
with other requirements described in the Pooling and Servicing Agreement
including requirements that the seller:
- deliver to the trustee an opinion of counsel that the deposit and
termination of obligations will not require the trust to register as an
"investment company" within the meaning of the Investment Company Act of
1940, as amended; and
- deliver to the trustee and providers of series enhancement a certificate
of an authorized officer stating that, based on the facts known to the
officer at the time, in the reasonable opinion of the seller, the deposit
and termination of obligations will not at the time of its occurrence
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
any series.
If the seller discharges its substantive obligations in respect of the
defeased series, any series enhancement for the affected series may no longer be
available to make payments on that series.
LIST OF CERTIFICATEHOLDERS
Upon application of certificateholders of record representing undivided
interests in the trust aggregating not less than 10% of the aggregate unpaid
principal amount of any or all series, the trustee will, if it has been
adequately indemnified by the certificateholders, within five business days of
the request, afford the certificateholders access to the current list of
registered certificateholders of the series or all series, as applicable. Access
to the list will be made only during business hours and only for the purposes of
communicating with other certificateholders concerning their rights under the
Pooling and Servicing Agreement or any series supplement or the certificates.
THE TRUSTEE
Bankers Trust Company is the trustee under the Pooling and Servicing
Agreement. The seller, the servicer and their respective affiliates may from
time to time enter into normal banking and trustee relationships with the
trustee and its affiliates. The trustee, the seller, the servicer and any of
their respective affiliates may hold certificates in their own names. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the trustee shall have the power to appoint a co-trustee or
separate trustees of all or any part of the trust. In the event of the
appointment, all rights, powers, duties and obligations conferred or imposed
upon the trustee by the Pooling and Servicing Agreement shall be conferred or
imposed upon the trustee and the separate trustee or co-trustee jointly, or, in
any jurisdiction in which the trustee shall be incompetent or unqualified to
perform certain acts, singly upon the separate trustee or co-trustee who shall
exercise and perform these rights, powers, duties and obligations solely at the
direction of the trustee.
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The trustee may resign at any time, in which event the servicer will be
obligated to appoint a successor trustee. The servicer may also remove the
trustee if the trustee ceases to be eligible to continue as trustee under the
Pooling and Servicing Agreement, is legally unable to act or if the trustee
becomes bankrupt or insolvent. In these circumstances, the servicer will be
obligated to appoint a successor trustee. Any resignation or removal of the
trustee and appointment of a successor trustee does not become effective until
acceptance of the appointment by the successor trustee.
ENHANCEMENT
GENERAL
For any series, enhancement may be provided for one or more classes.
Enhancement provided for a series of certificates or a class or classes within a
series is "SERIES ENHANCEMENT." Series enhancement may be in the form of the
subordination of one or more classes of the certificates of the series, a letter
of credit, the establishment of a cash collateral guaranty or account, a
collateral interest, a surety bond, insurance, the use of cross support
features, the use of a swap agreement or any combination of these. To the extent
specified in the related prospectus supplement, any form of series enhancement
may be structured so as to be drawn upon by more than one class.
For any series, the series enhancement may not provide protection against
all risks of loss and may not guarantee repayment of the entire principal
balance and interest of the certificates. If losses occur which exceed the
amount covered by the series enhancement or which are not covered by the series
enhancement, certificateholders will bear their allocable share of deficiencies.
If series enhancement is provided for a series, the related prospectus
supplement will include a description of:
- the amount payable under the series enhancement;
- any conditions to payment under the series enhancement not otherwise
described in this prospectus;
- the conditions, if any, under which the amount payable under the series
enhancement may be reduced and under which the series enhancement may be
terminated or replaced; and
- any provisions of any agreement relating to the series enhancement
material to the certificateholders of the series.
Additionally, the related prospectus supplement may set forth information
with respect to the issuer of any third-party series enhancement, including:
- a brief description of its principal business activities;
- its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do business;
- if applicable, the identity of regulatory agencies which exercise primary
jurisdiction over the conduct of its business; and
- its total assets, and its stockholders' or policyholders' surplus, if
applicable, as of the date specified in the prospectus supplement.
SUBORDINATION
If specified in the related prospectus supplement, one or more classes of a
series may be subordinated to one or more other classes of a series. If
specified in the related prospectus supplement, the rights of the holders of the
subordinated certificates or uncertificated interests to receive distributions
of principal and/or interest on any distribution date will be subordinated to
the rights of the holders of the certificates which are senior to the
subordinated certificates or uncertificated interests to the extent described in
the
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related prospectus supplement. The amount of subordination will decrease
whenever amounts otherwise payable to the holders of subordinated certificates
or uncertificated interests are paid to the holders of the senior certificates
or interests.
LETTER OF CREDIT
If specified in the related prospectus supplement, a letter of credit for a
series or class of certificates may be issued by the bank or financial
institution specified in the related prospectus supplement. Under the letter of
credit, the issuing bank will be obligated to honor drawings in an aggregate
fixed dollar amount, net of unreimbursed payments thereunder, equal to the
amount described in the related prospectus supplement. The amount available
under the letter of credit will be reduced to the extent of the unreimbursed
payments under it.
CASH COLLATERAL GUARANTY OR ACCOUNT
If specified in the related prospectus supplement, the certificates of any
class or series may have the benefit of a guaranty, called a "CASH COLLATERAL
GUARANTY," issued pursuant to a trust agreement between a cash collateral
depositor, a cash collateral trustee and the seller and the servicer or be
secured by the deposit of cash or permitted investments in a "CASH COLLATERAL
ACCOUNT" directly. The cash collateral guaranty will generally be an obligation
of the cash collateral trust and not of the cash collateral depositor, the cash
collateral trustee, except to the extent of amounts on deposit in the cash
collateral account, the trustee or the bank, as seller and servicer.
The servicer will determine prior to each distribution date with respect to
the series enhanced by the cash collateral guaranty or the cash collateral
account whether a deficiency exists for the payment of interest and/or principal
on the certificates so enhanced. If the servicer determines that a deficiency
exists, it shall instruct the trustee to draw an amount equal to the deficiency
from the cash collateral guaranty or the cash collateral account, up to the
maximum amount available.
COLLATERAL INTEREST
If so specified in the related prospectus supplement, support for a series
of certificates or one or more classes of certificates may be provided initially
by an uncertificated, subordinated interest in the trust called a "COLLATERAL
INTEREST" in an amount initially equal to a percentage of the certificates of
the series specified in the related prospectus supplement.
SWAP AGREEMENTS
If specified in the related prospectus supplement, the trustee, on behalf
of the trust, may enter into one or more interest rate swap agreements,
guaranteed rate agreements, interest rate cap agreements, currency swap
agreements or other forms of swap agreements for the benefit of a series or of a
class of a series. The terms of the swap agreement will be specified in the
related prospectus supplement.
SURETY BOND OR INSURANCE POLICY
If specified in the related prospectus supplement, insurance with respect
to a series or class of certificates may be provided by one or more insurance
companies. This insurance will guarantee, with respect to one or more classes of
the related series, distributions of interest or principal in the manner and
amount specified in the related prospectus supplement.
If specified in the related prospectus supplement, a surety bond may be
purchased for the benefit of the holders of any series or class of the series to
assure distributions of interest or principal for the series or class of
certificates in the manner and amount specified in the related prospectus
supplement.
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SPREAD ACCOUNT
If specified in the related prospectus supplement, support for a series or
one or more classes of a series may be provided upon the terms and conditions
described in the related prospectus supplement by the periodic deposit of
limited amounts of excess cash flow from the trust assets into an account called
the "SPREAD ACCOUNT," intended to assure the subsequent distribution of interest
and principal on the certificates of the class or series in the manner specified
in the related prospectus supplement.
CERTIFICATE RATING
Any rating of the certificates by a rating agency will indicate:
- that rating agency's view on the likelihood that certificateholders will
receive required interest and principal payments; and
- that rating agency's evaluation of the receivables and the availability
of any credit enhancement for the certificates.
Among the things a rating will not indicate are:
- the likelihood that interest or principal payments will be paid on a
scheduled date;
- the likelihood that a Pay Out Event will occur;
- the likelihood that a United States withholding tax will be imposed on
non-U.S. certificateholders;
- the marketability of the certificates;
- the market price of the certificates; or
- whether the certificates are an appropriate investment for any purchaser.
A rating will not be a recommendation to buy, sell or hold the
certificates. A rating may be lowered or withdrawn at any time by a rating
agency.
The seller will request a rating of the certificates offered by this
prospectus and the accompanying prospectus supplement from at least one rating
agency. Rating agencies other than those requested could assign a rating to the
certificates and that rating could be lower than any rating assigned by a rating
agency chosen by the seller.
Whenever in this prospectus there are references to notices given to the
rating agencies or notices, consents or letters to be obtained from the rating
agencies, those references are, with respect to any series or class, the
statistical rating agency or rating agencies selected by the seller to rate the
certificates of that series or class.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a discussion of the material federal income tax
consequences relating to the purchase, ownership and disposition of a
certificate offered by this prospectus and the related prospectus supplement.
This discussion has been prepared by Orrick, Herrington & Sutcliffe LLP as
special federal income tax counsel to the seller ("SPECIAL TAX COUNSEL").
Additional material federal income tax considerations, if any, relevant to a
particular series will be set forth in the related prospectus supplement.
Special tax counsel is of the opinion that this discussion is correct in all
material respects.
As more fully described below, special tax counsel is also of the opinion
that the offered certificates will be characterized as debt for federal income
tax purposes and the trust will not be treated as an association or publicly
traded partnership taxable as a corporation for these purposes. Except as
provided in
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the related prospectus supplement, special tax counsel will render no other tax
opinions to the seller with respect to the offered certificates or the trust.
This discussion is intended as an explanatory discussion of the possible effects
of the classification of the offered certificates as debt to investors generally
and related tax matters affecting investors generally, but does not purport to
furnish information in the level of detail or with the attention to an
investor's specific tax circumstances that would be provided by an investor's
tax advisor. This discussion is based on current law, which is subject to
changes that could prospectively or retroactively modify or adversely affect the
tax consequences summarized below. The discussion does not address all of the
tax consequences relevant to a particular Certificate Owner in light of that
Certificate Owner's circumstances, and some Certificate Owners may be subject to
special tax rules and limitations not discussed below. Each prospective
Certificate Owner is urged to consult its own tax adviser in determining the
federal, state, local and foreign income and any other tax consequences of the
purchase, ownership and disposition of a certificate.
For purposes of this discussion, "U.S. PERSON" means a citizen or resident
of the United States, a corporation or partnership organized in or under the
laws of the United States, any state thereof, or any political subdivision of
either (including the District of Columbia), or an estate or trust the income of
which is includible in gross income for U.S. federal income tax purposes
regardless of its source. The term "U.S. CERTIFICATE OWNER" means any U.S.
Person and any other person to the extent that the income attributable to its
interest in a certificate is effectively connected with that person's conduct of
a U.S. trade or business.
TREATMENT OF THE CERTIFICATE AS DEBT
The seller expresses in the Pooling and Servicing Agreement the intent that
for federal, state and local income and franchise tax purposes, the certificates
will be debt secured by the receivables. The seller, by entering into the
Pooling and Servicing Agreement, and each investor, by the acceptance of a
beneficial interest in a certificate, will agree to treat the certificates as
debt for federal, state and local income and franchise tax purposes. However,
the Pooling and Servicing Agreement generally refers to the transfer of
receivables as a "sale," and because different criteria are used in determining
the non-tax accounting treatment of the transaction, the seller will treat the
Pooling and Servicing Agreement for certain non-tax accounting purposes as
causing a transfer of an ownership interest in the receivables and not as
creating a debt obligation.
A basic premise of federal income tax law is that the economic substance of
a transaction generally determines its tax consequences. The form and non-tax
characterization of a transaction, while relevant factors, are not conclusive
evidence of its economic substance. In appropriate circumstances, the courts
have allowed taxpayers as well as the Internal Revenue Service to treat a
transaction in accordance with its economic substance as determined under
federal income tax law, even though the participants in the transaction have
characterized it differently for non-tax purposes.
The determination of whether the economic substance of a purchase of an
interest in property is instead a loan secured by the transferred property has
been made by the IRS and the courts on the basis of numerous factors designed to
determine whether the seller has relinquished and the purchaser has obtained
substantial incidents of ownership in the property. Among those factors, the
primary ones examined are whether the purchaser has the opportunity to gain if
the property increases in value, and has the risk of loss if the property
decreases in value.
Except to the extent otherwise specified in the accompanying prospectus
supplement, Orrick, Herrington & Sutcliffe LLP, special tax counsel to the
seller, is of the opinion that, under current law as in effect on the date of
issuance of a series of certificates, although no transaction closely comparable
to that contemplated by this prospectus has been the subject of any Treasury
regulation, revenue ruling or judicial decision, for federal income tax purposes
the certificates will not constitute an ownership interest in the receivables,
but will properly be characterized as debt. Except where indicated to the
contrary, the following discussion assumes that the certificates are debt for
federal income tax purposes.
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TREATMENT OF THE TRUST
General. The Pooling and Servicing Agreement permits the issuance of
certificates and certain other interests in the trust, including collateral
interests, each of which may be treated for federal income tax purposes either
as debt or as equity interests in the trust. If all of the certificates and
other interests, except the Bank Certificate, in the trust were characterized as
debt, the trust might be characterized as a security arrangement for debt
collateralized by the receivables and issued directly by the seller or other
holders of the Bank Certificate. Under this view, the trust would be disregarded
for federal income tax purposes. Alternatively, if some of the certificates and
other interests in the trust were characterized as equity, the trust might be
characterized as a separate entity owning the receivables, issuing its own debt,
and jointly owned by the seller or other holders of the Bank Certificate and any
other holders of equity interests in the trust. However special tax counsel is
of the opinion that, under the current law as in effect on the date of issuance
of a series of certificates, any entity constituted by the trust will not be an
association or publicly traded partnership taxable as a corporation.
Possible Treatment of the Trust as a Partnership or a Publicly Traded
Partnership. Although, as described above, special tax counsel is of the
opinion that the certificates will properly be treated as debt for federal
income tax purposes and that the trust will not be treated as an association or
publicly traded partnership taxable as a corporation for federal income tax
purposes, this opinion will not bind the IRS and thus, no assurance can be given
that such treatment will prevail. If the IRS were to contend successfully that
some or all of the Seller Certificates, the certificates or other interests in
the trust including any collateral interest were equity in the trust for federal
income tax purposes, all or a portion of the trust could be classified as a
partnership or a publicly trade partnership taxable as a corporation for such
purposes. Because special tax counsel is of the opinion that the certificates
will be characterized as debt for federal income tax purposes and because any
holder of an interest in a collateral interest will agree to treat that interest
as debt for tax purposes, no attempt will be made to comply with any tax
reporting requirements that would apply as a result of any alternative
characterizations.
If the trust were treated in whole or in part as a partnership in which
some or all holders of interests in the publicly offered certificates were
partners, that partnership could be classified as a publicly traded partnership
and so could be taxable as a corporation. Further, regulations published by the
Treasury Department could cause the trust to constitute a publicly traded
partnership even if all holders of interests in the publicly offered
certificates are treated as holding debt.
The publicly traded partnership regulations generally apply to taxable
years beginning after December 31, 1995, and, accordingly, could affect the
classification of presently existing entities and the ongoing tax treatment of
already completed transactions. Although the publicly traded partnership
regulations provide for a 10-year grandfather period for a partnership actively
engaged in an activity before December 4, 1995, it is not clear whether the
trust would qualify for the grandfather period. If the trust were classified as
a publicly traded partnership, whether by reason of the treatment of publicly
offered certificates as equity or by reason of publicly traded partnership
regulations, it would avoid taxation as a corporation if its income was not
derived in the conduct of a "financial business;" however, whether the income of
the trust would be so classified is unclear.
Under the Internal Revenue Code and the publicly traded partnership
regulations, a partnership will be classified as a publicly traded partnership
if equity interests therein are traded on an "established securities market," or
are "readily tradable" on a "secondary market" or its "substantial equivalent."
The seller intends to take measures designed to reduce the risk that the trust
could be classified as a publicly traded partnership by reason of interests in
the trust other than the publicly traded certificates. Although the seller
expects these measures will ultimately be successful, certain of the actions
that may be necessary for avoiding the treatment of the interests as "readily
tradable" on a "secondary market" or its "substantial equivalent" are not fully
within the control of the seller. As a result, there can be no assurance that
the measures the seller intends to take will in all circumstances be sufficient
to prevent the trust from being classified as a publicly traded partnership
under the publicly traded partnership regulations.
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If the trust were treated as a partnership other than a publicly traded
partnership taxable as a corporation, that partnership would not be subject to
federal income tax. Rather, each item of income, gain, loss and deduction of the
partnership generated through the ownership of the related receivables would be
taken into account directly in computing taxable income of the seller, or the
holder of the Bank Certificate, and any Certificate Owners treated as partners
in accordance with their respective partnership interests therein. The amounts
and timing of income reportable by any Certificate Owners treated as partners
would likely differ from that reportable by the Certificate Owners had they been
treated as owning debt. In addition, if the trust were treated in whole or in
part as a partnership other than a publicly traded partnership, income derived
from the partnership by any Certificate Owner that is a pension fund or other
tax-exempt entity may be treated as unrelated business taxable income.
Partnership characterization also may have adverse state and local income or
franchise tax consequences for a Certificate Owner. Further, if the trust were
treated in whole or in part as a partnership and the number of holders of
interests in the publicly offered certificates and other interests in the trust
treated as partners equaled or exceeded 100, the seller may cause the trust to
elect to be an "electing large partnership." The consequence of this election to
investors could include the determination of certain tax items at the
partnership level and the disallowance of otherwise allowable deductions. No
representation is made as to whether any this election will be made.
If the arrangement created by the Pooling and Servicing Agreement were
treated in whole or in part as a publicly traded partnership taxable as a
corporation, that entity would be subject to federal income tax at corporate tax
rates on its taxable income generated by ownership of the related receivables.
That tax could result in reduced distributions to Certificate Owners. No
distributions from the trust would be deductible in computing the taxable income
of the corporation, except to the extent that any certificates were treated as
debt of the corporation and distributions to the related Certificate Owners were
treated as payments of interest thereon. In addition, distributions to
Certificate Owners not treated as holding debt would be dividend income to the
extent of the current and accumulated earnings and profits of the corporation
and Certificate Owners may not be entitled to any dividends received deduction
in respect of this income.
TAXATION OF INTEREST INCOME OF U.S. CERTIFICATE OWNERS
General. Stated interest on a beneficial interest in a certificate will be
includible in gross income in accordance with a U.S. Certificate Owner's method
of accounting.
Original Issue Discount. If the certificates are issued with original
issue discount, the provisions of sections 1271 through 1273 and 1275 of the
Internal Revenue Code of 1986 will apply to the certificates. Under those
provisions, a U.S. Certificate Owner including a cash basis holder generally
would be required to accrue the original issue discount on its interest in a
certificate in income for federal income tax purposes on a constant yield basis,
resulting in the inclusion of original issue discount in income somewhat in
advance of the receipt of cash attributable to that income.
In general, a certificate will be treated as having original issue discount
to the extent that its "stated redemption price" exceeds its "issue price," if
such excess equals or exceeds 0.25 percent multiplied by the weighted average
life of the certificate. The weighted average life of the certificate will be
determined by taking into account only the number of complete years following
issuance until payment is made for any partial principal payments.
Under Section 1272(a)(6) of the Internal Revenue Code, special provisions
apply to debt instruments on which payments may be accelerated due to
prepayments of other obligations securing those debt instruments. However, no
regulations have been issued interpreting those provisions, and the manner in
which those provisions would apply to the certificates is unclear. Additionally,
the Internal Revenue Service could take the position based on Treasury
regulations that none of the interest payable on a certificate is
"unconditionally payable" and hence that all of the interest should be included
in the certificate's stated redemption price at maturity. If sustained, this
treatment should not significantly affect
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the tax liability of most Certificate Owners, but prospective U.S. Certificate
Owners should consult their own tax advisers concerning the impact to them in
their particular circumstances.
Market Discount. A U.S. Certificate Owner who purchases an interest in a
certificate at a discount that exceeds any unamortized original issue discount
may be subject to the "market discount" rules of sections 1276 through 1278 of
the Internal Revenue Code. These rules provide, in part, that gain on the sale
or other disposition of a certificate and partial principal payments on a
certificate are treated as ordinary income to the extent of accrued market
discount. The market discount rules also provide for deferral of interest
deductions with respect to debt incurred to purchase or carry a certificate that
has market discount.
Market Premium. A U.S. Certificate Owner who purchases an interest in a
certificate at a premium may elect to offset the premium against interest income
over the remaining term of the Certificate in accordance with the provisions of
section 171 of the Internal Revenue Code.
SALE OR EXCHANGE OF CERTIFICATES
Upon a disposition of an interest in a certificate, a U.S. Certificate
Owner generally will recognize gain or loss equal to the difference between the
amount realized on the disposition and the U.S. Certificate Owner's adjusted
basis in its interest in the certificate. The adjusted basis in the interest in
the certificate will equal its cost, increased by any original issue discount or
market discount includible in income with respect to the interest in the
certificate prior to its sale and reduced by any payments of principal and
original issue discount previously received with respect to the interest in the
certificate and any amortized premium. Subject to the market discount rules,
gain or loss will be capital gain or loss if the interest in the certificate was
held as a capital asset. Capital losses generally may be used only to offset
capital gains.
NON-U.S. CERTIFICATE OWNERS
In general, a non-U.S. Certificate Owner will not be subject to U.S.
federal income tax on interest, including original issue discount, on a
beneficial interest in a Certificate unless:
- the non-U.S. Certificate Owner actually or constructively owns 10 percent
or more of the total combined voting power of all classes of stock of the
seller entitled to vote or of a profits or capital interest of the trust
if characterized as a partnership;
- the non-U.S. Certificate Owner is a controlled foreign corporation that
is related to the seller or the trust if treated as a partnership through
stock ownership;
- the non-U.S. Certificate Owner is a bank described in Internal Revenue
Code section 881(c)(3)(A);
- this interest is contingent interest described in Internal Revenue Code
section 871(h)(4); or
- the non-U.S. Certificate Owner bears certain relationships to any holder
of either the Seller Certificates other than the Seller or any other
interest in the trust not properly characterized as debt.
To qualify for the exemption from taxation, under currently applicable
procedures, the last U.S. Person in the chain of payment prior to payment to a
non-U.S. Certificate Owner must have received, in the year in which a payment of
interest or principal occurs or in either of the two preceding years, a
statement that:
- is signed by the non-U.S. Certificate Owner under penalties of perjury;
- certifies that the non-U.S. Certificate Owner is not a U.S. Person; and
- provides the name and address of the non-U.S. Certificate Owner.
The statement may be made on a Form W-8 or substantially similar substitute
form, and the non-U.S. Certificate Owner must inform the withholding agent of
any change in the information on the
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statement within 30 days of the change. If a certificate is held through a
securities clearing organization or certain other financial institutions, the
organization or institution may provide a signed statement to the withholding
agent. However, in that case, the signed statement must be accompanied by a Form
W-8 or substitute form provided by the non-U.S. Certificate Owner to the
organization or institution holding the certificate on behalf of the non-U.S.
Certificate Owner. The U.S. Treasury Department is considering implementation of
further certification requirements aimed at determining whether the issuer of a
debt obligation is related to holders thereof. The U.S. Treasury Department
recently issued final regulations which will revise some of the foregoing
procedures whereby a non-U.S. Certificate Owner may establish an exemption from
withholding generally beginning January 1, 2001. Non-U.S. Certificate Owners
should consult their tax advisors concerning the impact to them, if any, of
these procedures.
Generally, any gain or income realized by a non-U.S. Certificate Owner upon
retirement or disposition of an interest in a certificate will not be subject to
U.S. federal income tax, provided that:
- in the case of a Certificate Owner that is an individual, that
Certificate Owner is not present in the United States for 183 days or
more during the taxable year in which such retirement or disposition
occurs; and
- in the case of gain representing accrued interest, the conditions
described in the preceding paragraph for exemption from withholding are
satisfied.
- Some exceptions to the exemption may be applicable, and an individual
non-U.S. Certificate Owner should consult a tax advisor.
If the certificates were treated as an interest in a partnership, the
recharacterization could cause a non-U.S. Certificate Owner to be treated as
engaged in a trade or business in the United States. In that event, the non-U.S.
Certificate Owner would be required to file a federal income tax return and, in
general, would be subject to U.S. federal income tax including the branch
profits tax on its net income from the partnership. Further, certain withholding
obligations apply with respect to income allocable or distributions made to a
foreign partner. That withholding may be at a rate as high as 39.6 percent. If
some or all of the certificates were treated as stock in a corporation, any
related dividend distributions to a non-U.S. Certificate Owner generally would
be subject to withholding of tax at the rate of 30 percent, unless that rate
were reduced by an applicable tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Backup withholding of U.S. federal income tax at a rate of 31 percent may
apply to payments made in respect of a certificate to a registered owner who is
not an "exempt recipient" and who fails to provide required identifying
information such as the registered owner's taxpayer identification number in the
manner required. Generally, individuals are not exempt recipients whereas
corporations and certain other entities are exempt recipients. Payments made in
respect of a U.S. Certificate Owner must be reported to the Internal Revenue
Service, unless the U.S. Certificate Owner is an exempt recipient or otherwise
establishes an exemption. Compliance with the identification procedures
described above under the caption "--Non-U.S. Certificate Owners" would
establish an exemption from backup withholding for a non-U.S. Certificate Owner
who is not an exempt recipient.
In addition, upon the sale of a certificate to, or through, a "broker," the
broker must withhold 31 percent of the entire purchase price, unless either:
- the broker determines that the seller of the certificate is a corporation
or other exempt recipient; or
- the seller of the certificate provides identifying information in the
required manner, and in the case of a non-U.S. Certificate Owner
certifies that the seller is a non-U.S. Certificate Owner and other
conditions are met.
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This sale must also be reported by the broker to the Internal Revenue
Service, unless either:
- the broker determines that the seller of the certificate is an exempt
recipient; or
- the seller of the certificate certifies its non-U.S. status and other
conditions are met. Certification of the registered owner's non-U.S.
status normally would be made on Form W-8 under penalties of perjury,
although in some cases it may be possible to submit other documentary
evidence.
As defined by Treasury regulations, the term "broker" includes all persons
who stand ready to effect sales made by others in the ordinary course of a trade
or business, as well as brokers and dealers registered as such under the laws of
the United States or a state. These requirements generally will apply to a U.S.
office of a broker, and the information reporting requirements generally will
apply to a foreign office of a U.S. broker as well as to a foreign office of a
foreign broker:
- that is a controlled foreign corporation within the meaning of section
957(a) of the Code; or
- 50 percent or more of whose gross income from all sources for the three
year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the foreign broker has been
in existence) was effectively connected with the conduct of a trade or
business within the United States.
Any amounts withheld under the backup withholding rules from a payment to a
Certificate Owner would be allowed as a refund or a credit against the
Certificate Owner's U.S. federal income tax, provided that the required
information is furnished to the Internal Revenue Service.
Recently issued final Treasury regulations will revise some of the
foregoing information reporting and backup withholding procedures generally
beginning January 1, 2001. Certificate Owners should consult their tax advisors
concerning the impact to them, if any, of the revised procedures.
STATE AND LOCAL TAXATION
The discussion above does not address the taxation of the trust or the tax
consequences of the purchase, ownership or disposition of an interest in the
certificates under any state or local tax law. Each investor should consult its
own tax adviser regarding state and local tax consequences.
ERISA CONSIDERATIONS
This section provides a brief summary of the material provisions of ERISA
and the Internal Revenue Code which should be considered by potential investors
if such investors contemplate acquisition of the certificates as an investment
or with "plan assets" of a plan, as defined below. Additional information with
respect to each series and the classes will be included in the related
prospectus supplement.
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, and section 4975 of the Internal Revenue Code prohibit certain pension,
profit sharing or other employee benefit plans, individual retirement accounts
or annuities and employee annuity plans and Keogh plans--collectively,
"PLANS"--from engaging in certain transactions involving "plan assets" with
persons that are "parties in interest" under ERISA or "disqualified persons"
under the Internal Revenue Code--collectively, "parties in interest"--with
respect to the plan. A violation of these "prohibited transaction" rules may
generate excise tax and other liabilities under ERISA and section 4975 of the
Internal Revenue Code for these persons, unless a statutory, regulatory or
administrative exemption is available.
Subject to the considerations described below and except to the extent
otherwise specified in the accompanying prospectus supplement, the seller
anticipates that the most senior class of each series of certificates will be
eligible for purchase by plan investors.
A violation of the prohibited transaction rules could occur if any class of
certificates were to be purchased with "plan assets" of any plan and the seller,
the trustee, any underwriters of the related series or any of their affiliates
were a party in interest with respect to the plan, unless a statutory,
regulatory or
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administrative exemption is available or an exception applies under a regulation
issued by the Department of Labor. The seller, the trustee, any underwriters of
a series and their affiliates are likely to be parties in interest with respect
to many plans. Before purchasing certificates, a plan fiduciary or other plan
investor should consider whether a prohibited transaction might arise by reason
of the relationship between the plan and the seller, the trustee, any
underwriters of the series or any of their affiliates and consult their counsel
regarding the purchase in light of the considerations described below.
The Department of Labor has issued five class exemptions that may apply to
otherwise prohibited transactions arising from the purchase or holding of the
certificates: Department of Labor Prohibited Transaction Class Exemptions 96-23
relating to transactions determined by "in-house asset managers", 95-60 relating
to transactions involving insurance company general accounts, 91-38 relating to
transactions involving bank collective investment funds, 90-1 relating to
transactions involving insurance company pooled separate accounts or 84-14
relating to transactions determined by independent "qualified professional asset
managers" or any other prohibited transaction exemption issued by the Department
of Labor. A purchaser of certificates of any class should be aware, however,
that even if the conditions specified in one or more of the above-referenced
exemptions are met, the scope of the exemptive relief provided by the exemption
might not cover all acts which might be construed as prohibited transactions.
Under certain circumstances, the Department of Labor plan asset regulation
treats the assets of an entity in which a plan holds an equity interest as "plan
assets" of that plan. Because the certificates will represent beneficial
interests in the trust, and despite the agreement of the seller and the
certificate owners to treat each series of certificates as debt instruments, the
certificates are likely to be considered equity interests in the trust for
purposes of the plan asset regulation, with the result that the assets of the
trust are likely to be treated as "plan assets" of the investing plans for
purposes of ERISA and section 4975 of the Internal Revenue Code, unless either
of the following exceptions applies.
The first exception applies to a "publicly-offered security." A
publicly-offered security is a security that is:
(1) freely transferable;
(2)part of a class of securities that is owned, immediately subsequent
to the initial offering, by 100 or more investors who were independent of
the issuer and of one another; and
(3) either is:
(a) part of a class of securities registered under section 12(b) or
12(g) of the Exchange Act; or
(b) sold to the plan as part of an offering of securities to the
public pursuant to an effective registration statement under
the Securities Act and the class of securities of which the
security is a part is registered under the Exchange Act within
120 days, or a later time as may be allowed by the SEC, after
the end of the fiscal year of the issuer during which the
offering of the securities to the public occurred.
For purposes of the 100 independent investor criterion, except to the extent
otherwise disclosed in the accompanying prospectus supplement, each class of
certificates should be deemed to be a "class" of securities that would be tested
separately from any other securities that may be issued by the trust. The
accompanying prospectus supplement will indicate whether it is anticipated that
each class of certificates will meet the foregoing criteria for treatment as
"publicly-offered securities." No restrictions will be imposed on the transfer
of the certificates. Unless otherwise disclosed in the accompanying prospectus
supplement, the seller expects that the most senior class of each series of
certificates will be held by at least 100 independent investors at the
conclusion of the initial public offering although no assurance can be given,
and no monitoring or other measures will be taken to ensure, that the condition
is met. Unless otherwise disclosed in the accompanying prospectus supplement,
the most senior class of each series of certificates will be sold as part of an
offering pursuant to an effective registration statement under the Securities
Act of 1933 and then will be timely registered under the Securities Act of 1934.
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The second exception applies if equity participation in the entity by
"benefit plan investors"--i.e., plans and other employee benefit plans not
subject to ERISA, such as governmental or foreign plans, as well as entities
holding assets deemed to be "plan assets"--is not "significant." Benefit plan
investors' equity participation in the trust is not significant on any date on
which any series of certificates is issued and outstanding if, immediately after
the most recent acquisition of any equity interest in the trust, less than 25%
of the value of each class of equity interests in the trust excluding interests
held by the seller, the trustee or their affiliates is held by benefit plan
investors. The seller can give no assurance as to whether the value of each
class of equity interests in the trust held by benefit plan investors will be
"significant" upon completion of the offering of any series of certificates or
thereafter, and no monitoring or other measures will be taken with respect to
the satisfaction of the conditions to this exception.
If neither of the foregoing exceptions under the plan asset regulation is
satisfied with respect to the trust and the trust were considered to hold "plan
assets," transactions involving the trust and parties in interest with respect
to a plan that is a Certificate Owner might be prohibited under section 406 of
ERISA and/or section 4975 of the Internal Revenue Code and result in excise tax
and other liabilities under ERISA and section 4975 of the Internal Revenue Code
unless an exemption were available. The five Department of Labor class
exemptions mentioned above may not provide relief for all transactions involving
the assets of the trust even if they would otherwise apply to the purchase of a
certificate by a plan. However, exemptive relief may be available under an
exemption issued to the seller if and to the extent disclosed in the related
prospectus supplement.
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the certificates on behalf or with "plan assets" of any plan should
consult their own counsel regarding whether the trust assets represented by the
certificates would be considered "plan assets," the consequences that would
apply if the trust's assets were considered "plan assets," and the availability
of exemptive relief from the prohibited transaction rules or the applicability
of an exception under the plan asset regulation. In addition, based on the
reasoning of the United States Supreme Court decision in John Hancock Mut. Life
Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. 86 (1993), under some
circumstances assets in the general account of an insurance company may be
deemed to be plan assets for certain purposes, with the result that a purchase
of certificates with assets of an insurance company's general account may
subject the insurance company to the prohibited transaction and other fiduciary
responsibility rules of ERISA with respect to these assets. Insurance company
general account investors should also consider the effect of the enactment of
section 401(c) of ERISA and any regulations issued under section 401(c).
Finally, plan fiduciaries and other plan investors should consider the fiduciary
standards under ERISA or other applicable law in the context of the plan's
particular circumstances before authorizing an investment of a portion of the
plan's assets in the certificates. Accordingly, among other factors, plan
fiduciaries and other plan investors should consider whether the investment:
- satisfies the diversification requirement of ERISA or other applicable
law;
- is in accordance with the plan's governing instruments; and
- is prudent in light of the "Risk Factors" and other factors discussed in
this prospectus and in the accompanying prospectus supplement.
PLAN OF DISTRIBUTION
The certificates of any series offered hereby and by the related prospectus
supplement may be offered by the underwriter or underwriters named in the
related prospectus supplement as agent or underwriter, or through underwriting
syndicates represented by the same underwriter or underwriters.
UNDERWRITING
The prospectus supplement relating to a series will set forth the terms of
the offering of that series and each class within the series, including the name
or names of the underwriters, the proceeds to and
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their intended use by the seller, and either the initial public offering price,
the discounts and commissions to the underwriters and any discounts or
concessions allowed or reallowed to certain dealers, or the method by which the
price at which the underwriters will sell the certificates of the series will be
determined.
The underwriters will be obligated, subject to certain conditions, to
purchase all of the certificates described in the prospectus supplement relating
to a series if any of the certificates are purchased. The certificates may be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The seller may also sell the certificates offered hereby and by means of
the related prospectus supplements from time to time in negotiated transactions
or otherwise, at prices determined at the time of sale. These transactions may
be effected by selling certificates to or through dealers and the dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the seller and any purchasers of certificates for whom they may
act as agents.
The place and time of delivery for the series in respect of which this
prospectus is delivered will be set forth in the accompanying prospectus
supplement.
LEGAL MATTERS
It is anticipated that certain legal matters relating to the issuance of
the certificates of any series will be passed upon for the bank by counsel named
in the related prospectus supplement and, with respect to the federal tax
consequences of such issuance, by the bank's special tax counsel. Certain legal
matters relating to the issuance of the certificates of a series will be passed
upon for the underwriters by the counsel named in the related prospectus
supplement. Prior to the sale of each series of certificates, the seller will
cause a legality opinion to be filed with the SEC with respect to that series.
REPORTS TO CERTIFICATEHOLDERS
The servicer will prepare monthly and annual reports that will contain
information about the trust. These reports will not constitute financial
statements prepared in accordance with generally accepted accounting principles.
Unless and until definitive certificates are issued to Certificate Owners, the
reports will be sent to the trustee and in turn sent only to Cede & Co., which
is the nominee of The Depository Trust Company and the only registered holder of
the certificates. No financial reports will be sent to you. See "Description of
the Certificates--Book-Entry Registration," "--Reports to Certificateholders"
and "--Evidence as to Compliance" in this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the certificates with the
SEC. This prospectus is part of the registration statement, but the registration
statement includes additional information.
The servicer will file with the SEC all required annual, monthly and
special reports and other information about the trust.
You may read and copy any reports, statements or other information we file
at the SEC's public reference room of the SEC in Washington, D.C. You can
request copies of these documents, upon payment of a duplicating fee, by writing
to the SEC. Please call the SEC at (800) SEC-0330 for further information and
the operation of the public reference room. Our SEC filings are also available
to the public on the SEC Internet site (http://www.sec.gov.).
The SEC allows us to "incorporate by reference" information we file with
it, which means that we can disclose important information to you by referring
you to those documents. This information incorporated by reference is considered
to be part of this prospectus. Information that we file later with the SEC will
automatically update the information in this prospectus. In all cases, you
should rely on the later information over different information included in this
prospectus or the accompanying prospectus
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supplement. We incorporate by reference any future annual, monthly and special
SEC reports and proxy materials filed by or on behalf of the trust until we
terminate our offering of the certificates.
As a recipient of this prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing or
calling us at: Fleet Bank (RI), National Association, 200 Tournament Drive,
Suite 303, Horsham, PA 19044-2303, Attn: Credit Card Securitization Department;
(215) 444-6800.
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INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
accumulation period................. 27
addition date....................... 43
additional sellers.................. 33
amortization period................. 27
automatic additions................. 45
bank................................ 16
Bank Certificate.................... 32
cash collateral account............. 60
cash collateral guaranty............ 60
Certificate Owner................... 28
certificateholders.................. 17
certificateholders' interest........ 17
collateral interest................. 60
collection account.................. 48
defaulted amount.................... 50
defaulted receivables............... 50
defeased series..................... 58
definitive certificates............. 31
depositaries........................ 29
depository.......................... 28
discount option receivable
collections....................... 47
discount percentage................. 47
distribution date................... 33
Eligible Account.................... 41
eligible deposit account............ 48
eligible institution................ 48
eligible investments................ 48
Eligible Receivable................. 41
eligible servicer................... 53
excess funding account.............. 48
FDIA................................ 24
finance charge receivables.......... 16
Fleet............................... 22
Fleet Credit Card Portfolio......... 18
ineligible receivables.............. 39
insolvency event.................... 52
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
interchange......................... 16, 22
interest period..................... 28
invested amount..................... 27
investor amount..................... 26
monthly period...................... 28
monthly servicing fee............... 52
Pay Out Event....................... 27
paying agent........................ 49
plans............................... 67
Pooling and Servicing Agreement..... 16
principal receivables............... 16
rapid accumulation period........... 27
rapid amortization period........... 27
receivables......................... 16
recoveries.......................... 16
Required Principal Balance.......... 43
Required Seller Amount.............. 43
Required Seller Percentage.......... 43
revolving period.................... 27
scheduled amortization date......... 27
Seller Amount....................... 26
Seller Certificates................. 35
Seller Percentage................... 49
sellers' interest................... 35
series accounts..................... 48
series enhancement.................. 59
Series Investor Amount.............. 43
Series Percentage................... 49
Servicer Default.................... 55
special tax counsel................. 61
spread account...................... 61
stated series termination date...... 51
Supplemental Certificate............ 32
trust termination date.............. 51
U.S. Certificate Owner.............. 62
U.S. Person......................... 62
</TABLE>
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain circumstances, the globally offered Fleet Credit Card
Master Trust II Asset Backed Securities (the "GLOBAL SECURITIES") to be issued
in Series from time to time (each, a "SERIES") will be available only in
book-entry form. Investors in the Global Securities may hold such Global
Securities through any of The Depository Trust Company ("DTC"), Cedelbank or
Euroclear. The Global Securities will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedelbank and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedelbank or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedelbank and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedelbank and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC (other than
through accounts at Cedelbank or Euroclear) will follow the settlement practices
applicable to U.S. corporate debt obligations. Investor securities custody
accounts will be credited with their holdings against payment in same-day funds
on the settlement date.
Investors electing to hold their Global Securities through Cedelbank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds in registered form. Global Securities will be credited to
the securities custody accounts on the business day following the settlement
date against payment for value on the settlement date.
SECONDARY MARKET TRADING
Because the purchaser determines the place of delivery, it is important to
establish at the time of the trading of any Global Securities where both the
purchaser's and seller's accounts are located to ensure that settlement can be
made on the desired value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants (other than Citibank, N.A. and Morgan Guaranty Trust Company of New
York as depositories for Cedelbank and Euroclear, respectively) will be settled
using the procedures applicable to U.S. corporate debt obligations in same-day
funds.
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<PAGE> 135
Trading between Cedelbank Customers and/or Euroclear
Participants. Secondary market trading between Cedelbank Customers and/or
Euroclear Participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
Trading between DTC seller and Cedelbank or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
(other than Citibank and Morgan as depositories for Cedelbank and Euroclear,
respectively) to the account of a Cedelbank Customer or a Euroclear Participant,
the purchaser must send instructions to Cedelbank prior to settlement date
12:30. Cedelbank or Euroclear, as the case may be, will instruct Citibank or
Morgan, respectively, to receive the Global Securities against payment. Payment
will then be made by Citibank or Morgan, as the case may be, to the DTC
Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedelbank Customer's or Euroclear Participant's
account. Credit for the Global Securities will appear the next day (European
time) and cash debit will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedelbank or Euroclear cash
debit will be valued instead as of the actual settlement date.
Cedelbank Customers and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedelbank or Euroclear. Under this approach,
they may take on credit exposure to Cedelbank or Euroclear until Global
Securities are credited to their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of credit
to them, Cedelbank Customers or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedelbank Customers or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on each Cedelbank
Customer's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
Citibank or Morgan for the benefit of Cedelbank Customers or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently from a trade between two DTC Participants.
Trading between Cedelbank or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedelbank Customers and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through Citibank or Morgan, to another DTC Participant. The seller must send
instructions to Cedelbank before settlement date 12:30. In these cases,
Cedelbank or Euroclear will instruct Citibank or Morgan, as appropriate, to
credit the Global Securities to the DTC Participant's account against payment.
The payment will then be reflected in the account of the Cedelbank Customer or
Euroclear Participant the following day, and receipt of the cash proceeds in the
Cedelbank Customer's or Euroclear Participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred in
New York). If the Cedelbank Customer or Euroclear Participant has a line of
credit with its respective clearing system and elects to draw on such line of
credit in anticipation of receipt of the sale proceeds in its account, the
back-valuation may substantially reduce or offset any overdraft charges incurred
over that one-day period. If settlement is not completed on the intended value
date (i.e., the
A-2
<PAGE> 136
trade fails), receipt of the cash proceeds in the Cedelbank Customer's or
Euroclear Participant's account would instead be valued as of the actual
settlement date.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless, under currently applicable law, (i) each
clearing system, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business in the chain of
intermediaries between such beneficial owner and the U.S. entity required to
withhold tax complies with applicable certification requirements and (ii) such
beneficial owner takes one of the following steps to obtain an exemption or
reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Certificates that are non-U.S. Persons generally can obtain a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificate
of Foreign Status). If the information shown on Form W-8 changes, a new
Form W-8 must be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a
U.S. branch, for which the interest income is effectively connected with
its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners
residing in a country that has a tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides only for a reduced rate, withholding tax will be imposed at
that rate unless the filer alternatively files Form W-8. Form 1001 may be
filed by the Certificate Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of
a Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom
it holds (the clearing agency, in the case of persons holding directly on
the books of the clearing agency). Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means:
(i) a citizen or resident of the United States;
(ii) a corporation or partnership organized in or under the laws of the
United States, any state thereof, or any political subdivision of
either (including the District of Columbia); or
(iii) an estate or trust the income of which is includible in gross income
for United States tax purposes regardless of its source.
This summary does not deal with all aspects of U.S. federal income tax
withholding that may be relevant to foreign holders of the Global Securities.
Investors are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Global Securities. Further, the
IRS has recently finalized new regulations that will revise some aspects of the
current system for withholding on amounts paid to foreign persons. Under these
regulations, interest or OID paid to a nonresident alien would continue to be
exempt from U.S. withholding taxes (including backup withholding) provided that
the holder complies with the new procedures.
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<PAGE> 137
PART II
ITEM 14. Other Expenses of Issuance and Distribution.
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Statement Fee.................................. $1,267,200**
Printing and Engraving Expenses............................. 560,000*
Trustee's Fees and Expenses................................. 105,000*
Legal Fees and Expenses..................................... 1,050,000*
Blue Sky Fees and Expenses.................................. 20,000*
Accountants' Fees and Expenses.............................. 210,000*
Rating Agency Fees.......................................... 2,100,000*
Miscellaneous Fees and Expenses............................. 35,000*
----------
Total....................................................... $5,347,200*
==========
</TABLE>
- ------------
* Estimates
** Actual
ITEM 15. Indemnification of Directors and Officers.
The Articles of Association of Fleet Bank (RI), National Association (the
"BANK") provide that each person who was or is made a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or she is or was a director, officer or employee of the Bank
or is or was serving at the request of the Bank as a director, officer, employee
or agent of another corporation or of a partnership, joint venture, limited
liability company, trust, or other enterprise, shall be indemnified and held
harmless by the Bank to the extent authorized by the law of the state in which
the Bank's ultimate parent company is incorporated, except as provided below.
The Bank may, by action of its Board of Directors, grant rights to
indemnification to agents of the Bank and to any of its subsidiaries with the
same scope and effect as the foregoing indemnification of directors and
officers.
The Articles of Association provide, however, that:
- no person shall be indemnified against expenses, penalties or other
payments incurred in an administrative proceeding or action instituted by
a federal bank regulatory agency that results in a final order assessing
civil money penalties against that person, affirmative action by that
person in the form of payments to the Bank or removing or prohibiting
that person from service with the Bank; and
- no person shall be indemnified by the Articles of Association to the
extent such indemnification would violate or conflict with any applicable
federal statute or any applicable final regulation or interpretation
adopted by the Office of the Comptroller of the Currency or the Federal
Deposit Insurance Corporation.
The Articles of Association also provide that the Bank may purchase,
maintain and make payment or reimbursement for reasonable premiums on, insurance
to protect itself and any director, officer, employee or agent of the Bank or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Bank would have the
power to indemnify such person against such expense, liability or loss under the
law of the state in which the Bank's ultimate parent is incorporated; provided,
however, that such insurance shall explicitly exclude insurance coverage for a
final order of a federal bank regulatory agency assessing civil money penalties
against a Bank director, officer, employee or agent.
II-1
<PAGE> 138
The Bank's ultimate parent company is incorporated in the State of Rhode
Island. The laws of the State of Rhode Island provide that Rhode Island
corporations may indemnify directors, officers, employees or agents against
judgments, fines, reasonable costs, expenses and counsel fees paid or in
connection with any proceeding or suit to which such director, officer, employee
or agent or his legal representative may be a party (or for testifying when not
a party) by reason of his being a director, officer, employee or agent, provided
that such director, officer, employee or agent shall have acted in good faith
and shall have reasonably believed:
- he was acting in his official capacity, and that his conduct was in the
corporation's best interest;
- in all other cases that his conduct was at least not opposed to its best
interests; and
- in the case of any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful.
With respect to possible indemnification of directors, officers and controlling
persons of the Bank for liabilities arising under the Securities Act of 1933
pursuant to such provisions, the Bank is aware that the Securities and Exchange
Commission has publicly taken the position that the indemnification is against
public policy as expressed in the Securities Act of 1933 and therefore,
unenforceable.
ITEM 16. Exhibits.
<TABLE>
<C> <C> <S>
1.1 -- Form of Underwriting Agreement for the Certificates
4.1 -- Amended and Restated Pooling and Servicing Agreement
(incorporated by reference to Exhibit 4.1 to the
registrant's Registration Statement on Form S-3, Nos.
333-52583 and 333-52583-01, filed May 13, 1998)
4.2 -- Amendment No. 1 to the Amended and Restated Pooling and
Servicing Agreement (incorporated by reference to Exhibit
4.2 to the registrant's Registration Statement on Form S-3,
Nos. 333-52583 and 333-52583-01, filed May 13, 1998)
4.3 -- Amendment No. 2 to the Amended and Restated Pooling and
Servicing Agreement (incorporated by reference to Exhibit
4.3 to the registrant's Registration Statement on Form S-3,
Nos. 333-52583 and 333-52583-01, filed May 13, 1998)
4.4 -- Amendment No. 3 to the Amended and Restated Pooling and
Servicing Agreement (incorporated by reference to Exhibit
4.4 to the registrant's Registration Statement on Form S-3,
Nos. 333-52583 and 333-52583-01, filed May 13, 1998)
4.5 -- Amendment No. 4 to the Amended and Restated Pooling and
Servicing Agreement
4.6 -- Assignment and Assumption Agreement (incorporated by
reference to Exhibit 4.5 to the registrant's Registration
Statement on Form S-3, Nos. 333-52583 and 333-52583-01,
filed May 13, 1998)
4.7 -- Form of Series Supplement to the Amended and Restated
Pooling and Servicing Agreement.
5.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to legality
8.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to federal tax matters
23.1 -- Consent of Orrick, Herrington & Sutcliffe LLP (included in
its opinion filed as Exhibit 5.1)
23.2 -- Consents of Orrick, Herrington & Sutcliffe LLP (included in
its opinion filed as Exhibit 8.1)
24.1 -- Powers of Attorney (included in Page II-4)
</TABLE>
ITEM 17. Undertakings.
The undersigned Registrant on behalf of the Fleet Credit Card Master Trust
II hereby undertakes as follows:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement; (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; (iii) to include any material information with
II-2
<PAGE> 139
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement; provided, however, that (a)(1)(i) and (a)(1)(ii)
will not apply if the information required to be included in a
post-effective amendment thereby is contained in periodic reports filed
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering hereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described
under Item 15 above, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final adjudication
of each issue.
(d) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering hereof.
II-3
<PAGE> 140
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, reasonably believes that the
security rating requirement contained in Transaction Requirement B.5 of Form S-3
will be met by the time of the sale of the securities registered hereunder and
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Horsham, PA on February 4, 2000.
FLEET BANK (RI), NATIONAL ASSOCIATION
as depositor to the trust and as
servicer on behalf of the trust
By: /s/ JOHN KIRBY BRAY
------------------------------------
Name: John Kirby Bray
Title: Executive Vice President
and Chief Financial
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John Kirby Bray and Joseph W. Saunders, and each
of them, his or her true and lawful attorney-in-fact and agents, with full power
of substitution and resubstitution, for and in his or her own name, place and
stead, in any and all amendments (including post-effective amendments) to this
Registration Statement and any or all other documents in connection therewith,
and to file the same, with all exhibits thereto, with the Securities and
Exchange Commission, granting unto said authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all said attorney-in-fact and agents or
any of them, or their substitute or substitutes, may lawfully for or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on February 4, 2000 by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ JOSEPH W. SAUNDERS Chairman, President, Chief Executive Officer
- ----------------------------------------------------- and Director
Joseph W. Saunders
/s/ JOHN KIRBY BRAY Executive Vice President and Chief Financial
- ----------------------------------------------------- Officer
John Kirby Bray
/s/ MICHAEL J. SHEAHAN Controller
- -----------------------------------------------------
Michael J. Sheahan
/s/ ANNE FINUCANE Director
- -----------------------------------------------------
Anne Finucane
/s/ ROBERT B. HEDGES, JR. Director
- -----------------------------------------------------
Robert B. Hedges, Jr.
/s/ V. DUNCAN JOHNSON Director
- -----------------------------------------------------
V. Duncan Johnson
</TABLE>
II-4
<PAGE> 141
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ EUGENE M. MCQUADE Director
- -----------------------------------------------------
Eugene M. McQuade
/s/ BRIAN T. MOYNIHAN Director
- -----------------------------------------------------
Brian T. Moynihan
/s/ EVELYN F. MURPHY Director
- -----------------------------------------------------
Evelyn F. Murphy
/s/ H. JAY SARLES Director
- -----------------------------------------------------
H. Jay Sarles
</TABLE>
II-5
<PAGE> 142
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement for the Certificates
4.1 -- Amended and Restated Pooling and Servicing Agreement
(incorporated by reference to Exhibit 4.1 to the
registrant's Registration Statement on Form S-3, Nos.
333-52583 and 333-52583-01, filed May 13, 1998)
4.2 -- Amendment No. 1 to the Amended and Restated Pooling and
Servicing Agreement (incorporated by reference to Exhibit
4.2 to the registrant's Registration Statement on Form S-3,
Nos. 333-52583 and 333-52583-01, filed May 13, 1998)
4.3 -- Amendment No. 2 to the Amended and Restated Pooling and
Servicing Agreement (incorporated by reference to Exhibit
4.3 to the registrant's Registration Statement on Form S-3,
Nos. 333-52583 and 333-52583-01, filed May 13, 1998)
4.4 -- Amendment No. 3 to the Amended and Restated Pooling and
Servicing Agreement (incorporated by reference to Exhibit
4.4 to the registrant's Registration Statement on Form S-3,
Nos. 333-52583 and 333-52583-01, filed May 13, 1998)
4.5 -- Amendment No. 4 to the Amended and Restated Pooling and
Servicing Agreement
4.6 -- Assignment and Assumption Agreement (incorporated by
reference to Exhibit 4.5 to the registrant's Registration
Statement on Form S-3, Nos. 333-52583 and 333-52583-01,
filed May 13, 1998)
4.7 -- Form of Series Supplement to the Amended and Restated
Pooling and Servicing Agreement.
5.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to legality
8.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect
to federal tax matters
23.1 -- Consent of Orrick, Herrington & Sutcliffe LLP (included in
its opinion filed as Exhibit 5.1)
23.2 -- Consents of Orrick, Herrington & Sutcliffe LLP (included in
its opinion filed as Exhibit 8.1)
24.1 -- Powers of Attorney (included in Page II-4)
</TABLE>
<PAGE> 1
Exhibit 1.1
OH&S DRAFT
01/11/00
___________ __, ____
[Form of Underwriting Agreement]
Fleet Credit Card Master Trust II
$_____________Class A [__%] [Floating Rate] Asset Backed
Certificates, Series ___-_
$_____________ Class B [__%] [Floating Rate] Asset Backed
Certificate, Series ___-_
FLEET BANK (RI), NATIONAL ASSOCIATION
(AS SELLER AND SERVICER)
UNDERWRITING AGREEMENT
Representative of the
Underwriter[s] set forth herein
Ladies and Gentlemen:
1. Introductory. Fleet Bank (RI), National Association, a national
banking association (the "Bank") proposes to cause $___________ principal amount
of Fleet Credit Card Master Trust II Class A [___%] [Floating Rate] Asset Backed
Certificates, Series ____-_ (the "Class A Certificates"), $____________
aggregate principal amount of Fleet Credit Card Master Trust II Class B [___%]
[Floating Rate] Asset Backed Certificates, Series ____-_ (the "Class B
Certificates," and together with the Class A Certificates, the "Certificates")
to be issued under an Amended and Restated Pooling and Servicing Agreement,
between Bankers Trust Company, as Trustee (the "Trustee") and the Bank (as
Seller and Servicer and successor to Advanta National Bank as provided in an
Assignment and Assumption Agreement dated as of February 20, 1998 (the
"Assumption Agreement") among Advanta National Bank, the Bank, Fleet Credit
Card, LLC and the Trustee), dated as of December 1, 1993 (as amended and
restated as of May 23, 1994, as amended by Amendment Number 1 to the Amended and
Restated Pooling and Servicing Agreement dated as of July 1, 1994, Amendment
Number 2 to the Amended and Restated Pooling and Servicing Agreement dated as of
October 6, 1995, Amendment Number 3 to the Pooling and Servicing Agreement dated
as of February 20, 1998 and Amendment Number 4 to the Pooling and Servicing
Agreement dated as of May 14, 1999, the "Amended and Restated Pooling and
Servicing Agreement"), as supplemented by the Series ____-_ Supplement with
respect to the Certificates to be dated as of ___________ __, ____ (the "Series
Supplement" and
<PAGE> 2
together with the Amended and Restated Pooling and Servicing Agreement, as
amended, and the Assumption Agreement, the "Pooling and Servicing Agreement").
The assets of the Trust will include, among other things, certain amounts
due (the "Receivables") on a pool of VISA and MasterCard credit card accounts of
the Bank (the "Accounts"), and recoveries on Defaulted Receivables. To the
extent not defined herein, capitalized terms used herein have the meanings
assigned in the Pooling and Servicing Agreement.
The Bank hereby agrees with the underwriter[s] for the Class A
Certificates listed on Schedule A hereto (the "Class A Underwriter[s]") and the
underwriter[s] for the Class B Certificates listed on Schedule A hereto (the
"Class B Underwriter[s]", and together with the Class A Underwriter[s], the
"Underwriter[s]") as follows:
2. Representations and Warranties of the Bank. The Bank represents and
warrants to, and agrees with, the Underwriter[s] that:
(a) The Bank is a national banking association duly organized and
validly existing in good standing under the laws of the United States, and
has all requisite corporate power, authority and legal right to own its
property and conduct its credit card business as such properties are
presently owned and such business is presently conducted, and to execute,
deliver and perform its obligations under this Agreement, the Certificates
and the Pooling and Servicing Agreement.
(b) The execution and delivery of this Agreement, the Certificates,
the Series Supplement and the Assumption Agreement, the incurrence of the
obligations herein and therein set forth and the consummation of the
transactions contemplated hereunder and thereunder have been duly
authorized by the Bank by all necessary action on the part of the Bank.
(c) This Agreement has been duly authorized, executed and delivered
by the Bank.
(d) The Series Supplement will be executed and delivered by the Bank
on or before the Closing Date, and when executed and delivered by the
other parties thereto, will constitute a valid and binding agreement of
the Bank, enforceable against the Bank in accordance with its terms, and
the Amended and Restated Pooling and Servicing Agreement as previously
executed and delivered by predecessors of the Bank and the Assumption
Agreement as previously executed by the Bank each constitute a valid and
binding agreement of the Bank, enforceable against the Bank, each in
accordance with its terms, except, in each case, to the extent that (i)
the enforceability thereof may be subject to insolvency, reorganization,
moratorium, receivership or other similar laws now or hereafter in effect
relating to creditors' or other obligees' rights generally or the rights
of creditors or other obligees insured by the FDIC, (ii) the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought and (iii) certain
remedial provisions of the Pooling and Servicing Agreement may be
2
<PAGE> 3
unenforceable in whole or in part under the UCC, but the inclusion of such
provisions does not render the other provisions of the Pooling and
Servicing Agreement invalid and, notwithstanding that such provisions may
be unenforceable in whole or in part, the Trustee, on behalf of the
Holders of the Certificates, will be able to enforce the remedies of a
secured party under the UCC.
(e) The Certificates will be issued pursuant to the terms of the
Pooling and Servicing Agreement and, when executed by the Bank and
authenticated by the Trustee in accordance with the Pooling and Servicing
Agreement and delivered pursuant to this Agreement, will be validly issued
and outstanding and entitled to the benefits of the Pooling and Servicing
Agreement. The Certificates will be in all material respects in the form
contemplated by the Pooling and Servicing Agreement and will conform to
the description thereof contained in the Prospectus and Registration
Statement, as amended or supplemented.
(f) The Bank is not in violation of any Requirement of Law or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan agreement, note, lease or other instrument to which it is a
party or by which it is bound or to which any of its property is subject,
which violations or defaults separately or in the aggregate would have a
material adverse effect on the Bank or the Trust.
(g) Neither the issuance and sale of the Certificates, nor the
execution and delivery by the Bank of this Agreement or the Certificates,
nor the incurrence by the Bank of the obligations herein and therein set
forth, nor the consummation of the transactions contemplated hereunder or
thereunder, nor the fulfillment of the terms hereof or thereof does or
will (i) violate any Requirement of Law presently in effect, applicable to
it or its properties or by which it or its properties are or may be bound
or affected, (ii) conflict with, or result in a breach of, or constitute a
default under, any indenture, contract, agreement, deed, lease, mortgage
or instrument to which it is a party or by which it or its properties are
bound, or (iii) result in the creation or imposition of any Lien upon any
of its property or assets, except for those encumbrances created under the
Pooling and Servicing Agreement.
(h) All consents, approvals, authorizations, orders, filings,
registrations or qualifications of or with any court or any other
governmental agency, board, commission, authority, official or body
required in connection with the execution and delivery by the Bank of this
Agreement, the Certificates or the Pooling and Servicing Agreement, or to
the consummation of the transactions contemplated hereunder and
thereunder, or to the fulfillment of the terms hereof and thereof have
been or will have been obtained on or before the Closing Date.
(i) All actions required to be taken by the Bank as a condition to
the offer and sale of the Certificates as described herein or the
consummation of any of the transactions described in the Prospectus and
Registration Statement have been or, prior to the Closing Date, will be
taken.
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<PAGE> 4
(j) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939.
(k) The representations and warranties made by the Bank in the
Pooling and Servicing Agreement and made in any Officer's Certificate of
the Bank delivered pursuant to the Pooling and Servicing Agreement will be
true and correct at the time made and on and as of the Closing Date as if
set forth herein.
(l) The Receivables (including Receivables in the Additional
Accounts, the Receivables of which are expected to be conveyed to the
Trust during the period from ___________ __, ___ through the Closing Date)
had an aggregate outstanding balance determined as of _________ __, ____
in the amount set forth in the Prospectus.
(m) The Bank agrees it has not granted, assigned, pledged or
transferred and shall not grant, assign, pledge or transfer to any Person
a security interest in, or any other right, title or interest in, the
Receivables, except as provided in the Pooling and Servicing Agreement,
and agrees to take all action required by the Pooling and Servicing
Agreement in order to maintain the security interest in the Receivables
granted pursuant to the Pooling and Servicing Agreement.
(n) A registration statement on Form S-3 (Nos. 333-___________ and
333-___________), including a form of prospectus and such amendments
thereto as may have been required to the date hereof, relating to the
Certificates and the offering thereof in accordance with Rule 415 under
the Securities Act of 1933, as amended (the "Act"), has been filed with,
and has been declared effective by, the Securities and Exchange Commission
(the "Commission"). If any post-effective amendment to such registration
statement has been filed with the Commission prior to the execution and
delivery of this Agreement, the most recent such amendment has been
declared effective by the Commission. For purposes of this Agreement,
"Effective Time" means the date and time as of which such registration
statement, or the most recent posteffective amendment thereto, if any, was
declared effective by the Commission, and "Effective Date" means the date
of the Effective Time. Such registration statement, as amended at the
Effective Time, is hereinafter referred to as the "Registration
Statement." The Bank proposes to file with the Commission pursuant to Rule
424(b) ("Rule 424(b)") under the Act a supplement (the "Prospectus
Supplement") to the prospectus included in the Registration Statement
(such prospectus, in the form it appears in the Registration Statement or
in the form most recently revised and filed with the Commission pursuant
to Rule 424(b), is hereinafter referred to as the "Base Prospectus")
relating to the Certificates and the method of distribution thereof. The
Base Prospectus and the Prospectus Supplement, together with any amendment
thereof or supplement thereto, are hereinafter referred to as the
"Prospectus".
(o) On the Effective Date, the Registration Statement conformed in
all respects to the requirements of the Act and the rules and regulations
of the Commission thereunder (the "Rules and Regulations") and did not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and on the date of this Agreement, the
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<PAGE> 5
Registration Statement and the Prospectus conform, and at the time of
filing of the Prospectus pursuant to Rule 424(b) the Registration
Statement and the Prospectus will conform, in all respects with the
requirements of the Act and the Rules and Regulations, and neither of such
documents includes, or will include, any untrue statement of a material
fact or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading,
except that the foregoing does not apply to statements in or omissions
from either of such documents based upon written information furnished to
the Bank by the Underwriter[s] specifically for use therein. The Bank
hereby acknowledges that (i) the only information provided by the Class A
Underwriter[s] for inclusion in the Registration Statement and the
Prospectus is set forth on the cover page of the Prospectus Supplement in
the table under the heading "Class A Certificates" and on the line across
from "Price to public per certificate," in the last sentence in the risk
factor captioned "Ability to Resell Series ____-_ Certificates Not
Assured" in the Prospectus Supplement, in the table listing the Class A
Underwriter[s] and the Principal Amount of Class A Certificates and in the
paragraph immediately following such table under "Underwriting" in the
Prospectus Supplement and in the final paragraph under "Underwriting" in
the Prospectus Supplement" (the "Class A Underwriter[s]' Information");
and (ii) the only information provided by the Class B Underwriter[s] for
inclusion in the Registration Statement and the Prospectus is set forth on
the cover page of the Prospectus Supplement in the table under the heading
"Class B Certificates" and on the line across from "Price to public per
certificate," in the last sentence under the caption "Risk
Factors--Ability to Resell Series ____-_ Certificates Not Assured" in the
Prospectus Supplement, in the table listing the Class B Underwriter[s] and
the Principal Amount of Class B Certificates and in the paragraph
immediately following such table under "Underwriting" in the Prospectus
Supplement and in the final paragraph under "Underwriting" in the
Prospectus Supplement" (the "Class B Underwriter[s]' Information").
(p) There has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Bank or its subsidiaries, taken as a whole, from
__________ __, ____.
3. Purchase, Sale, Payment and Delivery of the Certificates.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set
forth, the Bank agrees to sell to the Class A Underwriter[s], and the
Class A Underwriter[s] agree to purchase from the Bank, at a purchase
price of ________% of the principal amount thereof, $_________ aggregate
principal amount of the Class A Certificates, each Underwriter to purchase
the amounts shown on Schedule A hereto.
(b) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set
forth, the Bank agrees to sell to the Class B Underwriter[s], and the
Class B Underwriter[s] agree to purchase from the Bank, at a purchase
price of ___% of the principal amount thereof, $__________
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<PAGE> 6
aggregate principal amount of the Class B Certificates, each Underwriter
to purchase the amounts shown on Schedule A hereto.
(c) The Bank will deliver the Certificates to you against payment of
the purchase price in immediately available funds, drawn to the order of
the Bank, at the office of __________________, in ________________ at
10:00 A.M., New York City time, on ____________ __, ____, or at such other
time not later than seven full business days thereafter as you and the
Bank determine, such time being herein referred to as the "Closing Date."
Each of the Class A Certificates and the Class B Certificates so to be
delivered shall be represented by one or more definitive certificates
registered in the name of Cede & Co., as nominee for The Depository Trust
Company. The Bank shall make such definitive certificates representing the
Class A Certificates and the Class B Certificates available for inspection
by the Underwriter[s] at the office at which the Certificates are to be
delivered no later than five hours before the close of business in New
York City on the business day prior to the Closing Date.
4. Offering by Underwriter[s]. It is understood that after the
Effective Date, the Underwriter[s] propose to offer the Certificates for sale to
the public (which may include selected dealers) as set forth in the Prospectus.
5. Certain Agreements of the Bank. The Bank agrees with the
Underwriter[s] that:
(a) Immediately following the execution of this Agreement, the Bank
will prepare a Prospectus Supplement setting forth the amount of
Certificates covered thereby and the terms thereof not otherwise specified
in the Base Prospectus, the price at which such Certificates are to be
purchased by the Underwriter[s], the initial public offering price, the
selling concessions and allowances, and such other information as the Bank
deems appropriate. The Bank will transmit the Prospectus, including such
Prospectus Supplement, to the Commission pursuant to Rule 424(b) by a means
reasonably calculated to result in filing with the Commission pursuant to
Rule 424(b). The Bank will not file any amendment of the Registration
Statement with respect to the Certificates or supplement to the Prospectus
unless a copy has been furnished to you for your review a reasonable time
prior to the proposed filing thereof or to which you shall reasonably
object in writing. The Bank will advise you promptly of (i) the
effectiveness of any amendment or supplementation of the Registration
Statement or Prospectus, (ii) any request by the Commission for any
amendment or supplementation of the Registration Statement or the
Prospectus or for any additional information, (iii) the receipt by the Bank
of any notification with respect to the suspension of qualification of the
Certificates for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purposes and (iv) the institution by the
Commission of any stop order proceeding in respect of the Registration
Statement, and will use their best efforts to prevent the issuance of any
such stop order and to obtain as soon as possible its lifting, if issued.
(b) If at any time when a prospectus relating to the Certificates is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus, as then amended or supplemented, would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
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<PAGE> 7
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Bank promptly will prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither your consent to, nor the
Underwriter[s'] delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(c) As soon as practicable, the Bank will cause the Trust to make
generally available to the Certificateholders an earnings statement or
statements of the Trust covering a period of at least 12 months beginning
after the Effective Date which will satisfy the provisions of Section 11(a)
of the Act and Rule 158 of the Commission promulgated thereunder.
(d) The Bank will furnish to you copies of the Registration
Statement (one of which will be signed and will include all exhibits), the
Prospectus and all amendments and supplements to such documents, in each
case as soon as available and in such quantities as you reasonably request.
(e) The Bank will endeavor to qualify the Certificates for sale
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request and the determination of the eligibility for investment
of the Certificates under the laws of such jurisdictions as you may
designate and will continue such qualifications in effect so long as
required for the distribution of the Certificates; provided, however, that
the Bank shall not be obligated to qualify to do business in any
jurisdiction where such qualification would subject the Bank to general or
unlimited service of process in any jurisdiction where it is not now so
subject.
(f) For a period from the date of this Agreement until the
retirement of the Certificates, the Bank, as Servicer, will furnish to you
copies of each certificate and the annual statements of compliance
delivered to the Trustee pursuant to Article III of the Pooling and
Servicing Agreement and the annual independent certified public
accountant's servicing reports furnished to the Trustee pursuant to Article
III of the Pooling and Servicing Agreement, by first class mail as soon as
practicable after such certificates, statements and reports are furnished
to the Trustee.
(g) So long as any Certificate is outstanding, the Bank will furnish
to you, by first-class mail as soon as practicable (i) all documents
concerning the Certificates distributed by the Bank to Certificateholders,
or filed with the Commission pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (ii) any order of the Commission
under the Act or the Exchange Act applicable to the Trust or to the Bank as
originators of the Trust, or pursuant to a "no-action" letter obtained from
the staff of the Commission by the Bank and affecting the Trust or the Bank
as originators of the Trust and (iii) from time to time, such other
information concerning the Trust as you may reasonably request.
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<PAGE> 8
(h) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated for any reason, except a
default by you hereunder, the Bank will pay [description of expenses to be
paid by the Bank].
(i) To the extent, if any, that any of the ratings provided with
respect to the Certificates by Moody's Investors Service, Inc. or Standard
& Poor's Ratings Services are conditional upon the furnishing of documents
or the taking of any other actions by the Bank, the Bank shall furnish such
documents and take any such other actions.
6. Conditions of the Obligations of the Underwriter[s]. The obligation of
the Underwriter[s] to purchase and pay for the Certificates will be subject to
the accuracy of the representations and warranties on the part of the Bank
herein, to the accuracy of the statements of officers of the Bank made pursuant
to the provisions hereof, to the performance by the Bank of its obligations
hereunder and to the following additional conditions precedent:
(a) On or prior to the date of this Agreement, you shall have
received a letter, dated the date of this Agreement, of
______________________, confirming that they are independent public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder, substantially in the form heretofore
agreed to and otherwise in form and in substance satisfactory to you and
your counsel.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this
Agreement; and, prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of the Bank or you, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development involving
a prospective change, in or affecting particularly the business or
properties of the Bank which, in your judgment, materially impairs the
investment quality of the Certificates; (ii) any downgrading in the rating
of any debt securities of the Bank or FleetBoston Corporation by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any such
debt securities (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating), (iii) any suspension or limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Bank or Fleet Boston Corporation on any exchange or in
the over-the-counter market; (iv) any banking moratorium declared by
Federal, Rhode Island or New York authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in your judgment, the effect of any
such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the sale of and
payment for the Certificates.
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<PAGE> 9
(d) You shall have received an opinion, dated the Closing Date,
of ___________ _________________________ General Counsel for the Bank, to
the effect that:
(i) The Bank (x) has been duly chartered and is validly
existing as a national banking association under the laws of the
United States, with power and authority to own its properties and
conduct its business as described in the Prospectus; (y) is neither
required to qualify, nor to register as a foreign corporation, in any
state in order to conduct its credit card business, except where the
failure to so qualify or register would not have a material adverse
effect upon the Certificateholders; and (z) has the power, authority
and legal right to acquire, own and service the Accounts and the
Receivables;
(ii) The Bank has the power and authority to execute and
deliver this Agreement, the Series Supplement and the Certificates and
to consummate the transactions contemplated herein and therein and the
Bank, at the time of the Assumption Agreement, had the power and
authority to execute and deliver the Assumption Agreement and had and
at all times since has had and does now have the power to consummate
the transactions contemplated by the Assumption Agreement; provided,
however, that such counsel may rely on an opinion of Edwards & Angell
with respect to the Bank's authorization, execution and delivery of
the Assumption Agreement.
(iii) Each of the Series Supplement and the Certificates has
been duly authorized, executed and delivered by the Bank;
(iv) The Assumption Agreement has been duly authorized,
executed and delivered by the Bank;
(v) This Agreement has been duly authorized, executed and
delivered by the Bank;
(vi) The Registration Statement has become effective under the
Act and to the best of such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
threatened under the Act;
(vii) No consent, approval, authorization or order of, or
filing of any UCC financing statements with, any court or governmental
agency or body having jurisdiction over the Bank is required for the
consummation of the transactions contemplated by this Agreement or the
Pooling and Servicing Agreement, except for (x) filing of UCC
financing statements with respect to the transactions contemplated in
the Pooling and Servicing Agreement; (y) such consents, approvals,
authorizations, orders or filings as have been obtained under the Act;
and (z) such consents, approvals, authorizations, orders or filings as
may be required under the state securities or blue sky laws of any
jurisdiction;
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<PAGE> 10
(viii) The execution, delivery and performance by the Bank of
this Agreement and the Pooling and Servicing Agreement, the transfer
of the Receivables to the Trust, the issuance and sale of the
Certificates and the consummation of any other of the transactions
contemplated herein or in the Pooling and Servicing Agreement will not
conflict with, result in a breach of or a violation of any of the
terms of, or constitute a default under, (x) the Articles of
Association or By-Laws of the Bank or (y) any rule, order, statute or
regulation known to such counsel to be currently applicable to the
Bank, or (z) any agreement or other instrument, known to such counsel,
to which the Bank is a party or by which it is bound; and
(ix) To such counsel's knowledge, there are no actions,
proceedings or investigations pending before any court, administrative
agency or other tribunal (v) which are required to be disclosed in the
Prospectus and are not disclosed therein, (w) asserting the invalidity
of this Agreement, the Pooling and Servicing Agreement or the
Certificates, (x) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this
Agreement or the Pooling and Servicing Agreement, (y) which might
materially and adversely affect the performance by the Bank of its
obligations under, or the validity or enforceability of, this
Agreement, the Pooling and Servicing Agreement or the Certificates or
(z) seeking adversely to affect the federal income tax attributes of
the Certificates as described in the Prospectus Supplement under the
heading "Summary of Terms--Tax Status" and in the Base Prospectus
under the heading "Federal Income Tax Consequences."
(e) You shall have received a letter of Edwards & Angell, counsel
for the Bank, to the effect that you may rely on those provision of their
opinions to Moody's Investors Service, Inc. and Standard & Poor's Ratings
Services with respect to certain matters relating to the transfer of the
Receivables to the Trust, with respect to the perfection of the Trust's interest
in the Receivables and with respect to other related matters.
(f) You shall have received an opinion dated the closing date, of
Orrick, Herrington & Sutcliffe LLP, special counsel to the Bank, to the effect
that
(i) The Pooling and Servicing Agreement, including the
allocation of Collections provisions thereof, constitutes the legal,
valid and binding obligation of the Bank under the laws of the State
of New York, enforceable against the Bank in accordance with its
terms.
(ii) This Agreement constitutes the legal, valid and binding
obligation of the Bank under the laws of the State of New York,
enforceable against the Bank in accordance with its terms.
(iii) The Certificates, when executed and authenticated in
accordance with the terms of the Pooling and Servicing Agreement and
delivered to and paid for by the Underwriter[s] in accordance with
this Agreement, will be duly and
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<PAGE> 11
validly issued and outstanding and will be entitled to the benefits of
the Pooling and Servicing Agreement.
(iv) The statements in the Base Prospectus under the headings
"Material Legal Aspects of the Receivables," "ERISA Considerations"
and "Federal Income Tax Consequences" and the statements in the
Prospectus Supplement under the headings "Federal Income Tax
Consequences" and "ERISA Considerations" and the summaries thereof
under the headings "Summary of Terms--Tax Status" and "--ERISA
Considerations" in the Prospectus Supplement, to the extent they
constitute matters of law or legal conclusions with respect thereto,
have been reviewed by us and are correct in all material respects.
(v) This Agreement, the Pooling and Servicing Agreement and
the Certificates conform in all material respects to the descriptions
thereof contained in the Prospectus.
(vi) The Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended, and
the Trust is not now, and immediately following the sale of the
Certificates pursuant to this Agreement will not be, required to be
registered under the Investment Company Act of 1940, as amended.
(vii) For federal income tax purposes the Certificates will
properly be characterized as indebtedness and for purposes of Section
6.03(b)(vi) of the Pooling and Servicing Agreement (a) the issuance of
the Certificates will not adversely affect the tax characterization as
debt of Investor Certificates of any outstanding Series or Class that
were characterized as debt at the time of their issuance, (b)
following the issuance of the Certificates, the Trust will not be an
association (or publicly traded partnership) taxable as a corporation
and (c) the issuance of the Certificates will not cause or constitute
an event in which gain or loss would be recognized by any Investor
Certificateholder or the Trust; provided, however, that such counsel
may give the foregoing opinions subject to the discussion of
alternative characterizations and risks discussed in the Base
Prospectus under the heading "Federal Income Tax Consequences."
(viii) The Registration Statement and the Prospectus (other
than the financial and statistical information contained therein) on
their respective effective dates or dates of issuance appear on their
face to be appropriately responsive in all material respects to the
applicable requirements of the Act and the Rules and Regulations;
such counsel has no reason to believe that either the Registration
Statement or the Prospectus, as of such respective dates, contained
any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under
which they were made, not misleading, or that the Prospectus, as
amended or supplemented as of the date of such opinion, contains any
untrue statement of a material fact or omits to state any material
fact
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<PAGE> 12
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading (except that such counsel may express no
opinion as to (x) any financial statements, supporting schedules or
other financial or statistical information included in the
Registration Statement or the Prospectus or (y) the exhibits to the
Registration Statement.
(g) You shall have received from ________________________, special
counsel for the Underwriter[s], such opinion or opinions, dated the Closing
Date, with respect to such matters relating to this transaction as you may
require, and the Bank shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(h) You shall have received a certificate from the Bank, dated the
Closing Date, of two Vice Presidents or more senior officers of the Bank in
which such officers, to the best of their knowledge after reasonable
investigation, shall state that (u) the representations and warranties of the
Bank in this Agreement are true and correct in all material respects on and as
of the Closing Date, (v) the Bank has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date, (w) the representations and warranties of the Bank, as a
Seller and as Servicer, are true and correct as of the dates specified in the
Pooling and Servicing Agreement, (x) no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are threatened by the Commission, (y) nothing
has come to such officers' attention that would lead such officers to believe
that the Registration Statement or the Prospectus, and any amendment or
supplement thereto, as of its date and as of the Closing Date, contained an
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (z) subsequent to
the date of the Prospectus, there has been no material adverse change in the
financial position or results of operation of the Bank's credit card business
except as set forth in or contemplated by the Prospectus or as described in such
certificate.
(i) You shall have received an opinion of White & Case, counsel to
the Trustee, addressed to you, dated the Closing Date, satisfactory in form and
substance to you and your counsel and substantially to the effect that:
(i) The Trustee has been duly incorporated and is validly
existing as a New York banking corporation and has the power and
authority to enter into and to perform all actions required of it
under the Pooling and Servicing Agreement;
(ii) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Trustee and constitutes a
legal, valid and binding obligation of the Trustee, enforceable
against the Trustee in accordance with its terms, except as the
enforceability thereof may be limited by (y) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally, as such laws would apply in the event of
a bankruptcy,
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<PAGE> 13
insolvency, liquidation, reorganization or similar occurrence
affecting the Trustee, and (z) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(iii) The Certificates have been duly authenticated and
delivered by the Trustee;
(iv) The execution and delivery of the Pooling and Servicing
Agreement by the Trustee and the performance by the Trustee of its
terms does not conflict with or result in a violation of (y) any law
or regulation of the United States of America or the State of New York
governing the banking or trust powers of the Trustee, or (z) the
Certificate of Incorporation or By-Laws of the Trustee; and
(v) No approval, authorization or other action by, or filing
with, any governmental authority of the United States of America or
the State of New York having jurisdiction over the banking or trust
powers of the Trustee is required in connection with the execution and
delivery by the Trustee of the Pooling and Servicing Agreement or the
performance by the Trustee thereunder.
(j) You shall have received evidence satisfactory to you that the
Class A Certificates shall be rated ___ by Moody's Investors Service, Inc. and
___ by Standard & Poor's Ratings Services and that the Class B Certificates
shall be rated no lower than __ by Moody's Investors Service, Inc. and ____ by
Standard & Poor's Ratings Services.
The Bank will furnish you with such conformed copies of such opinions,
certificates, letters and documents as you reasonably request.
7. Indemnification and Contribution.
(a) The Bank will indemnify and hold harmless the
Underwriter[s] against any losses, claims, damages or liabilities,
joint or several, to which the Underwriter[s] may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Underwriter[s] for any legal or
other expenses reasonably incurred by the Underwriter[s] in connection
with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however,
that the Bank will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in
conformity with the Class A Underwriter[s'] Information or the Class B
Underwriter[s']. Information.
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(b) The Underwriter[s] agree, [severally and not jointly], to
indemnify and hold harmless the Bank against any losses, claims,
damages or liabilities to which the Bank may become subject, under the
Act or otherwise and will reimburse any legal or other expenses
reasonably incurred by the Bank in connection with investigating or
defending any such loss, claim, damage, liability or action as such
expenses are incurred, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that, with respect to each of the Class A Underwriter[s] and
the Class B Underwriter[s], such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with the Class A Underwriter[s'] Information or the
Class B Underwriter[s'] Information, and will reimburse any legal or
other expenses reasonably incurred by the Bank in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under
subsection (a) or (b) above. In case any such action is brought
against any indemnified party and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled
to participate therein and to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this section for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable
costs of investigation.
(d) If the indemnification provided for in this section is
unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as
a result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate
to reflect the relative benefits received by the Bank on the one hand
and the Underwriter[s] on the other from the offering of the
Certificates, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Bank on the one
hand and the Underwriter[s] on the other in connection with the
statements or omissions which resulted in such losses, claims, damages
or liabilities as well as any other relevant equitable considerations.
The relative benefits received by the Bank on the
14
<PAGE> 15
one hand and the Underwriter[s] on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering
(before deducting expenses) of the Certificates received by the Bank
bear to the total underwriting discounts and commissions received by
the Underwriter[s] with respect to the Certificates. The relative
fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Bank or the Underwriter[s] and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission
with respect to the Certificates. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be
deemed to include any other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), the
Underwriter[s] shall not be required to contribute any amount in
excess of the amount by which the total underwriting discount as set
forth on the cover page of the Prospectus Supplement exceeds the
amount of damages which the Underwriter[s] have otherwise been
required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission with respect to the Certificates. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Bank under this Section shall be
in addition to any liability which the Bank may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls the Underwriter[s] within the meaning of the Act;
and the obligations of the Underwriter[s] under this section shall be
in addition to any liability which the Underwriter[s] may otherwise
have and shall extend, upon the same terms and conditions, to each
director of the Bank, to each officer of the Bank who has signed the
Registration Statement and to each person, if any, who controls the
Bank within the meaning of the Act.
8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Bank or their officers and of the Underwriter[s] set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of the Underwriter[s], the Bank or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Certificates. If this Agreement is
terminated or if for any reason other than default by the Underwriter[s] the
purchase of the Certificates by the Underwriter[s] is not consummated, the Bank
shall remain responsible for the expenses to be paid by it pursuant to Section 5
and the respective obligations of the Bank and the Underwriter[s] pursuant to
Section 7 shall remain in effect. If for any reason the purchase of the
Certificates by the Underwriter[s] is not consummated other than solely because
of the occurrence of any event specified in clause (iii), (iv) or (v) of Section
6(c), the Bank will reimburse the Underwriter[s] for all out-of-pocket expenses
reasonably incurred by them in connection with the offering of the Certificates.
15
<PAGE> 16
9. Computational Materials and ABS Term Sheets. (a) Each
Underwriter agrees to provide to the Bank, not less than two Business Days prior
to the date on which the Bank is required to file the Prospectus Supplement
pursuant to Rule 424(b), any information used by it (in such written or
electronic format as required by the Bank) with respect to the offering of the
Certificates that constitutes "Computational Materials," as defined in the
Commission's No-Action Letter, dated May 20, 1994, addressed to Kidder, Peabody
Acceptance Corporation I, Kidder, Peabody & Co. Incorporated and Kidder
Structured Asset Corporation (as made generally applicable to registrants,
issuers and Underwriter[s] by the Commission's response to the request of the
Public Securities Association dated May 27, 1994 (the "Kidder/PSA Letter")),
that is not contained in the Prospectus (without taking into account information
incorporated therein by reference).
(a) Each Underwriter agrees to provide to the Bank, not less
than two Business Days prior to the date on which the Bank is required
to file the Prospectus Supplement pursuant to Rule 424(b), any
information used by it (in such written or electronic format as
required by the Bank) with respect to the offering of the Certificates
that constitutes "ABS Term Sheets," as defined in the Commission's
No-Action Letter, dated February 17, 1995, addressed to the Public
Securities Association, that is not contained in the Prospectus
(without taking into account information incorporated therein by
reference).
(b) Each Underwriter severally agrees, assuming all
information provided by the Bank is accurate and complete in all
material respects, to indemnify and hold harmless the Bank, each of
the officers and directors of the Bank and each person who controls
the Bank within the meaning of Section 15 of the Act against any and
all losses, claims, damages or liabilities, joint or several, to which
they may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement of a material fact
contained in the Computational Materials or ABS Term Sheets, if any,
provided by the Underwriter, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending or preparing to
defend any such loss, claim, damage, liability or action as such
expenses are incurred. The obligations of the Underwriter under this
Section 9(c) shall be in addition to any liability that the
Underwriter may otherwise have.
The procedures set forth in Sections 7(c) and 7(d) shall be equally
applicable to this Section 9(c). Notwithstanding anything in this Section 9,
each Underwriter represents and warrants that it has not used any Computational
Materials or ABS Term Sheets in connection with the offering of the
Certificates.
10. Electronic Distribution of Prospectus. Each Underwriter represents
that if it furnished an electronic copy of the preliminary Prospectus used in
connection with the Certificates to any person, such Underwriter has furnished a
printed copy of such preliminary Prospectus to all persons to whom it previously
sent an electronic copy.
16
<PAGE> 17
11. Notices. All communications hereunder will be in writing and,
if sent to the Underwriter[s], will be mailed, delivered or telegraphed and
confirmed to:
-----------------------
-----------------------
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
13. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
14. Financial Services Act. Each Underwriter represents and warrants
to, and agrees with, the Bank that (w) it has complied and shall comply with all
applicable provisions of the Financial Services Act 1986 and the Public Offers
of Securities Regulations 1995 (the "Regulations") with respect to anything done
by it in relation to the Certificates in, from or otherwise involving the United
Kingdom; (x) it has only issued or passed on and shall only issue or pass on in
the United Kingdom any document received by it in connection with the issue of
the Certificates to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or who is a person to whom the document may otherwise lawfully be issued or
passed on; (y) it has not offered or sold and, during the period of six months
from the date hereof, will not offer or sell any Certificate to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing, or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Regulations.
17
<PAGE> 18
If you are in agreement with the foregoing, please sign two counterparts
hereof and return one to the Bank whereupon this letter and your acceptance
shall become a binding agreement among the Bank and the Underwriter[s].
Very truly yours,
FLEET BANK (RI),
NATIONAL ASSOCIATION
By: _____________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date hereof
[Representative of the]
Underwriter[s] set forth herein
By: _____________________
Name:
Title:
<PAGE> 19
SCHEDULE A
Class A Certificates
Principal Amount of
Underwriter[s] Class A Certificates
Class B Certificates
Principal Amount of
Underwriter[s] Class B Certificates
<PAGE> 1
Exhibit 4.5
EXECUTION COPY
AMENDMENT NUMBER 4
TO THE
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
THIS AMENDMENT NUMBER 4 TO THE AMENDED AND RESTATED POOLING AND
SERVICING AGREEMENT, dated as of May 14, 1999, (this "Amendment") is between
FLEET BANK (RI), NATIONAL ASSOCIATION ("Fleet (RI)"), a national banking
association, as Seller and Servicer, and BANKERS TRUST COMPANY, as Trustee (the
"Trustee") under the Amended and Restated Pooling and Servicing Agreement, dated
as of December 1, 1993 (as amended by Amendment Number 1 to the Amended and
Restated Pooling and Servicing Agreement, dated as of July 1, 1994, as further
amended by Amendment Number 2 to the Amended and Restated Pooling and Servicing
Agreement, dated as of October 6, 1995, and as further amended by Amendment
Number 3 to the Amended and Restated Pooling and Servicing Agreement, dated as
of February 20, 1998, and as assigned by Advanta National Bank, previously known
as Advanta National Bank USA and prior to that known as Colonial National Bank
USA ("Advanta"), to Fleet (RI) pursuant to an Assignment and Assumption
Agreement, dated as of February 20, 1998, among Advanta, Fleet (RI), Fleet
Credit Card, LLC and Bankers Trust Company, as Trustee, the "Pooling and
Servicing Agreement"), between Fleet (RI), as Seller and Servicer, and the
Bankers Trust Company, as Trustee for the Fleet Credit Card Master Trust II.
RECITALS
WHEREAS, Fleet (RI) wishes to amend the Pooling and Servicing
Agreement as provided herein in accordance with Section 13.01(a) of the Pooling
and Servicing Agreement and the Trustee is willing to consent to such amendment
upon the terms provided for herein.
NOW THEREFORE, in consideration of the premises and the agreements
contained herein, the parties hereto agree as follows:
SECTION 1. Amendment of Section 4.02. Section 4.02 of the Pooling
and Servicing Agreement is hereby amended by adding the following paragraph at
the end of such section.
Notwithstanding the immediately preceding paragraph, the terms
of this paragraph shall apply and to the extent of any differences
between this paragraph and the immediately preceding paragraph the
terms of this paragraph shall control so long as (1) on each Date of
Processing if the Seller Amount on such Date of Processing is less
than the Required Seller Amount and the Seller makes a deposit
<PAGE> 2
into the Excess Funding Account to the extent needed to increase the
Seller Amount to the Required Seller Amount and (2) Fleet (RI)
remains the Servicer and maintains a certificate of deposit rating
of P-1 or better by Moody's. Funds on deposit in the Excess Funding
Account shall at the direction of the Servicer 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 Certificateholders. The Trustee shall maintain for the benefit
of the Certificateholders possession of the negotiable instruments
or securities, if any, evidencing such Eligible Investments. Funds
on deposit in the Excess Funding Account on any date (after giving
effect to any withdrawals from the Excess Funding Account on such
date) will be invested in Eligible Investments that will mature so
that funds will be available at the close of business on the
Transfer Date following such date or with respect to some or all of
the amounts so invested, so that funds will be available on such
earlier date as the Servicer directs. Unless directed by the
Servicer, funds deposited in the Excess Funding Account on a
Transfer Date with respect to the next following Distribution Date
are not required to be invested overnight. On each Transfer Date,
the Servicer shall instruct the Trustee to withdraw on the related
Distribution Date from the Excess Funding Account and deposit in the
Collection Account all interest and other investment earnings (net
of losses and investment expenses) on funds on deposit in the Excess
Funding Account, for application as Collections of Finance Charge
Receivables with respect to the prior Monthly Period. Interest
(including reinvested interest) and other investment income and
earnings on funds on deposit in the Excess Funding Account shall not
be considered part of the Excess Funding Amount for purposes of this
Agreement. On any Business Day on which no Series is in an
Accumulation Period or Amortization Period, the Servicer shall
determine the amount by which the Seller Amount exceeds the Required
Seller Amount on such date and shall instruct the Trustee in writing
to withdraw such amount from the Excess Funding Account on the next
succeeding Business Day and pay such amount to the Holders of the
Seller Certificates. On any Business Day on which one or more Series
is in an Accumulation Period or Amortization Period, if the Servicer
determines (i) that, on the first Distribution Date after such
Business Day no Principal Shortfall will exist with respect to any
Principal Sharing Series and (ii) that, on such Business Day, the
Seller Amount exceeds the Required Seller Amount, then the Servicer
shall instruct the Trustee in writing to withdraw the amount by
which the Seller Amount exceeds the Required Seller Amount from the
Excess Funding Account on the next succeeding Business Day and pay
such amount to the Holders of the Seller Certificates. For purposes
of the immediately preceding sentence, the Servicer shall determine
whether or not a Principal Shortfall will exist on the first
Distribution Date thereafter solely on the basis of Collections
received by the Servicer prior to the Business Day on which such
determination is made (and for the Monthly Period related to such
Distribution Date) and on the assumption that no additional
Collections will be received prior to such Distribution Date. On any
Transfer Date on which one or more Series is in an Accumulation
Period or Amortization Period, the Servicer shall determine
2
<PAGE> 3
the aggregate amount of Principal Shortfalls, if any, with respect
to each such Series that is a Principal Sharing Series (after giving
effect to the allocation and payment provisions in the Supplement
with respect to each such Series), and the Servicer shall instruct
the Trustee in writing to withdraw such amount (up to the Excess
Funding Amount) from the Excess Funding Account on the succeeding
Distribution Date and allocate such amount among each such Series as
Shared Principal Collections as specified herein and in each related
Supplement.
SECTION 2. SECTION 2. Effectiveness. The amendment provided
for by this Amendment shall become effective on the date (the "Effective
Date") that each of the following events occur:
(a) Fleet (RI) shall have delivered to the Trustee an Officer's
Certificate from Fleet (RI) stating that Fleet (RI) reasonably believes that the
execution and delivery of this Amendment will not have an Adverse Effect.
(b) Fleet (RI) shall have received from each Rating Agency written
confirmation that the execution and delivery of this Amendment will not result
in the reduction or withdrawal of its current rating of any outstanding Series
or Class of Investor Certificates.
(c) Each of the parties hereto shall have received counterparts of
this Amendment, duly executed by each of the parties hereto.
SECTION 3. Pooling and Servicing Agreement in Full Force and Effect
as Amended. Except as specifically amended hereby, all of the terms and
conditions of the Pooling and Servicing Agreement shall remain in full force and
effect. All references to the Pooling and Servicing Agreement in any other
document or instrument shall be deemed to mean such Pooling and Servicing
Agreement as amended by this Amendment. This Amendment shall not constitute a
novation of the Pooling and Servicing Agreement, but shall constitute an
amendment thereof. The parties hereto agree to be bound by the terms and
obligations of the Pooling and Servicing Agreement, as amended by this
Amendment, as though the terms and obligations of the Pooling and Servicing
Agreement were set forth herein.
SECTION 4. Counterparts. This Amendment may be executed in any
number of counterparts and by separate parties hereto on separate counterparts,
each of which when executed shall be deemed an original, but all such
counterparts taken together shall constitute one and the same instrument.
SECTION 5. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
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.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
the Pooling and Servicing Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
FLEET BANK (RI), NATIONAL ASSOCIATION,
Seller and Servicer
By: /s/ Jeffrey A. Lipson
-------------------------------------
Name: Jeffrey A. Lipson
Title: Vice President
BANKERS TRUST COMPANY,
Trustee
By: /s/ Peter Becker
-------------------------------------
Name: Peter Becker
Title: Assistant Vice President
[Signature Page to Amendment No. 4 to the
Amended and Restated Pooling and Servicing Agreement]
<PAGE> 1
Exhibit 4.7
OH&S DRAFT
01/11/00
[Form Of Series Supplement]
- ------------------------------------------------------------------------------
FLEET BANK (RI), NATIONAL ASSOCIATION
Seller and Servicer
and
BANKERS TRUST COMPANY
Trustee
on behalf of the Series - Certificateholders
---- -
SERIES - SUPPLEMENT
---- -
Dated as of ,
------------ -- ----
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of December 1, 1993,
as Amended and Restated on May 23, 1994
FLEET CREDIT CARD MASTER TRUST II
SERIES -
---- -
- ------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
Creation of the Series - Certificates
---- -
Section 1.1 Designation....................................................1
ARTICLE II
Definitions
Section 2.1 Definitions....................................................2
ARTICLE III
Servicer and Trustee
Section 3.1 Servicing Compensation.........................................1
ARTICLE IV
Rights of Series ____-_ Certificateholders and Collateral Interest Holder
and Allocation and Application of Collections
Section 4.1 Collections and Allocations...................................17
Section 4.2 Determination of Monthly Interest.............................19
Section 4.3 Determination of Monthly Principal............................21
Section 4.4 Required Amount...............................................22
Section 4.5 Application of Class A Available Funds, Class B Available
Funds, Collateral Available Funds and Available Investor
Principal Collections.........................................23
Section 4.6 Defaulted Amounts; Investor Charge-Offs.......................25
Section 4.7 Excess Spread; Excess Finance Charges.........................26
Section 4.8 Reallocated Principal Collections.............................27
Section 4.9 xcess Finance Charges.........................................28
Section 4.10 Shared Principal Collections..................................28
[Section 4.11 Determination of LIBOR........................................29
Section 4.12 Principal Funding Account....................................29
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 4.13 Accumulation Period...........................................30
Section 4.14 Reserve Account...............................................31
ARTICLE V
Distributions and Reports to Series ____-_ Certificateholders
Section 5.1 Distributions.................................................33
Section 5.2 Certificates and Statements...................................34
ARTICLE VI
Series ____-_ Pay Out Events
Section 6.1 Series ____-_ Pay Out Events..................................34
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.1 Optional Repurchase...........................................36
Section 7.2 Series Termination............................................36
ARTICLE VIII
Final Distributions
Section 8.1 Sale of Receivables or Certificateholders' Interest Pursuant to
Section 2.06 or 10.01 of the Agreement........................37
Section 8.2 Distribution of Proceeds of Sale, Disposition or Liquidation of
the Receivables Pursuant to Section 9.02 of the Agreement....38
Section 8.3 Instructions Pursuant to Section 9.02(a) of the Agreement.....39
ARTICLE IX
Certificates
Section 9.1 Book-Entry Certificates.......................................39
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE X
Miscellaneous Provisions
Section 10.1. Certain Matters Regarding the Collateral Interest Holder......40
Section 10.2 Ratification of Agreement.....................................40
Section 10.3 Counterparts..................................................40
Section 10.4 Governing Law.................................................40
Section 10.5 Notices.......................................................40
Section 10.6 Amendments....................................................40
Section 10.7. Uncertificated Securities.....................................40
Section 10.8. Transfers of the Collateral Interest..........................40
</TABLE>
EXHIBITS
EXHIBIT A-1 Form of Class A Certificate
EXHIBIT A-2 Form of Class B Certificate
EXHIBIT B Form of Monthly Payment Instructions
EXHIBIT C Form of Monthly Certificateholders' Statement
EXHIBIT D Form of Investment Letter
iii
<PAGE> 5
SERIES ____-_ SUPPLEMENT, dated as of ____________ __, ____ (the
"Supplement"), among FLEET BANK (RI), NATIONAL ASSOCIATION, a national banking
association, as Seller and Servicer by assignment from ADVANTA NATIONAL BANK
pursuant to an Assignment and Assumption Agreement dated as of February 20,
1998, and BANKERS TRUST COMPANY, a New York banking corporation, as Trustee.
Pursuant to the Amended and Restated Pooling and Servicing Agreement
dated as of December 1, 1993, as Amended and Restated on May 23, 1994 (and as
subsequently amended and supplemented, including by the terms of this
Supplement, the "Agreement"), among Fleet Bank (RI), National Association
(successor to Advanta National Bank), as Seller and Servicer, and the Trustee,
the Fleet Credit Card Master Trust II (the "Trust") has been created. 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.
Pursuant to this Supplement, the Seller and the Trustee shall create
a new Series of Investor Certificates and specify the Principal Terms thereof.
ARTICLE I
Creation of the Series ____-_ Certificates
Section 1.1 Designation.
(a) There is hereby created a Series of Investor Certificates to be
issued pursuant to the Agreement and this Supplement to be known as "Fleet
Credit Card Master Trust II, Series ____-_." The Series of Investor Certificates
created hereby shall be issued in two Classes. The first Class shall be known as
the "Class A Floating Rate Asset-Backed Certificates, Series ____-_," and the
second Class shall be known as the "Class B Floating Rate Asset-Backed
Certificates, Series ____-_." In addition, there is hereby created a third Class
of 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 shall be in uncertificated form and which shall be known as
the "Collateral Interest, Series ____-_." The Collateral Interest Holder shall
be the Series Enhancer for Series ____-_.
(b) Series ____-_ shall be included in Group One. Series ____-_
shall be a Principal Sharing Series with respect to Group One only. Series
____-_ shall not be subordinated to any other Series. Notwithstanding any
provision in the Agreement or in this Supplement to the contrary, the first
Distribution Date with respect to Series ____-_ shall be the _____________ __,
____ Distribution Date, and references herein to the Monthly Period relating to
the _____________ __, ____ Distribution Date shall mean the period from the
Closing Date through the end of _____________, ___.
(c) In the event that any term or provision contained herein shall
conflict with or be inconsistent with any term or provision contained in the
Agreement, the terms and provisions of this Supplement shall govern.
<PAGE> 6
(d) The Collateral Interest Holder, as holder of an "Investor
Certificate" under the Agreement, shall be entitled to the benefits of the
Agreement and this Supplement. Notwithstanding the foregoing, except as
expressly provided herein, (i) the provisions of Article VI and Article XII of
the Agreement relating to the execution, authentication, delivery, presentation,
cancellation and surrender of Registered Certificates and clauses (a) and (c) of
the definition of "Tax Opinion" in Section 1.01 of the Agreement shall not be
applicable to the Collateral Interest, and (ii) the provisions of Section 3.07
of the Agreement shall not cause the Collateral Interest to be treated as debt
for federal, state and local income and franchise tax purposes, but rather the
Seller intends, and together with the Collateral Interest Holder, agrees to
treat the Collateral Interest for federal, state and local income and franchise
tax purposes as representing an equity interest in the assets of the Trust.
ARTICLE II
Definitions
Section 2.1 Definitions.
(a) Whenever used in this 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 Date" shall mean the close of business on
_____________ __, ____.
"Accumulation Period" unless a Pay Out Event with respect to Series
____-_ shall have occurred prior thereto, the period commencing on the
Accumulation Date or such later date as is determined in accordance with Section
4.13 and ending on the first to occur of (a) the commencement of the Rapid
Amortization Period, (b) the payment in full to the Series ____-_ Holders of the
Investor Amount or (c) the Series Termination Date.
"Accumulation Period Length" shall have the meaning specified in
Section 4.13.
"Additional Interest" shall mean, at any time of determination, the
Class A Additional Interest, the Class B Additional Interest and the Collateral
Additional Interest.
"Assignee" shall have the meaning specified in subsection 10.8(a).
"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 Principal Allocation Percentage of all Collections of Principal Receivables
received during such Monthly Period minus (ii) the amount of Reallocated
Principal Collections with respect to such Monthly Period which pursuant to
Section 4.8 are required to fund any deficiency in the amounts to be distributed
pursuant to Sections 4.5(a)(i), (ii) and (iii), 4.5(b)(i), and (ii) and 4.7(d)
for the related Distribution Date, plus (b) any Shared Principal Collections
with respect to other Series in Group One that are allocated to Series ____-_ in
accordance with Section 4.04 of the Agreement and
2
<PAGE> 7
Section 4.10 hereof, plus (c) any other amounts which pursuant to subsection
4.5(a)(iii) (including any amounts allocated with respect thereto pursuant to
subsection 4.7(a)) and Section 4.7 hereof are to be treated as Available
Investor Principal Collections with respect to the related Distribution Date.
"Average Principal Balance" shall mean, for any Monthly Period in
which an Addition Date occurs, the weighted average of the sum of the Principal
Receivables in the Trust and the principal amount on deposit in the Excess
Funding Account at the end of the day on the last day of the prior Monthly
Period and the sum of the Principal Receivables in the Trust and the principal
amount on deposit in the Excess Funding Account at the end of the day on the
related Addition Date, weighted, respectively, by a fraction, the numerator of
which is the number of days from and including the first day of such Monthly
Period, to but excluding the related Addition Date, and the denominator of which
is the number of days in such Monthly Period, and by a fraction, the numerator
of which is the number of days from and including the related Addition Date to
and including the last day of such Monthly Period, and the denominator of which
is the number of days in such Monthly Period.
"Bank" shall mean Fleet Bank (RI), National Association.
"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 Class A Monthly Interest, the Class B Monthly Interest, the
Collateral Minimum 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.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.2(a).
"Class A Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the sum of (a) the Class A Floating Percentage of the
Collections of Finance Charge Receivables allocated to Series 2000-_ (including
any amounts that are to be treated as Collections of Finance Charge Receivables
in accordance with the Agreement) and (b) the amount of Principal Funding
Investment Proceeds, if any, with respect to such Distribution Date and (c) the
amount of funds, if any, to be withdrawn from the Reserve Account which,
pursuant to Section 4.14, are required to be included in Class A Available Funds
with respect to such Distribution Date.
"Class A Certificate Rate" shall mean for any Interest Period with
respect to the Class A Certificates, a per annum rate equal to [LIBOR as of the
LIBOR Determination Date applicable to such Interest Period plus the Class A
Certificate Rate Spread].
"Class A Certificate Rate Spread" shall mean ___% per annum.
"Class A Certificateholder" shall mean the Person in whose name a
Class A Certificate is registered in the Certificate Register.
"Class A Certificates" shall mean any one of the Certificates
executed by the Seller and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1.
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<PAGE> 8
"Class A Expected Final Distribution Date" shall mean the
____________ __ Distribution Date.
"Class A 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 A 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 Invested Amount as of such
day; provided, however, that with respect to the first Monthly Period, the Class
A Floating 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 Initial Invested Amount" shall mean $_____________.
"Class A Interest Shortfall" shall have the meaning specified in
subsection 4.2(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, 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 subsection 4.6(a)
prior to such date minus (d) the Principal Funding Account Balance (but not in
excess of the Class A Initial Invested Amount) on such date.
"Class A Investor Amount" shall mean, on any date of determination,
an amount equal to the sum of (a) the Class A Invested Amount and (b) the
Principal Funding Account Balance (but not in excess of the Class A Initial
Invested Amount).
"Class A Investor Charge-Off" shall have the meaning specified in
Section 4.6(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 Monthly Interest" shall have the meaning specified in
Section 4.2(a).
"Class A Monthly Principal" shall have the meaning specified in
Section 4.3(a).
"Class A Penalty Rate" shall mean the sum of the Class A Certificate
Rate and ___% 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 and the denominator of which is the Invested Amount as of such day and
(ii) after 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 Revolving Period, and the denominator
of which is the
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<PAGE> 9
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 4.4(a).
"Class A Servicing Fee" shall have the meaning specified in Section
3.1.
"Class B Additional Interest" shall have the meaning specified in
Section 4.2(b).
"Class B Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the Class B Floating Percentage of the Collections of
Finance Charge Receivables allocated to Series ____-_ (including any amounts
that are to be treated as Collections of Finance Receivables in accordance with
the Agreement).
"Class B Certificate Rate" shall mean, for any Interest Period with
respect to the Class B Certificates, a per annum rate equal to [LIBOR as of the
LIBOR Determination Date for such Interest Period plus the Class B Certificate
Rate Spread].
"Class B Certificate Rate Spread" shall mean ___% per annum.
"Class B Certificateholder" shall mean the Person in whose name a
Class B Certificate is registered in the Certificate Register.
"Class B Certificates" shall mean any one of the Certificates
executed by the Seller and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2.
"Class B Expected Final Distribution Date" shall mean the
__________ __ Distribution Date.
"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 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 Invested Amount as of such
day; provided, however, that with respect to the first Monthly Period, the Class
B Floating 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.
"Class B Initial Invested Amount" shall mean $___________.
"Class B Interest Shortfall" shall have the meaning specified in
Section 4.2(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 on
or prior to such date, minus (c) the excess, if any, of the aggregate amount of
Class B Investor Charge-Offs for all prior Distribution Dates
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<PAGE> 10
over the aggregate amount of any reimbursement of Class B Investor Charge-Offs
pursuant to subsection 4.6(b) for all Distribution Dates preceding such date,
minus (d) the aggregate amount of Reallocated Principal Collections allocated on
all prior Distribution Dates pursuant to Section 4.8(a) (excluding any
Reallocated Principal Collections that have resulted in a reduction in the
Collateral Invested Amount pursuant to Section 4.6(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 4.6(a) plus (f) the aggregate
amount of Excess Spread and Excess Finance Charges allocated and available on
all prior Distribution Dates pursuant to Section 4.7(e) for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e);
and minus (g) the positive difference, if any, between the Principal Funding
Account Balance and the Class A Investor Amount on such date; provided, however,
that the Class B Invested Amount may not be reduced below zero.
"Class B Investor Amount" shall mean, for any date of determination,
an amount equal to the sum of (a) the Class B Invested Amount and (b) the
positive difference, if any, between the Principal Funding Account Balance and
the Class A Investor Amount on such date (such sum not to exceed the Class B
Initial Invested Amount).
"Class B Investor Charge-Off" shall have the meaning specified in
Section 4.6(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 4.2(b).
"Class B Monthly Principal" shall have the meaning specified in
Section 4.3(b).
"Class B Penalty Rate" shall mean the sum of the Class B Certificate
Rate and ___% per annum.
"Class B Principal Commencement Date" shall mean, the earlier to
occur of (x) the Class B Expected Final Distribution Date (but only if the Class
A Investor Amount is paid in full on such date) and (y) the Special Payment Date
on which the Class A Investor Amount is paid in full.
"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 and the denominator of which is the Invested Amount as of such day and
(ii) after 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 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.
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<PAGE> 11
"Class B Required Amount" shall have the meaning specified in
Section 4.4(b).
"Class B Servicing Fee" shall have the meaning specified in Section
3.1.
"Closing Date" shall mean __________ __, ____.
"Collateral Additional Interest" shall have the meaning specified
in Section 4.2(c).
"Collateral Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the Collateral Floating Percentage of the Collections
of Finance Charge Receivables allocated to Series ____-_ (including any amounts
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 Expected Final Distribution Date" shall mean the
__________ ____ Distribution Date.
"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 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 Invested Amount as of such day; provided,
however, that with respect to the first Monthly Period, the Collateral Floating
Percentage shall mean the percentage equivalent of a fraction, the numerator of
which is the Collateral Initial Invested Amount and the denominator of which is
the Initial Invested Amount.
"Collateral Initial Invested Amount" shall mean $_____________.
"Collateral Interest" shall mean a fractional undivided interest in
the Trust which shall consist of the right to receive, (i) to the extent
necessary to make the required payments to the Collateral Interest Holder under
this Supplement, the portion of Collections allocable thereto under the
Agreement and this Supplement, funds on deposit in the Collection Account
allocable thereto pursuant to the Agreement and this Supplement and, (ii)
amounts available for payment to the Collateral Interest Holder pursuant to
subsections 4.7(k), 4.14(e), 4.14(f), 8.1(b), 8.2(a) and 8.2(b) or any other
provision of this Supplement.
"Collateral Interest Holder" shall mean the entity so designated
in the Transfer Agreement.
"Collateral Interest Shortfall" shall have the meaning specified
in subsection 4.2(c).
"Collateral Invested Amount" shall mean, for any date of
determination, an amount equal to (a) the Collateral Initial Invested Amount,
minus (b) an amount equal to the
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<PAGE> 12
amount by which the Collateral Invested Amount has been reduced on all prior
Distribution Dates pursuant to Section 4.6, minus (c) the aggregate amount paid
pursuant to subsection 4.5(e)(iii) prior to such date, plus (d) the aggregate
amount of Excess Finance Charges and Excess Spread allocated and available on
all prior Distribution Dates pursuant to subsection 4.7(i) for the purpose of
reimbursing amounts deducted pursuant to the foregoing clause (b); provided,
however, that the Collateral Invested Amount may not be reduced below zero.
"Collateral Minimum Interest Rate" shall mean the rate designated as
such in the Transfer Agreement; provided, that for purposes or this Supplement,
such rate shall not exceed _____% per annum.
"Collateral Minimum Monthly Interest" shall have the meaning
specified in Section 4.2(c).
"Collateral Monthly Principal" shall have the meaning specified
in Section 4.3(c).
"Collateral Principal Commencement Date" shall mean, the earlier to
occur of (x) the Collateral Expected Final Distribution Date (but only if the
Class A Investor Amount and the Class B Investor Amount are paid in full on or
prior to such date) and (y) the Special Payment Date on which the Class A
Investor Amount and the Class B Investor Amount are paid in full.
"Collateral 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
Collateral Invested Amount as of the last day of the immediately preceding
Monthly Period and the denominator of which is the Invested Amount as of such
day and (ii) after the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Collateral 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 Collateral Principal
Percentage shall mean the percentage equivalent of a fraction, the numerator of
which is the Collateral Initial Invested Amount and the denominator of which is
the Initial Invested Amount.
"Collateral Servicing Fee" shall have the meaning specified in
Section 3.1.
"Controlled Accumulation Amount" shall mean (a) for any Distribution
Date with respect to the Accumulation Period, the sum of the Class A Initial
Invested Amount and the Class B Initial Invested Amount divided by 9; provided,
however, that, if the Accumulation Period is modified pursuant to Section 4.13,
(i) the Controlled Accumulation Amount for each Distribution Date with respect
to the Accumulation Period shall mean the amount determined in accordance with
Section 4.13 on the date on which the Accumulation Period has most recently been
modified and (ii) the sum of the Controlled Accumulation Amounts for all
Distribution Dates with respect to the modified Accumulation Period shall not be
less than the Initial Invested Amount.
"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
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<PAGE> 13
Amount for such Distribution Date and any Deficit Controlled Accumulation Amount
for the immediately preceding Distribution Date.
"Covered Amount" shall mean for any Distribution Date with respect
to the Accumulation Period or the first Special Payment Date if such Special
Payment Date occurs prior to the date on which the Class A Investor Amount is
paid in full, 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 Class A Certificate Rate and (ii) the
Principal Funding Account Balance (but not in excess of the Class A Initial
Invested Amount), if any, as of the preceding Distribution Date.
"Deficit Controlled Accumulation Amount" shall mean (a) on the first
Distribution Date with respect to the 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 and Class B
Monthly Principal for such Distribution Date and (b) on each subsequent
Distribution Date with respect to the Accumulation Period, the excess, if any,
of the Controlled Deposit Amount for such subsequent Distribution Date over the
amount distributed from the Collection Account as Class A Monthly Principal and
Class B Monthly Principal for such subsequent Distribution Date.
"Designated Maturity" shall mean, for any LIBOR Determination Date,
one month; provided, [that LIBOR for the initial Interest Period will be
determined by straight-line interpolation (based on the actual number of days in
the initial Interest Period) between two rates determined in accordance with the
definition of LIBOR, one of which will be determined for a Designated Maturity
of one month and the other of which will be determined for a Designated Maturity
of two months.]
"Distribution Date" shall have the meaning assigned thereto in the
Agreement, except that with respect to the Series ____-_ Certificates, the first
Distribution Date shall be _____________ __, ____.
"Excess Finance Charges" shall have the meaning specified in
Section 4.9.
"Excess Spread" shall mean, with respect to any Distribution Date,
the sum of the amounts, if any, specified pursuant to Sections 4.5(a)(iv),
4.5(b)(iii) and 4.5(c)(ii) with respect to such Distribution Date.
"Finance Charge Shortfall" shall have the meaning specified in
Section 4.9.
"Fitch" shall mean Fitch IBCA, Inc., or its successors.
"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 Invested Amount as of the
last day of the preceding Monthly Period (or with respect to the first Monthly
Period, the Initial Invested Amount) and the denominator of which is the greater
of (1) the sum of (x) the total amount of Principal Receivables in the Trust at
the end of the day on such date (or with respect to the first Monthly Period, at
the end of the day
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<PAGE> 14
on the Closing Date) and (y) the principal amount on deposit in the Excess
Funding Account as of the end of the day on such date and (2) the sum of the
numerators used to calculate the Series Percentages (as such term is defined in
the Agreement) with respect to Finance Charge Receivables or Defaulted
Receivables, as applicable, for all Series then outstanding; provided, however,
that with respect to any Monthly Period in which an Addition Date occurs and the
Servicer need not make daily deposits of Collections into the Collection
Account, the denominator in (x) above shall be the Average Principal Balance;
provided further, however, that with respect to any Monthly Period in which an
Addition Date occurs and the Servicer is required to make daily deposits of
Collections into the Collection Account, the denominator in (x) above shall be
(1) for the period from and including the first day of such Monthly Period to
but excluding the related Addition Date, the aggregate amount of Principal
Receivables in the Trust at the end of the day on the last day of the prior
Monthly Period and (2) for the period from and including the related Addition
Date to and including the last day of such Monthly Period, the aggregate amount
of Principal Receivables in the Trust at the end of the day on the related
Addition Date.
"Group One" shall mean Series 1995-A, Series ________, __________
and ________ and each other outstanding Series hereafter
specified in the related Supplement to be included in Group One.
"Initial Invested Amount" shall mean the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the Collateral Initial
Invested Amount.
"Initial Servicing Fee" shall have the meaning specified in
Section 3.1.
"Interchange" shall mean, with respect to Series ____-_ and with
respect to each Distribution Date, an amount of Interchange (as defined in the
Agreement) equal to one-twelfth of ____% of the outstanding balance of the
Principal Receivables allocable to Series ____-_ on the last day of the
preceding Monthly Period.
"Interest Period" shall mean, with respect to any Distribution Date,
the period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution 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 Invested
Amount as of such date.
"Investment Letter" shall have the meaning specified in
subsection 10.8(b).
"Investor Amount" shall mean, as of any date of determination, an
amount equal to the sum of (a) the Invested Amount and (b) the Principal Funding
Account Balance.
"Investor Charge-Offs" shall mean Class A Investor Charge-Offs
and Class B Investor Charge-Offs.
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<PAGE> 15
"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.
["LIBOR" shall mean an interest rate per annum determined by the
Trustee for each Interest Period in accordance with the provisions of Section
4.11.]
["LIBOR Determination Date" shall mean ____________ __, ____ with
respect to the period from the Closing Date through ____________ __, ____; and,
with respect to each Interest Period thereafter, the second London Business Day
prior to every Distribution Date on which such Interest Period begins commencing
with the ____________ __, ____ Distribution Date.]
"London Business Day" shall mean a Business 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 the Collateral
Minimum Monthly Interest for such Distribution Date.
"Monthly Servicing Fee" shall have the meaning specified in
Section 3.1.
"Net 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 other amounts that are to be treated as Collections of
Finance Charge Receivables in accordance with the Agreement), plus (b) the
amount of any Principal Funding Investment Proceeds for the related Distribution
Date, plus (c) the amount of funds, if any, to be withdrawn from the Reserve
Account which, pursuant to subsection 4.14(d), are required to be deposited into
the Collection Account and included in Class A Available Funds with respect to
such Distribution Date, minus (d) 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.
"Percentage Allocation" shall have the meaning specified in
Section 4.1(b)(ii).
"Permitted Assignee" shall mean any Person who, if it were the
Collateral Interest Holder or holder of an interest in the Trust, as applicable,
would not cause the Trust to be taxable as a publicly traded partnership for
federal income tax purposes.
"Principal Allocation Percentage" shall mean, with respect to any
Monthly Period:
(a) during the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, (x) the numerator of which is
the Invested Amount as of the last day of the immediately preceding Monthly
Period (or, in the case of the first Monthly
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<PAGE> 16
Period, the Closing Date) and (y) the denominator of which is the greater of (i)
the sum of (A) the total amount of Principal Receivables in the Trust as of the
last day of the immediately preceding Monthly Period and (B) 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 Closing Date) and (ii) the sum of the
numerators used to calculate the Series Percentages applicable to Principal
Receivables for all Series outstanding as of the date as to which such
determination is being made;
(b) during the Accumulation Period or the Rapid Amortization Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, (x) the numerator of which is the Invested Amount as of the last day
of the Revolving Period or, if the numerator has been reduced as described in
the first proviso below during the Accumulation Period and a Rapid Amortization
Period commences, as of the last day of the Accumulation Period, and (y) the
denominator of which is the greater of (i) the sum of (A) the total amount of
Principal Receivables in the Trust as of the last day of the immediately
preceding Monthly Period and (B) the principal amount on deposit in the Excess
Funding Account as of such last day and (ii) the sum of the numerators used to
calculate the Series Percentages applicable to Principal Receivables for all
Series outstanding as of the date as to which such determination is being made;
provided however, that during the Accumulation Period, on any date, at the
option of the Servicer, the numerator of the Principal Allocation Percentage may
be reduced below the numerator used in the previous Monthly Period, to an amount
not less than the greater of (x) the Invested Amount as of the last day of the
immediately preceding Monthly Period (less the amount of any distributions of
principal deposited in the Principal Funding Account since the last day of the
immediately preceding Monthly Period) and (y) an amount that, if used as the
numerator of the Principal Allocation Percentage for the remainder of the
Accumulation Period, assuming for this purpose that (1) the payment rate with
respect to Collections of Principal Receivables remains constant at the level of
the immediately preceding Monthly Period, (2) the total amount of Principal
Receivables in the Trust (and the principal amount on deposit in the Excess
Funding Account, if any) remains constant at the level on the date of such
reduction, (3) no Pay Out Event with respect to any Series will subsequently
occur and (4) no additional Series (other than any Series being issued on the
date of such reduction) will be subsequently issued, would assure that Available
Investor Principal Collections for Series ____-_ would equal at least ___% of
the Controlled Accumulation Amount for each Monthly Period for so long as the
Invested Amount is greater than zero; provided further, however, that any such
reduction of the numerator of the Principal Allocation Percentage shall be
subject to the receipt by the Trustee of an Officer's Certificate of the
Servicer to the effect that the Servicer does not expect that the Available
Investor Principal Collections for any Monthly Period would be less than the
Controlled Accumulation Amount; provided further, however that with respect to
any Monthly Period in which an Addition Date occurs and the Servicer need not
make daily deposits of Collections into the Collection Account, the amount in
clause (y) (i) of paragraphs (a) and (b) above shall be the Average Principal
Balance; provided further, however, that with respect to any Monthly Period in
which an Addition Date occurs and the Servicer is required to make daily
deposits of Collections into the Collection Account, the amount in clause (y)
(i) of paragraphs (a) and (b) above shall be (1) for the period from and
including the first day of such Monthly Period to but excluding the related
Addition Date, the sum of (x) the aggregate amount of Principal Receivables in
the Trust at the end of the day on the last day of the prior Monthly Period and
(y) the principal amount on deposit in the Excess Funding Account as of such
last day and (2) for the
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<PAGE> 17
period from and including the related Addition Date to and including the last
day of such Monthly Period, the sum of (x) the aggregate amount of Principal
Receivables in the Trust at the end of the day on the related Addition Date and
(y) the principal amount on deposit in the Excess Funding Account at the end of
the day on the related Addition Date.
"Principal Funding Account" shall have the meaning set forth in
subsection 4.12(a)(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 subsection 4.12(a)(ii).
"Principal Shortfall" shall have the meaning specified in Section
4.10.
"Rapid Amortization Period" shall mean, (a) if on the day on which a
Trust Pay Out Event or a Series ____-_ Pay Out Event is deemed to have occurred
the Servicer need not make daily deposits into or withdrawals from the
Collection Account pursuant to Section 4.03(a) of the Agreement, the period
commencing at the close of business on the Business Day immediately preceding
the first day of the Monthly Period in which such Trust Pay Out Event or Series
____-_ Pay Out Event is deemed to have occurred or (b) otherwise, the period
commencing at the close of business on the Business Day immediately preceding
the day on which a Trust Pay Out Event or a Series ____-_ Pay Out Event 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 Investor Amount and the Class B Investor Amount, respectively, and the
payment in full to the Collateral Interest Holder of the Collateral Invested
Amount, or (ii) the Series Termination Date.
"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 in
respect of Principal Receivables for such Monthly Period and (c) the sum of the
Class B Principal Percentage and the Collateral Principal Percentage with
respect to such Monthly Period. Reallocated Principal Collections allocable to
the Class B Certificates shall equal, with respect to any Monthly Period, the
product of (a) the Principal Allocation Percentage with respect to such Monthly
Period of the aggregate amount of Collections in respect of Principal
Receivables deposited in the Collection Account for such Monthly Period and (b)
the Class B Principal Percentage with respect to such Monthly Period.
Reallocated Principal Collections allocable to the Collateral Interest shall
equal, with respect to any Monthly Period, the product of (a) the Principal
Allocation Percentage with respect to such Monthly Period of the aggregate
amount of Collections in respect of Principal Receivables deposited in the
Collection Account for such Monthly Period and (b) the Collateral Principal
Percentage with respect to such Monthly Period. In no event will the Collections
of Principal Receivables allocable to the Collateral Interest on any
Distribution Date exceed the Collateral Invested Amount on such Distribution
Date and in no event will the Collections of Principal
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Receivables allocable to the Class B Certificates on any Distribution Date
exceed the Class B Invested Amount.
"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 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 Series ____-_ Holders
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 Series ____-_ Holders on a prior Distribution Date.
["Reference Banks" shall mean ____________________________, and
__________________________ or such other major banks in the London interbank
market selected by the Servicer from time to time.]
"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) ___%
of the Class A Investor Amount as of the preceding Distribution Date (after
giving effect to all changes therein on such date) and (ii) a fraction, the
numerator of which is the number of Monthly Periods scheduled to be included in
the Accumulation Period as of such date and the denominator of which is nine
(except that if such numerator is one, the Required Reserve Account Amount
determined pursuant to this clause (a) shall be $0) 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 result in the reduction or withdrawal of
the rating of the Series ____-_ Certificates 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 Series ____-_.
"Reserve Account" shall have the meaning specified in Section
4.14(a).
"Reserve Account Funding Date" shall mean the Distribution Date with
respect to the Monthly Period which commences three months prior to the Monthly
Period in which, as of the related Determination Date, the Accumulation Period
is scheduled to commence.
"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
4.14(c).
"Revolving Period" shall mean the period beginning on the Closing
Date and ending on the earlier of (a) the close of business on the day preceding
the commencement of the Accumulation Period and (b) the close of business on the
day preceding the commencement of the Rapid Amortization Period.
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"Series Invested Amount" shall mean the Invested Amount.
"Series Investor Amount" shall mean, as of any date of
determination, an amount equal to the numerator of the Principal Allocation
Percentage on such date.
"Series ____-_" shall mean the Series of Investor Certificates, the
terms of which are specified in this Supplement and shall include the Class A
Certificates, the Class B Certificates and the Collateral Interest.
"Series ____-_ Certificate" shall mean a Class A Certificate or a
Class B Certificate.
"Series ____-_ Certificateholder" shall mean a Class A
Certificateholder or a Class B Certificateholder.
"Series ____-_ Holder" shall mean a Class A Certificateholder, a
Class B Certificateholder or the Collateral Interest Holder.
"Series ____-_ Pay Out Event" shall have the meaning specified in
Section 6.1.
"Series ____-_ Supplement" shall mean this Supplement.
"Series Percentage" shall mean with respect to Finance Charge
Receivables and Defaulted Receivables, the Floating Allocation Percentage, and
with respect to Principal Receivables, the Principal Allocation Percentage.
"Series Termination Date" shall mean the earlier to occur of (i) the
__________ __ Distribution Date and (ii) the termination of the Trust pursuant
to Section 12.01 of the Agreement.
"Servicing Base Amount" shall have the meaning specified in
Section 3.1.
"Servicing Fee Rate" shall mean ___%.
"Special Payment Date" shall mean each Distribution Date with
respect to the Rapid Amortization Period.
"Telerate Page 3750" shall mean the display page currently so
designated on the Bridge Telerate Capital Markets Report (or such other page as
may replace such page on such service for the purpose of displaying comparable
rates or prices).
"Transfer" shall have the meaning specified in subsection 10.8(a).
"Transfer Agreement" shall mean the agreement between Fleet (RI) and
the Collateral Interest Holder, dated as of _____________ __, ____, as amended
or modified from time to time, relating to the transfer of the Collateral
Interest.
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<PAGE> 20
(b) Notwithstanding anything to the contrary in this Supplement or
the Agreement, the term "Rating Agency" shall mean, whenever used in this
Supplement or the Agreement with respect to Series ____-_, Moody's, Standard &
Poor's and Fitch; provided, however, that references to "Rating Agency" in the
definition of "Eligible Investments" shall be deemed to not include Fitch to the
extent that an investment is rated by Moody's and Standard & Poor's, but not by
Fitch. Reference to rating categories of Moody's and Standard & Poor's in the
Agreement shall be deemed to be references to the equivalent rating categories
of Fitch.
(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 this Supplement shall refer to this Supplement as a
whole and not to any particular provision of this Supplement; references to any
Article, Section or Exhibit are references to Articles, Sections and Exhibits in
or to this Supplement unless otherwise specified; and the term "including" means
"including without limitation."
(e) Unless the context otherwise requires, references in this
Supplement to the "Seller" and from and after the date any Additional Seller is
designated pursuant to Section 2.08(e) of the Agreement, such references shall
mean the Bank in its capacity as Seller and any such Additional Seller(s).
ARTICLE III
Servicer and Trustee
Section 3.1 Servicing Compensation.
The share of the Servicing Fee allocable to the Series ____-_
Holders with respect to any Distribution Date (the "Monthly Servicing Fee"),
shall be equal to one-twelfth the product of (i) the Servicing Fee Rate and (ii)
the Invested Amount, if any, as of the last day of the Monthly Period preceding
such Distribution Date (the amount calculated pursuant to this clause (ii) is
referred to as the "Servicing Base Amount"); provided, however, with respect to
the ____________ ____ Distribution Date, the Monthly Servicing Fee (the "Initial
Servicing Fee") shall be $___________.
The share of the Monthly Servicing Fee allocable to the Class A
Certificateholders 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 Servicing Fee Rate and (c) the Servicing Base Amount;
provided, however, that with respect to the ____________ ____ Distribution Date,
the Class A Servicing Fee shall be $________. The share of the Monthly Servicing
Fee allocable to the Class B Certificateholders 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 Servicing Fee Rate and
(c) the Servicing Base Amount; provided, however, that with respect to the
_____________ ____ Distribution Date, the Class B Servicing Fee shall be
$______. The share of the Monthly Servicing Fee allocable to the Collateral
Interest Holder with respect to any Distribution Date (the "Collateral
Servicing Fee"),
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<PAGE> 21
shall be equal to one-twelfth of the product of (a) the Collateral Floating
Percentage, (b) the Servicing Fee Rate and (c) the Servicing Base Amount;
provided, however, that with respect to the ___________ ____ Distribution Date,
the Collateral Servicing Fee shall be $______. In no event shall the Trust, the
Trustee, or the Series ____-_ Holders be liable for the share of the Servicing
Fee to be paid by the Holders of the Seller Certificates or the
Certificateholders of any other Series. The 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 4.5(a)(ii), 4.7(a) or
4.8(a); the Class B Servicing Fee shall be payable solely to the extent amounts
are available for distribution in respect thereof pursuant to Section
4.5(b)(ii), 4.7(c) or 4.8(b); and the Collateral Servicing Fee shall be payable
solely to the extent amounts are available for distribution in respect thereof
pursuant to Section 4.5(c)(i) or 4.7(g).
ARTICLE IV
Rights of Series ____-_ Certificateholders and Collateral Interest
Holder and Allocation and Application of Collections
Section 4.1 Collections and Allocations. The Servicer will apply, or
will instruct the Trustee in writing to apply, all Collections and other funds
on deposit in the Collection Account that are allocated to the Series ____-_
Holders as follows:
(a) Allocations During the Revolving Period. During the Revolving
Period, the Servicer shall, on or prior to the close of business on the second
Business Day following any Date of Processing, allocate the following amounts as
set forth below:
(i) Allocate to the Series ____-_ Holders the product of (x)
the Floating Allocation Percentage on such Date of Processing and
(y) the aggregate amount of Collections of Finance Charge
Receivables on such Date of Processing, and of that allocation,
deposit and retain in the Collection Account (A) prior to the LIBOR
Determination Date occurring in such Monthly Period, an amount equal
to the product of (v) the Floating Allocation Percentage on such
Date of Processing and (w) the aggregate amount of Collections of
Finance Charge Receivables on such Date of Processing and (B) on and
after such LIBOR Determination Date, the difference between (1)
Monthly Interest for the related Distribution Date (plus, if the
Bank is not the Servicer, the Monthly Servicing Fee for such Monthly
Period) and (2) the amounts previously deposited in the Collection
Account with respect to such Monthly Period pursuant to this
subsection (a)(i);
(ii) Allocate to the Series ____-_ Holders an amount equal to
the product of (A) the Principal Allocation Percentage on such Date
of Processing and (B) the aggregate amount of Collections of
Principal Receivables on such Date of Processing, which amount shall
be first, if any other Principal Sharing Series in Group One is
outstanding and in its Amortization Period or Accumulation Period
(as such terms are defined in the Agreement), retained in the
Collection Account for application, to the extent necessary, as
Shared Principal
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Collections in accordance with Section 4.04 of the Agreement to
other Series in Group One on the related Distribution Date, and
second paid to the Holders of the Seller Certificates; provided,
however, that the amount to be paid to the Holders of the Seller
Certificates pursuant to this Section 4.1(a)(ii) on any Date of
Processing shall be paid to such Holders only if the Seller Amount
on such Date of Processing is greater than the Required Seller
Amount (after giving effect to all Principal Receivables transferred
to the Trust on such day and any amounts deposited in the Excess
Funding Account on such day) and otherwise shall be deposited in the
Excess Funding Account until the Seller Amount is greater than the
Required Seller Amount and applied in accordance with Section 4.02
of the Agreement and the remainder shall be paid to the Holders of
the Seller Certificates.
(b) Allocations During the Accumulation Period. During the
Accumulation Period, the Servicer shall, prior to the close of business on the
second Business Day following any Date of Processing, allocate the following
amounts as set forth below:
(i) Allocate to the Series ____-_ Holders and deposit and
retain in the Collection Account an amount equal to the product of
(A) the Floating Allocation Percentage on such Date of Processing
and (B) the aggregate amount of Collections of Finance Charge
Receivables on such Date of Processing.
(ii) Allocate to the Series ____-_ Holders and deposit and
retain in the Collection Account an amount equal to the product of
(x) the Principal Allocation Percentage on such Date of Processing
and (y) the aggregate amount of Collections of Principal Receivables
on such Date of Processing (for any such date, a "Percentage
Allocation"); provided, however, that if the sum of such Percentage
Allocations with respect to the same Monthly Period exceeds the
Controlled Deposit Amount for the related Distribution Date, then
such excess shall not be treated as a Percentage Allocation and
shall be first, if any other Principal Sharing Series in Group One
is outstanding and in its Amortization Period or Accumulation Period
(as such terms are defined in the Agreement), retained in the
Collection Account for application, to the extent necessary, as
Shared Principal Collections in accordance with Section 4.04 of the
Agreement to other Series in Group One on the related Distribution
Date, and second paid to the Holders of the Seller Certificates only
if the Seller Amount on such Date of Processing is greater than the
Required Seller Amount (after giving effect to all Principal
Receivables transferred to the Trust on such day and any amounts
deposited in the Excess Funding Account on such day) and otherwise
shall be deposited in the Excess Funding Account until the Seller
Amount is greater than the Required Seller Amount and applied in
accordance with Section 4.02 of the Agreement and the remainder
shall be paid to the Holders of the Seller Certificates.
(c) Allocations During the Rapid Amortization Period. During the
Rapid Amortization Period, the Servicer shall, prior to the close of business on
the second Business Day following any Date of Processing, allocate the following
amounts as set forth below:
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(i) Allocate to the Series ____-_ Holders and deposit and
retain in the Collection Account an amount equal to the product of
(A) the Floating Allocation Percentage on such Date of Processing
and (B) the aggregate amount of Collections of Finance Charge
Receivables on such Date of Processing.
(ii) Allocate to the Series ____-_ Holders and deposit and
retain in the Collection Account an amount equal to the product of
(A) the Principal Allocation Percentage on such Date of Processing
and (B) the aggregate amount of Collections of Principal Receivables
on such Date of Processing; provided, however, that after the date
on which an amount of such Collections equal to the Invested Amount
has been deposited into the Collection Account and allocated to the
Series ____-_ Holders, the amount determined in accordance with this
subparagraph (ii) in excess thereof shall be first, if any other
Principal Sharing Series in Group One is outstanding and in its
Amortization Period or Accumulation Period (as such terms are
defined in the Agreement), retained in the Collection Account for
application, to the extent necessary, as Shared Principal
Collections in accordance with Section 4.04 of the Agreement to
other Series in Group One on the related Distribution Date, and
second paid to the Holders of the Seller Certificates only if the
Seller Amount on such Date of Processing is greater than the
Required Seller Amount (after giving effect to all Principal
Receivables transferred to the Trust on such day and any amounts
deposited in the Excess Funding Account on such day) and otherwise
shall be deposited in the Excess Funding Account until the Seller
Amount is greater than the Required Seller Amount and applied in
accordance with Section 4.02 of the Agreement and the remainder
shall be paid to the Holders of the Seller Certificates.
(d) Notwithstanding anything to the contrary in this Section 4.1, if
on any Date of Processing the aggregate amount of Principal Receivables is less
than the sum of the Series Investor Amounts for all Series outstanding, all
Collections of Principal Receivables on such date that are otherwise payable to
the Holders of the Seller Certificates shall, unless such Collections are to be
retained in the Collection Account, be deposited in the Excess Funding Account
and applied in accordance with Section 4.02 of the Agreement.
(e) Notwithstanding the foregoing, the Servicer need not make daily
deposits of Collections into the Collection Account at any time when the
requirements of Section 4.03 of the Agreement are satisfied.
Section 4.2 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 each 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 related Interest Period and the denominator of which is 360, times (B) the
Class A Certificate Rate and (ii) the outstanding principal amount of the Class
A Certificates as of the close of business on the preceding Record Date;
provided, however, with respect to the ____________ ____ Distribution Date,
Class A Monthly Interest shall be equal to the interest accrued on the Class A
Initial Invested Amount at the applicable Class A Certificate Rate for the
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period from the Closing Date through ____________ __, ____ (calculated on the
basis of the actual number of days in such period and a year of 360 days).
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class A Interest Shortfall"),
of (x) the Class A Monthly Interest for such Distribution Date over (y) the
aggregate amount of funds allocated and available to pay such Class A Monthly
Interest on such Distribution Date. If the Class A Interest Shortfall with
respect to any Distribution Date is greater than zero, on each subsequent
Distribution Date until such Class A Interest Shortfall is fully paid, an
additional amount ("Class A Additional Interest") equal to the product of (i)
(A) a fraction, the numerator of which is the actual number of days from and
including the Distribution Date on which there is a shortfall to but excluding
such subsequent Distribution Date and the denominator of which is 360, times (B)
the Class A Penalty Rate and (ii) such Class A Interest Shortfall (or the
portion thereof which has not been paid to the Class A Certificateholders) shall
be payable as provided herein with respect to the Class A Certificates.
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 each 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 related Interest Period and the denominator of which is 360, times (B) the
Class B Certificate Rate and (ii) the outstanding principal amount of the Class
B Certificates as of the close of business on the preceding Record Date;
provided, however, with respect to the ____________ ____ Distribution Date,
Class B Monthly Interest shall be equal to the interest accrued on the Class B
Initial Invested Amount at the applicable Class B Certificate Rate for the
period from the Closing Date through ____________ __, ____ (calculated on the
basis of the actual number of days in such period and a year of 360 days).
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class B Interest Shortfall"),
of (x) the Class B Monthly Interest for such Distribution Date over (y) the
aggregate amount of funds allocated and available to pay such Class B Monthly
Interest on such Distribution Date. If the Class B Interest Shortfall with
respect to any Distribution Date is greater than zero, on each subsequent
Distribution Date until such Class B Interest Shortfall is fully paid, an
additional amount ("Class B Additional Interest") 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 Distribution Date on which there is a shortfall to
but excluding such subsequent Distribution Date and the denominator of which is
360, times (B) the Class B Penalty Rate and (ii) such Class B Interest Shortfall
(or the portion thereof which has not been paid to the Class B
Certificateholders) shall be payable as provided herein with respect to the
Class B Certificates. 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 Minimum Monthly
Interest") distributable from the Collection Account with respect to the
Collateral Interest on each Distribution Date shall be an amount equal to
one-twelfth of the product of (i) the Collateral
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Minimum Interest Rate and (ii) the outstanding principal amount of the
Collateral Interest as of the close of business on the preceding Record Date;
provided, however, with respect to the ____________ ____ Date, the Collateral
Minimum Monthly Interest shall be $________.
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Collateral Interest
Shortfall"), of (x) the Collateral Minimum Monthly Interest for such
Distribution Date over (y) the aggregate amount of funds allocated and available
to pay such Collateral Minimum Monthly Interest on such Distribution Date. If
the Collateral Interest Shortfall with respect to any Distribution Date is
greater than zero, on each subsequent Distribution Date until such Collateral
Interest Shortfall is fully paid, an additional amount ("Collateral Additional
Interest") equal to one-twelfth of the product of (i) the Collateral Minimum
Interest Rate and (ii) such Collateral Interest Shortfall (or the portion
thereof which has not been paid to the Collateral Interest Holder) shall be
payable as provided herein with respect to the Collateral Interest.
Notwithstanding anything to the contrary herein, Collateral Additional Interest
shall be payable or distributed to the Collateral Interest Holder only to the
extent permitted by applicable law.
Section 4.3 Determination of Monthly Principal.
(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 Distribution
Date with respect to the Accumulation Period or the Rapid Amortization 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 Accumulation Period (and on or
prior to the Class A Expected Final Distribution Date), the Controlled Deposit
Amount for such Distribution Date and (z) the Class A 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 first Distribution
Date with respect to the Accumulation Period on which the full amount of the
Class A Investor Amount is on deposit in the Principal Funding Account or has
been paid to the Class A Certificateholders or, if earlier, the first Special
Payment Date on which the Class A Investor Amount is paid in full, 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 Accumulation Period (and on or prior to the Class B Expected
Final Distribution Date), the Controlled Deposit Amount for such Distribution
Date (minus the portion of such Controlled Deposit Amount for such Distribution
Date applied to Class A Monthly Principal on such Distribution Date) and (z) the
Class B Invested Amount on such Distribution Date.
(c) The amount of monthly principal ("Collateral Monthly Principal")
distributable from the Collection Account with respect to the Collateral
Interest on each Distribution Date, beginning with the Collateral Principal
Commencement Date, shall be equal to the lesser of (x) the Available Investor
Principal Collections on deposit in the Collection Account
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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 (y) the Collateral Invested
Amount on such Distribution Date.
Section 4.4 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 Monthly Interest previously due but
not paid to the Class A Certificateholders on a prior Distribution Date, (iii)
any Class A Additional Interest for such Distribution Date and any Class A
Additional Interest previously due but not paid to the Class A
Certificateholders on a prior Distribution Date, (iv) the Class A 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, all or a portion of the Excess Spread and the Excess Finance Charges
allocable to 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 4.7(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 Series ____-_ with respect to the related Monthly
Period, 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
4.8(a).
(b) With respect to each Distribution Date on the related
Determination Date, the Servicer shall determine the amount (the "Class B
Required Amount"), equal to the sum of (I) the amount if any, by which (a) the
sum of (i) Class B Monthly Interest for such Distribution Date, (ii) any Class B
Monthly Interest previously due but not paid to the Class B Certificateholders
on a prior Distribution Date, (iii) any Class B Additional Interest for such
Distribution Date and any Class B Additional Interest previously due but not
paid to the Class B Certificateholders on a prior Distribution Date, (iv) the
Class B Servicing Fee for such Distribution Date and (v) any Class B Servicing
Fee previously due but not paid to the Servicer exceeds (b) the Class B
Available Funds, plus (II) the Class B Investor Default Amount for such
Distribution Date. In the event that the Class B Required Amount for such
Distribution Date is greater than zero, all or a portion of Excess Spread and
the Excess Finance Charges allocable to Series ____-_ (other than Excess Spread
and Excess Finance Charges applied pursuant to Sections 4.7(a) and (b) 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 portion of Excess
Spread and Excess Finance Charges allocated to Series ____-_ with respect to the
related Monthly Period and available to fund the Class B Required Amount as
provided in the preceding sentence, all or a portion of the Reallocated
Principal Collections allocable to the Collateral Invested Amount available
therefor 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 4.8(b).
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Section 4.5 Application of Class A Available Funds, Class B
Available Funds, Collateral Available Funds and Available Investor Principal
Collections. The Servicer shall apply or shall direct the Trustee in writing to
apply, on each Distribution Date, Class A Available Funds, Class B Available
Funds, Collateral Available Funds and Available Investor Principal Collections
for the Monthly Period 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 Monthly Interest
previously due but not distributed to the Class A Certificateholders
on a prior Distribution Date, plus the amount of any Class A
Additional Interest for such Distribution Date and any Class A
Additional Interest previously due but not distributed to the Class
A Certificateholders on a prior Distribution Date, shall be
distributed to the Paying Agent for payment to the Class A
Certificateholders;
(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;
(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 4.7.
(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 Monthly Interest
previously due but not distributed to the Class B Certificateholders
on a prior Distribution Date, plus the amount of any Class B
Additional Interest for such Distribution Date and any Class B
Additional Interest previously due but not distributed to the Class
B Certificateholders on a prior Distribution Date, shall be
distributed to the Paying Agent for payment to the Class B
Certificateholders;
(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; and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.7.
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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) if the Bank or the Trustee is no longer the Servicer, 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; and
(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed as set forth in Section 4.7.
(d) On each Distribution Date with respect to the Revolving Period,
an amount equal to the Available Investor Principal Collections 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 Accumulation
Period, or the Rapid Amortization Period, an amount equal to the Available
Investor Principal Collections 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 Invested Amount on such
Distribution Date, shall be deposited in the Principal Funding
Account for payment to the Class A Certificateholders by the Paying
Agent in accordance with Section 5.1(b) on each Distribution Date
beginning on the earlier to occur of the Class A Expected Final
Distribution Date or the first Special Payment Date;
(ii) after giving effect to the distribution referred to in
clause (i) above, an amount equal to Class B Monthly Principal for
such Distribution Date, up to the Class B Invested Amount on such
Distribution Date, shall be deposited in the Principal Funding
Account for payment to the Class B Certificateholders by the Paying
Agent in accordance with subsection 5.1(d) on each Distribution Date
beginning on the Class B Principal Commencement Date;
(iii) after giving effect to the distributions referred to in
clauses (i) and (ii) above, an amount equal to Collateral Monthly
Principal for such Distribution Date, up to the Collateral Invested
Amount for such Distribution Date shall be distributed to the
Collateral Interest Holder in accordance with subsection 5.1(e) on
each Distribution Date beginning on the Collateral Principal
Commencement Date; and
(iv) for each Distribution Date, after giving effect to the
distributions referred to in clauses (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.
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Section 4.6 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 and (y) the amount of Excess Spread and the
Excess Finance Charges allocable to Series ____-_ with respect to such
Distribution Date, the Collateral Invested Amount shall 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 sum of the amount of Reallocated
Principal Collections and Excess Spread and Excess Finance Charges used to fund
the Class A Investor Default Amount for such Distribution Date. In the event
that such reduction would cause the Collateral Invested Amount to be a negative
number, the Collateral Invested Amount shall be reduced to zero and the Class B
Invested Amount shall be reduced by the amount by which the Collateral 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
sum of the amount of such reduction, if any, of the Collateral Invested Amount
with respect to such Distribution Date and the amount of Reallocated Principal
Collections and Excess Spread and Excess Finance Charges 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 sum of the
aggregate amount of the reductions, if any, of the Collateral Invested Amount
and the Class B Invested Amount for such Distribution Date and the amount of
Reallocated Principal Collections and Excess Spread and Excess Finance Charges
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 4.7(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 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 and (y) the amount of Reallocated Principal
Collections which are available to fund the Class B Required Amount on such
Distribution Date pursuant to Section 4.8(b), then the Collateral Invested
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 sum of the amount of Reallocated Principal Collections and Excess Spread and
Excess Finance Charges used to fund the Class B Investor Default Amount for such
Distribution Date. In the event that such reduction would cause the Collateral
Invested Amount to be a negative number, the Collateral Invested Amount shall be
reduced to zero, and the Class B Invested Amount shall be reduced by the amount
by which the Collateral Invested Amount would have been reduced below zero, but
not by more than the excess, if any, of the Class B
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Investor Default Amount for such Distribution Date over the sum of the amount of
such reduction, if any, of the Collateral Invested Amount with respect to such
Distribution Date and the amount of Reallocated Principal Collections and Excess
Spread and Excess Finance Charges 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 subsection 4.7(e).
(c) If, on any Distribution Date, Reallocated Principal Collections
for such Distribution Date are applied pursuant to Section 4.8(a) or (b), the
Collateral Invested Amount shall be reduced by the amount of such Reallocated
Principal Collections. In the event that such reduction would cause the
Collateral Invested Amount to be a negative number, the Collateral Invested
Amount shall be reduced to zero, and the Class B Invested Amount shall be
reduced by the amount by which the Collateral Invested 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 subsection 4.7(h) on such Distribution
Date, then the Collateral Invested Amount shall be reduced by the amount of such
excess; provided, however, that the Collateral Invested Amount shall not be
reduced below zero.
Section 4.7 Excess Spread; Excess Finance Charges. The Servicer
shall apply or shall direct the Trustee in writing to apply, on each
Distribution Date, Excess Spread and Excess Finance Charges allocated to 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 4.5(a)(i), (ii) and (iii), in that order of
priority;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed as provided in Section
4.6(a) (after giving effect to the allocation on such Distribution Date of any
amount for that purpose pursuant to Section 4.6(a)) shall be treated as a
portion of Available Investor Principal Collections for such Distribution Date;
(c) an amount up to the Class B Required Amount, if any, with
respect to such Distribution Date shall be distributed by the Trustee to fund
any deficiency pursuant to Sections 4.5(b)(i) and (ii), in that order of
priority;
(d) an amount equal to the Class B Investor Default Amount for such
Distribution Date shall be treated as a portion of Available Investor Principal
Collections for such Distribution Date;
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(e) 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 2.1 of this 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;
(f) an amount equal to the Collateral Minimum Monthly Interest for
such Distribution Date, plus the amount of any Collateral Minimum Monthly
Interest previously due but not distributed to the Collateral Interest Holder on
a prior Distribution Date pursuant to this subsection 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
Interest Holder on a prior Distribution Date shall be paid to the Collateral
Interest Holder;
(g) an amount equal to the Collateral Servicing Fee for such
Distribution Date (or if the Bank or the Trustee is no longer the Servicer, the
portion of the Collateral Servicing Fee for such Distribution Date not paid
pursuant to Section 4.5(c)(i)), 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;
(h) an amount equal to the Collateral Default Amount for such
Distribution Date shall be treated as a portion of Available Investor Principal
Collections with respect to such Distribution Date;
(i) an amount equal to the aggregate amount by which the Collateral
Invested Amount has been reduced pursuant to clause (b) of the definition of
"Collateral Invested 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 Available Investor Principal Collections with respect to such
Distribution Date;
(j) an amount up to the excess, if any, of the Required Reserve
Account Amount over the amount on deposit therein, shall be deposited into the
Reserve Account; and
(k) the balance, if any, shall be distributed to the Collateral
Interest Holder.
Section 4.8 Reallocated Principal Collections. The Servicer shall
apply or shall direct the Trustee in writing to apply on each Distribution Date,
Reallocated Principal Collections (applying all such Collections with respect to
the Collateral Invested 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
amount of Excess Spread and Excess Finance Charges allocated to Series ____-_
with respect to the related Monthly Period shall, be distributed by the Trustee
to fund any deficiency pursuant to Sections 4.5(a)(i), (ii) and (iii), in that
order of priority;
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(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
amount of Excess Spread and Excess Finance Charges allocated and available to
the Class B Certificates pursuant to Sections 4.7(c) and (d) on such
Distribution Date, shall be distributed by the Trustee to fund any deficiency
pursuant to Sections 4.5(b)(i) and (ii) and Section 4.7(d), in that order of
priority; and
(c) the balance, if any, of such Reallocated Principal Collections
shall be treated as a portion of Available Investor Principal Collections to be
applied in accordance with subsections 4.5(d) and (e).
Section 4.9 Excess Finance Charges. On each Distribution Date, (a)
the Servicer shall allocate the aggregate amount for all outstanding Series in
Group One that the related Supplements or Transfer Agreements specify are to be
treated as a portion of Excess Finance Charges for such Distribution Date
(collectively, "Excess Finance Charges") as specified in the Supplements or
Transfer Agreements for each Series in Group One and (b) the Servicer shall
withdraw (or shall instruct the Trustee in writing to withdraw) from the
Collection Account and pay to the Holders of the Seller Certificates an amount
equal to the excess, if any, of (x) the Excess Finance Charges for such
Distribution Date over (y) the aggregate amount for all Series in Group One that
the related Supplements specify are Finance Charge Shortfalls (as defined in the
related Supplements or Transfer Agreements ) for such Distribution Date. Excess
Finance Charges for any Distribution Date will be allocated to Series ____-_ in
an amount equal to the product of (x) the aggregate amount of Excess Finance
Charges for such Distribution Date and (y) a fraction, the numerator of which is
the Finance Charge Shortfall for 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 amount of
"Excess Finance Charges" for Series ____-_ for any Distribution Date shall be
specified in the Transfer Agreement. On each Distribution Date, the Trustee
shall deposit in the Collection Account for application in accordance with
Section 4.5 of the Agreement, the amount of "Excess Finance Charges" received by
the Trustee pursuant to the Transfer Agreement on such date. The "Finance Charge
Shortfall" for Series ____-_ for any Distribution Date shall be equal to the
excess, if any, of (a) the full amount required to be paid, without duplication,
pursuant to Sections 4.5(a), 4.5(b), 4.5(c) and 4.7(a) through (j) on such
Distribution Date over (b) the sum of Class A Available Funds, Class B Available
Funds and Collateral Available Funds 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 Series ____-_ in an amount equal to the product of (x) the
aggregate amount of Shared Principal Collections with respect to all Series in
Group One for such Distribution Date and (y) a fraction, the numerator of which
is the Principal Shortfall for Series ____-_ for such Distribution Date and the
denominator of which is the aggregate amount of Principal Shortfalls for all the
Series which are Principal Sharing Series in Group One for such Distribution
Date. The "Principal Shortfall" for Series ____-_ shall be equal to (a) for any
Distribution Date with respect to the Revolving Period and the Rapid
Amortization Period, zero, and (b) for any Distribution Date with respect to the
Accumulation Period on or prior to the Class B Expected Final Distribution 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
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thereof attributable to Shared Principal Collections) and (c) for each
Distribution Date on or after the Class B Expected Final Distribution Date, the
excess, if any, of the Invested Amount over the amount of Available Investor
Principal Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections).
[Section 4.11 Determination of LIBOR.
(a) On each LIBOR Determination Date, the Trustee shall determine
LIBOR based on the rate for deposits in United States dollars for a period of
the Designated Maturity which appears on Telerate Page 3750 as of 11:00 A.M.
(London Time) on such date.
(b) If such rate does not appear on Telerate Page 3750, the Trustee
will determine LIBOR on the basis of quotations of the offered rates for
deposits in United States dollars provided by the Reference Banks at
approximately 11:00 A.M. (London time) on such LIBOR Determination Date to prime
banks in the London interbank market for a period of the Designated Maturity. If
at least two such quotations are provided, LIBOR will be the arithmetic mean of
such quotations.
(c) If, on the LIBOR Determination Date, such rate does not appear
on Telerate Page 3750 and only one or none of the Reference Banks provides such
offered quotations, LIBOR will be the rate per annum that the Trustee determines
to be the arithmetic mean of the offered quotations that three major banks in
The City of New York selected by the Servicer are quoting at approximately 11:00
A.M. (New York City time) on that day for loans in United States dollars to
leading European banks for a period of the Designated Maturity.]
Section 4.12 Principal Funding Account.
(a)(i) The Servicer, for the benefit of the Series ____-_
Holders, 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 Series
____-_ Certificateholders. The Principal Funding Account shall
initially be established by the Trustee.
(ii) At the written 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 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 in writing
by the Servicer, the Servicer having reasonably
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determined that the interest of the 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 Distribution 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 in
writing 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 Class A Available Funds 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 this
Supplement.
(v) The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Principal Funding
Account and in all proceeds thereof. The Principal Funding Account
shall be under the sole dominion and control of the Trustee for the
benefit of the Series ____-_ Certificateholders. If, at any time,
the Principal Funding Account ceases to be an Eligible Deposit
Account, the Trustee 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 Principal Funding Account
meeting the conditions specified in paragraph (a) (i) above as an
Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Principal Funding Account.
(vi) 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 in writing to make withdrawals and payments
from the Principal Funding Account 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 5.1 of this
Supplement and Section 6.07 of the Agreement, the Paying Agent shall
have the power, revocable by the Trustee, to withdraw funds from the
Principal Funding Account for the purpose of making distributions to
the Series ____-_ Certificateholders.
Section 4.13 Accumulation Period. The Accumulation Period is
scheduled to commence on the Accumulation Date; provided, however, that if the
Accumulation Period Length on any Determination Date (determined as described
below) is less than nine months, upon notice to the Trustee, the Seller, each
Rating Agency and the Collateral Interest Holder, the Servicer, at its option,
may elect to modify the date on which the Accumulation Period actually commences
to the first day of the month that is a number of months prior to the month in
which the Class A Expected Final Distribution Date occurs at least equal to the
Accumulation Period Length (so that, as a result, the number of Monthly Periods
in the Accumulation Period will at least equal the Accumulation Period Length);
provided, however, that (i) the length of the
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Accumulation Period will not be less than one month; and (ii) notwithstanding
any other provision of this Supplement to the contrary, no election to postpone
the commencement of the 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 "Accumulation Period Length," which will mean a number of months
such that the amount available for distribution of principal on the Class A
Certificates on the Class A Expected Final Distribution Date and for
distribution of principal on the Class B Certificates on the Class B Expected
Final Distribution Date will equal or exceed the sum of the Class A Investor
Amount and the Class B Investor Amount, assuming for this purpose that (1) the
payment rate with respect to Collections of Principal Receivables remains
constant at the lowest level of such payment rate during the twelve preceding
Monthly Periods (or such lower payment rate as the Servicer may select), (2) the
total amount of Principal Receivables in the Trust (and the principal amount on
deposit in the Excess Funding Account, if any) remains constant at the level on
such date of determination, (3) no Pay Out Event with respect to any Series will
subsequently occur and (4) no additional Series (other than any Series being
issued on such date of determination) will be subsequently issued. Any notice by
the Servicer electing to modify the commencement of the Accumulation Period
pursuant to this Section 4.13 shall specify (i) the Accumulation Period Length,
(ii) the commencement date of the Accumulation Period and (iii) the Controlled
Accumulation Amount with respect to each Monthly Period during the Accumulation
Period.
Section 4.14 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 Series ____-_ Holders,
an Eligible Deposit Account (the "Reserve Account") bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Series ____-_ Holders. 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 Series ____-_ Holders. 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 written direction of the Servicer, shall
(i) make withdrawals from the Reserve Account from time to time for the purposes
set forth in this 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 4.7(j).
(b) Funds on deposit in the Reserve Account shall be invested at the
written 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 immediately succeeding Transfer
Date. The Trustee shall maintain for the benefit of the Series ____-_ Holders
possession of the negotiable
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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 in writing, the
Servicer having reasonably determined that the interest of the Series ____-_
Holders 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 amount on deposit in the Reserve Account 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
allocable to Series ____-_. For purposes of determining the availability of
funds or the balance in the Reserve Account for any reason under this
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
Distribution 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 subsection 4.7(j) with respect to such Distribution 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 amount on
deposit in the Reserve Account, 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 the Class A Available Funds 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 written instructions of the
Servicer, shall withdraw from the Reserve Account, and distribute to the
Collateral Interest Holder, 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 Class A
Investor Amount is paid in full to the Class A Certificateholders, (iii) if the
Accumulation Period has not commenced, the occurrence of a Pay Out Event with
respect to Series ____-_ and (iv) if the Accumulation Period has commenced, the
earlier of the first Special Payment Date and the Class A Expected Final
Distribution Date, the Trustee, acting in accordance with the written
instructions of the Servicer, after the prior payment of all amounts owing to
the Series ____-_ Certificateholders which are payable from the Reserve Account
as provided herein, shall withdraw from the Reserve Account and distribute to
the Collateral Interest Holder all amounts, if any, on deposit in the Reserve
Account and the Reserve Account shall be deemed to have terminated for purposes
of this Supplement.
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ARTICLE V
Distributions and Reports to Series ____-_ Certificateholders
Section 5.1 Distributions.
(a) On each Distribution 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
Distribution Date to pay interest on the Class A Certificates pursuant to this
Supplement.
(b) On each Distribution Date, commencing with the first to occur of
the Class A Expected Final Payment Date and the first Special 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 on
deposit in the Principal Funding Account or that are otherwise allocated and
available on such date to pay principal of the Class A Certificates pursuant to
this 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 Certificateholders' Interest pursuant to Section 10.01 of the Agreement, in
which event the foregoing limitation will not apply).
(c) On each Distribution 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
Distribution Date to pay interest on the Class B Certificates pursuant to this
Supplement.
(d) On each Distribution Date, commencing with the Class B Principal
Commencement 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 on deposit in the Principal Funding Account (after
payments have been made to the Class A Certificateholders as provided in (b)
above) or that are otherwise allocated and available on such date to pay
principal of the Class B Certificates pursuant to this 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 Certificateholders'
Interest pursuant to Section 10.01 of the Agreement, in which event the
foregoing limitation will not apply).
(e) On each Transfer Date, the Trustee shall distribute to the
Collateral Interest Holder the aggregate amount payable to the Collateral
Interest Holder pursuant to Sections 4.5, 4.7 and 4.14 to the Collateral
Interest Holder's account, as specified in writing by the Collateral Interest
Holder, in immediately available funds.
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(f) The distributions to be made pursuant to this Section 5.1 are
subject to the provisions of Sections 2.06, 9.02, 10.01 and 12.02 of the
Agreement and Sections 8.1 and 8.2 of this Supplement.
(g) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution, distributions to Series ____-_
Certificateholders hereunder shall be made by check mailed to each Series ____-_
Certificateholder at such Series ____-_ Certificateholder's address appearing in
the Certificate Register without presentation or surrender of any Series ____-_
Certificate or the making of any notation thereon; provided, however, that with
respect to Series ____-_ Certificates registered in the name of a Clearing
Agency, such distributions shall be made to such Clearing Agency in immediately
available funds.
Section 5.2 Certificates and Statements.
(a) Not later than each Determination Date, the Servicer shall
deliver to the Trustee, the Paying Agent, each Rating Agency and the Collateral
Interest Holder, a certificate substantially in the form of Exhibit B prepared
by the Servicer.
(b) On each Distribution Date, the Paying Agent, on behalf of the
Trustee, shall forward to each Series ____-_ Certificateholder a statement
substantially in the form of Exhibit C prepared by the Servicer.
(c) A copy of each statement or certificate provided pursuant to
paragraph (a) or (b) may be obtained by any 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
calendar year ____, 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 Series ____-_ Certificateholder, a statement prepared by the
Servicer containing the information which is required to be contained in the
statement to Series ____-_ Certificateholders, as set forth in paragraph (b)
above, aggregated for such calendar year or the applicable portion thereof
during which such Person was a 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
Series ____-_ Pay Out Events
Section 6.1 Series ____-_ Pay Out Events. If any one of the
following events (each, a "Series Pay Out Event") shall occur with respect to
Series ____-_:
(a) failure on the part of the Seller (A) to make any payment or
deposit required by the terms of the Agreement on or before the date occurring
five Business Days after
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<PAGE> 39
the date such payment or deposit is required to be made herein or (B) duly to
observe or perform in any material respect any other covenants or agreements of
the Seller set forth in the Agreement which has a material adverse effect on the
Series ____-_ Holders (which determination shall be made, for so long as the
Collateral Invested Amount is greater than zero, without reference to whether
any funds are available pursuant to Series Enhancement) and 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 Series ____-_ Holders aggregating
not less than 50% of the outstanding principal balance of the Series ____-_;
(b) any representation or warranty made by the Seller in the
Agreement or any information contained in a computer file or microfiche list
required to be delivered by the Servicer on behalf of the Seller pursuant to
Section 2.01 or 2.08 of the Agreement (A) 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 Holders of the Series ____-_ Certificates aggregating not less than 50% of
the outstanding principal balance of the Series ____-_ Certificates and (B) as a
result of which the interests of the Series ____-_ Certificateholders are
materially and adversely affected (which determination shall be made, for so
long as the Collateral Invested Amount is greater than zero, without reference
to whether any funds are available pursuant to any Series Enhancement);
provided, however, that a Series Pay Out Event pursuant to this subparagraph (b)
shall not be deemed to occur hereunder if the Seller has accepted reassignment
of the related Receivable, or all of such Receivables, if applicable, during
such period (or such longer period as the Trustee may specify) in accordance
with the provisions hereof and of the Agreement;
(c) (1) with respect to the last day of any prior Monthly Period
during which the Seller Amount is less than the Required Seller Amount, the
failure of the Seller to convey on or prior to the Required Designation Date
Receivables in Additional Accounts to the Trust such that the Seller Amount
shall be at least equal to the Required Seller Amount as of the close of
business on the applicable Addition Date; or (2) with respect to the last day of
any prior Monthly Period during which the aggregate amount of Principal
Receivables is less than the Required Principal Balance as of such day, the
failure of the Seller to convey on or prior to the Required Designation Date
Receivables in Additional Accounts to the Trust such that the aggregate amount
of the Principal Receivables shall be at least equal to the Required Principal
Balance as of the close of business on the applicable Addition Date;
(d) the Net Portfolio Yield averaged over three consecutive Monthly
Periods is less than the Base Rate averaged over such period;
(e) any Servicer Default shall occur which would have a material
adverse effect on the Series ____-_ Certificateholders (which determination
shall be made, for so long as the Collateral Invested Amount is greater than
zero, without reference to whether any funds are available pursuant to any
Series Enhancement); or
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<PAGE> 40
(f) the Class A Investor Amount shall not be paid in full on the
Class A Expected Final Distribution Date or the Class B Investor Amount shall
not be paid in full on the Class B Expected Final Distribution Date or the
Collateral Invested Amount shall not be paid in full on the Collateral Expected
Final Distribution Date;
then, in the case of any event described in subparagraph (a), (b) or (e), after
the applicable grace period, if any, set forth in such subparagraphs, either the
Trustee or the holders of Investor Certificates (including the Collateral
Interest Holder) of Series ____-_ evidencing more than 50% of the aggregate
unpaid principal amount of such Investor Certificates (including the Collateral
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 Interest Holder) of Series ____-_) may declare that a Pay Out Event
has occurred with respect to Series ____-_ as of the date of such notice, and,
in the case of any event described in subparagraph (c), (d) or (f) a Pay Out
Event shall occur with respect to Series ____-_ without any notice or other
action on the part of the Trustee or Holders of Investor Certificates (including
the Collateral Interest Holder) of Series ____-_ immediately upon the occurrence
of such event.
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.1 Optional Repurchase. On any day occurring on or after
the date on which the Investor Amount is reduced to 5% or less of the Initial
Invested Amount, the Seller shall have the option to purchase the interest of
the Series ____-_ Holders, 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.
Section 7.2 Series Termination.
(a) If, on the ______________ ____ Distribution Date, the Investor
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 Investor Amount and accrued and
unpaid interest thereon at the close of business on the last day of the Monthly
Period preceding the Series Termination Date (after giving effect to all
distributions required to be made on the Series Termination Date, except
pursuant to this Section 7.2; provided, however that in no event shall such
amount exceed the Series Percentage of Receivables on the Series Termination
Date). Such bids shall require that such sale shall (subject to Section 7.2(b))
occur on the Series Termination Date. The Seller and the Collateral Interest
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 Series 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
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<PAGE> 41
allocated to Series ____-_ pursuant to the Agreement and this 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 to the Series 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.
ARTICLE VIII
Final Distributions
Section 8.1 Sale of Receivables or Certificateholders' Interest
Pursuant to Section 2.06 or 10.01 of the Agreement.
(a) Purchase Price. The amount to be paid with respect to Series
____-_ in connection with (i) a reassignment of Receivables to the Seller
pursuant to Section 2.06 of the Agreement or (ii) a repurchase of the
Certificateholders' Interest pursuant to Section 10.01 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.
(b) Distributions Pursuant to Section 7.1 or 7.2 of this Supplement
and Section 10.01 of the Agreement. With respect to the Reassignment Amount
deposited into the Collection Account pursuant to Section 7.1 or 8.1(a)(ii) or
any amounts allocable to Series ____-_ deposited into the Collection Account
pursuant to Section 7.2, the Trustee shall, not later than 3:00 p.m. New York
City 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 Investor 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 Monthly Interest
previously due but not distributed to the Class A Certificateholders on a prior
Distribution Date and (C) the amount of Class A Additional Interest, if any, for
such Distribution Date and any Class A Additional Interest previously due but
not distributed to the Class A Certificateholders on any prior Distribution
Date, will be distributed to the Paying Agent for payment to the Class A
Certificateholders, (ii) (x) the Class B Investor 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 Monthly Interest previously
due but not distributed to the Class B Certificateholders on a prior
Distribution Date and (C) the amount of Class B Additional Interest, if any, for
such Distribution Date and any Class B Additional Interest previously due but
not distributed to the Class B Certificateholders on any prior Distribution
Date, will be distributed to the Paying Agent for payment to the Class B
Certificateholders and (iii) all remaining amounts will be distributed to the
Collateral Interest Holder.
(c) Distributions Pursuant to Section 2.06 of the Agreement. With
respect to any amounts deposited into the Collection Account pursuant to
subsection 8.1(a)(i), the Trustee
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shall, not later than 3:00 p.m., New York City time, on the related Distribution
Date, deposit the principal portion of such amounts that are allocable to the
Class A Certificates and the Class B Certificates into the Collection Account
and the principal portion of such amounts allocable to the Collateral Interest
shall be distributed to the Collateral Interest Holder.
(d) Notwithstanding anything to the contrary in this Supplement or
the Agreement, all amounts distributed to the Paying Agent pursuant to Section
8.1(b) for payment to the Series ____-_ Certificateholders shall be deemed
distributed in full to the 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 8.2 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, New York City 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 Investor 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 Investor 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) distribute the remaining amount of the Insolvency Proceeds to the
Collateral Interest Holder.
(b) Not later than 12:00 noon, New York City 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 Monthly Interest
previously due but not distributed to the Class A Certificateholders on a prior
Distribution Date and (y) the amount of Class A Additional Interest, if any, for
such Distribution Date and any Class A Additional Interest previously due but
not distributed to the Class A Certificateholders on a prior Distribution Date
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
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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 Monthly Interest
previously due but not distributed to the Class B Certificateholders and (y) the
amount of Class B Additional Interest, if any, for such Distribution Date and
any Class B Additional Interest previously due but not distributed to the Class
B Certificateholders on a prior Distribution Date 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
distributed to the Collateral Interest Holder.
(c) Notwithstanding anything to the contrary in this Supplement or
the Agreement, all amounts distributed to the Paying Agent pursuant to this
Section for payment to the Series ____-_ Certificateholders shall be distributed
in full to the 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.
Section 8.3 Instructions Pursuant to Section 9.02(a) of the
Agreement. The Holders of Investor Certificates of Series ____-_ evidencing more
than 50% of the Investor Amount of each Class (including the Collateral
Interest) shall not be considered as having disapproved of any liquidation of
the Receivables and to continue transferring Principal Receivables to the Trust
pursuant to Section 9.02(a) of the Agreement unless Holders of more than 50% of
the Investor Amount of each of the Class A Certificates, the Class B
Certificates and the Collateral Interest instruct the Trustee to such effect in
the manner required pursuant to Section 9.02(a) of the Agreement.
ARTICLE IX
Certificates
Section 9.1 Book-Entry Certificates. The Class A Certificates and
the Class B Certificates shall be delivered as Book-Entry Certificates. The
Clearing Agency for the Class A Certificates and the Class B Certificates shall
be The Depository Trust Company, and the Class A Certificates and the Class B
Certificates shall be initially registered in the name of Cede & Co., its
nominee.
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ARTICLE X
Miscellaneous Provisions
Section 10.1. Certain Matters Regarding the Collateral Interest
Holder. Amounts payable to the Collateral Interest Holder hereunder shall be
applied in accordance with the provisions of the Transfer Agreement.
Section 10.2 Ratification of Agreement. As supplemented by this
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
Section 10.3 Counterparts. This 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 10.4 Governing Law. THIS SUPPLEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING THE UCC AS IN
EFFECT IN 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 10.5 Notices. All directions, notices and instructions
to the Trustee shall be in writing (which may be facsimile).
Section 10.6 Amendments. This Supplement may be amended by the
Seller without the consent of the Servicer, the Trustee or any Investor
Certificateholder if the Seller provides the Trustee with (i) an Opinion of
Counsel to the effect that such amendment or modification would reduce the risk
that the Trust would be treated as taxable as a publicly traded partnership
pursuant to Code section 7704 and (ii) an Officer's Certificate that such
amendment or modification would not materially and adversely affect any Investor
Certificateholder, provided that no such amendment shall be deemed effective
without (i) the Trustee's consent, if the Trustee's rights, duties and
obligations hereunder are thereby modified and (ii) the Trustee having obtained
written assurance that such amendment or modification will not, by itself, lower
the current ratings on the Series ____-_ Certificates. The Seller shall provide
the Rating Agencies with prior written notice of any such amendment or
modification.
Section 10.7. Uncertificated Securities. The Collateral
Interest shall be delivered in uncertificated form.
Section 10.8. Transfers of the Collateral Interest.
(a) Unless otherwise consented to by the Seller, no portion of the
Collateral Interest or any interest therein may be sold, conveyed, assigned,
hypothecated, pledged, participated, exchanged or otherwise transferred (each, a
"Transfer") except in accordance with this Section 10.8 and only to a Permitted
Assignee. Any attempted or purported transfer, assignment, exchange, conveyance,
pledge, hypothecation or grant other than to a Permitted
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<PAGE> 45
Assignee shall be void. Unless otherwise consented to by the Seller, no portion
of the Collateral Interest or any interest therein may be Transferred to any
Person (each such Person acquiring the Collateral Interest or any interest
therein, an "Assignee") unless such Assignee shall have executed and delivered
to the Seller on or before the effective date of any Transfer a letter
substantially in the form attached hereto as Exhibit D (an "Investment Letter"),
executed by such Assignee, with respect to the related Transfer to such Assignee
of all or a portion of the Collateral Interest.
(b) Each Assignee will certify that the Collateral Interest or the
interest therein purchased by such Assignee will be acquired for investment only
and not with a view to any public distribution thereof, and that such Assignee
will not offer to sell or otherwise dispose of the Collateral Interest or any
interest therein so acquired by it in violation of any of the registration
requirements of the Securities Act, or any applicable state or other securities
laws. Each Assignee will acknowledge and agree that (i) it has no right to
require the Seller to register under the Securities Act or any other securities
law the Collateral Interest or the interest therein to be acquired by the
Assignee and (ii) the sale of the Collateral Interest is not being made by means
of the prospectus prepared in connection with the sale of the Series ____-_
Certificates. Each Assignee will agree with the Seller that: (a) such Assignee
will deliver to the Seller on or before the effective date of any Transfer a
letter in the form annexed hereto as Exhibit E (an "Investment Letter"),
executed by such Assignee with respect to the purchase by such Assignee of all
or a portion of the Collateral Interest and (b) all of the statements made by
such Assignee in its Investment Letter shall be true and correct as of the date
made.
(c) No portion of the Collateral Interest or any interest therein
may be Transferred, and each Assignee will certify that it is not, (a) an
"employee benefit plan" (as defined in Section 3(3) of ERISA), including
governmental plans and church plans, (b) any "plan" (as defined in Section
4975(e)(1) of the Code) including individual retirement accounts and Keogh
plans, or (c) any other entity whose underlying assets include "plan assets"
(within the meaning of Department of Labor Regulation Section 2510.3-101, 29
C.F.R. Section 2510.3-101 or otherwise under ERISA) by reason of a plan's
investment in the entity, including, without limitation, an insurance company
general account.
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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.
FLEET BANK (RI), NATIONAL ASSOCIATION,
Seller and Servicer,
By:
--------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
Trustee
By:
--------------------------------
Name:
Title:
[Signature Page for Series ____-_ Supplement]
<PAGE> 1
Exhibit 5.1
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
February 4, 2000
Fleet Bank (RI), National Association
111 Westminster Street
Providence, Rhode Island 02903
RE: FLEET CREDIT CARD MASTER TRUST II
FLEET BANK (RI), NATIONAL ASSOCIATION (SELLER AND SERVICER)
REGISTRATION STATEMENT ON FORM S-3 NO. 333-
Ladies and Gentlemen:
We have acted as counsel for Fleet Bank (RI), National Association,
a national banking association (the "Bank"), in connection with the Registration
Statement on Form S-3 (the "Registration Statement") filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), for the registration under the Act of Asset Backed Certificates
(collectively, the "Certificates") to be issued from time to time in series
(each, a "Series") and representing undivided interests in the Fleet Credit Card
Master Trust II (the "Trust"). The Certificates will be issued pursuant to the
Amended and Restated Pooling and Servicing Agreement, as amended (the "Pooling
and Servicing Agreement"), between the Bank, as Seller and Servicer by
assignment from the previous seller and servicer, and Bankers Trust Company, as
Trustee.
We have examined such instruments, documents and records as we
deemed relevant and necessary as a basis of our opinion hereinafter expressed.
In such examination, we have assumed the following: (a) the authenticity of
original documents and the genuineness of all signatures; (b) the conformity to
the originals of all documents submitted to us as copies; and (c) the truth,
accuracy and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates we have
reviewed.
Based on such examination, we are of the opinion that when the
issuance of each Series of the Certificates has been duly authorized by the
appropriate corporate action and the Certificates of such Series have been duly
executed, authenticated and delivered in accordance with the Pooling and
Servicing Agreement, and sold in the manner described in the Registration
<PAGE> 2
Fleet Bank (RI), National Association
February 4, 2000
Page 2
Statement, any amendment thereto and the prospectus and prospectus supplement
relating thereto, the Certificates will be legally issued, fully paid,
non-assessable and binding obligations of the Trust and the holders of the
Certificates of such Series will be entitled to the benefits of the Pooling and
Servicing Agreement, except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance,
moratorium, or other laws relating to or affecting the rights of creditors
generally and general principles of equity, including without limitation
concepts of materiality, reasonableness, good faith and fair dealing, and the
possible unavailability of specific performance or injunctive relief, regardless
of whether such enforceability is considered in a proceeding in equity or at
law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever appearing in the
Registration Statement and the prospectus contained therein. In giving such
consent, we do not admit that we are "experts," within the meaning of the term
as used in the Act or the rules and regulations of the Securities and Exchange
Commission issued thereunder, with respect to any part of the Registration
Statement, including this opinion as an exhibit or otherwise.
Very truly yours,
/s/ ORRICK, HERRINGTON & SUTCLIFFE LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE> 1
Exhibit 8.1
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
February 4, 2000
Fleet Bank (RI), National Association
111 Westminster Street
Providence, Rhode Island 02903
Re: FLEET CREDIT CARD MASTER TRUST II
FLEET BANK (RI), NATIONAL ASSOCIATION (SELLER AND SERVICER)
REGISTRATION STATEMENT ON FORM S-3 No. 333-
Ladies and Gentlemen:
We have acted as counsel for Fleet Bank (RI), National Association, a
national banking association (the "Bank"), in connection with the preparation of
the Registration Statement on Form S-3 (the "Registration Statement") filed on
February 4, 2000 with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), for the registration under the
Act of Asset Backed Certificates (collectively, the "Certificates") to be issued
from time to time in series (each, a "Series") and representing an undivided
interest in Fleet Credit Card Master Trust II (the "Trust"). Such Certificates
will be issued pursuant to a pooling and servicing agreement (the "Pooling and
Servicing Agreement"), between the Bank, as Seller and Servicer by assignment
from the previous seller and servicer, and Bankers Trust Company, as Trustee.
We hereby confirm that the statements set forth in the prospectus relating
to the Certificates (the "Prospectus") forming a part of the Registration
Statement under the heading "Federal Income Tax Consequences," and the
statements set forth in the prospectus supplement relating to the Certificates
(the "Prospectus Supplement") forming a part of the Registration Statement under
the headings "Summary of Terms--Tax Status" and "Federal Income Tax
Consequences," which statements have been prepared by us, to the extent that
they constitute matters of law or legal conclusions with respect thereto, are
correct in all material respects, and we hereby adopt and confirm the opinions
set forth therein.
We note that the form of Prospectus Supplement does not relate to a
specific transaction. Accordingly, the above-referenced description of federal
income tax consequences and opinions may, under certain circumstances, require
modification in the context of an actual transaction. In the event that our
opinions referred to in the preceding paragraph were to require modification in
the context of an actual transaction, we hereby undertake, if we are special
tax counsel to the Bank with respect to such transaction, to include any such
modifications in a tax
<PAGE> 2
Fleet Bank (RI), National Association
February 4, 2000
Page 2
opinion (including a consent to filing) filed with the Securities and Exchange
Commission pursuant to a post-effective Amendment or Form 8-K prior to the time
of sales.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are
"experts" within the meaning of the term used in the Act or the rules and
regulations of the Securities and Exchange Commission issued thereunder, with
respect to any part of the Registration Statement, including this opinion as an
exhibit or otherwise.
Very truly yours,
/s/ ORRICK, HERRINGTON & SUTCLIFFE LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
