<PAGE> 1
FILED PURSUANT TO RULE 424(b)(4)
REGISTRATION NO. 333-43570
333-43570-d
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 16, 2000
[NATIONAL CITY LOGO]
NATIONAL CITY CREDIT CARD MASTER TRUST
ISSUER
NATIONAL CITY BANK
SELLER AND SERVICER
$525,000,000 CLASS A FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 2000-1
$36,000,000 CLASS B FLOATING RATE ASSET BACKED CERTIFICATES, SERIES 2000-1
<TABLE>
<CAPTION>
CLASS A CERTIFICATES CLASS B CERTIFICATES
---------------------------- ----------------------------
<S> <C> <C>
Certificate rate One-Month LIBOR plus 0.15% One-Month LIBOR plus 0.40%
per year per year
Interest paid Monthly on the 15th, Monthly on the 15th,
beginning October 16, 2000 beginning October 16, 2000
Scheduled principal payment August 15, 2005 August 15, 2005
date
Legal final maturity date August 15, 2007 August 15, 2007
Price to public 100.000% 100.000%
Underwriting discount 0.275% 0.325%
Proceeds to seller 99.725% 99.675%
</TABLE>
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-7 IN THIS PROSPECTUS
SUPPLEMENT
AND PAGE 6 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 National City Credit Card
Master Trust only and will not represent interests in or obligations of National
City Bank or any of its affiliates.
This prospectus supplement may be used to offer and sell the certificates only
if accompanied by the prospectus.
This prospectus supplement and the accompanying prospectus may be used by
NatCity Investments, Inc. or another affiliate of the bank in connection with
offers and sales of the certificates in market-making transactions.
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 $39,000,000.
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
SALOMON SMITH BARNEY
LEHMAN BROTHERS
NATCITY INVESTMENTS, INC.
Underwriter of the Class B certificates
SALOMON SMITH BARNEY
AUGUST 16, 2000
<PAGE> 2
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: (a) this prospectus supplement, which describes the specific terms of
your series of certificates, (b) the accompanying prospectus, which provides
general information, some of which may not apply to your series of certificates.
If the terms of your series of certificates vary between this prospectus
supplement and the accompanying prospectus, you should rely on the information
in this prospectus supplement.
You should rely on the information provided in this prospectus supplement
and the accompanying prospectus, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the certificates in any state where the offer
is not permitted.
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 included in the accompanying prospectus provide the pages on which
these captions are located.
Parts of this prospectus supplement and the accompanying prospectus use
defined terms. You can find these terms and their definitions under the caption
"Glossary of Defined Terms" beginning on page S-26 in this document and on page
63 in the accompanying prospectus.
TO ASSIST YOU IN UNDERSTANDING THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS, THE TERMS THAT ARE DEFINED IN THE "GLOSSARY OF DEFINED
TERMS" IN THIS PROSPECTUS SUPPLEMENT AND IN THE ACCOMPANYING PROSPECTUS APPEAR
IN BOLD TYPEFACE THE FIRST TIME THEY APPEAR IN EACH OF THE SECTIONS AND
SUBSECTIONS, BEGINNING ON PAGE S-9 IN THIS PROSPECTUS SUPPLEMENT AND BEGINNING
ON PAGE 14 IN THE ACCOMPANYING PROSPECTUS.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Transaction Summary.................. S-1
Summary of Terms..................... S-2
The Trust.......................... S-2
Offered Securities................. S-2
Interest Payments............... S-2
Principal Payments.............. S-2
The Collateral Interest............ S-3
Credit Enhancement................. S-3
Other Interests in the Trust....... S-3
Other Series of Certificates.... S-3
The Seller Interest............. S-3
Information about the
Receivables..................... S-3
Allocations........................ S-4
Your Series..................... S-4
Among Classes................... S-4
Application of Collections......... S-4
Finance Charge Receivables
Collections................... S-4
Excess Spread................... S-4
Principal Collections........... S-5
Pay Out Events..................... S-5
Optional Repurchase................ S-5
Registration, Clearance and
Settlement...................... S-5
Tax Status......................... S-6
ERISA Considerations............... S-6
Certificate Ratings................ S-6
Risk Factors......................... S-7
Ability to Resell Series 2000-1
Certificates Not Assured........ S-7
Credit Enhancement May Not Be
Sufficient to Prevent Loss...... S-7
Class B Certificates are
Subordinate to the Class A
Certificates; Trust Assets May
Be Diverted from Class B to Pay
Class A......................... S-7
Ratings May Be Lowered or Withdrawn
After You Purchase Your
Certificates and the Market
Value of Your Certificates May
Be Reduced...................... S-8
Introduction......................... S-9
Maturity Considerations.............. S-9
Controlled Accumulation Period..... S-9
Early Amortization Period.......... S-10
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Use of Proceeds...................... S-11
National City Bank................... S-11
Series Provisions.................... S-11
Interest Payments.................. S-11
Principal Payments................. S-12
Revolving Period................ S-12
Controlled Accumulation
Period........................ S-12
Early Amortization Period....... S-13
Postponement of Controlled
Accumulation Period............. S-13
Subordination...................... S-13
Allocation Percentages............. S-13
Reallocation of Cash Flows......... S-14
Class A Required Amount......... S-14
Class B Required Amount......... S-15
Application of Collections......... S-15
Payment of Interest, Fees and
Other Items................... S-15
Excess Spread and Excess Finance
Charge Collections............ S-16
Payments of Principal........... S-17
Sharing of Excess Finance Charge
Collections..................... S-18
Shared Principal Collections....... S-18
Defaulted Receivables; Investor
Charge-Offs..................... S-18
Class A Investor Default
Amount........................ S-18
Class B Investor Default
Amount........................ S-19
Collateral Default Amount....... S-19
Principal Funding Account.......... S-20
Reserve Account.................... S-20
Pay Out Events..................... S-21
Servicing Compensation............. S-22
Series Termination................. S-22
ERISA Considerations................. S-23
General............................ S-23
Class A Certificates............... S-23
Class B Certificates............... S-24
Underwriting......................... S-24
Glossary of Defined Terms............ S-26
Annex I: Previous Issuances of
Certificates....................... I-1
Annex II: The Bank Portfolio......... II-1
</TABLE>
i
<PAGE> 4
TRANSACTION SUMMARY
Trust and Issuer: National City Credit Card Master Trust
Seller: National City Bank
Servicer: National City Bank
Trustee: The Bank of New York
Closing Date: August 24, 2000
Series Servicing Fee
Percentage: 2% per annum
Clearance and Settlement: DTC/Clearstream/Euroclear
Primary Trust Assets: Receivables originated in MasterCard(R) and
VISA(R)* accounts
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Principal Amount: $525,000,000 $36,000,000
Percentage of Series:** 87.5% 6.0%
Anticipated Ratings:*** Aaa/AAA/AAA A2/A/A
(Moody's/Standard & Poor's/
Fitch)
Credit Enhancement: subordination of Class B and subordination of collateral
collateral interest interest
Certificate Rate: one-month one-month
LIBOR plus LIBOR plus
0.15% per year 0.40% per year
Interest Accrual Method: actual/360 actual/360
Interest Payment Dates: monthly (15th) monthly (15th)
Certificate Rate Index Reset 2 London business days before 2 London business days before
Date: each interest payment date each interest payment date
First Interest Payment Date: October 16, 2000 October 16, 2000
Commencement of Controlled
Accumulation Period
(subject to adjustment): beginning at the close of beginning at the close of
business on July 31, 2004 business on July 31, 2004
Scheduled Principal Payment
Date: August 15, 2005 August 15, 2005
Final Maturity Date: August 15, 2007 August 15, 2007
ERISA eligibility Yes, subject to important No
(investors should consult considerations described under
with their counsel): "ERISA Considerations" in this
prospectus supplement and the
accompanying prospectus.
Debt for United States Federal Yes, subject to important Yes, subject to important
Income Tax Purposes considerations described under considerations described under
(investors should consult "Federal Income Tax "Federal Income Tax
with their tax counsel): Consequences" in the Consequences" in the
accompanying prospectus. accompanying prospectus.
</TABLE>
---------------
* MasterCard(R) and VISA(R) are federally registered servicemarks of
MasterCard International Incorporated and VISA U.S.A., Inc., respectively.
** The percentage of Series 2000-1 comprised by the collateral interest is
6.5%.
*** It is a condition to issuance of the Series 2000-1 certificates that one of
these ratings be obtained.
S-1
<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. TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING OF THE
CERTIFICATES, READ CAREFULLY THIS ENTIRE DOCUMENT AND THE ACCOMPANYING
PROSPECTUS.
THIS SUMMARY PROVIDES AN OVERVIEW OF CERTAIN CALCULATIONS, CASH FLOWS AND OTHER
INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE FULL DESCRIPTION
OF THESE CALCULATIONS, CASH FLOWS AND OTHER INFORMATION IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
THE TRUST
National City Credit Card Master Trust will issue the certificates. The trustee
is The Bank of New York.
OFFERED SECURITIES
National City Credit Card Master Trust is offering the Class A certificates and
the Class B certificates as part of Series 2000-1. The Class A certificates and
the Class B certificates represent an interest in the assets of the trust.
The Class B certificates are subordinated to the Class A certificates.
INTEREST PAYMENTS
The Class A certificates will accrue interest for each interest period at an
annual rate equal to LIBOR plus 0.15%.
The Class B certificates will accrue interest for each interest period at an
annual rate equal to LIBOR plus 0.40%.
Interest accrued during each interest period will be due on each distribution
date. Any interest due but not paid on a distribution date will be payable on
the next distribution date together with additional interest at the applicable
certificate rate plus 2.0% per annum.
- A distribution date is the 15th day of each month, or if that day is not a
business day, the next business day. The first distribution date is October
16, 2000.
- Each interest period begins on and includes a distribution date and ends on
but excludes the next distribution date. However, the first interest period
will begin on and include, August 24, 2000, which is the closing date, and end
on but exclude October 16, 2000, the first distribution date.
- LIBOR is the rate for deposits in U.S. dollars for a one-month period which
appears on Telerate Page 3750 (or similar replacement page) as of 11:00 a.m.,
London time, on the related LIBOR determination date. See "Series
Provisions -- Interest Payments" in this prospectus supplement for a
discussion of the determination of LIBOR if that rate does not appear on
Telerate Page 3750 (or similar replacement page).
See "Series Provisions -- Interest Payments" in this prospectus supplement for a
discussion of the LIBOR determination date, and the determination of amounts
available to pay interest.
You may obtain the certificate rates for the current and immediately preceding
interest periods by telephoning The Bank of New York, the trustee, at (212)
815-5731.
PRINCIPAL PAYMENTS
You are expected to receive payment of principal in full on August 15, 2005, or,
if that date is not a business day, the next business day, which is called the
scheduled principal payment date. However, principal could be paid earlier or
later, or in reduced amounts. No principal will be paid to the Class B
certificateholders until the Class A certificateholders are paid in full. For a
discussion of how amounts are allocated and the timing of principal payments,
see "Maturity Considerations" in this prospectus supplement and in the
accompanying prospectus and "Series Provisions -- Allocation Percentages" in
this prospectus supplement.
The final payment of principal and interest on the certificates will be made no
later than August 15, 2007, or, if that date is not a business day, the next
business day, which is called the Series 2000-1 termination date.
S-2
<PAGE> 6
See "Series Provisions -- Principal Payments" in this prospectus supplement for
a discussion of amounts available to pay principal.
THE COLLATERAL INTEREST
The trust is also issuing an interest in the assets of the trust that is
subordinated to the certificates, called the collateral interest. The initial
collateral invested amount is $39,000,000, representing 6.5% of the sum of the
initial aggregate principal amount of the certificates and the initial
collateral invested amount. As a subordinated interest, the collateral interest
is a form of credit enhancement for the certificates. The collateral interest
holder 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 prospectus supplement and the
accompanying prospectus.
CREDIT ENHANCEMENT
Credit enhancement for your series is for your series' benefit only, and you are
not entitled to the benefits of any credit enhancement available to other
series.
Subordination of the Class B certificates provides credit enhancement for the
Class A certificates. Subordination of the collateral interest provides credit
enhancement for the Class A certificates and the Class B certificates. The
collateral invested amount and the interest of the Class B certificateholders,
called the Class B invested amount, must be reduced to zero before the Class A
certificateholders will suffer any loss of principal. The collateral invested
amount must be reduced to zero before the Class B certificateholders will suffer
any loss of principal. For a description of the events which may lead to a
reduction of Class A, Class B and the collateral invested amounts, see "Series
Provisions -- Reallocation of Cash Flows," "-- Application of Collections" and
"-- Defaulted Receivables; Investor Charge-Offs" in this prospectus supplement.
OTHER INTERESTS IN THE TRUST
OTHER SERIES OF CERTIFICATES
The trust has issued other series of certificates and expects to issue
additional series of certificates. When issued by the trust, the certificates of
each of those series also represent an interest in the assets of the trust. You
can review a summary of each series previously issued and currently outstanding
under the caption "Annex I: Previous Issuances of Certificates" included at the
end of this prospectus supplement. The trust may issue additional series with
terms that may be different from any other series without prior review or
consent by any certificateholders.
THE SELLER INTEREST
National City Bank will own the seller interest, which represents the remaining
interest in the assets of the trust not represented by the certificates, the
collateral interest and the other interests issued by the trust. The seller
interest does not provide credit enhancement for your series or any other
series.
INFORMATION ABOUT THE RECEIVABLES
The trust assets include receivables from certain MasterCard(R) and VISA(R)*
revolving credit card accounts selected from National City Bank's credit card
account portfolio.
The receivables consist of both principal receivables and finance charge
receivables.
Principal receivables are, generally, (a) amounts charged by cardholders for
goods and services and (b) cash advances.
Finance charge receivables are (a) the related finance charges and credit card
fees, (b) for your series, certain amounts of fees, called interchange,
collected through MasterCard and VISA and annual membership fees collected from
cardholders and (c) amounts that are recovered after they were previously
considered defaulted.
National City Bank, as servicer, will collect payments on the receivables in the
trust and will deposit those collections in a collection account. The servicer
will keep track of those collections
---------------
* MasterCard(R) and VISA(R) are federally registered servicemarks of MasterCard
International Incorporated and Visa U.S.A., Inc., respectively.
S-3
<PAGE> 7
that are finance charge receivables and those collections that are principal
receivables.
ALLOCATIONS
YOUR SERIES
Each month National City Bank, as servicer, will allocate collections received
among:
- Series 2000-1;
- other series outstanding; and
- the seller interest in the trust.
The amount allocated to your series will be determined mainly upon the size of
the invested amount of your series compared to the total amount of principal
receivables in the trust. At the time of issuance of the certificates, the
invested amount for Series 2000-1 will be $600,000,000.
AMONG CLASSES
Amounts allocated to your series will be further allocated among the holders of
the Class A certificates, the holders of the Class B certificates and the holder
of the collateral interest on the basis of the invested amount of each class.
Initially the invested amount of each class will be equal to the original
principal amount of the class.
See "Series Provisions -- Allocation Percentages" in this prospectus supplement.
You are entitled to receive payments of interest and principal only from
collections and other trust assets allocated to your series. The invested
amount, which is the primary basis for allocations to your series, is the sum of
(a) the Class A invested amount, (b) the Class B invested amount and (c) the
collateral invested amount.
If the invested amount of your series declines, amounts allocated and available
for payment to your series and to you will be reduced. In addition, for purposes
of allocating finance charge collections and amounts that are written off as
uncollectible, the allocations to the certificates will be based upon the
adjusted invested amount, which will be the invested amount less amounts
accumulated in the principal funding account for payment to the
certificateholders and the collateral interest holder on the scheduled principal
payment date. For a description of the events which may lead to these
reductions, see "Series Provisions -- Allocation Percentages" and
"-- Reallocation of Cash Flows" in this prospectus supplement.
APPLICATION OF COLLECTIONS
FINANCE CHARGE RECEIVABLES COLLECTIONS
The following steps describe how the trust allocates and applies collections of
finance charge receivables to your series.
- Collections of finance charge receivables 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 in "-- Excess Spread" 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 in "-- Excess Spread" 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.
Any remaining amount will become excess spread and be applied as described in
"-- Excess Spread" below.
EXCESS SPREAD
Each month the trust will distribute the excess spread and your series' share of
excess finance charges from other series in the following order of priority:
- first to make up deficiencies with respect to Class A;
- then to make up deficiencies with respect to Class B;
- then to pay interest on the collateral interest and to make up deficiencies
with respect to the collateral interest;
- then, in limited circumstances, to fund a reserve account to cover interest
payment deficits during the accumulation period;
S-4
<PAGE> 8
- finally to make payments to the holder of the collateral interest.
See "Series Provisions -- Application of Collections" in this prospectus
supplement.
PRINCIPAL COLLECTIONS
The trust will apply your series' share of principal collections 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 not made
from finance charge collections, excess spread, excess finance charge
collections or funds in the reserve account.
- During the revolving period, no principal will be paid to you or accumulated
in a trust account. Instead, your series' share of principal collections will
then be treated as shared principal collections and may be available to make
principal payments for other series.
- The accumulation period is scheduled to begin at the close of business on July
31, 2004, but may begin at a later date. During the accumulation period,
principal collections will be deposited in a trust account, up to a controlled
deposit amount, for payment to the holders of the Class A certificates, the
Class B certificates and the collateral interest on the scheduled principal
payment date.
- If a pay out event (described below) that applies to Series 2000-1 or to all
series occurs, the early amortization period will begin. During the early
amortization period, principal collections will be paid first to the Class A
certificateholders, then to the Class B certificateholders and then to the
collateral interest holder.
- Any remaining principal collections will be first made available to other
series and then paid to the holder of the seller interest or deposited in the
special funding account.
PAY OUT EVENTS
The documents under which the Class A certificates, the Class B certificates and
the collateral interest will be issued include a list of adverse events known as
pay out events. If a pay out event that applies to Series 2000-1 or to all
series occurs, the trust will use collections of principal receivables allocated
to Series 2000-1 each month to pay principal.
The following are pay out events:
- the seller fails to make required payments, fails to make required deposits,
or violates other covenants and agreements;
- any representation or warranty of the seller is materially incorrect;
- the seller does not transfer additional assets to the trust when required;
- the yield on the trust portfolio averaged over three months is less than the
weighted average interest rate for Series 2000-1, calculated by dividing the
interest rate for the Class A, Class B and collateral interest, plus the
series servicing fee percentage for Series 2000-1 by the invested amount
averaged over the same three months;
- certain defaults of the servicer;
- the occurrence of certain events of insolvency or receivership relating to the
seller (including any additional seller);
- the seller is unable to transfer receivables to the trust as required under
the pooling and servicing agreement; and
- the trust becomes an "investment company" under the Investment Company Act of
1940.
For a more detailed discussion of pay out events, see "Series Provisions -- Pay
Out Events" in this prospectus supplement. In addition, see "Description of the
Certificates -- Pay Out Events" in the accompanying prospectus.
OPTIONAL REPURCHASE
National City Bank has the option to repurchase your certificates when the
invested amount for your series has been reduced to 5.0% or less of the initial
invested amount. See "Description of the Certificates -- Optional Termination;
Final Payment of Principal" in the accompanying prospectus.
REGISTRATION, CLEARANCE AND SETTLEMENT
Your certificates will be registered in the name of Cede & Co., as the nominee
of the Depository
S-5
<PAGE> 9
Trust Company. You will not receive a definitive certificate representing your
interest, except in limited circumstances described in the accompanying
prospectus when certificates in fully registered, certificated form are issued.
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
Clearstream Banking, societe anonyme or the Euroclear System, in Europe.
Transfers within DTC, Clearstream or Euroclear, as the case may be, will be made
in accordance with the usual rules and operating procedures of those systems.
Cross-market transfers between persons holding directly or indirectly through
DTC and counterparties holding directly or indirectly through Clearstream or
Euroclear will be made in DTC through the relevant depositaries of Clearstream
or Euroclear. See "Description of the Certificates -- Book-Entry Registration"
in the accompanying prospectus.
We expect that the certificates will be delivered in book-entry form through the
facilities of DTC, Clearstream and Euroclear on or about the closing date.
TAX STATUS
Subject to important considerations described under "Federal Income Tax
Consequences" in the accompanying prospectus, 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. The seller has agreed, and, by the purchase of your certificates, you
agree, to treat your certificates as debt for federal, state and local income
tax purposes and franchise tax purposes. See "Federal Income Tax Consequences"
in the accompanying prospectus for additional information concerning the
application of federal income tax laws and information regarding certain state
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.
CERTIFICATE RATINGS
The Class A certificates are required to be rated in the highest rating category
by at least one nationally recognized rating organization.
The Class B certificates are required to be rated in one of the three highest
rating categories by at least one nationally recognized rating organization.
See "Certificate Ratings" in the accompanying prospectus for a discussion of the
primary factors upon which the ratings are based. See also "Risk
Factors -- Ratings May Be Lowered or Withdrawn After You Purchase Your
Certificates and the Market Value of Your Certificates May Be Reduced" in this
prospectus supplement and "Risk Factors -- Credit Ratings Assigned to Your
Certificates are Limited in Nature" in the accompanying prospectus.
S-6
<PAGE> 10
RISK FACTORS
In the accompanying prospectus you will find a section called "Risk
Factors." The information in that section applies 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 accompanying prospectus and the risk factors discussed below in
this section before deciding whether to purchase any of the Series 2000-1
certificates.
ABILITY TO RESELL SERIES 2000-1 CERTIFICATES NOT ASSURED
If you purchase Series 2000-1 certificates, you may not 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 TO PREVENT LOSS
Credit enhancement for the Class A certificates is provided through the
subordination of the Class B certificates and the collateral interest. However,
this credit enhancement 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 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 "Series Provisions -- Allocation
Percentages" and "-- Defaulted Receivables; Investor Charge-Offs" in this
prospectus supplement.
CLASS B CERTIFICATES ARE SUBORDINATE TO THE CLASS A CERTIFICATES; TRUST ASSETS
MAY BE DIVERTED FROM CLASS B TO PAY CLASS A
If you purchase a Class B certificate, your right to receive principal payments
is subordinated to the payment in full of the Class A certificates. No principal
will be paid to you until the full amount of principal has been paid or
accumulated for payment on the Class A certificates. In addition, if Class A's
share of collections of finance charge receivables allocated to Series 2000-1,
excess spread and the collateral interest's share of principal collections are
insufficient to make all required payments for the Class A certificates,
collections of principal receivables allocated to Class B may be diverted to
Class A. Also, if Class A's share of losses on the receivables exceeds
collections and credit enhancement available to cover those losses and the
collateral invested amount is reduced to zero, the Class B invested amount may
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.
Accordingly, you may receive payment of interest or principal later than you
expect or you may not receive the full
S-7
<PAGE> 11
amount of principal and interest due to you. See "Series
Provisions -- Reallocation of Cash Flows" and "-- Defaulted Receivables;
Investor Charge-Offs" in this prospectus supplement.
RATINGS MAY BE LOWERED OR WITHDRAWN AFTER YOU PURCHASE YOUR CERTIFICATES AND THE
MARKET VALUE OF YOUR CERTIFICATES MAY BE REDUCED
The ratings assigned to the Series 2000-1 certificates are based upon many
factors, including the credit quality of the receivables and the amount of
credit enhancement provided. The ratings are not a recommendation to purchase,
hold or sell any of the Series 2000-1 certificates. The ratings also are not
intended and should not be relied upon to determine the marketability of the
Series 2000-1 certificates, the market value of the Series 2000-1 certificates
or whether the Series 2000-1 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.
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INTRODUCTION
The following provisions of this prospectus supplement contain more
detailed information concerning the asset backed certificates offered by this
prospectus supplement and the accompanying prospectus. The Class A certificates,
the Class B certificates and the COLLATERAL INTEREST will be issued by National
City Credit Card Master Trust pursuant to the SERIES 2000-1 SUPPLEMENT to the
pooling and servicing agreement, as amended and restated. The Series 2000-1
supplement will specify the principal terms of the Class A certificates, the
Class B certificates and the collateral interest. Forms of a series supplement
and the pooling and servicing agreement have been filed as exhibits to the
registration statement for the National City Credit Card Master Trust.
The property of the trust includes receivables generated from time to time
in a portfolio of consumer revolving credit card accounts. A description of the
bank portfolio and the trust portfolio is provided in Annex II. See "Annex II."
Annex II is incorporated into this prospectus supplement by reference.
Series 2000-1 will be the second series issued by the trust and the second
series outstanding, as of the CLOSING DATE, included in GROUP ONE. See "Annex I:
Previous Issuances of Certificates." Annex I is incorporated into this
prospectus supplement by reference. Other series issued in the future may be
included in group one.
The Class A and Class B certificates offered by this prospectus supplement
and the accompanying prospectus are investment grade asset backed securities
within the meaning of the Securities Act of 1933, as amended and the rules
promulgated under the Securities Act.
To assist you in understanding this prospectus supplement and the
accompanying prospectus, the terms that are defined in the "Glossary of Defined
Terms" appear in bold typeface the first time they appear in this section and
each of the following sections and subsections.
MATURITY CONSIDERATIONS
You are expected to receive payment of principal in full on August 15,
2005, the SCHEDULED PRINCIPAL PAYMENT DATE. You may, however, receive payments
of principal earlier than the scheduled principal payment date if a PAY OUT
EVENT occurs and the EARLY AMORTIZATION PERIOD begins. The holders of the Class
B certificates will not begin to receive principal payments until the final
principal payment on the Class A certificates has been made.
CONTROLLED ACCUMULATION PERIOD
Series 2000-1 will have a period of time, called the CONTROLLED
ACCUMULATION PERIOD when payments of principal are deposited in the PRINCIPAL
FUNDING ACCOUNT to pay the certificates and the COLLATERAL INTEREST in full on
the SCHEDULED PRINCIPAL PAYMENT DATE. The controlled accumulation period is
scheduled to begin at the close of business on July 31, 2004, but in some cases
may be delayed to no later than the close of business on June 30, 2005. The
controlled accumulation period will end when any one of the following occurs:
- the INVESTED AMOUNT is paid in full;
- the EARLY AMORTIZATION PERIOD begins; or
- the SERIES 2000-1 TERMINATION DATE.
On each DISTRIBUTION DATE during the controlled accumulation period, an
amount equal to, for each MONTHLY PERIOD, the least of:
(a) the AVAILABLE PRINCIPAL COLLECTIONS;
(b) the applicable CONTROLLED DEPOSIT AMOUNT; and
(c) the ADJUSTED INVESTED AMOUNT prior to any deposits on that date;
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will be deposited in the principal funding account established by the trustee
until the amount on deposit in the principal funding account equals the invested
amount. Amounts in the principal funding account are expected to be available to
pay in full the CLASS A INVESTED AMOUNT and, after the payment of the Class A
invested amount in full, the CLASS B INVESTED AMOUNT and, after the payment of
the Class B invested amount in full, the COLLATERAL INVESTED AMOUNT, each on the
scheduled payment date.
We cannot assure you that collections of PRINCIPAL RECEIVABLES in the trust
portfolio will be similar to the payment rate experience shown in the table
under "The Bank Portfolio -- Payment Rates" in Annex II of this prospectus
supplement, or that, therefore, deposits into the principal funding account will
equal the CONTROLLED ACCUMULATION AMOUNT. In addition, as described under
"Series Provisions -- Postponement of Controlled Accumulation Period" in this
prospectus supplement, the servicer may shorten the controlled accumulation
period and, in that event, we cannot assure you that there will be sufficient
time to accumulate all amounts necessary to pay the invested amount on the
scheduled principal payment date. See "Maturity Considerations" and "Risk
Factors" in the accompanying prospectus. If the amount required to pay the Class
A invested amount, the Class B invested amount and the collateral invested
amount in full is not available on the scheduled principal payment date, a PAY
OUT EVENT will occur and the early amortization period will commence.
EARLY AMORTIZATION PERIOD
A PAY OUT EVENT occurs, either automatically or after specified notice, if
one of the adverse events described in "Series Provisions -- Pay Out Events" in
this prospectus supplement or in "Description of the Certificates -- Pay Out
Events" in the accompanying prospectus occurs. If a pay out event occurs during
either the REVOLVING PERIOD or the CONTROLLED ACCUMULATION PERIOD, the EARLY
AMORTIZATION PERIOD will commence. If a pay out event occurs during the
controlled accumulation period, any amount on deposit in the PRINCIPAL FUNDING
ACCOUNT will be paid to the Class A certificateholders and, after the CLASS A
INVESTED AMOUNT has been paid in full, to the Class B certificateholders on the
first DISTRIBUTION DATE during the early amortization period.
During the early amortization period, AVAILABLE PRINCIPAL COLLECTIONS will
be paid to the Class A certificateholders on each distribution date until the
earliest of:
(a) the date on which the Class A certificates are paid in full;
(b) the SERIES 2000-1 TERMINATION DATE; and
(c) the TRUST TERMINATION DATE.
After the Class A certificates have been paid in full and if the Series
2000-1 termination date or the trust termination date has not occurred,
available principal collections will be paid to the Class B certificateholders
on each distribution date until the earliest of:
(a) the date on which the Class B certificates are paid in full;
(b) the Series 2000-1 termination date; and
(c) the trust termination date.
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USE OF PROCEEDS
The net proceeds from the sale of the certificates will be paid to the
bank. The bank will use the proceeds for general corporate purposes. However,
the bank will not receive any proceeds from the sale of the certificates in
market-making transactions by NatCity Investments, Inc. or any other affiliate
of the bank. See "Underwriting" in this prospectus supplement.
NATIONAL CITY BANK
At its June 30, 2000 Call Report, the bank had total deposits of
approximately $15.7 billion, total assets of approximately $33.2 billion and
total equity of approximately $2.2 billion. A call report is required to be
prepared in accordance with regulatory accounting principles, which differ in
some respects from generally accepted accounting principles. See "The Bank's
Credit Card Activities" in the accompanying prospectus.
SERIES PROVISIONS
The following summary describes certain material terms applicable to the
certificates. Reference should be made to the prospectus for additional
information concerning the certificates, the SERIES 2000-1 SUPPLEMENT and the
pooling and servicing agreement.
INTEREST PAYMENTS
The Class A certificates will accrue interest from and including the
CLOSING DATE to but excluding September 15, 2000, from and including September
15, 2000 to but excluding October 16, 2000 and for each following INTEREST
PERIOD, at a rate of 0.15% per annum above LIBOR prevailing on the related LIBOR
DETERMINATION DATE for each period.
The Class B certificates will accrue interest from and including the
closing date to but excluding September 15, 2000, from and including September
15, 2000 to but excluding October 16, 2000 and for each following interest
period, at a rate of 0.40% per annum above LIBOR prevailing on the related LIBOR
determination date for each period.
The trustee will determine LIBOR on August 22, 2000 for the period from and
including the closing date to but excluding September 15, 2000, on September 13,
2000 for the period from and including September 15, 2000 to but excluding
October 16, 2000 and, for each following interest period, on the second London
BUSINESS DAY prior to each DISTRIBUTION DATE on which the interest period
commences. We refer to this DETERMINATION DATE as a LIBOR determination date.
The Class A certificate rate and the Class B certificate rate applicable to
the then current and immediately preceding interest period may be obtained by
telephoning the trustee at (212) 815-5731.
Interest on the certificates will be calculated on the basis of the actual
number of days in the related interest period and a 360-day year.
Interest will be paid on each distribution date which will be October 16,
2000 and the 15th day of each following month, or, if such 15th day is not a
business day, the next succeeding business day.
Interest payments on the Class A certificates and the Class B certificates
on any distribution date will be calculated on the outstanding principal balance
of the Class A certificates and the outstanding principal balance of the Class B
certificates, as applicable, as of the last day of the preceding calendar month.
However, interest for the first distribution date will accrue at the applicable
certificate rate on the initial outstanding principal balance of the Class A
certificates and the initial outstanding principal balance of the Class B
certificates, as applicable, from the closing date.
CLASS A MONTHLY INTEREST and CLASS B MONTHLY INTEREST due on the
certificates but not paid on any distribution date will be payable on the next
succeeding distribution date together with ADDITIONAL INTEREST on that amount at
the applicable certificate rate plus 2% per year. This CLASS A ADDITIONAL
INTEREST and CLASS B ADDITIONAL INTEREST will accrue on the same basis as
interest on the certificates and will accrue
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from and including the distribution date the overdue interest became due to but
excluding the distribution date on which the additional interest is paid.
Interest payments on the Class A certificates on any distribution date will
be paid from CLASS A AVAILABLE FUNDS for the related MONTHLY PERIOD and, to the
extent these Class A available funds are insufficient to pay the interest, from
EXCESS SPREAD, EXCESS FINANCE CHARGE COLLECTIONS and REALLOCATED PRINCIPAL
COLLECTIONS (to the extent available) for the monthly period. Interest payments
on the Class B certificates on any distribution date will be paid from CLASS B
AVAILABLE FUNDS for the related monthly period and, to the extent these Class B
available funds are insufficient to pay the interest, from excess spread, excess
finance charge collections and REALLOCATED COLLATERAL PRINCIPAL COLLECTIONS (to
the extent available) remaining after certain other payments have been made with
respect to the Class A certificates.
PRINCIPAL PAYMENTS
REVOLVING PERIOD
Series 2000-1 will have a period of time, called the REVOLVING PERIOD, when
the trust will not pay, or accumulate, principal for certificateholders or the
holder of the COLLATERAL INTEREST. The revolving period starts on the CLOSING
DATE and ends on the earlier to begin of:
- the CONTROLLED ACCUMULATION PERIOD; or
- the EARLY AMORTIZATION PERIOD.
During the revolving period, collections of PRINCIPAL RECEIVABLES allocable
to the INVESTED AMOUNT will be treated as SHARED PRINCIPAL COLLECTIONS, subject
to certain limitations, including the allocation of any REALLOCATED PRINCIPAL
COLLECTIONS for the related MONTHLY PERIOD to pay the CLASS A REQUIRED AMOUNT
and the CLASS B REQUIRED AMOUNT, or be deposited into the SPECIAL FUNDING
ACCOUNT.
CONTROLLED ACCUMULATION PERIOD
On each DISTRIBUTION DATE relating to the controlled accumulation period,
the trustee will deposit in the PRINCIPAL FUNDING ACCOUNT an amount equal to the
least of:
(a) AVAILABLE PRINCIPAL COLLECTIONS on the distribution date;
(b) the applicable CONTROLLED DEPOSIT AMOUNT; and
(c) the ADJUSTED INVESTED AMOUNT prior to any deposits on that date.
Unless a PAY OUT EVENT has occurred, amounts in the principal funding
account will be paid:
- first to Class A certificateholders (in an amount not to exceed the
CLASS A INVESTED AMOUNT) on the SCHEDULED PRINCIPAL PAYMENT DATE;
- then to Class B certificateholders (to the extent the funds exceed
the Class A invested amount and in an amount not to exceed the CLASS
B INVESTED AMOUNT) on the scheduled principal payment date; and
- lastly, to the collateral interest holder (to the extent the funds
exceed the sum of the Class A invested amount and the Class B
invested amount and in an amount not to exceed the COLLATERAL
INVESTED AMOUNT) on the scheduled principal payment date.
During the controlled accumulation period, the portion of available
principal collections not applied to CLASS A MONTHLY PRINCIPAL, CLASS B MONTHLY
PRINCIPAL or COLLATERAL MONTHLY PRINCIPAL on a distribution date will generally
be treated as shared principal collections or deposited into the special funding
account. See "-- Shared Principal Collections" below.
If funds on deposit in the principal funding account are insufficient to
pay in full the invested amount on the scheduled principal payment date, the
early amortization period will begin.
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EARLY AMORTIZATION PERIOD
On each distribution date with respect to the early amortization period,
the Class A certificateholders will be entitled to receive available principal
collections for the related monthly period in an amount up to the Class A
invested amount until the earliest of the date the Class A certificates are paid
in full, the SERIES 2000-1 TERMINATION DATE and the TRUST TERMINATION DATE.
After payment in full of the Class A invested amount, the Class B
certificateholders will be entitled to receive, on each distribution date with
respect to the early amortization period, available principal collections for
the related monthly period in an amount up to the Class B invested amount until
the earliest of the date the Class B certificates are paid in full, the Series
2000-1 termination date and the trust termination date.
After payment in full of the Class B invested amount, the collateral
interest holder will be entitled to receive on each distribution date, available
principal collections until the earliest of the date the collateral interest is
paid in full, the Series 2000-1 termination date and the trust termination date.
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
Upon written notice to the trustee, the servicer may elect to postpone the
commencement of the CONTROLLED ACCUMULATION PERIOD and extend the length of the
REVOLVING PERIOD, subject to certain conditions including those set forth below.
On the DETERMINATION DATE immediately preceding the July 2004 DISTRIBUTION
DATE, and each following determination date until the controlled accumulation
period begins, the servicer will determine the ACCUMULATION PERIOD LENGTH.
If the accumulation period length is less than twelve months, the servicer
may, at its option, postpone the commencement of the controlled accumulation
period so that the number of months included in the controlled accumulation
period will be equal to or exceed the accumulation period length. This will
permit the servicer to shorten the controlled accumulation period based on the
INVESTED AMOUNT of other series in GROUP ONE which are scheduled to be in their
revolving periods at such time and based on increases in the principal payment
rate occurring after the CLOSING DATE. The length of the controlled accumulation
period will not be shortened to less than one month.
SUBORDINATION
The Class B certificates and the COLLATERAL INTEREST will be subordinated
to the extent necessary to fund certain payments with respect to the Class A
certificates. In addition, the collateral interest will be subordinated to the
extent necessary to fund certain payments with respect to the Class B
certificates. Certain principal payments otherwise allocable to the Class B
certificateholders may be reallocated to cover amounts in respect of the Class A
certificates, and the CLASS B INVESTED AMOUNT may be reduced if the COLLATERAL
INVESTED AMOUNT is equal to zero. Similarly, certain principal payments
allocable to the collateral interest may be reallocated to cover amounts in
respect of the Class A certificates and the Class B certificates, 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 certificates
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, and the
amounts available to be distributed with respect to interest on the Class B
certificates, will be reduced. See "-- Allocation Percentages," "-- Reallocation
of Cash Flows" and "-- Application of Collections -- Excess Spread and Excess
Finance Charge Collections" below.
ALLOCATION PERCENTAGES
The servicer will allocate among the INVESTED AMOUNT for Series 2000-1, the
invested amount for all other series issued and outstanding and the SELLER
INTEREST, all amounts collected on FINANCE CHARGE
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RECEIVABLES, all amounts collected on PRINCIPAL RECEIVABLES and the DEFAULTED
AMOUNT for each MONTHLY PERIOD. Collections of finance charge receivables and
the defaulted amount will be allocated to the invested amount based on the
FLOATING ALLOCATION PERCENTAGE. These amounts so allocated will be further
allocated among the Class A certificateholders, Class B certificateholders and
the collateral interest holder based on the CLASS A FLOATING PERCENTAGE, the
CLASS B FLOATING PERCENTAGE and the COLLATERAL FLOATING PERCENTAGE,
respectively.
Collections of principal receivables will be allocated to the invested
amount based on the PRINCIPAL ALLOCATION PERCENTAGE. During the CONTROLLED
ACCUMULATION PERIOD and the EARLY AMORTIZATION PERIOD, the principal allocation
percentage will be a fixed percentage. These amounts so allocated will be
further allocated among the Class A certificateholders, the Class B
certificateholders and the collateral interest holder based on the CLASS A
PRINCIPAL PERCENTAGE, the CLASS B PRINCIPAL PERCENTAGE and the COLLATERAL
PRINCIPAL PERCENTAGE, respectively.
REALLOCATION OF CASH FLOWS
CLASS A REQUIRED AMOUNT
For each DISTRIBUTION DATE, the servicer will determine the CLASS A
REQUIRED AMOUNT. If the Class A required amount is greater than zero, the
following reallocations will occur:
(i) EXCESS SPREAD and EXCESS FINANCE CHARGE COLLECTIONS allocated to
Series 2000-1 and available for such purpose will be used to fund the Class
A required amount for the distribution date;
(ii) if this excess spread and excess finance charge collections are
insufficient to fund the Class A required amount, first, REALLOCATED
COLLATERAL PRINCIPAL COLLECTIONS and then, REALLOCATED CLASS B PRINCIPAL
COLLECTIONS will be used to fund the remaining Class A required amount; and
(iii) if REALLOCATED PRINCIPAL COLLECTIONS for the related MONTHLY
PERIOD, together with excess spread and excess finance charge collections,
are insufficient to fund the remaining Class A required amount for the
related monthly period, then the COLLATERAL INVESTED AMOUNT (after giving
effect to reductions for any COLLATERAL CHARGE-OFFS and reallocated
principal collections on the distribution date) will be reduced by the
amount of this excess (but not by more than the CLASS A INVESTOR DEFAULT
AMOUNT for the monthly period).
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 (after giving effect to reductions for any CLASS
B INVESTOR CHARGE-OFFS and any reallocated Class B principal collections for
which the collateral invested amount was not reduced on such distribution date)
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 of the Class A investor
default amount, if any, for the monthly period over the amount of this
reduction, if any, of the collateral invested amount for the monthly period).
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 monthly period
over the amount of the reductions, if any, of the collateral invested amount and
the Class B invested amount for the monthly period). This reduction in the Class
A invested amount will have the effect of slowing or reducing the return of
principal and interest to the Class A certificateholders. In that case, the
Class A certificateholders will bear directly the credit and other risks
associated with their interests in the trust. See "-- Defaulted Receivables;
Investor Charge-Offs" below.
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CLASS B REQUIRED AMOUNT
For each distribution date, the servicer will determine the CLASS B
REQUIRED AMOUNT. If the Class B required amount is greater than zero, the
following reallocations will occur:
(a) excess spread and excess finance charge collections allocated to
Series 2000-1 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 the distribution date;
(b) if this excess spread and excess finance charge collections are
insufficient to fund the Class B required amount, reallocated collateral
principal collections not required to fund the Class A required amount for
the related monthly period will be used to fund the remaining Class B
required amount; and
(c) if this reallocated collateral principal collections for the
related monthly period are insufficient to fund the remaining Class B
required amount, then the collateral invested amount (after giving effect
to reductions for any collateral charge-offs and reallocated principal
collections on the distribution date and after any adjustments made thereto
for the benefit of the Class A certificateholders) will be reduced by the
amount of the deficiency (but not by more than the CLASS B INVESTOR DEFAULT
AMOUNT for the monthly period).
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 of the Class B investor default amount for the monthly period
over the amount of the reduction of the collateral invested amount). In that
case, the Class B certificateholders will bear directly the credit and other
risks associated with their interests in the trust. See "-- Defaulted
Receivables; Investor Charge-Offs" below.
Reductions of the Class A invested amount or Class B invested amount
described above shall be reimbursed by, and the Class A invested amount or Class
B invested amount increased to the extent of, excess spread and excess finance
charge collections available for these purposes on each distribution date. See
"-- Application of Collections -- Excess Spread and Excess Finance Charge
Collections" below. When these reductions of the Class A invested amount and
Class B invested amount have been fully reimbursed, reductions of the collateral
invested amount shall be reimbursed until reimbursed in full in a similar
manner.
APPLICATION OF COLLECTIONS
PAYMENT OF INTEREST, FEES AND OTHER ITEMS
On each DISTRIBUTION DATE, the trustee, acting under the servicer's
instructions, will apply the CLASS A AVAILABLE FUNDS, CLASS B AVAILABLE FUNDS
and COLLATERAL AVAILABLE FUNDS in the COLLECTION ACCOUNT on each distribution
date in the following priority:
(A) An amount equal to the Class A available funds on the distribution
date will be distributed in the following priority:
(i) an amount equal to CLASS A MONTHLY INTEREST for the
distribution date plus the amount of any overdue Class A monthly
interest, plus any CLASS A ADDITIONAL INTEREST will be distributed to
holders of the Class A certificates;
(ii) an amount equal to the Class A servicing fee for the
distribution date, plus the amount of any overdue Class A servicing fee,
will be distributed to the servicer;
(iii) an amount equal to the CLASS A INVESTOR DEFAULT AMOUNT for
the distribution date will be treated as a portion of AVAILABLE
PRINCIPAL COLLECTIONS for the distribution date; and
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(iv) the balance, if any, will constitute a portion of EXCESS
SPREAD and will be allocated and distributed as described under
"-- Excess Spread and Excess Finance Charge Collections" below.
(B) An amount equal to the Class B available funds on the distribution
date will be distributed or deposited in the following priority:
(i) an amount equal to CLASS B MONTHLY INTEREST for the
distribution date, plus the amount of any overdue Class B monthly
interest, plus any CLASS B ADDITIONAL INTEREST will be distributed to
the holders of the Class B certificates;
(ii) an amount equal to the Class B servicing fee for the
distribution date, plus the amount of any overdue Class B servicing fee,
will be distributed to the servicer; and
(iii) the balance, if any, will constitute a portion of excess
spread and will be allocated and distributed as described under
"-- Excess Spread and Excess Finance Charge Collections" below.
(C) An amount equal to the collateral available funds will be
distributed in the following priority:
(i) if the bank or The Bank of New York is no longer the servicer,
an amount equal to the collateral servicing fee, plus the amount of any
overdue collateral servicing fee, for the related MONTHLY PERIOD will be
paid to the servicer; and
(ii) the balance, if any, will constitute a portion of excess
spread and will be allocated and distributed as described under
"-- Excess Spread and Excess Finance Charge Collections" below.
EXCESS SPREAD AND EXCESS FINANCE CHARGE COLLECTIONS
On each distribution date, the trustee, acting pursuant to the servicer's
instructions, will apply excess spread and EXCESS FINANCE CHARGE COLLECTIONS for
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, for the
distribution date will be used to fund the Class A required amount, and if
the Class A required amount for the distribution date exceeds the amount of
excess spread and excess finance charge collections, such excess spread and
excess finance charge collections will be applied:
(i) first to pay any deficiency in the application described in
clause (A)(i) under "-- Payment of Interest, Fees and Other Items"
above;
(ii) second to pay any deficiency in the application described in
clause (A)(ii) under "-- Payment of Interest, Fees and Other Items"
above; and
(iii) third to pay any deficiency in the application described in
clause (A)(iii) under "-- Payment of Interest, Fees and Other Items"
above;
(b) 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 principal collections for the distribution date and
applied as described under "-- Payments of Principal" below;
(c) an amount equal to the CLASS B REQUIRED AMOUNT, if any, for the
distribution date will be used to fund the Class B required amount and will
be applied:
(i) first to pay any deficiency in the application described in
clause (B)(i) under "-- Payment of Interest, Fees and Other Items"
above;
(ii) second to pay any deficiency in the application described in
clause (B)(ii) under "-- Payment of Interest, Fees and Other Items"
above; and
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(iii) third, the amount remaining, up to the CLASS B INVESTOR
DEFAULT AMOUNT, will be treated as a portion of available principal
collections for the distribution date and applied as described under
"-- Payments of Principal" below;
(d) an amount equal to the aggregate amount by which the CLASS B
INVESTED AMOUNT has been reduced for reasons other than the payment of
principal to the Class B certificateholders (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 principal collections
for the distribution date and applied as described under "-- Payments of
Principal" below;
(e) an amount equal to COLLATERAL MINIMUM MONTHLY INTEREST for the
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, will be distributed to the collateral
interest holder;
(f) an amount equal to any due but unpaid collateral servicing fee
will be paid to the servicer;
(g) an amount equal to the aggregate COLLATERAL DEFAULT AMOUNT, if
any, for the distribution date will be treated as a portion of available
principal collections for the distribution date and applied as described
under "-- Payments of Principal" below;
(h) an amount equal to the aggregate amount by which the COLLATERAL
INVESTED AMOUNT has been reduced for reasons other than the payment of
principal to the collateral interest holder (but not in excess of the
aggregate amount of such reductions which have not been previously
reimbursed) will be treated as a portion of available principal collections
for the distribution date and applied as described under "-- Payments of
Principal" below;
(i) on each distribution date from and after the funding of the
RESERVE ACCOUNT, but prior to the date on which the reserve account
terminates as described under "-- Reserve Account" below, an amount up to
the excess, if any, of the REQUIRED RESERVE ACCOUNT AMOUNT over the amount
available to be withdrawn from the reserve account will be deposited into
the reserve account; and
(j) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (i) above will be distributed to the
collateral interest holder.
PAYMENTS OF PRINCIPAL
On each distribution date, the trustee, acting under the servicer's
instructions, will distribute available principal collections on deposit in the
COLLECTION ACCOUNT in the following priority:
(a) on each distribution date in the REVOLVING PERIOD, all available
principal collections will be treated as SHARED PRINCIPAL COLLECTIONS and
applied as described under "-- Shared Principal Collections" below and
"Description of the Certificates -- Shared Principal Collections" in the
accompanying prospectus;
(b) on each distribution date in the CONTROLLED ACCUMULATION PERIOD or
the EARLY AMORTIZATION PERIOD, all available principal collections will be
distributed or deposited in the following priority:
(i) an amount equal to CLASS A MONTHLY PRINCIPAL will be deposited
in the principal funding account (during the controlled accumulation
period) or will be distributed to the Class A certificateholders (during
the early amortization period);
(ii) an amount equal to CLASS B MONTHLY PRINCIPAL will be:
(x) after an amount equal to the CLASS A INVESTED AMOUNT has
been deposited in the PRINCIPAL FUNDING ACCOUNT, deposited in the
principal funding account (during the controlled accumulation
period); or
(y) after the Class A invested amount has been paid in full,
distributed to the Class B certificateholders (during the early
amortization period); and
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<PAGE> 21
(iii) an amount equal to COLLATERAL MONTHLY PRINCIPAL will be:
(x) after an amount equal to the sum of the Class A invested
amount and the Class B invested amount has been deposited in the
principal funding account, deposited in the principal funding account
(during the controlled accumulation period); or
(y) after the Class B invested amount has been paid in full,
distributed to the collateral interest holder (during the early
amortization period);
(c) during the controlled accumulation period and the early
amortization period, the balance of available principal collections not
applied as described in clause (b) above, if any, will be treated as shared
principal collections and applied as described under "-- Shared Principal
Collections" below and "Description of the Certificates-- Shared Principal
Collections" in the accompanying prospectus.
The final payment of principal and interest on the certificates will be
made no later than the SERIES 2000-1 TERMINATION DATE.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS
The servicer will determine the amount of EXCESS FINANCE CHARGE COLLECTIONS
for each MONTHLY PERIOD. The servicer will allocate these excess finance charge
collections to cover any shortfalls with respect to amounts payable from
collections of FINANCE CHARGE RECEIVABLES for any series in GROUP ONE which have
not been covered out of the collections of finance charge receivables allocable
to such series and certain other amounts for such series, pro rata based on the
amount of the shortfall, if any, with respect to each series in group one. See
"Description of the Certificates -- Shared Excess Finance Charge Collections" in
the accompanying prospectus.
SHARED PRINCIPAL COLLECTIONS
The servicer will determine the amount of SHARED PRINCIPAL COLLECTIONS for
each MONTHLY PERIOD. The servicer will allocate these shared principal
collections to cover any scheduled or permitted principal distributions to
certificateholders and deposits to PRINCIPAL FUNDING ACCOUNTS, if any, for any
series in GROUP ONE which have not been covered out of the collections of
PRINCIPAL RECEIVABLES allocable to such series and certain other amounts for
such series. If these PRINCIPAL SHORTFALLS exceed shared principal collections
for any monthly period, shared principal collections will be allocated pro rata
among the applicable series in group one based on the relative amounts of
principal shortfalls. To the extent that shared principal collections exceed
principal shortfalls, the balance will, subject to certain limitations, be paid
to the holder of the SELLER INTEREST. See "Description of the
Certificates -- Shared Principal Collections" in the accompanying prospectus.
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
On each DETERMINATION DATE the servicer will calculate the INVESTOR DEFAULT
AMOUNT for the preceding MONTHLY PERIOD. A portion of the investor default
amount will be allocated to the Class A certificates, the Class B certificates
and the COLLATERAL INTEREST.
CLASS A INVESTOR DEFAULT AMOUNT
On each DISTRIBUTION DATE, if the CLASS A INVESTOR DEFAULT AMOUNT exceeds
the amount of CLASS A AVAILABLE FUNDS, EXCESS SPREAD, EXCESS FINANCE CHARGE
COLLECTIONS and REALLOCATED PRINCIPAL COLLECTIONS available to fund such amount
for the monthly period immediately preceding such distribution date, as
described under "-- Application of Collections -- Excess Spread and Excess
Finance Charge Collections" above, the COLLATERAL INVESTED AMOUNT (after giving
effect to reductions for any COLLATERAL CHARGE-OFFS and any reallocated
principal collections on the distribution date) will be reduced by the amount of
this excess. The amount of this reduction, however, will not be more than the
Class A investor default amount for the distribution date.
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<PAGE> 22
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 (after giving effect to reductions for any CLASS
B INVESTOR CHARGE-OFFS and any REALLOCATED CLASS B PRINCIPAL COLLECTIONS on the
distribution date for which the collateral invested amount is not reduced) will
be reduced by the amount by which the collateral invested amount would have been
reduced below zero.
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. The amount of this
reduction, however, will not be more than the Class A investor default amount.
If the Class A invested amount has been reduced by the amount of any CLASS
A INVESTOR CHARGE-OFFS, it will be reimbursed 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 charge collections allocated and
available for the purpose described under "-- Application of
Collections -- Excess Spread and Excess Finance Charge Collections" above.
CLASS B INVESTOR DEFAULT AMOUNT
On each distribution date, if the CLASS B INVESTOR DEFAULT AMOUNT exceeds
the amount of excess spread, excess finance charge collections and REALLOCATED
COLLATERAL PRINCIPAL COLLECTIONS available to fund such amount for the monthly
period preceding such distribution date, as described under "-- Application of
Collections -- Excess Spread and Excess Finance Charge Collections" above, the
collateral invested amount (after giving effect to reductions for any collateral
charge-offs and any reallocated principal collections on the distribution date
and after giving effect to any adjustments as described in the preceding
paragraph) will be reduced by the amount of this excess. The amount of this
reduction, however, will not be 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. The amount of
this reduction, however, will not be more than the Class B investor default
amount.
The Class B invested amount will also be reduced by the amount of
reallocated Class B principal collections in excess of the collateral invested
amount (after giving effect to reductions for any collateral charge-offs and any
reallocated collateral principal collections on the distribution date) and the
amount of any portion of the Class B invested amount allocated to the Class A
certificates to avoid a reduction in the Class A invested amount. The Class B
invested amount will then be reimbursed (but not in excess of the unpaid
principal balance of the Class B certificates) on any distribution date by the
amount of excess spread and excess finance charge collections allocated and
available for the purpose described under "-- Application of
Collections -- Excess Spread and Excess Finance Charge Collections" above.
COLLATERAL DEFAULT AMOUNT
On each distribution date, if the COLLATERAL DEFAULT AMOUNT exceeds the
amount of excess spread and excess finance charge collections available to fund
such amount, as described under "-- Application of Collections -- Excess Spread
and Excess Finance Charge Collections" above, the collateral invested amount
will be reduced by the amount of such excess. The amount of this reduction,
however, will not be more than the lesser of the collateral invested amount and
the collateral default amount.
The collateral invested amount will also be reduced by the amount of
reallocated principal collections and the amount of any portion of the
collateral invested amount allocated to the Class A certificates to avoid a
reduction in the Class A invested amount or to the Class B certificates to avoid
a reduction in the Class B invested amount. The collateral invested amount will
then be reimbursed on any distribution date by the amount of excess spread and
excess finance charge collections allocated and available for the purpose
described under "-- Application of Collections -- Excess Spread and Excess
Finance Charge Collections" above.
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<PAGE> 23
PRINCIPAL FUNDING ACCOUNT
The servicer will establish the PRINCIPAL FUNDING ACCOUNT, which shall be
an ELIGIBLE DEPOSIT ACCOUNT, to be maintained and controlled by the trustee for
the benefit of the certificateholders and the collateral interest holder. During
the CONTROLLED ACCUMULATION PERIOD, the trustee at the direction of the servicer
will transfer collections in respect of PRINCIPAL RECEIVABLES (other than
REALLOCATED PRINCIPAL COLLECTIONS) and SHARED PRINCIPAL COLLECTIONS from other
series, if any, allocated to the Series 2000-1 certificates from the collection
account to the principal funding account as described under "-- Application of
Collections" above.
Funds on deposit in the principal funding account will be invested by the
trustee at the direction of the servicer in ELIGIBLE INVESTMENTS. During the
controlled accumulation period, investment earnings (net of investment losses
and expenses) on funds on deposit in the principal funding account will be
deposited in the finance charge account and included in CLASS A AVAILABLE FUNDS
and CLASS B AVAILABLE FUNDS. If, for any DISTRIBUTION DATE, these amounts are
less than the COVERED AMOUNT, the amount of the deficiency shall be withdrawn,
to the extent required and available, from the RESERVE ACCOUNT and included as
Class A available funds or Class B available funds, as applicable, for the
distribution date. See "-- Reserve Account" below.
RESERVE ACCOUNT
The servicer will establish the RESERVE ACCOUNT, which shall be an ELIGIBLE
DEPOSIT ACCOUNT, to be maintained and controlled by the trustee for the benefit
of the certificateholders and the collateral interest holder. The reserve
account is established to assist with the distribution of interest on the
certificates during the CONTROLLED ACCUMULATION PERIOD and on the first
DISTRIBUTION DATE for the EARLY AMORTIZATION PERIOD. The reserve account will
begin to be funded no later than three months prior to the commencement of the
controlled accumulation period, or such earlier date as the servicer may
determine. On each distribution date from and after the distribution date on
which funding of the reserve account begins, but prior to the termination of the
reserve account, the trustee, acting pursuant to the servicer's instructions,
will deposit EXCESS SPREAD and EXCESS FINANCE CHARGE COLLECTIONS (to the extent
described under "-- Application of Collections -- Excess Spread and Excess
Finance Charge Collections" above) in the reserve account until the amount on
deposit in the reserve account is equal to the REQUIRED RESERVE ACCOUNT AMOUNT.
On each distribution date, after giving effect to any deposits to, and any
withdrawals from, the reserve account to be made on the distribution date, the
trustee will withdraw from the reserve account an amount equal to the excess, if
any, of the amount on deposit in the reserve account over the required reserve
account amount and will distribute this excess 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.
So long as the reserve account is not terminated as described below, all
amounts on deposit in the reserve account on 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 to the following distribution date 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 these investments will be retained in the reserve account (to the
extent the amount on deposit is less than the required reserve account amount)
or treated as CLASS A AVAILABLE FUNDS.
On or before each distribution date for the controlled accumulation period
and on the first distribution date for the early amortization period, a
withdrawal will be made from the reserve account, and the amount of this
withdrawal will be deposited in the finance charge account and included as Class
A available funds or CLASS B AVAILABLE FUNDS, as provided in the SERIES 2000-1
SUPPLEMENT. However, the amount of this withdrawal will be reduced to the extent
that funds otherwise would be available to be deposited in the reserve account
on the distribution date.
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<PAGE> 24
The reserve account will be terminated upon the earliest to occur of:
(a) the termination of the trust pursuant to the pooling and servicing
agreement;
(b) the first distribution date for the early amortization period; and
(c) the distribution date immediately preceding the SCHEDULED
PRINCIPAL PAYMENT DATE.
Upon the termination of the reserve account, all amounts on deposit in the
reserve account (after giving effect to any withdrawal from the reserve account
on the date as described above) will be distributed to the collateral interest
holder and will not be available for distribution to the certificateholders.
PAY OUT EVENTS
The REVOLVING PERIOD will continue through July 31, 2004 (unless this date
is postponed as described under "-- Postponement of Controlled Accumulation
Period" above), unless a PAY OUT EVENT occurs prior to this date. The pay out
events with respect to the certificates will include each of the events
specified in the prospectus under "Description of the Certificates -- Pay Out
Events" and the following:
(a) a failure on the part of the seller:
(i) to make any payment or deposit required under the pooling and
servicing agreement or the SERIES 2000-1 SUPPLEMENT within five BUSINESS
DAYS after the day the payment or deposit is required to be made; or
(ii) to observe or perform any other covenants or agreements of the
seller set forth in the pooling and servicing agreement or the Series
2000-1 supplement, which failure has a material adverse effect on the
certificateholders and which continues unremedied for sixty days after
written notice;
(b) any representation or warranty made by the seller in the pooling
and servicing agreement or the Series 2000-1 supplement or any information
required to be given by the seller to the trustee to identify the ACCOUNTS
proves to have been incorrect in any material respect when made and
continues to be incorrect in any material respect for sixty days after
written notice and as a result of which the interests of the
certificateholders are materially and adversely affected, except that a pay
out event will not be deemed to occur if the bank has repurchased the
related receivables or all the receivables, if applicable, during the
period in accordance with the provisions of the pooling and servicing
agreement;
(c) a failure by the seller to make an addition to the trust within
five business days after the day on which it is required to make the
addition pursuant to the pooling and servicing agreement or the Series
2000-1 supplement;
(d) any SERVICER DEFAULT occurs;
(e) the average PORTFOLIO YIELDS for any three consecutive MONTHLY
PERIODS is less than the average of the BASE RATES for such period; and
(f) insufficient moneys available to pay the INVESTED AMOUNT on the
SCHEDULED PRINCIPAL PAYMENT DATE.
In the case of any event described in subparagraph (a), (b) or (d), after
the applicable grace period, if any, set forth in these subparagraphs, either
the trustee or the holders of certificates evidencing more than 50% of the
aggregate unpaid principal amount of certificates by written notice then given
to the seller and the servicer, and to the trustee if given by the
certificateholders, may declare that a pay out event has occurred with respect
to Series 2000-1 as of the date of this notice, and, in the case of an event
described in subparagraphs (c), (e) or (f) a pay out event shall occur with
respect to Series 2000-1 without any notice or other action on the part of the
trustee immediately upon the occurrence of this event.
On the date on which a pay out event occurs, the early amortization period
will commence.
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<PAGE> 25
If the proceeds of any sale of the receivables following the occurrence of
an INSOLVENCY EVENT with respect to the seller, as described in the accompanying
prospectus under "Description of the Certificates -- Pay Out Events," allocated
to the CLASS A INVESTED AMOUNT and the proceeds of any collections on the
receivables in the COLLECTION ACCOUNT are not sufficient to pay in full the
remaining amount due on the Class A certificates, the Class A certificateholders
will suffer a corresponding loss and none of the proceeds will be available to
the Class B certificateholders. See "Certain Legal Aspects of the
Receivables -- Certain Matters Relating to Receivership and Conservatorship" in
the accompanying prospectus for a discussion of the impact of recent federal
legislation on the trustee's ability to liquidate the receivables. Once Series
1995-1, a series of certificates previously issued by the trust, is no longer
outstanding, the trustee will not liquidate the receivables following an
insolvency event with respect to the seller as described in "Description of the
Certificates -- Pay Out Events" in the accompanying prospectus.
SERVICING COMPENSATION
The share of the servicing fee allocable to Series 2000-1 with respect to
any DISTRIBUTION DATE shall be paid from SERVICER INTERCHANGE and the MONTHLY
SERVICING FEE.
The share of the monthly servicing fee allocable to the Class A
certificateholders for any distribution date and is equal to one-twelfth of the
product of:
(a) the CLASS A FLOATING PERCENTAGE;
(b) NET SERVICING FEE RATE; and
(c) the SERVICING BASE AMOUNT.
However, for the first distribution date the Class A servicing fee will be equal
to $535,937.50.
The share of the monthly servicing fee allocable to the Class B
certificateholders for any distribution date and is equal to one-twelfth of the
product of:
(a) the CLASS B FLOATING PERCENTAGE;
(b) the net servicing fee rate; and
(c) the servicing base amount.
However, for the first distribution date the Class B servicing fee will be equal
to $36,750.00.
The share of the monthly servicing fee allocable to the collateral interest
holder for any distribution date and is equal to one-twelfth of the product of:
(a) the COLLATERAL FLOATING PERCENTAGE;
(b) the net servicing fee rate; and
(c) the servicing base amount.
However, for the first distribution date the collateral servicing fee will be
equal to $39,812.50.
The Class A servicing fee, the Class B servicing fee and the collateral
servicing fee will be payable to the servicer solely to the extent amounts are
available for distribution as described under "-- Application of
Collections -- Payment of Interest, Fees and Other Items" and "-- Application of
Collections -- Excess Spread and Excess Finance Charge Collections" in this
prospectus supplement.
SERIES TERMINATION
If, on the DISTRIBUTION DATE that is two months prior to the SERIES 2000-1
TERMINATION DATE, the INVESTED AMOUNT, after giving effect to all changes
therein on that date, exceeds zero, the servicer will, within the 40-day period
beginning on that date, solicit bids for the sale of interests in the PRINCIPAL
RECEIVABLES or certain principal receivables, together in each case with the
related FINANCE CHARGE RECEIVABLES, in an amount equal to the invested amount at
the close of business on the last day of the
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<PAGE> 26
MONTHLY PERIOD preceding the Series 2000-1 termination date, after giving effect
to all distributions required to be made on the Series 2000-1 termination date.
The seller may be entitled to participate in, and to receive notice of each bid
submitted in connection with, this bidding process. Upon the expiration of the
40-day period, the trustee will determine:
(a) which bid is the highest cash purchase offer; and
(b) the available final distribution amount which otherwise would be
available in the COLLECTION ACCOUNT on the Series 2000-1 termination date
for distribution to the certificateholders.
The servicer will sell the receivables on the Series 2000-1 termination date to
the bidder who provided the highest cash purchase offer and will deposit the
proceeds of the sale in the collection account for allocation, together with the
available final distribution amount, to the certificateholders' interest.
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 Class A 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 such Class A
certificates. See "ERISA Considerations" in the accompanying prospectus.
The Class B certificates may not be acquired or held by or with "plan
assets" of any plan. By its acceptance of a Class B certificate, each Class B
certificateholder will be deemed to have represented and warranted that either
(i) it is not and will not be a plan or (ii) it did not purchase and will not
hold the Class B certificates with "plan assets" of any plan.
CLASS A CERTIFICATES
It is anticipated that the Class A certificates will meet the criteria for
treatment as "publicly-offered securities" as described in the accompanying
prospectus. No restrictions will be imposed on the transfer of the Class A
certificates. It is expected that the Class A certificates will be held by at
least 100 independent investors at the conclusion of the initial public offering
made hereby although no assurance can be given, and no monitoring or other
measures will be taken to ensure, that such condition is met. The Class A
certificates will be sold as part of an offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, and then
will be timely registered under the Securities Exchange Act of 1934, as amended.
If the foregoing exception under the plan asset regulation were not
satisfied, transactions involving the trust and parties in interest with respect
to a PLAN that purchases or holds the Class A certificates 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 described in the accompanying prospectus may not provide
relief for all transactions involving the assets of the trust even if they would
otherwise apply to the purchase of Class A certificates by a plan. See "ERISA
Considerations" in the accompanying prospectus.
Any plan fiduciary considering whether to purchase any Class A certificates
on behalf of, or with "plan assets" of, a plan should consult with its counsel
regarding the applicability of the fiduciary responsibility and prohibited
transaction provisions of ERISA and Section 4975 of the Internal Revenue Code to
such investment. Among other things, before purchasing any Class A certificates,
a plan fiduciary should make its own determination as to the availability of any
prohibited transaction exemptions.
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<PAGE> 27
CLASS B CERTIFICATES
The underwriter of the Class B certificates does not expect that the Class
B certificates will be held by at least 100 independent investors and,
therefore, does not expect that the Class B certificates will qualify as
publicly-offered securities under the plan asset regulation. Accordingly, the
Class B certificates may not be acquired or held by (a) any employee benefit
PLAN that is subject to ERISA, (b) any plan or other arrangement (including an
individual retirement account or Keogh plan) that is subject to Section 4975 of
the Internal Revenue Code or (c) any entity whose underlying assets include
"plan assets" under the plan asset regulation by reason of any such plan's
investment in the entity. By its acceptance of a Class B certificate, each Class
B certificateholder will be deemed to have represented and warranted that it is
not subject to the foregoing limitations. See "ERISA Considerations" in the
accompanying prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
between the seller and the underwriters named below, the seller has agreed to
sell to the underwriters, and each of the underwriters has severally agreed to
purchase, the principal amount of the Class A certificates and Class B
certificates set forth opposite its name:
<TABLE>
<CAPTION>
CLASS A UNDERWRITERS PRINCIPAL AMOUNT
-------------------- ----------------
<S> <C>
Salomon Smith Barney Inc............................... $175,000,000
Lehman Brothers Inc.................................... 175,000,000
NatCity Investments, Inc............................... 175,000,000
------------
Total........................................ $525,000,000
============
</TABLE>
<TABLE>
<CAPTION>
CLASS B UNDERWRITER PRINCIPAL AMOUNT
------------------- ----------------
<S> <C>
Salomon Smith Barney Inc............................... $36,000,000
-----------
Total........................................ $36,000,000
===========
</TABLE>
The underwriting agreement provides that the obligations of the
underwriters to pay for and accept delivery of the certificates are subject to
the approval of certain legal matters by their counsel and to certain other
conditions. All of the certificates offered hereby will be issued if any are
issued.
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 a price less concessions not in
excess of 0.165% of the principal amount of the Class A certificates. The Class
A underwriters may allow, and the dealers may reallow, concessions not in excess
of 0.100% of the principal amount of the Class A certificates to certain brokers
and dealers. After the initial public offering, the public offering price and
other selling terms may be changed by the Class A underwriters.
The Class B underwriter proposes 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 such price less concessions not
in excess of 0.195% of the principal amount of the Class B certificates. The
Class B underwriter may allow, and such dealers may reallow, concessions not in
excess of 0.120% of the principal amount of the Class B certificates to certain
brokers and dealers. After the initial public offering, the public offering
price and other selling terms may be changed by the Class B underwriter.
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;
S-24
<PAGE> 28
(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. These 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 represent
that the underwriters will engage in any such transactions or that these
transactions, once commenced, will not be discontinued without notice at any
time.
The seller will indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or
contribute to payments the underwriters may be required to make.
This prospectus supplement and the accompanying prospectus may be used by
NatCity Investments, Inc., one of the Class A underwriters and an affiliate of
the bank, or another affiliate of the bank in connection with offers and sales
related to market-making transactions in the Class A certificates. In these
market-making transactions, NatCity Investments, Inc. or another affiliate of
the bank may act as a principal or an agent and the sales will be at negotiated
prices related to prevailing market prices at the time of the sale. See "Risk
Factors -- Ability to Resell Series 2000-1 Certificates Not Assured" in this
prospectus supplement.
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<PAGE> 29
GLOSSARY OF DEFINED TERMS
Many of the defined terms below contain terms that are defined elsewhere in
this glossary and in the "Glossary of Defined Terms" in the accompanying
prospectus.
"ACCUMULATION PERIOD LENGTH" means the number of whole months expected to
be required to fully fund the principal funding account no later than the
scheduled principal payment date, based on:
(a) the expected monthly collections of principal receivables expected
to be distributable to the certificateholders of all series (excluding
certain other series), assuming a principal payment rate no greater than
the lowest monthly principal payment rate on the receivables for the
preceding twelve months; and
(b) the amount of principal expected to be distributable to
certificateholders of all series (excluding certain other series) which are
not expected to be in their revolving periods during the controlled
accumulation period.
However, the calculation of accumulation period length may be changed at any
time if the rating of the certificates is withdrawn or reduced.
"ADJUSTED INVESTED AMOUNT" means, for any date of determination, the sum of
(a) the Class A adjusted invested amount, (b) the Class B adjusted invested
amount and (c) the collateral adjusted invested amount.
"AVAILABLE PRINCIPAL COLLECTIONS" means, for any monthly period, an amount
equal to the sum of:
(1) (a) the principal allocation percentage of all collections of principal
receivables received during the monthly period; minus
(b) the amount of reallocated principal collections for the monthly
period used to fund the Class A required amount and the Class B
required amount; plus
(2) any shared principal collections with respect to other series in group
one that are allocated to Series 2000-1; plus
(3) any other amounts to be treated as available principal collections
pursuant to the Series 2000-1 supplement.
"BASE RATE" means, for purposes of a pay out event, for any monthly period,
the annualized percentage equivalent of a fraction:
(1) the numerator of which is equal to the sum of Class A monthly interest,
Class B monthly interest, collateral minimum monthly interest and the
monthly servicing fee for the related distribution date; and
(2) the denominator of which is the invested amount as of the last day of
the preceding monthly period.
"BUSINESS DAY" means (a) any day other than a Saturday, a Sunday or a day
on which national banking associations or state institutions in New York, New
York are authorized or obligated by law, executive order or governmental decree
to be closed or (b) for purposed of determining LIBOR, a day on which dealings
in United States dollars are transacted in the London interbank market in
London.
"CLASS A ADDITIONAL INTEREST" means, for any distribution date, an amount
equal to the product of:
(1) the Class A certificate rate for the related interest period plus 2.0%;
(2) the actual number of days in such interest period divided by 360; and
(3) any Class A monthly interest that was due on any prior distribution
date and not paid on or prior to the preceding distribution date.
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"CLASS A ADJUSTED INVESTED AMOUNT" means, for any date of determination, an
amount equal to the Class A invested amount, minus the funds on deposit in the
principal funding account on such date (up to the Class A invested amount).
"CLASS A AVAILABLE FUNDS" means, for any monthly period, an amount equal to
the sum of:
(1) the Class A floating percentage of collections of finance charge
receivables including recoveries and annual membership fees allocated
to the invested amount with respect to the monthly period (excluding
the portion of collections of finance charge receivables attributable
to interchange that is allocable to servicer interchange);
(2) the aggregate amount of net investment earnings, if any, in the
principal funding account which are required to be treated as Class A
available funds pursuant to the Series 2000-1 supplement with respect
to the related distribution date; and
(3) amounts, if any, to be withdrawn from the reserve account which are
required to be included in Class A available funds pursuant to the
Series 2000-1 supplement for the distribution date.
"CLASS A FLOATING PERCENTAGE" means, for any monthly period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction:
(1) the numerator of which is equal to the Class A adjusted invested amount
as of the close of business on the last day of the preceding monthly
period; and
(2) the denominator of which is equal to the adjusted invested amount as of
the close of business on that day;
except that for 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 INVESTED AMOUNT" for any date means an amount equal to:
(1) the aggregate initial principal amount of the Class A certificates;
minus
(2) the aggregate amount of principal payments made to Class A
certificateholders on or prior to such date; minus
(3) the excess, if any, of the aggregate amount of Class A investor
charge-offs for all distribution dates preceding such date over the
aggregate amount of any reimbursements of Class A investor charge-offs
for all distribution dates preceding such date.
However, the Class A invested amount may not be reduced below zero.
"CLASS A INVESTOR CHARGE-OFFS" means, for any distribution date, the amount
of any reductions in the Class A invested amount as described in "Series
Provisions -- Defaulted Receivables; Investor Charge-Offs -- Class A Investor
Default Amount" in this prospectus supplement.
"CLASS A INVESTOR DEFAULT AMOUNT" means, for each distribution date, an
amount equal to the product of:
(1) the investor default amount for the related monthly period; and
(2) the Class A floating percentage for the related monthly period.
"CLASS A MONTHLY INTEREST" means, for any distribution date, an amount
equal to the product of:
(1) the Class A certificate rate for the related interest period;
(2) the actual number of days in such interest period divided by 360; and
(3) the outstanding principal balance of the Class A certificates as of the
close of business on the last day of the preceding monthly period.
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<PAGE> 31
However, for the first distribution date, Class A monthly interest will be equal
to the interest accrued on the initial outstanding principal balance of the
Class A certificates at the Class A certificate rate for the period from and
including the closing date to but excluding October 16, 2000.
"CLASS A MONTHLY PRINCIPAL" means, for any distribution date beginning with
the first distribution date of the earlier to begin of the controlled
accumulation period and the early amortization period, an amount equal to the
least of:
(1) the available principal collections on deposit in the collection
account on the distribution date;
(2) for each distribution date relating to the controlled accumulation
period, the applicable controlled deposit amount for the distribution
date; and
(3) the Class A adjusted invested amount on the distribution date.
"CLASS A PRINCIPAL PERCENTAGE" means, for any monthly period:
(a) during the revolving period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction:
(i) the numerator of which is the Class A adjusted invested amount
as of the last day of the immediately preceding monthly period; and
(ii) the denominator of which is the adjusted invested amount as of
such day, and
(b) during the controlled accumulation period or the early
amortization period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction:
(i) the numerator of which is the Class A invested amount as of the
end of the revolving period; and
(ii) the denominator of which is the invested amount as of the end
of the revolving period.
However, for the first monthly period, the Class A principal percentage shall
mean the percentage equivalent of a fraction, the numerator of which is the
initial principal amount of the Class A certificates and denominator of which is
the initial invested amount.
"CLASS A REQUIRED AMOUNT" means the amount, if any, by which:
(a) the sum of:
(i) Class A monthly interest due on the related distribution date
and overdue Class A monthly interest and Class A additional interest, if
any; plus
(ii) the Class A servicing fee for the related monthly period and
overdue Class A servicing fee, if any; plus
(iii) the Class A investor default amount, if any, for the related
monthly period; exceeds
(b) the Class A available funds for the related monthly period.
"CLASS B ADDITIONAL INTEREST" means, for any distribution date, an amount
equal to the product of:
(1) the Class B certificate rate for the related interest period plus 2.0%;
(2) the actual number of days in such interest period divided by 360; and
(3) any Class B monthly interest that was due on any prior distribution
date and not paid on or prior to the preceding distribution date.
"CLASS B ADJUSTED INVESTED AMOUNT" means, for any date of determination, an
amount equal to the Class B invested amount, minus the funds on deposit in the
principal funding account in excess of the Class A invested amount on such date
(up to the Class B invested amount).
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"CLASS B AVAILABLE FUNDS" means, for any monthly period, an amount equal to
the sum of:
(1) the Class B floating percentage of collections of finance charge
receivables including recoveries and annual membership fees allocated
to the invested amount with respect to the monthly period (excluding
the portion of collections of finance charge receivables attributable
to interchange that is allocable to servicer interchange);
(2) the aggregate amount of net investment earnings, if any, in the
principal funding account which are required to be treated as Class B
available funds pursuant to the Series 2000-1 supplement with respect
to the related distribution date; and
(3) amounts, if any, to be withdrawn from the reserve account which are
required to be included in Class B available funds pursuant to the
Series 2000-1 supplement for the distribution date.
"CLASS B FLOATING PERCENTAGE" means, for any monthly period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction:
(1) the numerator of which is equal to the Class B adjusted invested amount
as of the close of business on the last day of the preceding monthly
period; and
(2) denominator of which is equal to the adjusted invested amount as of the
close of business on that day;
except that for 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 INVESTED AMOUNT" for any date means an amount equal to:
(1) the aggregate initial principal amount of the Class B certificates;
minus
(2) the aggregate amount of principal payments made to Class B
certificateholders prior to such date; minus
(3) the aggregate amount of Class B investor charge-offs for all prior
distribution dates; minus
(4) the aggregate amount of reallocated Class B principal collections for
all prior distribution dates for which the collateral invested amount
has not been reduced; minus
(5) the aggregate amount by which the Class B invested amount has been
reduced to fund the Class A investor default amount on all prior
distribution dates as described under "Series Provisions -- Defaulted
Receivables; Investor Charge-Offs" in this prospectus supplement; plus
(6) the aggregate amount of excess spread and excess finance charge
collections allocated and available on all prior distribution dates for
the purpose of reimbursing amounts deducted pursuant to the foregoing
clauses (3), (4) and (5).
However, the Class B invested amount may not be reduced below zero.
"CLASS B INVESTOR CHARGE-OFFS" means, for any distribution date, the amount
of any reduction of the Class B invested amount as described in the second
paragraph of "Series Provisions -- Defaulted Receivables; Investor
Charge-Offs -- Class B Investor Default Amount" in this prospectus supplement.
"CLASS B INVESTOR DEFAULT AMOUNT" means, for each distribution date, an
amount equal to the product of:
(1) the investor default amount for the related monthly period; and
(2) the Class B floating percentage for the related monthly period.
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"CLASS B MONTHLY INTEREST" means, for any distribution date, an amount
equal to the product of:
(1) the Class B certificate rate for the related interest period;
(2) the actual number of days in the interest period divided by 360; and
(3) the outstanding principal balance of the Class B certificates as of the
close of business on the last day of the preceding monthly period.
However, for the first distribution date, Class B monthly interest will be equal
to the interest accrued on the initial outstanding principal balance of the
Class B certificates at the Class B certificate rate for the period from and
including the closing date to but excluding October 16, 2000.
"CLASS B MONTHLY PRINCIPAL" means, for any distribution date beginning with
the first to occur of (a) the distribution date during the controlled
accumulation period on which an amount equal to the Class A invested amount has
been deposited in the principal funding account (after taking into account
deposits to be made on the distribution date), or (b) the distribution date
during the early amortization period immediately preceding the distribution date
on which the Class A certificates will be paid in full (after taking into
account payments to be made on the distribution date), an amount equal to the
least of:
(1) the available principal collections on deposit in the collection
account on the distribution date (minus the portion of such available
principal collections applied to Class A monthly principal on the
distribution date);
(2) for each distribution date relating to the controlled accumulation
period, the applicable controlled deposit amount for the distribution
date (minus the Class A monthly principal for the distribution date);
and
(3) the Class B adjusted invested amount prior to any deposits on the
distribution date.
"CLASS B PRINCIPAL PERCENTAGE" means, for any monthly period:
(a) during the revolving period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction:
(i) the numerator of which is the Class B adjusted invested amount
as of the last day of the immediately preceding monthly period; and
(ii) the denominator of which is the adjusted invested amount as of
such day, and
(b) during the controlled accumulation period or the early
amortization period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction:
(i) the numerator of which is the Class B invested amount as of the
end of the revolving period; and
(ii) the denominator of which is the invested amount as of the end
of the revolving period.
However, for the first monthly period, the Class B principal percentage shall
mean the percentage equivalent of a fraction, the numerator of which is the
initial principal amount of the Class B certificates and denominator of which is
the initial invested amount.
"CLASS B REQUIRED AMOUNT" means the sum of:
(a) the amount, if any, by which:
(i) the sum of (x) Class B monthly interest due on the related
distribution date and overdue Class B monthly interest and Class B
additional interest, if any; and(y) the Class B servicing fee for the
related monthly period and overdue Class B servicing fee, if any;
exceeds
(ii) the Class B available funds for the related monthly period;
plus
(b) the Class B investor default amount, if any, for the related
monthly period.
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<PAGE> 34
"CLOSING DATE" means August 24, 2000.
"COLLATERAL ADJUSTED INVESTED AMOUNT" means, for any date of determination,
an amount equal to the collateral invested amount, minus the funds on deposit in
the principal funding account in excess of the sum of the Class A invested
amount and the Class B invested amount on that date (up to the collateral
invested amount).
"COLLATERAL AVAILABLE FUNDS" means, for any monthly period, an amount equal
to the collateral floating percentage of collections of finance charge
receivables including recoveries and annual membership fees allocated to the
invested amount with respect to the monthly period (excluding the portion of
collections of finance charge receivables attributable to interchange that is
allocable to servicer interchange).
"COLLATERAL CHARGE-OFFS" means, for any distribution date, the amount of
any reductions in the collateral invested amount as described in the first
paragraph of "Series Provisions -- Defaulted Receivables; Investor
Charge-Offs -- Collateral Default Amount" in this prospectus supplement.
"COLLATERAL DEFAULT AMOUNT" means, for each distribution date, an amount
equal to the product of:
(1) the investor default amount for the related monthly period; and
(2) the collateral floating percentage for the related monthly period.
"COLLATERAL FLOATING PERCENTAGE" means, for any monthly period, the
percentage equivalent (which shall never exceed 100%) of a fraction:
(1) the numerator of which is equal to the collateral adjusted invested
amount as of the close of business on the last day of the prior monthly period;
and
(2) the denominator of which is equal to the adjusted invested amount as of
the close of business on that day;
except that for the first monthly period, the collateral floating percentage
shall mean the percentage equivalent of a fraction, the numerator of which is
the initial collateral invested amount and the denominator of which it the
initial invested amount.
"COLLATERAL INVESTED AMOUNT" for any date means an amount equal to:
(1) the initial collateral invested amount, which shall be $39,000,000;
minus
(2) the aggregate amount of principal payments made to the collateral
interest holder prior to that date; minus
(3) the aggregate amount of collateral charge-offs for all prior
distribution dates; minus
(4) the aggregate amount of reallocated principal collections for all prior
distribution dates; minus
(5) 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 "Series Provisions-- Defaulted Receivables; Investor Charge-Offs"
in this prospectus supplement; plus
(6) the aggregate amount of excess spread and excess finance charge
collections allocated and available on all prior distribution dates for
the purpose of reimbursing amounts deducted pursuant to the foregoing
clauses (3), (4) and (5).
However, the collateral invested amount may not be reduced below zero.
"COLLATERAL MINIMUM MONTHLY INTEREST" for any distribution date will equal
the product of:
(1) an amount equal to the London interbank offered rate for one-month
United States dollar deposits plus 1.00% per annum or such lesser
amount as may be designated in the transfer agreement among the bank
and the collateral interest holder relating to the transfer of the
collateral interest to the collateral interest holder;
S-31
<PAGE> 35
(2) the actual number of days in the related interest period divided by
360; and
(3) the collateral initial invested amount less the aggregate amount
distributed to the collateral interest holder in respect of collateral
monthly principal for all prior distribution dates.
"COLLATERAL MONTHLY PRINCIPAL" means, for any distribution date beginning
with the first to occur of (a) the distribution date during the controlled
accumulation period on which an amount equal to the sum of (i) the Class A
invested amount and (ii) the Class B invested amount has been deposited in the
principal funding account (after taking into account deposits to be made on such
distribution date), or (b) the distribution date during the early amortization
period immediately preceding the distribution date on which the Class B
certificates will be paid in full (after taking into account payments to be made
on such distribution date), an amount equal to the least of:
(1) the available principal collections on deposit in the collection
account with respect to the distribution date (minus the portion of
such available principal collections applied to Class A monthly
principal and Class B monthly principal on the distribution date);
(2) for each distribution date with respect to the controlled accumulation
period, the applicable controlled deposit amount for such distribution
date (minus the sum of the Class A monthly principal and the Class B
monthly principal for the distribution date); and
(3) the collateral adjusted invested amount prior to any deposits on the
distribution date.
"COLLATERAL PRINCIPAL PERCENTAGE" means, for any monthly period,
(a) during the revolving period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction:
(i) the numerator of which is the collateral invested amount as of the
last day of the immediately preceding monthly period; and
(ii) the denominator of which is the invested amount as of such day, and
(b) during the controlled accumulation period or the early amortization
period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction:
(i) the numerator of which is the collateral invested amount as of the
end of the revolving period, and
(ii) the denominator of which is the invested amount as of the end of
the revolving period.
However, for the first monthly period, the collateral principal percentage shall
mean the percentage equivalent of a fraction, the numerator of which is the
initial collateral invested amount and denominator of which is the initial
invested amount.
"CONTROLLED ACCUMULATION AMOUNT" means for any distribution date during the
controlled accumulation period, $50,000,000. However, if the commencement of the
controlled accumulation period is delayed as described above under "Series
Provisions -- Postponement of Controlled Accumulation Period" in this prospectus
supplement, the controlled accumulation amount may be higher than the amount
stated above for each distribution date with respect to the controlled
accumulation period and will be determined by the servicer in accordance with
the Series 2000-1 supplement based on the principal payment rates for the
accounts of the trust and on the invested amounts of other series (other than
certain excluded series) which are scheduled to be in their revolving periods
and then scheduled to create shared principal collections during the controlled
accumulation period.
"CONTROLLED ACCUMULATION PERIOD" means the period of time described under
"Series Provisions -- Principal Payments -- Controlled Accumulation Period" in
this prospectus supplement.
"CONTROLLED DEPOSIT AMOUNT" means for any distribution date during the
controlled accumulation period, the sum of the applicable controlled
accumulation amount and any controlled accumulation amount for any prior monthly
period not deposited in the principal funding account.
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<PAGE> 36
"COVERED AMOUNT" means, for any distribution date, the sum of:
(1) the product of:
(a) the Class A certificate rate for the related interest period;
(b) a fraction, the numerator of which is the actual number of days in
the related interest period, and the denominator of which is 360;
and
(c) the aggregate amount on deposit in the principal funding account
with respect to Class A monthly principal as of the record date
immediately preceding the distribution date; and
(2) the product of:
(a) the Class B certificate rate for the related interest period;
(b) a fraction, the numerator of which is the actual number of days in
the related interest period, and the denominator of which is 360;
and
(c) the aggregate amount on deposit in the principal funding account
with respect to Class B monthly principal as of the record date
immediately preceding the distribution date.
"DISTRIBUTION DATE" means October 16, 2000 and the 15th day of each
following month, or, if such 15th day is not a business day, the next succeeding
business day.
"EARLY AMORTIZATION PERIOD" means the period of time described under
"Series Provisions -- Principal Payments -- Early Amortization Period" in this
prospectus supplement.
"EXCESS SPREAD" means, with respect to any distribution date, an amount
equal to the sum of the amounts described in clause (A)(iv), clause (B)(iii) and
clause (C)(ii) of "Series Provisions -- Application of Collections -- Payment of
Interest, Fees and Other Items" in this prospectus supplement.
"FLOATING ALLOCATION PERCENTAGE" means, for any monthly period, the
percentage equivalent of a fraction:
(1) the numerator of which is the adjusted invested amount as of the close
of business on the last day of the preceding monthly period; and
(2) the denominator of which is the greater of:
(x) the sum of (1) the total amount of principal receivables in the
trust as of the close of business on the last day of the preceding
monthly period and (2) the principal amount on deposit in the
special funding account on the close of business on the last day of
the preceding monthly period; and
(y) the sum of the numerators used to calculate the floating allocation
percentages for all outstanding series on the date of such
determination.
However, for any monthly period in which an addition of accounts occurs or in
which a removal of accounts occurs, the amount in clause (x)(1) above shall be
the average of following amounts, weighted by the number of days in the
respective periods referred to in the following clauses:
(i) the aggregate amount of principal receivables in the trust as of
the close of business on the last day of the prior monthly period
for the period from and including the first day of the monthly
period to but excluding the related addition date or removal date;
and
(ii) the aggregate amount of principal receivables in the trust at the
end of the day on the related addition date or removal date for
the period from and including the related addition date or removal
date to and including the last day of the monthly period.
"GROUP ONE" means the group of series issued by the trust which includes
Series 2000-1 and the series listed on Annex I.
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<PAGE> 37
"INTEREST PERIOD" means the period in which interest accrues beginning with
any distribution date until the succeeding distribution date, but in the case of
the first distribution date, beginning on the closing date until the first
distribution date, but excluding the interest payment date.
"INVESTED AMOUNT" for any date means an amount equal to the sum of the
Class A invested amount, the Class B invested amount and the collateral invested
amount on that date.
"INVESTOR DEFAULT AMOUNT" means, for any monthly period, the product of:
(1) the floating allocation percentage for the monthly period; and
(2) the amount of receivables in accounts, the receivables in which have
been written of as uncollectible for the monthly period.
"LIBOR" means, as of any LIBOR determination date, the rate for one-month
United States dollar deposits that appears on Telerate Page 3750 as of 11:00
a.m., London time, on that date. If this rate does not appear on Telerate Page
3750, the rate for that date will be determined on the basis of the rates at
which one month United States dollar deposits are offered by four major banks
selected by the servicer at approximately 11:00 a.m., London time, on that day
to prime banks in the London interbank market for such one-month period. The
trustee will request the principal London office of each such bank to provide a
quotation of its rate. If at least two quotations are provided, the rate for
that date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the servicer, at approximately 11:00 a.m., New York City time, on that day for
one-month loans in United States dollars to leading European banks for the
one-month period. If on a LIBOR determination date, the banks selected by the
servicer are not quoting rates, LIBOR for the interest period will be LIBOR as
determined on the previous LIBOR determination date.
"LIBOR DETERMINATION DATE" means August 22, 2000 for the period from and
including the closing date to but excluding September 15, 2000, September 13,
2000 for the period from and including September 15, 2000 to but excluding
October 16, 2000 and the second London business day prior to the commencement of
each interest period thereafter.
"MONTHLY PERIOD" means the period from and including the first day of a
calendar month to and including the last day of such calendar month (other than
the initial monthly period, which will commence on and include the closing date
and end on and include September 30, 2000).
"MONTHLY SERVICING FEE" means, with respect to any distribution date, an
amount equal to one-twelfth of (a) the product of (i) the series servicing fee
percentage and (ii) servicing base amount, minus (b) the product of the servicer
interchange percentage and the servicing base amount. However, for the first
distribution date, the monthly servicing fee will be equal to $612,500.00.
"NET SERVICING FEE RATE" means the series servicing fee percentage less the
servicer interchange percentage.
"PAY OUT EVENT" means any of the events described in clauses (a) through
(f) of "Series Provisions -- Pay Out Events" in this prospectus supplement and
any of the events described in clauses (a) through (c) of "Description of the
Certificates -- Pay Out Events" in the accompanying prospectus.
"PORTFOLIO YIELD" means, for any monthly period, the annualized percentage
equivalent of a fraction:
(a) the numerator of which is equal to:
(i) the floating allocation percentage of collections of finance charge
receivables (including recoveries, interchange and annual
membership fees), plus
(ii) net investment earnings on amounts in the principal funding account
deposited into the collection account for such monthly period, plus
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<PAGE> 38
(iii) the amount withdrawn from the reserve account deposited into the
collection account for such monthly period as described in "Series
Provisions -- Reserve Account" in this prospectus supplement,
minus
(iv) the investor default amount for such monthly period, and
(b) the denominator of which is the invested amount as of the last day of
the preceding monthly period (or for the first monthly period, the
invested amount as of the closing date).
"PRINCIPAL ALLOCATION PERCENTAGE" means, for any monthly period, the
percentage equivalent of a fraction (which percentage shall never exceed 100%):
(1) the numerator of which is, during the revolving period, the invested
amount as of the last day of the immediately preceding monthly period,
and, during the controlled accumulation period or the early
amortization period, the invested amount as of the close of business on
the last day of the revolving period; and
(2) the denominator of which is the greater of:
(x) the sum of (1) the total amount of principal receivables in the
trust as of the close of business on the last day of the prior
monthly period and (2) the principal amount on deposit in the
special funding account on the close of business on the last day of
the prior monthly period; and
(y) the sum of the numerators used to calculate the principal
allocation percentages for all outstanding series as of the date as
to which such determination is being made.
However, for any monthly period in which an addition of accounts occurs or in
which a removal of accounts occurs, the amount in clause (x)(1) above shall be
the average of following amounts, weighted by the number of days in the
respective periods referred to in the following clauses:
(i) the aggregate amount of principal receivables in the trust as of
the close of business on the last day of the prior monthly period
for the period from and including the first day of the monthly
period to but excluding the related addition date or removal date;
and
(ii) the aggregate amount of principal receivables in the trust at the
end of the day on the related addition date or removal date for
the period from and including the related addition date or removal
date to and including the last day of the monthly period.
However, if the controlled accumulation period or the early amortization period
has commenced and a pay out event occurs with respect to another Series that was
designated as a Series that is "paired" with respect to Series 2000-1, the
seller may, upon satisfaction of certain conditions, designate a different
numerator for the above fraction.
"PRINCIPAL FUNDING ACCOUNT" means the account established as described
under "Series Provisions -- Principal Funding Account" in this prospectus
supplement.
"PRINCIPAL SHORTFALLS" means any principal distributions to
certificateholders and deposits to principal funding accounts for any series
that are either scheduled or permitted and that have not been covered out of the
investor principal collections and certain other amounts for a series.
"REALLOCATED CLASS B PRINCIPAL COLLECTIONS" for any monthly period means
collections of principal receivables allocable to the Class B invested amount
for that monthly period in an amount not to exceed the amount applied to fund
the Class A required amount, if any; provided that this amount will not exceed
the Class B invested amount after giving effect to any Class B investor
charge-offs for the related distribution date.
"REALLOCATED COLLATERAL PRINCIPAL COLLECTIONS" for any monthly period means
collections of principal receivables allocable to the collateral invested amount
for that monthly period in an amount not to exceed the amount applied to fund
the Class A required amount and the Class B required amount, if any;
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<PAGE> 39
provided that this amount will not exceed the collateral invested amount after
giving effect to any collateral charge-offs for the related distribution date.
"REALLOCATED PRINCIPAL COLLECTIONS" for any monthly period means the sum of
(a) the reallocated Class B principal collections for the monthly period, if
any, and (b) the reallocated collateral principal collections for the monthly
period, if any.
"REQUIRED RESERVE ACCOUNT AMOUNT" means, for any distribution date, an
amount equal to:
(1) 0.50% of the invested amount as of the preceding distribution date
(after giving effect to all distributions on that date); or
(2) any other amount designated by the seller, except that if the
designation is of a lesser amount, the seller will provide the
servicer, the collateral interest holder and the trustee with evidence
that the rating of the certificates has not been withdrawn or reduced,
and the seller will deliver to the trustee a certificate of an
authorized officer of the seller to the effect that, based on the facts
known to such officer at such 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 with respect to Series 2000-1.
"RESERVE ACCOUNT" means the account established as described under "Series
Provisions -- Reserve Account" in this prospectus supplement.
"REVOLVING PERIOD" means the period of time described under "Series
Provisions -- Principal Payments -- Revolving Period" in this prospectus
supplement.
"SCHEDULED PRINCIPAL PAYMENT DATE" means August 15, 2005, the date the
trust is expected to pay available principal amounts to the certificateholders.
"SERIES 2000-1 SUPPLEMENT" means the supplement to the pooling and
servicing agreement dated as of the closing date.
"SERIES 2000-1 TERMINATION DATE" means August 15, 2007, which is the final
date on which principal and interest on the certificates will be made, or, if
that date is not a business day, the next business day.
"SERIES SERVICING FEE PERCENTAGE" means 2.0%.
"SERVICER INTERCHANGE" means for any monthly period, the lesser of:
(1) the floating allocation percentage of interchange deposited in the
collection account during the monthly period; and
(2) the servicer interchange percentage of the servicing base amount.
"SERVICER INTERCHANGE PERCENTAGE" means 1.0%.
"SERVICING BASE AMOUNT" means an amount equal to:
(1) the invested amount as of the last day of the monthly period preceding
the distribution date; minus
(2) the product of the amount, if any, on deposit in the special funding
account as of the last day of the monthly period preceding the
distribution date and the floating allocation percentage for the
monthly period.
"TELERATE PAGE 3750" means the display page currently so designated on the
Bridge Telerate Market Report (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
S-36
<PAGE> 40
ANNEX I
PREVIOUS ISSUANCES OF CERTIFICATES
The table below sets forth the principal characteristics of the other
series previously issued by the trust that are currently outstanding, all of
which are in GROUP ONE. For more specific information with respect to any
series, any prospective investor should contact the bank at 1-800-622-4204. The
bank will provide, without charge, to any prospective purchaser of the
certificates, a copy of the disclosure documents for any previous
publicly-issued series.
1. Series 1995-1
<TABLE>
<S> <C>
Initial Class A Invested Amount.............. $470,000,000
Class A Certificate Rate..................... One-Month LIBOR plus 0.18% per annum
Initial Class B Invested Amount.............. $30,000,000
Class B Certificate Rate..................... One-Month LIBOR plus 0.30% per annum
Class A Expected Final Payment Date.......... December 2000 Distribution Date
Class B Expected Final Payment Date.......... February 2001 Distribution Date
Cash Collateral Amount....................... $32,500,000
Other Enhancement for the Class A
Certificates............................... Subordination of Class B Certificates
Series 1995-1 Termination Date............... February 2002 Distribution Date
Series Issuance Date......................... June 14, 1995
</TABLE>
I-1
<PAGE> 41
ANNEX II
THE BANK PORTFOLIO
GENERAL
Set forth below is certain information with respect to the bank portfolio.
See "The Bank's Credit Card Activities" in the prospectus. The ACCOUNTS have
been selected from ELIGIBLE ACCOUNTS, determined as of the TRUST CUT-OFF DATE in
the designated portfolio. The designated portfolio is a portion of the bank
portfolio that consists of accounts owned by the bank and originated by the bank
or institutions acquired by the bank. The following tables show the delinquency,
loss, yield and payment experience for the bank portfolio beginning on April 1,
1999. On April 1, 1999, the bank completed the process of acquiring the credit
card portfolios of certain of its affiliates. Information prior to April 1, 1999
is shown pro forma as if the bank had purchased the credit card portfolios of
its affiliates as of the beginning of 1997. As of the beginning of the day on
June 30, 2000, the receivables in the trust portfolio (including receivables
that have been or will be added to the trust between June 30, 2000 and the
CLOSING DATE) represented approximately 93.2% of the bank portfolio. Because the
trust portfolio is only a portion of the bank portfolio, actual delinquency,
loss, yield and payment rate characteristics of the receivables in the trust may
be different from that set forth below for the bank portfolio. We cannot assure
you that the delinquency, loss, yield and payment rate characteristics for the
receivables in the future will be similar to the historical experience of the
bank portfolio as set forth below.
DELINQUENCY AND LOSS EXPERIENCE
The following tables set forth the delinquency experience for the bank
portfolio at the dates shown and loss experience for the bank portfolio for each
of the periods shown. Any particular segment of the bank portfolio may have
delinquency and gross charge-off characteristics different from those of the
overall bank portfolio.
DELINQUENCY EXPERIENCE
THE BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------------------
JUNE 30, 2000 1999 1998 1997
------------------------- ------------------------- ------------------------- -------------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL OF TOTAL OF TOTAL
RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES RECEIVABLES
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Receivables
Outstanding(1)..... $2,058,828 100.00% $2,118,054 100.00% $2,080,333 100.00% $2,436,236 100.00%
Receivables
Delinquent:
30 to 59 Days...... $ 36,513 1.77% $ 36,094 1.70% $ 43,144 2.07% $ 43,745 1.80%
60 to 89 Days...... 20,300 0.99 26,920 1.27 30,141 1.45 26,134 1.07
90 Days or More.... 13,475 0.65 17,501 0.83 22,368 1.08 28,788 1.18
---------- ------- ---------- ------- ---------- ------- ---------- -------
Total........ $ 70,288 3.41% $ 80,515 3.80% $ 95,653 4.60% $ 98,667 4.05%
========== ======= ========== ======= ========== ======= ========== =======
</TABLE>
---------------
(1) Information prior to April 1, 1999 is shown pro forma as if the bank had
purchased the credit card portfolios of its affiliates as of the beginning
of 1997. "Receivables Outstanding" on the accounts consist of all amounts
due from cardholders as posted to the accounts at the dates shown.
II-1
<PAGE> 42
LOSS EXPERIENCE
THE BANK PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------
JUNE 30, 2000 1999 1998 1997
-------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(1).................... $2,038,577 $2,003,165 $2,192,429 $2,444,439
Gross Charge-Offs(2).................................. 52,026 118,500 133,688 132,864
Recoveries(3)......................................... 11,610 21,600 18,558 15,636
Net Charge-Offs....................................... 40,416 96,900 115,130 117,228
Net Charge-Offs as a percentage of Average Receivables
Outstanding......................................... 3.97%(4) 4.84% 5.25% 4.80%
</TABLE>
---------------
(1) Information prior to April 1, 1999 is shown pro forma as if the bank had
purchased the credit card portfolios of its affiliates as of the beginning
of 1997. "Average Receivables Outstanding" is the average of the daily
receivable balance during the period indicated.
(2) "Gross Charge-offs" are total principal and interest charge-offs before
recoveries and do not include the amount of any reductions in Average
Receivables Outstanding due to fraud, returned goods, customer disputes or
other miscellaneous credit adjustments.
(3) "Recoveries" are total recoveries with respect to charged-off accounts owned
by National City.
(4) Annualized.
The bank's delinquency and loss rates at any time reflect, among other
factors, the credit quality of the credit card accounts, the average seasoning
of the bank's accounts, the success of the bank's collection efforts and general
economic conditions. The industry continues to experience intense competition,
which results in increased account turnover and higher costs per account. The
bank's focus continues to be to optimize the profitability of each account
within the context of acceptable risk characteristics. As the bank increases
market penetration, it will continue to focus on segments of the credit market
which have been highly profitable, and the bank believes its delinquency and
loss rates will generally follow industry trends.
REVENUE EXPERIENCE
The following table sets forth the revenues from finance charges and fees
billed with respect to the bank portfolio for each of the periods shown.
The historical yield figures in the following table are calculated on an
accrual basis. Collections of receivables included in the trust will be on a
cash basis and may not reflect the historical yield experience in the table.
During periods of increasing delinquencies or periodic payment deferral
programs, accrual yields may exceed cash amounts collected from cardholders.
Conversely, cash yields may exceed accrual yields as amounts collected in a
current period may include amounts accrued during prior periods.
However, the bank believes that during the periods contained in the
following table, the yield on an accrual basis closely approximated the yield on
a cash basis. The yield on both an accrual and a cash basis will be affected by
numerous factors, including the monthly periodic finance charges on the
receivables, the amount of the annual membership fees and other fees, changes in
the delinquency rate on the receivables and the percentage of cardholders who
pay their balances in full each month and do not incur monthly periodic finance
charges. See "Risk Factors" in the accompanying prospectus.
II-2
<PAGE> 43
YIELD EXPERIENCE
THE BANK PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED --------------------------
JUNE 30, 2000 1999 1998 1997
------------- ------ ------ ------
<S> <C> <C> <C> <C>
Average Account Monthly Accrued Finance Charges and Fees.... $ 15 $ 13 $ 13 $ 12
Average Account Balance(1).................................. $ 990 $ 825 $ 860 $ 803
Yield from Finance Charges and Fees(2)...................... 15.74% 15.61% 16.23% 15.41%
Yield from Interchange(3)................................... 3.02% 3.04% 2.53% 2.24%
------ ------ ------ ------
Yield from Finance Charges, Fees and Interchange(4)......... 18.76% 18.65% 18.76% 17.65%
====== ====== ====== ======
</TABLE>
---------------
(1) Information prior to April 1, 1999 is shown pro forma as if the bank had
purchased the credit card portfolios of its affiliates as of the beginning
of 1997. "Average Account Balances" includes purchases, cash advances and
accrued and unpaid monthly periodic finance and other charges and are
calculated based on the average of the account balances during the periods
shown for accounts with charging privileges.
(2) "Yield from Finance Charges and Fees" is the result of dividing the
annualized Average Account Monthly Accrued Finance Charges and Fees by the
Average Account Balance for the period.
(3) "Yield from Interchange" is the result of dividing annualized revenue
attributable to Interchange received during the period by the Average
Account Balance for the period.
(4) The percentage reflected for the six months ended June 30, 2000 is an
annualized figure.
The revenue for the bank portfolio shown in the above table is comprised of
monthly periodic finance charges, credit card fees and interchange. These
revenues vary for each account based on the type and volume of activity for each
account. Because the trust portfolio is only a portion of the bank portfolio,
actual yield with respect to receivables in the trust may be different from that
set forth above for the bank portfolio. See "Risk Factors" and "The Bank's
Credit Card Activities" in the accompanying prospectus.
PAYMENT RATES
The following table sets forth the highest and lowest cardholder monthly
payment rates for the bank portfolio during any month in the period shown and
the average cardholder monthly payment rates for all months during the periods
shown, in each case calculated as a percentage of total opening monthly account
balances during the periods shown. Payment rates shown in the table are based on
payments of PRINCIPAL RECEIVABLES and FINANCE CHARGE RECEIVABLES with respect to
the ACCOUNTS.
CARDHOLDER MONTHLY PAYMENT RATES
THE BANK PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------
JUNE 30, 2000 1999 1998 1997
------------- ----- ----- -----
<S> <C> <C> <C> <C>
Lowest Month(1)............................................. 18.52% 17.67% 16.72% 14.74%
Highest Month............................................... 20.84% 20.99% 19.28% 18.91%
Monthly Average............................................. 19.51% 19.05% 18.06% 16.64%
</TABLE>
---------------
(1) Information prior to April 1, 1999 is shown pro forma as if the bank had
purchased the credit card portfolios of its affiliates as of the beginning
of 1997.
The amount of collections of receivables may vary from month to month due
to seasonal variations, general economic conditions and payment habits of
individual cardholders.
II-3
<PAGE> 44
THE RECEIVABLES
Each of the trust portfolio numbers provided in this section include
receivables that have been or will be added to the trust between June 30, 2000
and the CLOSING DATE.
As of June 30, 2000:
- the trust portfolio included $1,894,149,637 of PRINCIPAL RECEIVABLES and
$24,126,548 of FINANCE CHARGE RECEIVABLES;
- the ACCOUNTS had an average principal balance of $1,083 and an average
credit limit of $7,472;
- the percentage of the aggregate total receivables balance to the
aggregate total credit limit was 14.68%;
- the average age of the accounts was approximately 101 months;
- 58% of the accounts were premium accounts and 42% of the accounts were
standard accounts; and
- the aggregate principal receivable balances of premium accounts and
standard accounts, as a percentage of the total aggregate principal
receivables, were 64% and 36%, respectively.
The following tables summarize the trust portfolio by various criteria as
of June 30, 2000. References to "Receivables Outstanding" in the following
tables include both finance charge receivables and principal receivables.
Because the future composition of the trust portfolio may change over time,
these tables are not necessarily indicative of the composition of the trust
portfolio at any subsequent time.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
NUMBER PERCENTAGE
NUMBER OF OF OF TOTAL
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
--------------------- --------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Credit Balance................................ 19,998 1.14% $ (2,576,044) (0.13)%
Zero Balance.................................. 788,682 45.08 -- 0.00
$0 to $500.................................... 333,319 19.05 62,057,491 3.24
$500 to $1,000................................ 127,659 7.30 93,290,738 4.86
$1,000.01 to $1,500........................... 81,809 4.68 101,371,015 5.28
$1,500.01 to $5,000........................... 279,283 15.96 828,860,002 43.21
$5,000.01 to $10,000.......................... 112,523 6.43 759,681,349 39.60
$10,000.01 or More............................ 6,080 0.35 75,591,635 3.94
--------- ------ -------------- ------
TOTAL............................... 1,749,353 100.00% $1,918,276,185 100.00%
========= ====== ============== ======
</TABLE>
II-4
<PAGE> 45
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
NUMBER PERCENTAGE
NUMBER OF OF OF TOTAL
CREDIT LIMIT RANGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
------------------ --------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
$0 to $500.................................... 23,428 1.34% $ 3,848,194 0.20%
$500.01 to $1,000............................. 40,481 2.31 12,630,297 0.66
$1,000.01 to $1,500........................... 38,436 2.20 18,220,533 0.95
$1,500.01 to $5,000........................... 471,845 26.97 424,710,756 22.14
$5,000.01 to $10,000.......................... 793,825 45.38 1,057,622,379 55.13
$10,000.01 or More............................ 381,338 21.80 401,244,026 20.92
--------- ------ -------------- ------
TOTAL............................... 1,749,353 100.00% $1,918,276,185 100.00%
========= ====== ============== ======
</TABLE>
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
NUMBER PERCENTAGE
NUMBER OF OF OF TOTAL
PERIOD OF DELINQUENCY ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
--------------------- --------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Not Delinquent................................ 1,722,320 98.45% $1,825,209,237 95.15%
30 to 59 Days................................. 21,296 1.22 68,254,452 3.56
60 to 89 Days................................. 3,831 0.22 14,876,889 0.78
90 Days or More............................... 1,906 0.11 9,935,607 0.52
--------- ------ -------------- ------
TOTAL............................... 1,749,353 100.00% $1,918,276,185 100.00%
========= ====== ============== ======
</TABLE>
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
NUMBER PERCENTAGE
NUMBER OF OF OF TOTAL
ACCOUNT AGE ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
----------- --------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
6 Months or Less.............................. 130,811 7.48% $ 176,249,072 9.19%
Over 6 to 12 Months........................... 93,474 5.34 101,966,484 5.32
Over 12 to 24 Months.......................... 184,995 10.58 164,291,070 8.56
Over 24 to 36 Months.......................... 72,685 4.15 76,202,702 3.97
Over 36 to 48 Months.......................... 109,170 6.24 126,638,975 6.60
Over 48 to 60 Months.......................... 95,733 5.47 121,270,188 6.32
Over 60 to 72 Months.......................... 93,215 5.33 128,918,629 6.72
Over 72 Months................................ 969,270 55.41 1,022,739,066 53.32
--------- ------ -------------- ------
TOTAL............................... 1,749,353 100.00% $1,918,276,185 100.00%
========= ====== ============== ======
</TABLE>
II-5
<PAGE> 46
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
NUMBER PERCENTAGE
NUMBER OF OF OF TOTAL
STATE OR TERRITORY ACCOUNTS ACCOUNTS RECEIVABLES RECEIVABLES
------------------ --------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Michigan...................................... 370,670 21.19% $ 382,251,414 19.93%
Ohio.......................................... 316,119 18.07 382,263,404 19.93
Illinois...................................... 171,380 9.80 166,981,346 8.70
Pennsylvania.................................. 150,931 8.63 178,379,868 9.30
Indiana....................................... 134,474 7.69 156,375,973 8.15
Kentucky...................................... 90,724 5.19 94,808,423 4.94
Massachusetts................................. 59,644 3.41 65,179,719 3.40
California.................................... 51,058 2.92 50,885,133 2.65
Minnesota..................................... 41,992 2.40 39,173,646 2.04
New York...................................... 40,620 2.32 41,684,569 2.17
Other......................................... 321,741 18.38 360,292,690 18.79
--------- ------ -------------- ------
TOTAL............................... 1,749,353 100.00% $1,918,276,185 100.00%
========= ====== ============== ======
</TABLE>
II-6
<PAGE> 47
PROSPECTUS
[NATIONAL CITY LOGO]
NATIONAL CITY CREDIT CARD MASTER TRUST
ISSUER
NATIONAL CITY BANK
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 consumer 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 6 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 National City Bank 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.
August 16, 2000
<PAGE> 48
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 timing of interest and principal payments;
- financial and other information about the receivables;
- information about enhancement for each class;
- the ratings for each class; and
- the method for selling the certificates.
IF THE TERMS OF A PARTICULAR SERIES OF CERTIFICATES VARY BETWEEN THIS
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN
THE PROSPECTUS SUPPLEMENT.
You should rely only on the information provided in this prospectus and the
accompanying prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the certificates in any state where the offer
is not permitted. We do not claim the accuracy of the information in this
prospectus or the accompanying prospectus supplement as of any date other than
the dates stated on their respective covers.
We include cross-references in this prospectus and in 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.
Parts of this prospectus use defined terms. You can find these terms and
their definitions under the caption "Glossary of Defined Terms" on page 63 in
this prospectus. To assist you in understanding this document, the terms that
are defined in the "Glossary of Defined Terms" appear in bold typeface the first
time they appear in each of the sections and subsections, beginning on page 14
in this prospectus.
------------------------
ii
<PAGE> 49
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................. 1
The Trust and the Trustee......... 1
Trust Assets...................... 1
Information about the
Receivables.................... 1
Collections by the Servicer....... 2
Allocation of Trust Assets........ 2
Interest Payments on the
Certificates................... 2
Principal Payments on the
Certificates................... 2
Revolving Period............... 2
Controlled Accumulation
Period....................... 2
Scheduled Amortization
Period....................... 3
Principal Amortization
Period....................... 3
Rapid Accumulation Period...... 3
Early Amortization Period...... 3
Pay Out Events................. 3
Special Funding Account........... 4
Shared Excess Finance Charge
Collections.................... 4
Shared Principal Collections...... 4
Credit Enhancement................ 4
Optional Repurchase............... 4
Tax Status........................ 4
Certificate Ratings............... 5
Risk Factors........................ 6
It May Not be Possible to Find an
Investor to Purchase Your
Certificates................... 6
Issuance of Additional Series by
the Trust May Affect the Timing
of Payments.................... 6
Credit Quality of Trust Assets May
be Eroded by the Addition of
New Assets..................... 6
Recharacterization of the Transfer
from the Seller to the Trust,
or the Conservatorship or
Receivership of the Seller,
Could Delay or Reduce Payments
to You......................... 6
The FDIC Has Special Powers under
Banking Laws to Take Actions
during the Insolvency of the
Seller That Could Delay or
Reduce Payments to You......... 7
Changes to Consumer Protection
Laws May Impede Collection
Efforts or Reduce
Collections.................... 8
The Effect on Certificateholders
of Certain Litigation Against
the Seller is Unclear.......... 9
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Credit Ratings Assigned to Your
Certificates are Limited in
Nature......................... 10
Payment Pattern of Receivables
Could Reduce Collections....... 10
The Interest Rate on Receivables
May Fluctuate Differently than
the Interest Rate on the
Certificates, Resulting in
Reduced Payments to You........ 10
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.............. 11
Social, Economic and Geographic
Factors Affect Credit Card
Payments and Are Unpredictable
and May Cause a Delay or
Default in Payment............. 11
Competition in the Credit Card
Industry Could Lead to Early
Payment of Your Certificates... 11
The Seller May Change the Terms of
the Accounts in a Way That
Reduces Collections............ 12
Subordinated Classes Bear
Additional Risks............... 13
The Bank May Transfer Its
Obligations to Another
Entity......................... 13
The Trust........................... 14
Transfer And Assumption............. 14
The Transfer...................... 14
Assumption Agreements and
Amendments to the Pooling and
Servicing Agreement............ 14
The Bank's Credit Card Activities... 15
General........................... 15
New Accounts and Underwriting..... 15
Use of Credit Cards............... 16
Billing and Payments.............. 16
Delinquencies..................... 17
Interchange....................... 17
The Bank and National City
Corporation....................... 17
Assumption of the Bank's
Obligations....................... 18
The Receivables..................... 18
Maturity Considerations............. 19
Use of Proceeds..................... 20
Description of the Certificates..... 20
General........................... 20
</TABLE>
iii
<PAGE> 50
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Book-Entry Registration........... 22
Definitive Certificates........... 25
Interest.......................... 25
Principal......................... 26
Transfer and Assignment of
Receivables.................... 26
Addition of Trust Assets.......... 27
Automatic Account Additions....... 28
Removal of Accounts............... 29
Collection and Other Servicing
Procedures..................... 30
Discount Option................... 30
New Issuances..................... 31
Representations and Warranties.... 33
Funding Period.................... 35
Collection Account................ 35
Allocation Percentages............ 36
Deposits in Collection Account.... 36
Shared Excess Finance Charge
Collections.................... 37
Shared Principal Collections...... 37
Special Funding Account........... 37
Defaulted Receivables; Rebates and
Fraudulent Charges............. 38
Record Date....................... 38
Defeasance........................ 38
Optional Termination; Final
Payment of Principal........... 39
Pay Out Events.................... 39
Servicing Compensation and Payment
of Expenses.................... 40
Certain Matters Regarding the
Seller and the Servicer........ 41
Servicer Default.................. 43
Evidence as to Compliance......... 44
Amendments........................ 44
Termination of the Trust.......... 46
List of Certificateholders........ 46
The Trustee....................... 46
Certificateholders Have Limited
Control of Actions............. 46
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Credit Enhancement.................. 47
General........................... 47
Subordination..................... 47
Letter of Credit.................. 48
Cash Collateral Guaranty or
Account........................ 48
Collateral Interest............... 48
Surety Bond or Insurance Policy... 49
Spread Account.................... 49
Reserve Account................... 49
Swap Agreements................... 49
Certificate Ratings................. 49
Certain Legal Aspects of the
Receivables....................... 50
Transfer of Receivables........... 50
Certain Matters Relating to
Receivership and
Conservatorship................ 51
Consumer Protection Laws.......... 52
Claims and Defenses of Cardholders
Against the Trust.............. 53
Federal Income Tax Consequences..... 53
General........................... 53
Treatment of the Certificates as
Debt........................... 54
Treatment of the Trust............ 54
Taxation of Interest Income of
U.S. Certificate Owners........ 56
Sale or Exchange of
Certificates................... 57
Foreign Certificate Owners........ 57
Backup Withholding and Information
Reporting...................... 58
State and Local Taxation.......... 58
ERISA Considerations................ 59
Plan of Distribution................ 61
Legal Matters....................... 62
Reports to Certificateholders....... 62
Where You Can Find More
Information....................... 62
Glossary of Defined Terms........... 63
Annex I: Global Clearance,
Settlement and Tax Documentation
Procedures........................ A-1
</TABLE>
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<PAGE> 51
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 CERTAIN CALCULATIONS, CASH FLOWS AND OTHER
INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE FULL DESCRIPTION
OF THESE CALCULATIONS, CASH FLOWS AND OTHER INFORMATION IN THIS PROSPECTUS AND
THE ACCOMPANYING PROSPECTUS SUPPLEMENT.
THE TRUST AND THE TRUSTEE
National City Credit Card Master Trust (formerly the First of America Credit
Card Master Trust) was formed on June 1, 1995 under a pooling and servicing
agreement between The Bank of New York, as trustee, and certain predecessors of
National City Bank (First of America Bank - Michigan, N.A., as seller and as
servicer, and First of America Bank - Illinois, N.A., as seller of the
receivables). The trust is a master trust under which one or more series of
certificates will be issued through a series supplement to the pooling and
servicing agreement. Other classes or series may not be offered by this
prospectus; for example, they may be offered in a private placement.
TRUST ASSETS
The bank and its predecessors have transferred to the trust the receivables from
certain MasterCard(R) and VISA(R)* revolving credit card accounts. All new
receivables generated in the 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 existing accounts.
Additional similar assets may be transferred to the trust. See "The Receivables"
and "Description of the Certificates -- Addition of Trust Assets" and
"-- Automatic Account Additions" in this prospectus.
The trust assets also include payments due on the receivables and other proceeds
of the receivables and of related credit insurance policies. Additionally, the
trust assets will include any amounts recovered from receivables previously
written off as uncollectible.
Additional trust assets may include:
- rights to certain fees the bank receives through VISA and MasterCard, called
interchange;
- monies deposited in certain of the trust's bank accounts and investments of
those monies;
- participation interests in the trust;
- enhancements, including any credit enhancement, guaranteed rate agreement,
maturity liquidity facility, interest rate cap agreement, tax protection
agreement, interest rate swap agreement, or other similar arrangement.
The trust assets may change over the life of the trust as receivables in
revolving credit card accounts are included and others are charged-off or
removed. See "Description of the Certificates -- Addition of Trust Assets" and
" -- Removal of Accounts" in this prospectus.
INFORMATION ABOUT THE RECEIVABLES
The receivables consist of both principal receivables and finance charge
receivables.
Principal receivables are, generally, (a) amounts charged by cardholders for
goods and services and (b) cash advances.
Finance charge receivables are the related finance charges and credit card fees.
Interchange fees collected through MasterCard and VISA, annual membership fees
collected from cardholders and amounts recovered from receivables previously
written off as uncollectible generally are treated as collections of finance
charge receivables.
---------------
* MasterCard(R) and VISA(R) are federally registered servicemarks of MasterCard
International Inc. and VISA U.S.A., Inc., respectively.
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COLLECTIONS BY THE SERVICER
The bank services the receivables under 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 bank, or any new servicer,
is called the servicer. The servicer receives a servicing fee from the trust for
each series. See "Description of the Certificates -- Servicing Compensation and
Payment of Expenses" in this prospectus.
The servicer receives collections on the receivables, deposits those collections
in a collection account and keeps track of those collections for finance charge
receivables and principal receivables. The servicer then allocates those
collections as summarized below.
ALLOCATION OF TRUST ASSETS
The trust assets will be allocated to the holders of certificates and other
interests of each series and to the bank, as holder of the seller interest. The
remaining interest in the assets of the trust not represented by the
certificates and other interests issued by the trust is called the seller
interest, and, on any date, is equal to the assets in the trust not allocated to
investor certificates and other interests of each series. If there is more than
one class in a series, there may be a further allocation of trust assets among
each class.
Certificateholders are only entitled to amounts allocated to their series equal
to the interest and principal payments on their certificates. See "Description
of the Certificates -- Allocation Percentages" 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 accompanying prospectus supplement. If a series of
certificates consists of one or more classes, each class may differ in, among
other things, priority of payments, payment dates, interest rates, method for
computing interest, and rights to enhancement.
Each class of certificates may have fixed or floating interest rates. Generally,
interest will be paid monthly, quarterly, semi-annually or on other scheduled
dates over the life of the certificates.
If interest is paid less frequently than monthly, collections of finance charge
receivables may be deposited monthly in one or more trust accounts and invested
under guidelines established by the rating agencies until paid to
certificateholders. See "Description of the Certificates -- Interest" and
"Credit 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 accompanying prospectus supplement. If a series of
certificates consists of one or more classes, 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 class of certificates will begin with a period during which the trust will
not pay, or accumulate, principal for the related certificateholders, called a
revolving period. The trust, subject to certain limitations, will pay available
principal to the holder of the seller interest and may pay amounts due to
holders of certificates of other series. The revolving period for a class starts
on the date that class is issued and ends at the start of an amortization period
or an accumulation period.
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 accumulated in varying amounts following certain adverse events
and paid on a scheduled date; or
- principal is paid in varying amounts each month following certain adverse
events.
CONTROLLED ACCUMULATION PERIOD
If a class of certificates has a controlled accumulation period, the trust is
expected to pay available principal to those certificateholders on a
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<PAGE> 53
date specified in the accompanying prospectus supplement. If the series has more
than one class, each class may have a different priority for payment. For a
period of time prior to the scheduled payment date, the trust is scheduled to
deposit available principal in a trust account in specified amounts plus any
specified amounts not previously deposited. If amounts sufficient to pay the
invested amount for a class have not been accumulated by the scheduled principal
payment date for that class, a pay out event will occur and the early
amortization period will begin. The controlled accumulation period for a class
starts on a date specified in the accompanying prospectus supplement and ends
when any one of the following occurs:
- the invested amount for the series is paid in full;
- an early amortization period starts; or
- the latest date by which principal and interest for the series of certificates
can be paid.
SCHEDULED AMORTIZATION PERIOD
If a class of certificates has a scheduled amortization period, the trust will
pay available principal to those certificateholders on each distribution date
during the scheduled amortization period in a fixed amount plus any amounts not
previously paid. If the series has more than one class, each class may have a
different priority for payment. The scheduled amortization period for a class
starts on the date specified in the accompanying prospectus supplement and ends
when any one of the following occurs:
- the invested amount for the series is paid in full;
- an early amortization period starts; or
- the latest date by which principal and interest for the series of certificates
can be paid.
PRINCIPAL AMORTIZATION PERIOD
If a class of certificates has a principal amortization period, the trust will
pay available principal to those certificateholders on each distribution date
during the principal amortization period. If a series has more than one class,
each class may have a different priority for payment. The principal amortization
period for a class starts on the date specified in the accompanying prospectus
supplement and ends when any one of the following occurs:
- the invested amount for the class is paid in full;
- an early amortization period starts; or
- the latest date by which principal and interest for the series of certificates
can be paid.
RAPID ACCUMULATION PERIOD
If a class of certificates has a controlled accumulation period, it may also
have a rapid accumulation period. During a rapid accumulation period, the trust
will periodically deposit available principal in a trust account prior to the
scheduled payment date. The rapid accumulation period for a class starts as
specified in the accompanying prospectus supplement on a day on or after a
designated pay out event has occurred, but in no event later than the scheduled
payment date, and ends when any one of the following occurs:
- the invested amount for the class is paid in full;
- an early amortization period starts; or
- the scheduled payment date.
EARLY AMORTIZATION PERIOD
If a class of certificates is in an early amortization period, the trust will
pay available principal to those certificateholders on each distribution date.
If the series has more than one class, each class may have a different priority
for payment. For a class without a rapid accumulation period, the early
amortization period starts on the day a pay out event occurs. For a class with a
rapid accumulation period, the early amortization period starts as specified in
the accompanying prospectus supplement on a day on or after a pay out event
occurs, but in no event later than the scheduled payment date for that class.
The early amortization period ends when any of the following occurs:
- the invested amount for the class is paid in full;
- the series termination date; or
- the trust termination date.
PAY OUT EVENTS
A pay out event for any series of certificates will include certain adverse
events described in the
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<PAGE> 54
accompanying prospectus supplement and the following:
- certain events of insolvency or receivership relating to the seller;
- 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.
See "Description of the Certificates -- Pay Out Events" in this prospectus.
SPECIAL FUNDING ACCOUNT
If on any date the seller amount is less than or equal to the required seller
amount or the amount of principal receivables in the trust is less than or equal
to the required principal balance, the servicer will not pay to the seller
shared principal collections not otherwise needed for any series of
certificates, but will deposit such funds in the special funding account.
See "Description of the Certificates -- Special Funding Account" in this
prospectus.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Any series may be included in a group of series. If specified in the
accompanying prospectus supplement, to the extent that collections of finance
charge receivables allocated to any series are not needed for that series, those
collections may be applied to certain shortfalls of another series in the same
group. See "Description of the Certificates -- Shared Excess Finance Charge
Collections," "-- Deposits in Collection Account" and "-- Defaulted Receivables;
Rebates and Fraudulent Charges" in this prospectus.
SHARED PRINCIPAL COLLECTIONS
If specified in the accompanying prospectus supplement, to the extent that
collections of principal receivables and certain other amounts that are
allocated to the invested amount for any series are not needed for that series,
those collections may be applied to cover principal payments for another series
in the same group. Any reallocation for this purpose will not reduce the
invested amount for the series to which those collections were initially
allocated. 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
provides additional payment protection to investors in each class of
certificates that has credit enhancement.
Credit enhancement for the certificates of any class may take the form of one or
more of the following:
<TABLE>
<CAPTION>
<S> <C>
- subordination - letter of credit
- collateral interest - surety bond
- insurance policy - spread account
- cash collateral - reserve account
guaranty or account - swap agreements
</TABLE>
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
- established based on the requirements of each rating agency rating one or more
classes of the certificates of that series.
See "Credit Enhancement" and "Certificate Ratings" in this prospectus.
OPTIONAL REPURCHASE
The bank may have the option to repurchase any series of certificates once the
invested amount for the series is reduced to the percentage of the initial
invested amount specified in the related prospectus supplement. See "Description
of the Certificates -- Optional Termination; Final Payment of Principal" in this
prospectus.
TAX STATUS
For information concerning the application of the federal income tax laws,
including whether the certificates will be characterized as debt for federal
income tax purposes, see "Federal Income Tax Consequences" in this prospectus
and "Summary of Terms -- Tax Status" in the accompanying prospectus supplement.
4
<PAGE> 55
CERTIFICATE RATINGS
Any certificate offered by this prospectus and the 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 rating 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.
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<PAGE> 56
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the certificates.
IT MAY NOT BE POSSIBLE TO FIND AN INVESTOR TO PURCHASE YOUR CERTIFICATES
The underwriters may assist in resales of the certificates but they are not
required to do so. A secondary market for any certificates may not develop. If a
secondary market does develop, it might not continue or it might not be
sufficiently liquid to allow you to resell any of your certificates.
ISSUANCE OF ADDITIONAL SERIES BY THE TRUST MAY AFFECT THE TIMING OF PAYMENTS
The trust has issued other series of certificates and is expected to issue
additional series from time to time. 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 confirm 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.
CREDIT QUALITY OF TRUST ASSETS MAY BE ERODED BY THE ADDITION OF NEW ASSETS
The seller 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
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 seller 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 Trust Assets."
RECHARACTERIZATION OF THE TRANSFER FROM THE SELLER TO THE TRUST, OR THE
CONSERVATORSHIP OR RECEIVERSHIP OF THE SELLER, COULD DELAY OR REDUCE PAYMENTS TO
YOU
The seller has documented the transfer of the receivables to the trust as a
sale. However, a court could conclude that the seller still owns the receivables
subject to a security interest in favor of the
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<PAGE> 57
trust in the receivables. The seller has taken steps to give the trustee a
"first priority perfected security interest" in the receivables in the event a
court concludes the seller still owns the receivables. Regardless of these
steps, however, your interests could be impaired:
- a tax, governmental or other nonconsensual lien on the seller's property
arising before receivables come into existence may have priority over the
trust's interests in the receivables;
- if the Federal Deposit Insurance Corporation ("FDIC") were appointed
conservator or receiver for the seller, 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
seller or, in certain circumstances, if certain time periods were to
pass, the trust may not have a first priority perfected security interest
with respect to the receivables held by the seller and not deposited into
the collection account, which may result in a loss to the
certificateholders.
See "Certain Legal Aspects of the Receivables -- Transfer of Receivables" and
"Description of the Certificates -- Representations and Warranties" in this
prospectus.
THE FDIC HAS SPECIAL POWERS UNDER BANKING LAWS TO TAKE ACTIONS DURING THE
INSOLVENCY OF THE SELLER THAT COULD DELAY OR REDUCE PAYMENTS TO YOU
The Federal Deposit Insurance Act, as amended by the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FDIA"), provides that a security
interest granted by the seller 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 seller; and
- the security interest is not taken in contemplation of the seller's
insolvency or with the intent to hinder, delay or defraud the seller 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 seller in the receivables. If the FDIC were to
assert a different 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;
7
<PAGE> 58
- request a stay of any actions by the trustee to enforce the pooling and
servicing agreement or the certificates against the seller; 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.
If a conservator or receiver were appointed for the seller, then a pay out event
could occur on all outstanding series. Under the terms of the pooling and
servicing agreement, new principal receivables would not be transferred to the
trust and the trustee would sell the receivables (unless holders of more than
50% of the invested amount of each class of outstanding certificates, and anyone
else authorized to vote on those matters in a series supplement, 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 net proceeds to pay you in full. However, the conservator or
receiver may have the power --
- regardless of the terms of the pooling and servicing agreement, (a) to
prevent the beginning of an early amortization period (or, if applicable,
rapid accumulation period), (b) to prevent the early sale of the
receivables and termination of the trust or (c) 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 servicer default occurs solely because the servicer is
insolvent or a conservator or receiver is appointed for the servicer, the
conservator or receiver might have the power to prevent either the trustee or
the certificateholders from appointing a new servicer under the pooling and
servicing agreement. See "Certain Legal Aspects of the Receivables -- Certain
Matters Relating to Receivership and Conservatorship" in this prospectus. If the
FDIC were to take any of those actions, your payments could be delayed or
reduced.
CHANGES TO CONSUMER PROTECTION LAWS MAY IMPEDE COLLECTION EFFORTS OR REDUCE
COLLECTIONS
Federal and state consumer protection laws regulate the creation and enforcement
of consumer loans. Congress and the states could further regulate the credit
card and consumer credit industry in ways that make it more difficult for the
servicer to collect
8
<PAGE> 59
payments on the receivables or that reduce the finance charges and other fees
that the seller can charge on credit card account balances. For example, if the
seller were required to reduce its finance charges and other fees, resulting in
a corresponding decrease in the accounts' effective yield, this could lead to a
pay out event, resulting in the payment of principal sooner than expected. See
"Description of the Certificates -- Pay Out Events" in this prospectus.
The seller makes representations and warranties relating to the validity and
enforceability of the receivables. Subject to certain conditions described under
"Description of the Certificates -- Representations and Warranties" in this
prospectus, the seller must accept reassignment of each receivable that does not
comply in all material respects with all requirements of applicable law.
However, we do not anticipate that the trustee will make any examination of the
receivables or the related records for the purpose of determining the presence
or absence of defects, compliance with representations and warranties, or for
any other purpose. The only remedy if any representation or warranty is
violated, and the violation continues beyond the period of time the seller has
to correct the violation, is that the seller must accept reassignment of the
receivables affected by the violation (subject to certain conditions described
under "Description of the Certificates -- Representations and Warranties" in
this prospectus). See also "Certain Legal Aspects of the Receivables -- Consumer
Protection Laws" in this prospectus.
If a cardholder sought protection under federal or state bankruptcy or debtor
relief laws, a court could reduce or discharge completely the cardholder's
obligations to repay amounts due on its account and, as a result, the related
receivables would be written off as uncollectible. The certificateholders could
suffer a loss if no funds are available from credit enhancement or other
sources. See "Description of the Certificates -- Defaulted Receivables; Rebates
and Fraudulent Charges" in this prospectus.
THE EFFECT ON CERTIFICATEHOLDERS OF CERTAIN LITIGATION AGAINST THE SELLER IS
UNCLEAR
In October 1998, the U.S. Justice Department sued MasterCard International
Incorporated, VISA U.S.A., Inc. and VISA International, Inc. in the U.S.
District Court for the Southern District of New York. The suit asserts that
joint control of both the MasterCard and VISA associations by the same group of
banks lessens competition and therefore violates the antitrust laws. The
government contends that banks should not be permitted to participate in the
governance of both associations. The government is also challenging the rules of
the associations that restrict banks from issuing American Express or Discover
cards. MasterCard and VISA have both stated that they believe the suit to be
without merit, and have denied the allegations. However, we cannot predict the
outcome of the litigation, or its effect on the competitive environment in the
credit card industry.
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<PAGE> 60
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 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.
PAYMENT PATTERN OF RECEIVABLES COULD REDUCE COLLECTIONS
The receivables may be paid at any time. We cannot assure the creation of
additional receivables in the accounts or that any particular pattern of
cardholder payments will occur. The commencement and continuation of a revolving
period, a scheduled amortization period, a principal amortization period or a
controlled accumulation period for a series or class of the series depend upon
the continued generation of new receivables to be conveyed to the trust. A
significant decline in the amount of receivables generated could result in the
occurrence of a pay out event for one or more series and the commencement of the
early amortization period or, if applicable, the rapid accumulation period for
each of those series. If a pay out event occurs, you could receive payment of
principal sooner than expected. The seller's ability to compete in the current
industry environment will affect its ability to generate new receivables and
might also affect payment patterns on the receivables. In addition, changes in
finance charges can alter the monthly payment rates of cardholders. A
significant decrease in monthly payment rates could slow the return or
accumulation of principal during an amortization period or accumulation period.
See "Maturity Considerations" in this prospectus.
THE INTEREST RATE ON RECEIVABLES MAY FLUCTUATE DIFFERENTLY THAN THE INTEREST
RATE ON THE CERTIFICATES, RESULTING IN REDUCED PAYMENTS TO YOU
Some accounts may have finance charges set at a variable rate based on a
designated index, for example, the prime rate. A series
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<PAGE> 61
of certificates may bear interest either at a fixed rate or at a floating rate
based on a different index. If the rate charged on the accounts declines,
collections of finance charge receivables may be reduced without a corresponding
reduction in the amounts payable as interest on the certificates and other
amounts paid from collections of finance charge receivables. This could result
in delayed or reduced principal and interest payment to you.
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 the
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 certificate owners are the
registered holders, such 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, Clearstream or Euroclear and their participating
organizations. See "Description of the Certificates -- Book-Entry Registration"
in this prospectus.
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
"Annex II: The Bank Portfolio" in the accompanying prospectus supplement.
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
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<PAGE> 62
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 certificate. 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 early amortization upon the
occurrence of a series pay out event, these events may cause your principal to
be paid back earlier than expected.
THE SELLER MAY CHANGE THE TERMS OF THE ACCOUNTS IN A WAY THAT REDUCES
COLLECTIONS
The seller transfers the receivables to the trust but continues to own the
accounts. As owner of the accounts, the seller retains the right to change
various account terms (including finance charges and other fees it charges and
the required monthly minimum payment). A pay out event could occur if the seller
reduced the finance charges and other fees it charges and a corresponding
decrease in the collection of finance charges and fees resulted. In addition,
changes in the account terms may alter payment patterns. If payment rates
decrease significantly at a time when you are scheduled to receive principal,
you might receive principal more slowly than planned.
The seller will not reduce the interest rate it charges on the receivables or
other fees if that action would result in a pay out event unless the seller is
required by law or determines it is necessary to maintain its credit card
business, based on its good faith assessment of its business competition.
The seller will not change the terms of the accounts or its servicing practices
(including the reduction of the required minimum monthly payment and the
calculation of the amount or the timing of finance charges, other fees and
charge-offs) unless the seller reasonably believes a pay out event would not
occur for any series and takes the same action on its other substantially
similar accounts, to the extent permitted by those accounts.
The seller has no restrictions on its ability to change the terms of the
accounts except as described above or in the accompanying prospectus supplement.
Changes in relevant law, changes in the marketplace or prudent business
practices could cause the seller to change account terms.
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SUBORDINATED CLASSES BEAR ADDITIONAL RISKS
Where one or more classes in a series are subordinated, principal payments on
the subordinated class or classes generally will not begin until the senior
class or classes are repaid. Additionally, if collections of finance charge
receivables allocated to a series are insufficient to cover amounts due for that
series' senior certificates, the invested amount for the subordinated
certificates might be reduced. This would reduce the amount of the collections
of finance charge receivables available to the subordinated certificates in
future periods and could cause a possible delay or reduction in principal and
interest payments on the subordinated certificates. If receivables had to be
sold, the net proceeds of that sale available to pay principal would be paid
first to senior certificateholders and any remaining net proceeds would be paid
to the subordinated certificateholders.
THE BANK MAY TRANSFER ITS OBLIGATIONS TO ANOTHER ENTITY
The bank may, subject to certain conditions, transfer its respective interests
and obligations with respect to the trust and under the pooling and servicing
agreement to an assuming entity that is not affiliated with the bank without
obtaining certificateholder consent to the transfer. See "Assumption of the
Bank's Obligations" in this prospectus.
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THE TRUST
National City Credit Card Master Trust was formed, in accordance with the
laws of the State of New York, pursuant to a pooling and servicing agreement
dated as of June 1, 1995. The pooling and servicing agreement was amended and
restated as of July 1, 2000. The pooling and servicing agreement is between
National City Bank, the bank, as seller and servicer, and The Bank of New York,
as trustee. The pooling and servicing agreement, as originally executed, was
between First of America Bank - Michigan, N.A., as seller and servicer, First of
America Bank - Illinois, N.A., as seller, and the trustee. First of America Bank
-Michigan, N.A., was succeeded, as described in this prospectus, as seller and
servicer and First of America Bank - Illinois, N.A. was succeeded, as described
in this prospectus, as seller on September 1, 1998 by the bank. The pooling and
servicing agreement, as amended and restated, and any series supplement are
sometimes together referenced to as the pooling and servicing agreement.
The trust, from time to time, issues series of asset backed certificates.
Each series is issued pursuant to the terms of a series supplement to the
pooling and servicing agreement. The trust will only engage in the following
business activities:
- acquiring and holding trust assets;
- issuing series of certificates and other interests in the trust;
- making payments on the certificates and other interests; and
- engaging in related activities (including, with respect to any series,
obtaining any enhancement and entering into an enhancement agreement
relating thereto).
As a consequence, the trust is not expected to have any need for additional
capital resources other than the assets of the trust.
To assist you in understanding this prospectus and the accompanying
prospectus supplement, the terms that are defined in the "Glossary of Defined
Terms" appear in bold typeface the first time they appear in each section and
subsection.
TRANSFER AND ASSUMPTION
THE TRANSFER
The trust was created in 1995 and from this formation until July 1, 2000
was known as First of America Credit Card Master Trust. First of America Bank -
Michigan, N.A., was a seller and the servicer and First of America Bank -
Illinois, N.A. was a seller under the original pooling and servicing agreement
dated June 1, 1995. On September 1, 1998, First of America Bank - Michigan, N.A.
and First of America Bank - Illinois, N.A. transferred to the bank certain
assets and liabilities relating to their respective credit card businesses
including their credit card accounts and the assets and liabilities of First of
America Bank - Michigan, N.A. and First of America Bank - Illinois, N.A.
relating to the trust.
ASSUMPTION AGREEMENT AND AMENDMENTS TO THE POOLING AND SERVICING AGREEMENT
Under the terms of an assumption agreement and amendment to the pooling and
servicing agreement dated as of September 1, 1998, the bank accepted and assumed
all of First of America Bank - Michigan, N.A.'s and First of America Bank -
Illinois, N.A.'s liabilities under and assumed and agreed to perform each and
every covenant and obligation of the seller and the servicer contained in the
pooling and servicing agreement and the series supplements. Pursuant to the
assumption agreement and amendment, the SELLER INTEREST was assigned and assumed
by the bank.
In addition, under the assumption agreement and amendment, ownership of the
ACCOUNTS was transferred to the bank, and the bank sold, transferred, assigned,
set over and otherwise conveyed 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 the accounts. The bank has also granted to the
trustee on behalf of the
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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.
Under the terms of the pooling and servicing agreement, as amended and
restated as of July 1, 2000, the bank changed the name of the trust from First
of America Credit Card Master Trust to National City Credit Card Master Trust.
Pursuant to the assumption agreement and amendments described above:
- First of America Bank - Michigan, N.A. was released as a seller and as
servicer and has no further obligations or liabilities under the pooling
and servicing agreement or the series supplements;
- First of America Bank - Illinois, N.A. was released as a seller and has
no further obligations or liabilities under the pooling and servicing
agreement or the series supplements;
- the bank has become the sole seller and servicer;
- the name of the trust has become National City Credit Card Master Trust.
THE BANK'S CREDIT CARD ACTIVITIES
GENERAL
The bank portfolio is serviced at offices located in Michigan and Ohio. The
primary servicing center is located in Kalamazoo, Michigan, where collection,
customer service, settlement and finance departments are housed. Additional
services such as credit processing and relationship management are done through
the Columbus, Ohio location.
Certain data processing and ministerial functions associated with the
servicing of the bank portfolio are performed on behalf of the bank by First
Data Resources, Inc. If FDR were to fail or become insolvent, delays in
processing and recovery of information with respect to charges incurred by
cardholders could occur and the replacement of the services FDR currently
provides to the bank could be time consuming. As a result, delays in payments to
certificateholders could occur.
FDR was established in 1968 as the data processing unit of MidAmerica
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.
The bank uses a variety of the services provided by FDR in originating and
servicing the bank's VISA and MasterCard accounts, including a provision of
network interface to other card processors through VISA USA, Inc. and MasterCard
International, Inc. This network provides cardholder authorizations in addition
to a conduit for funds transfer and settlement.
NEW ACCOUNTS AND UNDERWRITING
Substantially all of the bank portfolio has been generated through direct
mailings, telemarketing and branch take-ones. The bank identifies potential
cardholders for pre-approved solicitations by supplying a list of credit
criteria to a credit bureau, which generates a list of individuals who meet such
criteria. When the bank receives an acceptance certificate from an individual
who received a pre-approved solicitation, the bank obtains a credit report on
such individual issued by an independent credit reporting agency, and the
issuance of a credit card to such individual and the credit limit and terms of
the account are subject to limited post-screening review by the bank. Generally,
the bank issues classic, gold and platinum credit cards, each with a
corresponding higher credit limit.
The bank's underwriting approach to non pre-approved account approval uses
computerized credit scoring systems. Additionally, variables such as outstanding
debt and credit bureau risk score of credit
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history are also considered. Furthermore, the bank reviews a credit report on
each applicant issued by an independent credit reporting agency and, for certain
applicants, independently verifies employment, income or other information
contained in the credit application.
If an application is approved, the bank establishes an initial credit limit
on the cardholder's account based on a scored evaluation of the cardholder's
creditworthiness. This credit limit is adjusted from time to time based on the
bank's continuing evaluation of the cardholder's repayment ability as evidenced
by the cardholder's repayment history and other factors. The bank also may
increase the credit limit at the cardholder's request after completion of an
evaluation comparable to that performed during the initial underwriting.
The bank reviews credit losses on a monthly basis. From time to time, based
on such review and other factors, the bank adjusts its underwriting standards
appropriately. The bank also performs an ongoing credit review of each account
which may result in closing the account.
USE OF CREDIT CARDS
Each cardholder is subject to an agreement with the bank governing the
terms and conditions of the related MasterCard or VISA account. Under each such
agreement, the bank reserves the right, upon advance notice to the cardholder,
to add or to change any terms, conditions, services or features of its
MasterCard or VISA accounts at any time, including increasing or decreasing
periodic finance charges, other charges or minimum payment terms. The agreement
with each cardholder provides that the bank may apply such changes, when
applicable, to current outstanding balances as well as to future transactions.
The cardholder can avoid certain changes in terms by giving timely written
notification to the bank and by not using the account.
A cardholder may use the credit card for two types of transactions:
purchases and cash advances. Cardholders make purchases when using the credit
card to pay for goods or services. A cash advance is made when a credit card is
used to obtain cash from a financial institution or an automated teller machine.
Cardholders may use special cash advance checks issued by the bank to draw
against their MasterCard or VISA credit lines. Cardholders may draw against
their credit lines with the bank as a cash advance by transferring balances owed
to other creditors to their accounts with the bank.
BILLING AND PAYMENTS
The ACCOUNTS in the trust portfolio currently have various billing and
payment characteristics, including varying periodic rate finance charges and
fees.
Cardholders receive monthly billing statements summarizing the activity in
their accounts. Currently, a cardholder must make a monthly minimum payment
generally equal to the greater of 2.5% of the outstanding account balance (plus
the full amount, if any, in excess of the applicable credit limit, and any
amount past due) or $10. Balances of $10 or less must be paid in full. Other
charges currently assessed by the bank include a late charge (generally between
$25 and $29, assessed by the bank if they do not receive the required minimum
payment on or before the last day of the billing cycle), a fee for exceeding the
applicable credit limited (generally between $25 and $29) and a return check
charge (generally between $25 and $29). The bank has reserved the right to
assess cash advance fees (generally equal to 3% of the cash advance subject to a
$3 minimum). Cardholders may also purchase credit life, unemployment and
disability insurance covering their account. All fees, charges and insurance
premiums assessed by the bank are automatically charged to the account and are
included in the account balance.
The bank assesses interest based on the average daily account balance. To
calculate this balance, the bank first takes the beginning account balance each
day, adds any new purchases or cash advances and subtracts any payments or
credits. This computation yields the daily account balance. The bank then adds
all the daily account balances for the billing cycle and divides the total by
the number of days in the billing cycle. This produces the average daily account
balance. The total periodic charge for a billing cycle is calculated by
multiplying the average daily account balance by the daily periodic rate and by
the
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number of days in the billing cycle. Periodic charges for purchases are not
assessed if all balances shown in the billing statement are paid by the due date
each month, which is normally 27 days after the statement closing date, or if
the previous purchase balance on the most recent prior monthly statement was
zero. Cash advances accrue periodic charges on the outstanding balance of the
advance from the date of the advance until the date full payment is received.
Currently, substantially all of the accounts in the trust portfolio incur
periodic finance charges at variable annual percentage rates. The bank makes use
of introductory periodic finance charge rates. The introductory periodic finance
charge rates are generally fixed for some initial period, and at the conclusion
of this period rise to a higher, variable periodic finance charge rate.
DELINQUENCIES
An ACCOUNT is contractually delinquent if the minimum payment indicated on
the cardholder's statement is not received by the payment due date. In addition,
a late fee is assessed at the due date. Efforts to collect contractually
delinquent credit card receivables are made by the bank's service center
personnel or the bank's designees. Collection activities include statement
messages, formal collection letters and telephone calls. Collection personnel
generally initiate telephone contact with cardholders whose accounts have become
from one to sixty days contractually delinquent depending on the risk associated
with the cardholder as indicated by an adaptive control system. In the event
that initial telephone contact fails to resolve the delinquency, the bank
continues to contact the cardholder by telephone and by mail. In certain
situations, the bank may enter into arrangements with the cardholders to extend
or otherwise change payment schedules and other account terms. Delinquency
levels are monitored by collection managers and information is reported
regularly to senior management of the bank. Accounts are generally charged off
when they become 120 days contractually delinquent (or sooner in the event of
receipt of notice of death or bankruptcy of the credit card holder). At that
time, they are generally referred to the internal recovery department or, in
appropriate circumstances, to outside collection agencies.
The bank's account origination, credit evaluation, servicing and charge-off
policies and collection practices may change from time to time in accordance
with the bank's business judgement, industry practice, applicable laws and
regulations and other factors. These changes may affect the performance of the
trust portfolio and the collectability of the receivables.
INTERCHANGE
Issuing banks participating in the VISA and MasterCard associations receive
certain fees from VISA and MasterCard, 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 systems, interchange in connection with cardholder purchases for
goods and services is passed from acquiring banks which clear the transactions
for merchants to credit card issuing banks. Interchange fees are set annually by
MasterCard and VISA and are based on the number of credit card transactions and
the amount charged per transaction. The seller may be required, as described in
the accompanying prospectus supplement, to transfer to the trust a percentage of
the interchange attributed to cardholder charges for goods and services in the
related accounts. If so required to be transferred, interchange arising under
the related accounts will be allocated to the related certificates of any series
in the manner provided in the accompanying prospectus supplement, and, unless
otherwise provided in the accompanying prospectus supplement, will be treated as
collections of finance charge receivables and will be used to pay required
monthly payments, including interest on the related series of certificates, and,
in some cases, to pay all or a portion of the servicing fee paid to the
servicer.
THE BANK AND NATIONAL CITY CORPORATION
The bank is a national banking association and wholly owned subsidiary of
National City Corporation. As of May 16, 2000, the Corporation became a
financial holding company under the terms of the
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Financial Modernization law, also known as the Gramm-Leach-Bliley Act. Prior to
becoming a financial holding company, the Corporation was a bank holding company
organized under the Bank Holding Company Act of 1956, as amended. The executive
offices of the bank and the Corporation are located at 1900 East 9th Street,
Cleveland, Ohio and the telephone number is (216) 575-2000.
ASSUMPTION OF THE BANK'S OBLIGATIONS
The bank, from time to time, may consider a transfer of all or a portion of
its consumer revolving credit card accounts and the receivables in these
accounts to another entity which may or may not be affiliated with the bank.
This may include all, but not less than all, of the accounts and the following:
- the bank's remaining interest in the receivables in the accounts;
- the bank's interest in assigned assets; and
- all of the bank's assumed obligations including servicing functions and
related obligations under the pooling and servicing agreement.
Under the pooling and servicing agreement, the bank is permitted to assign,
convey and transfer the assigned assets and assumed obligations to this assuming
entity, without the consent or approval of the holders of any certificates, if
the following conditions are satisfied:
(i) the assuming entity, the bank and the trustee have entered into an
assumption agreement providing for the assuming entity to assume the
assumed obligations, inducing the obligation under the pooling and
servicing agreement to transfer the receivables arising under the accounts
and receivables arising under any additional accounts to the trust;
(ii) each provider of SERIES ENHANCEMENT, if any, shall have consented
to the transfer and assumption;
(iii) all filings required to perfect the interest of the trustee in
the receivables under the accounts are made and copies have been delivered
by the bank or the assuming entity to the trustee;
(iv) the bank received written notice from each rating agency that the
transfer and assumption will not cause any rating agency to reduce or
withdraw its rating of the certificates of any outstanding series;
(v) the trustee received an opinion of counsel regarding clause (iii)
above and as to other matters specified in the pooling and servicing
agreement; and
(vi) the trustee received a TAX OPINION.
The pooling and servicing agreement provides that the bank, the assuming
entity and the trustee may enter into amendments to the pooling and servicing
agreement to permit the transfer and assumption described above without the
consent of the holders of any certificates. After any permitted transfer and
assumption, the assuming entity will be considered to be the "seller" for all
purposes, and the bank will have no further liability or obligation under the
pooling and servicing agreement, other than those liabilities that arose prior
to this transfer. Additionally, the seller may transfer, from time to time, to
any other seller upon satisfaction of clauses (i) and (iii) above.
THE RECEIVABLES
The receivables in the trust, called the trust portfolio, will arise in
ACCOUNTS selected from the bank portfolio on the basis of criteria set forth in
the pooling and servicing agreement as applied on the CUT-OFF DATE specified in
the accompanying prospectus supplement and, with respect to additional accounts,
as of the date of their designation. The seller will have the right (subject to
certain limitations and conditions set forth therein), and in some circumstances
will be obligated, to designate from time to time additional eligible revolving
credit card accounts to be included as accounts and to transfer to the trust all
receivables
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of these additional accounts, whether the receivables are then existing or
thereafter created, or to transfer to the trust, undivided interests, called
participations, in receivables primarily consisting of revolving credit card
accounts owned by the seller instead. Any additional accounts designated by the
seller must meet certain eligibility requirements on the date of designation.
The seller also has the right (subject to certain limitations and conditions) to
designate certain accounts and to require the trustee to reconvey all
receivables in these accounts to the seller, whether the receivables are then
existing or created in the future. Throughout the term of the trust, the
accounts from which the receivables arise will be the accounts designated by the
seller on the cut-off date plus any additional accounts minus any removed
accounts. With respect to each series of certificates, the seller will represent
and warrant to the trust that, as of the date of issuance of the related series
and the date receivables are conveyed to the trust, the receivables meet certain
eligibility requirements. See "Description of the Certificates --
Representations and Warranties" in this prospectus.
The prospectus supplement relating to each series of certificates will
provide certain information about the trust portfolio as of the date specified.
The information will include, but not be limited to, the amount of PRINCIPAL
RECEIVABLES, the amount of FINANCE CHARGE RECEIVABLES, the range and average of
principal balances of the accounts, the range and average of credit limits of
the accounts, the range and average of ages of the accounts, the geographic
distribution of the accounts, the types of accounts and delinquency statistics
relating to the accounts.
MATURITY CONSIDERATIONS
For each series, following the revolving period, collections of PRINCIPAL
RECEIVABLES are expected to be:
- distributed to holders of specified classes of certificates on each
specified distribution date during the scheduled amortization period or
the principal amortization period; or
- accumulated for payment to certificateholders of specified classes during
an accumulation period and, under certain limited circumstances if so
specified in the accompanying prospectus supplement, a rapid accumulation
period, and distributed on a scheduled payment date.
If the early amortization period or rapid accumulation period commences,
collections of principal receivables will be paid to certificateholders in the
manner described in this prospectus and in the accompanying prospectus
supplement. The accompanying prospectus supplement will specify:
- when the amortization period or accumulation period will commence;
- the principal payments expected or available to be received or
accumulated during that amortization period or accumulation period, or on
the scheduled payment date, as applicable;
- the manner and priority of principal accumulations and payments among the
classes of a series;
- the payment rate assumptions on which such expected principal
accumulations and payments are based; and
- the PAY OUT EVENTS which, if any were to occur, would lead to the
commencement of an early amortization period or, if so specified in the
accompanying prospectus supplement, a rapid accumulation period.
We cannot assure you, however, that the principal receivables allocated to
be paid to you will be available for distribution or accumulation for payment on
each distribution date during the amortization period or accumulation period, or
on the scheduled payment date, as applicable. In addition, we cannot assure you
that the payment rate assumptions for any series will prove to be correct. The
accompanying prospectus supplement will provide certain historical data relating
to payments by cardholders, total charge-offs and other related information
relating to the bank portfolio. There can be no assurance that future events
will be consistent with the historical data.
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Cardholders' use of credit and payment patterns may change due to:
- seasonal variations;
- the payment habits of individual cardholders; or
- a variety of social, technological, legal and economic factors.
As a result, the amount of collections of receivables may vary from month
to month. Economic factors include the rate of inflation, unemployment levels
and relative interest rates.
While the addresses of the cardholders in the portfolio suggest a wide
geographic distribution, the seller is unable to determine the extent to which
these factors may affect future credit use or payment patterns.
We cannot assure you that collections of principal receivables with respect
to the trust portfolio, and thus the rate at which certificateholders could
expect to receive or accumulate payments of principal on their certificates
during an amortization period or accumulation period, or on any scheduled
payment date, as applicable, will be similar to any historical experience set
forth in the accompanying prospectus supplement. If a pay out event occurs and
the early amortization period commences, the average life and maturity of your
certificates could be significantly reduced.
We cannot assure you that the actual number of months elapsed from the date
of issuance of a series of certificates to the final distribution date for the
certificates will equal the expected number of months, because, for any series:
- there may be a slowdown in the payment rate below the payment rate used
to determine the amount of collections of principal receivables scheduled
or available to be distributed or accumulated for later payment to
certificateholders during an amortization period or an accumulation
period, or on any scheduled payment date, as applicable; or
- a pay out event may occur which could initiate the early amortization
period.
USE OF PROCEEDS
The net proceeds from the sale of each series of certificates offered
hereby will be paid to the seller. The seller will use these proceeds for its
general corporate purposes. However, the seller will not receive any proceeds
from the sale of the certificates in market-making transactions by NatCity
Investments, Inc. or any other affiliate of the seller. See "Plan of
Distribution" in this prospectus.
DESCRIPTION OF THE CERTIFICATES
The certificates will be issued in series. Each series will represent an
interest in the trust other than the interests represented by any other series
of certificates issued by the trust (which may include series offered pursuant
to this prospectus) and the SELLER INTEREST. Each series will be issued pursuant
to the pooling and servicing agreement and a series supplement to the pooling
and servicing agreement, a copy of the form of which is filed as an exhibit to
the registration statement of which this prospectus is a part. The prospectus
supplement for each series will describe any provisions which may differ
materially from the exhibits filed with the registration statement.
The following summaries describe certain provisions common to each series
of certificates.
GENERAL
The certificates of each series will represent an interest in certain
assets of the trust, including the right to the applicable investor percentage
of all cardholder payments on the receivables in the trust. For
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each series of certificates, unless otherwise specified in the accompanying
prospectus supplement, the INVESTED AMOUNT on any date will be equal to:
(1) the initial invested amount as of the related closing date for such
series (increased by the principal balance of any certificates of such
series issued after the closing date for such series); minus
(2) the amount of principal paid to the related certificateholders prior to
such date; minus
(3) the amount of unreimbursed INVESTOR CHARGE-OFFS with respect to such
certificates prior to such date.
If so specified in the prospectus supplement relating to any series of
certificates, under certain circumstances the invested amount may be further
adjusted by the amount of principal allocated to certificateholders, the funds
on deposit in any specified ACCOUNT, and any other amount specified in the
accompanying prospectus supplement.
Each series of certificates may consist of one or more classes, one or more
of which may be senior certificates and one or more of which may be subordinated
certificates. Each class of a series will evidence the right to receive a
specified portion of each distribution of principal or interest or both. The
invested amount with respect to a series with more than one class will be
allocated among the classes as described in the accompanying prospectus
supplement. The certificates of a class may differ from certificates of other
classes of the same series in, among other things, the amounts allocated to
principal payments, maturity date, certificate rate and the availability of
enhancement.
For each series of certificates, payments and deposits of interest and
principal will be made on distribution dates to certificateholders in whose
names the certificates were registered on the record dates specified in the
accompanying prospectus supplement. Interest will be distributed to
certificateholders in the amounts, for the periods and on the dates specified in
the accompanying prospectus supplement.
The seller initially will own the SELLER INTEREST. The holder of the seller
interest, subject to certain limitations, will have the right to a percentage of
all cardholder payments from the receivables in the trust. The seller interest
may be transferred in whole or in part subject to certain limitations and
conditions set forth in the pooling and servicing agreement. At the discretion
of the seller, the seller interest may be held either in an uncertificated form
or by a SELLER CERTIFICATE. See " -- Certain Matters Regarding the Seller and
the Servicer" in this prospectus.
With respect to each series of certificates, during the revolving period,
the amount of the invested amount in the trust will remain constant except under
certain limited circumstances. See " -- Defaulted Receivables; Rebates and
Fraudulent Charges" in this prospectus. The amount of PRINCIPAL RECEIVABLES in
the trust, however, will vary each day as new principal receivables are created
and others are paid. The amount of the seller interest will fluctuate each day,
therefore, to reflect the changes in the amount of the principal receivables in
the trust. When a series is amortizing, the aggregate unpaid principal amount of
that series will decline as customer payments of principal receivables are
collected and distributed to or accumulated for distribution to the
certificateholders. As a result, the seller interest will generally increase to
reflect reductions in the invested amount for that series and will also change
to reflect the variations in the amount of principal receivables in the trust.
The seller interest may also be reduced as the result of the issuance of a new
series. See " -- New Issuances" in this prospectus.
Unless otherwise specified in the accompanying prospectus supplement,
certificates of each series initially will be represented by certificates
registered in the name of the nominee of DTC, called together with any successor
depository selected by the seller, the depository, except as set forth below.
Unless otherwise specified in the accompanying prospectus supplement, with
respect to each series of certificates, beneficial interests in the certificates
will be available for purchase in minimum denominations of $1,000 and integral
multiples thereof only through the book-entry procedures of a depository and its
participants. 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. No CERTIFICATE OWNER acquiring an interest
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in the certificates will be entitled to receive a certificate representing such
person's interest in the certificates. Unless and until certificates in fully
registered, certificated form are issued for any series under the limited
circumstances described in this prospectus:
- all references in this prospectus or any related prospectus supplement 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 that term is used in the pooling and servicing
agreement) and all references in this prospectus or any related
prospectus supplement 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 procedures.
Therefore, until such time, a certificate owner will only be able to
exercise its rights as a certificateholder indirectly through DTC, Clearstream
Banking, societe anonyme or the Euroclear System and their participating
organizations. See " -- Book-Entry Registration" and " -- Definitive
Certificates" in this prospectus.
If so specified in the prospectus supplement relating to a series,
application will be made to list the certificates of the series, or all or a
portion of any class thereof, on the Luxembourg Stock Exchange or any other
specified exchange.
BOOK-ENTRY REGISTRATION
Certificateholders may hold their certificates through DTC (in the United
States) or Clearstream or Euroclear (in Europe) if they are participants of
these systems, or indirectly through organizations that are participants in such
systems.
Cede, as nominee for DTC, will hold the global certificates. Clearstream
and Euroclear will hold omnibus positions on behalf of the Clearstream customers
and the Euroclear participants, respectively, through 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 participants and facilitate the clearance and settlement of securities
transactions between its 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), 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, as indirect participants, that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Transfers between DTC participants will occur in accordance with DTC rules.
Transfers between Clearstream 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, on the one hand, and directly or indirectly through Clearstream
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, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions
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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. Clearstream customers and Euroclear participants may not deliver
instructions directly to the depositaries.
Because of time-zone differences, credits of securities in Clearstream or
Euroclear 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 the credits or any transactions in the
securities settled during the processing will be reported to the relevant
Clearstream customer or Euroclear participant on such business day. Cash
received in Clearstream or Euroclear as a result of sales of securities by or
through a Clearstream 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 Clearstream 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 interest
in, certificates may do so only through participants and indirect participants.
In addition, certificate owners will receive all distributions of principal of
and interest on the certificates from the trustee through the participants who
in turn will receive them from DTC. Under a book-entry format, certificate
owners may experience some delay in their receipt of payments, since such
payments will be forwarded by the trustee to Cede, as nominee for DTC. DTC will
forward such payments to its participants which thereafter will forward them to
indirect participants or certificate owners. It is anticipated that the only
certificateholder will be Cede, as nominee of 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 and is required to
receive and transmit distributions of principal and interest on the
certificates. Participants and indirect participants with which certificate
owners have accounts with respect to the certificates similarly are required to
make book-entry transfers and receive and transmit such 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 can only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a certificate
owner to pledge certificates to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of these certificates, may
be limited due to the lack of a physical certificate for these certificates.
DTC has advised the seller that it will take any action permitted to be
taken by a certificateholder 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 seller that it will
take such actions with respect to specified percentages of the INVESTED AMOUNT
only at the direction of and on behalf of participants whose holdings include
interests that satisfy such specified percentages. DTC may take conflicting
actions with respect to other interests to the extent that such actions are
taken on behalf of participants whose holdings include such interests.
Clearstream is incorporated under the laws of Luxembourg. Clearstream holds
securities for its customers and facilitates the clearance and settlement of
securities transactions between Clearstream customers through electronic
book-entry changes in accounts of Clearstream customers, thereby eliminating the
need for physical movement of certificates. Transactions may be settled in
Clearstream in any of 36 currencies, including United States dollars.
Clearstream provides to its Clearstream customers, among other things, services
for safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Clearstream also deals
with domestic securities markets in over 30 countries through established
depository and custodial relationships. Clearstream is registered as a bank in
Luxembourg, and as such is subject to regulation by the Commission de
Surveillance du Secteur Financier, which supervises Luxembourg banks.
Clearstream's 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
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series of certificates. Clearstream's U.S. customers are limited to securities
brokers and dealers and banks. Currently, Clearstream has approximately 2,000
customers located in over 80 countries, including all major European countries,
Canada and the United States. Indirect access to Clearstream is also available
to other institutions that clear through or maintain a custodial relationship
with an account holder of Clearstream. Clearstream has established an electronic
bridge with Morgan Guaranty Trust Company of New York as the operator of the
Euroclear System in Brussels to facilitate settlement of trades between
Clearstream and Euroclear.
Euroclear 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 27 currencies, including United States
dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. The Euroclear System is operated by Morgan Guaranty Trust
Company of New York, Brussels, Belgium office as the Euroclear operator, under
contract with Euroclear Clearance System, S.C., 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 on behalf of Euroclear participants. Euroclear
participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
underwriters of any series of certificates. Indirect access to the Euroclear
System is also available to other firms that clear through or maintain a
custodial relationship with a Euroclear participant, either directly or
indirectly.
The Euroclear operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law.
These rules and laws 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 these rules and laws 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 Clearstream or
Euroclear will be credited to the cash accounts of Clearstream customers or
Euroclear participants in accordance with the relevant system's rules and
procedures, to the extent received by its depositary. Such distributions will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations. See "Federal Income Tax Consequences" in this prospectus.
Clearstream 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 Clearstream 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, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of certificates among participants
of DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
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DEFINITIVE CERTIFICATES
The certificates of each series will be issued in fully registered,
certificated form to CERTIFICATE OWNERS or their nominees 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 to discharge properly its responsibilities as depository
with respect to such series, and the trustee or the seller is unable to
locate a qualified successor;
(2) the seller, at its option, advises the trustee in writing that it
elects to terminate the book-entry system through DTC; or
(3) after the occurrence of a SERVICER DEFAULT, certificate owners
representing not less than 50% (or such other percentage specified in the
accompanying prospectus supplement) of the INVESTED AMOUNT advise the
trustee and DTC through participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the
best interest of the certificate owners.
Upon the occurrence of any of these events, the trustee is required,
through DTC, to notify all participants of the availability through DTC of
definitive certificates. Upon surrender by DTC of the definitive certificate
representing the certificates and instructions for re-registration, the trustee
will issue the certificates as definitive certificates, and thereafter the
trustee will recognize the holders of such definitive certificates as holders of
certificates under the pooling and servicing agreement.
Distribution of principal and interest on the certificates will be made by
the trustee directly to holders of definitive certificates in accordance with
the procedures set forth 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. Distributions
will be made by check mailed to the address of such holder as it appears on the
register maintained by the trustee. The final payment on any certificate
(whether definitive certificates or the certificates registered in the name of
Cede representing the certificates), however, will be made only upon
presentation and surrender of such certificate at the office or agency specified
in the notice of final distribution to certificateholders. The trustee will
provide the notice to registered certificateholders not later than the fifth day
of the month of the final distributions.
Definitive certificates will be transferable and exchangeable at the
offices of the transfer agent and registrar, which shall initially be the
trustee. No service charge will be imposed for any registration of transfer or
exchange, but the transfer agent and registrar may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith. The transfer agent and registrar shall not be required to register
the transfer or exchange of definitive certificates for a period of fifteen days
preceding the due date for any payment with respect to such definitive
certificates.
INTEREST
Interest will accrue on the certificates from the relevant closing date at
the applicable certificate rate, which may be a fixed, floating or other type of
rate as specified in the accompanying prospectus supplement. Interest will be
distributed or deposited with respect to certificateholders on the distribution
dates. Interest payments or deposits on any distribution date will be funded
from collections of FINANCE CHARGE RECEIVABLES allocated to the INVESTED AMOUNT
during the preceding monthly period or periods and may be funded from certain
investment earnings on funds held in ACCOUNTS of the trust and, from any
applicable credit enhancement, if necessary, or certain other amounts as
specified in the accompanying prospectus supplement.
If the distribution dates for payment or deposit of interest for a series
or class occur less frequently than monthly, such collections or other amounts
(or the portion thereof allocable to a class) may be deposited in one or more
interest funding accounts pending distribution to the certificateholders of such
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series or class, as described in the accompanying prospectus supplement. If a
series has more than one class, each class may have a separate interest funding
account.
The prospectus supplement relating to each series of certificates will
describe:
- the amounts and sources of interest payments to be made;
- the certificate rate; and
- for a series or class thereof bearing interest at a floating certificate
rate:
(i) the initial certificate rate or the date and manner for
determining the initial certificate rate;
(ii) the dates and the manner for determining subsequent certificate
rates; and
(iii) the formula, index or other method by which such certificate
rates are determined.
PRINCIPAL
During the revolving period for each series of certificates, no principal
payments will be made to the certificateholders of the related series.
During the scheduled amortization period or principal amortization period,
as applicable, which will be scheduled to begin on the date specified in, or
determined in the manner specified in the accompanying prospectus supplement,
and during the early amortization period, which will begin upon the occurrence
of a PAY OUT EVENT or, if so specified in the accompanying prospectus
supplement, the rapid accumulation period, principal will be paid to the
certificateholders in the amounts and on the dates specified in the accompanying
prospectus supplement.
During an accumulation period, principal will be accumulated in a principal
funding account established for the benefit of the certificateholders for later
distribution to certificateholders on the scheduled payment date in the amounts
specified in the accompanying prospectus supplement.
Principal payments for any series or class will be funded from collections
of PRINCIPAL RECEIVABLES received during the related monthly period or periods
as specified in the accompanying prospectus supplement and allocated to the
series or class and from certain other sources specified in the accompanying
prospectus supplement. In the case of a series with more than one class, the
certificateholders of one or more classes may receive payments of principal at
different times. The accompanying prospectus supplement will describe the
manner, timing and priority of payments of principal to certificateholders of
each class.
Funds on deposit in any principal funding account applicable to a series
may be subject to a guaranteed rate agreement or guaranteed investment contract
or other arrangement specified in the accompanying 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 series or class of certificates at the end of an accumulation period, the
series or class may be subject to a principal guaranty or other similar
arrangement specified in the accompanying prospectus supplement.
TRANSFER AND ASSIGNMENT OF RECEIVABLES
The seller has transferred and assigned all of its right, title and
interest in, to and under the receivables in the ACCOUNTS and all future
receivables created in the accounts.
In connection with each previous transfer of the receivables to the trust,
the seller indicated, and in connection with each subsequent transfer of
receivables to the trust, the seller will indicate, in its computer files that
the receivables have been conveyed to the trust. In addition, the seller has
provided to the trustee computer files or microfiche lists, containing a true
and complete list showing each account, identified by account number and by
total outstanding balance on the date of transfer. The seller will not deliver
to the trustee any other records or agreements relating to the accounts or the
receivables, except in connection with additions or removals of accounts. Except
as stated above, the records and agreements relating to the
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accounts and the receivables in the trust maintained by the seller or the
servicer are not and will not be segregated by the seller or the servicer from
other documents and agreements relating to other credit card accounts and
receivables and are not and will not be stamped or marked to reflect the
transfer of the receivables to the trust, but the computer records of the seller
are and will be required to be marked to evidence such transfer. The seller has
filed Uniform Commercial Code financing statements with respect to the
receivables in the trust meeting the requirements of the applicable state law.
See "Risk Factors" and "Certain Legal Aspects of the Receivables" in this
prospectus.
ADDITION OF TRUST ASSETS
The seller will have the right to designate for the trust, from time to
time, additional accounts to be included as ACCOUNTS transferred to the trust.
In addition, the seller will be required to designate additional accounts under
the circumstances and in the amounts specified in the accompanying prospectus
supplement. The seller will convey to the trust its interest in all receivables
of the additional accounts, whether the receivables are then existing or
thereafter created.
If, as of the close of business on the last business day of any monthly
period, either:
(1) the SELLER AMOUNT is less than the REQUIRED SELLER AMOUNT, or
(2) the amount of PRINCIPAL RECEIVABLES in the trust is less than the
REQUIRED PRINCIPAL BALANCE,
then the seller shall on that day or before 10 business days following that day
make an addition to the trust. As a result of the addition, the seller amount
should be at least equal to the required principal balance.
Each additional account must be an ELIGIBLE ACCOUNT at the time of its
designation. However, additional accounts may not be of the same credit quality
as the initial accounts transferred to the trust. Additional accounts may have
been originated by the seller using credit criteria different from those which
were applied by the seller to the initial accounts transferred to the trust or
may have been acquired by the seller from an institution which may have had
different credit criteria.
In addition to or in lieu of additional accounts, the seller is permitted
to add to the trust participations representing interests in a pool of assets
primarily consisting of receivables arising under consumer revolving credit card
accounts owned by the seller and collections thereon. Participations may be
evidenced by one or more certificates of ownership issued under a separate
pooling and servicing agreement or similar agreement entered into by the seller
which entitles the certificateholder to receive percentages of collections
generated by the pool of assets subject to such participation agreement from
time to time and to certain other rights and remedies specified in the
agreement. Participations may have their own credit enhancement, PAY OUT EVENTS,
servicing obligations and SERVICER DEFAULTS, all of which are likely to be
enforceable by a separate trustee under the participation agreement and may be
different from those specified in this prospectus. The rights and remedies of
the trust as the holder of a participation (and therefore the
certificateholders) will be subject to all the terms and provisions of the
related participation agreement.
A conveyance by the seller to the trust of receivables in additional
accounts or participations is subject to the following conditions, among others:
(1) the seller shall give the trustee, each rating agency and the
servicer written notice that such additional accounts or
participations will be included in the trust, which notice shall
specify the approximate aggregate amount of the receivables or
interests therein to be transferred;
(2) the seller shall have delivered to the trustee a written assignment
(including an acceptance by the trustee on behalf of the trust for
the benefit of the certificateholders) and a computer file or
microfiche list, dated the date of the assignment, containing a true
and complete list of the additional accounts or participations
transferred to the trust;
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(3) the seller shall represent and warrant that:
(x) an addition will not be based on facts known by the authorized
representative of the seller at the time of certification, cause
a pay out event in any series; and
(y) no selection procedures believed by the seller to be materially
adverse to the interests of the certificateholders were utilized
in selecting the additional accounts from the available eligible
accounts from the bank portfolio;
(4) in the case of an addition, other than a required addition or an
automatic account addition as described below, the seller received
confirmation from each rating agency that the addition will not
cause the rating agency to reduce or withdraw the rating of any
outstanding certificates; and
(5) in the case of a required addition that exceeds the AGGREGATE
ADDITIONAL LIMIT, the seller provided to Standard & Poor's with 15
days prior written notice and Standard & Poor's has not notified the
seller that the addition would cause the rating to be reduced or
withdrawn.
Affiliates of the seller or third parties may originate or acquire
portfolios of revolving credit card accounts. The receivables or participations
of these portfolios may be transferred to the seller and sold to the trust. This
sale of receivables to the trust will be subject to the conditions described
above relating to additions.
Additional accounts or participations may include accounts originated using
criteria different from those that were applied to the accounts initially
selected for the trust portfolio. These accounts may have originated at a later
date or were part of a portfolio of revolving credit card accounts which were
not part of the designated portfolio as of the TRUST CUT-OFF DATE or which were
acquired from another institution. Moreover, additional accounts and accounts
included in participations may not be accounts of the same type previously
included in the trust. See "Description of the Certificates -- Representations
and Warranties." Consequently, there can be no assurance that these additional
accounts or participations will be of the same credit quality or have the same
payment characteristics as the accounts initially selected for the trust
portfolio or the additional accounts previously included in the trust.
Additional accounts of types different than the accounts initially selected
for the trust portfolio may contain receivables that consist of fees, charges
and amounts that are different from the fees, charges and amounts that have been
designated as FINANCE CHARGE RECEIVABLES and principal receivables and
participations may be added to the trust as additions. In either case, the
servicer will designate the portions of funds collected or to be collected in
respect of these receivables or participations to be treated for purposes of the
pooling and servicing agreement as principal receivables and finance charge
receivables.
AUTOMATIC ACCOUNT ADDITIONS
Provided each rating agency initially consents, the seller may from time to
time after obtaining such initial consent, at its sole discretion, subject to
and in compliance with the limitations and conditions specified in clauses (1)
through (4) below, designate ELIGIBLE ACCOUNTS, called automatic additional
accounts, to be included as ACCOUNTS as of the applicable ADDITION DATE. For
purposes of this paragraph, eligible accounts shall be deemed to include only
consumer revolving credit card accounts which are originated by the seller or
any affiliate of the seller.
An automatic conveyance by the seller to the trust of receivables in
additional accounts or participations is subject to the following conditions,
among others:
(1) the seller shall have delivered to the trustee a written assignment
(including an acceptance by the trustee on behalf of the trust for
the benefit of the certificateholders) and a computer file or
microfiche list, dated the date of the assignment, containing a true
and complete list of the additional accounts or participations
transferred to the trust;
(2) the seller shall represent and warrant that:
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(x) an addition will not be based on facts known by the authorized
representative of the seller at the time of certification,
cause a pay out event in any series; and
(y) no selection procedures believed by the seller to be materially
adverse to the interests of the certificateholders were
utilized in selecting the additional accounts from the
available eligible accounts from the bank portfolio;
(3) unless each rating agency otherwise consents, the number of accounts
contained in the automatic account addition shall not exceed the
AGGREGATE ADDITIONAL LIMIT; and
(4) any other condition the rating agencies may require at the time of
its initial consent to the inclusion in the trust of automatic
additional accounts.
REMOVAL OF ACCOUNTS
The seller may, but shall not be obligated to, designate from time to time
(which may be restricted to certain periods if so specified in the accompanying
prospectus supplement) ACCOUNTS to be removed accounts, all receivables in which
shall be subject to deletion and removal from the trust. The seller, however,
may not make more than one such designation in any monthly period. The seller
will be permitted to designate and require reassignment to it or its designee of
the receivables from removed accounts only upon satisfaction of the following
conditions:
(1) the removal of any receivables of any removed accounts shall not, in
the reasonable belief of the seller, cause a PAY OUT EVENT to occur;
(2) the seller shall have delivered to the trustee for execution a
written assignment and a computer file or microfiche list, dated the
removal date containing a true and complete list of all removed
accounts identified by account number and the aggregate amount of
the receivables in such removed accounts;
(3) the seller shall represent and warrant that no selection procedures
believed by the seller to be materially adverse to the interests of
the holders of any series of certificates outstanding under the
trust were utilized in selecting the removed accounts to be removed
from the trust;
(4) each rating agency then rating each series of certificates
outstanding under the trust shall have received notice of such
proposed removal of accounts and the seller shall have received
notice from each such rating agency that such proposed removal will
not result in a downgrade of its then-current rating for any such
series;
(5) on or before the tenth business day prior to the removal date the
seller shall have given the trustee, servicer, each rating agency
and some providers of SERIES ENHANCEMENT written notice of the
removal including the removal date;
(6) the designation of the removed accounts shall have been through
random selection unless these accounts relate to an affinity, agent
bank or similar relationship with a third party which has been
terminated and the removal of these accounts would not otherwise
have materially adverse accounting implications for the seller;
(7) such other conditions as may be specified in the accompanying
prospectus supplement; and
(8) the seller shall have delivered to the trustee an officer's
certificate confirming the items set forth in clauses (1) and (3)
above.
Upon satisfaction of the above conditions, the trustee shall execute and
deliver to the seller a written reassignment and shall be deemed to sell,
transfer, assign, set over and otherwise 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 receivables arising in the removed accounts or the
participations, all monies due and to become due and all amounts and proceeds
received.
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The seller will be permitted to designate as a removed account without the
consent of the trustee, certificateholders or rating agencies, and without
having to satisfy the conditions described above, any account that has a zero
balance and which the seller will remove from its computer file.
In addition to the foregoing, on the date when any receivable in an account
becomes a DEFAULTED RECEIVABLE (including any related FINANCE CHARGE
RECEIVABLES), the trust shall automatically and without further action or
consideration be deemed to transfer, set over and otherwise convey to the seller
with respect to the account, without recourse, representation or warranty:
(1) all right, title and interest of the trust in and to the defaulted
receivables (including any related finance charge receivables) in
the account;
(2) all monies due or to become due under the account;
(3) all proceeds from the account; and
(4) any insurance proceeds relating to the account,
provided that recoveries of the account shall be applied as provided in the
pooling and servicing agreement. The trustee shall execute and deliver such
instruments of transfer and assignment (including any UCC termination
statements), in each case without recourse, as shall be reasonably requested by
the seller to vest in the seller or its designee all right, title and interest
that the trust had in the defaulted receivables (including any related finance
charge receivables).
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the pooling and servicing agreement, the servicer is
responsible for servicing, collecting, enforcing and administering the
receivables in accordance with its customary and usual procedures for servicing
receivables comparable to the receivables and in accordance with the CREDIT CARD
GUIDELINES.
Servicing activities to be performed by the servicer include collecting and
recording payments, communicating with cardholders, investigating payment
delinquencies, evaluating the increase of credit limits and the issuance of
credit cards, providing billing and tax records, if any, to cardholders and
maintaining internal records with respect to each ACCOUNT. Managerial and
custodial services performed by the servicer on behalf of the trust include:
(a) providing assistance in any inspections of the documents and records
relating to the accounts and receivables by the trustee pursuant to
the pooling and servicing agreement; and
(b) maintaining the agreement, documents and files relating to the
accounts and receivables as custodian for the trust; and providing
related data processing and reporting services for
certificateholders of any series and on behalf of the trustee.
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 of its affiliates and to certain third-party service providers that agree to
conduct these duties in accordance with the pooling and servicing agreement and
the credit card guidelines. The bank currently contracts with FDR and intends to
continue to contract with FDR (and possibly one or more other third-party
service providers) to perform certain of its servicing activities as described
under "The Bank's Credit Card Activities -- General" in this prospectus.
Notwithstanding this delegation to any entity, the servicer will continue to be
liable for all of its obligations under the pooling and servicing agreement.
DISCOUNT OPTION
The seller has the option to reclassify a percentage, called the DISCOUNT
PERCENTAGE of collections of PRINCIPAL RECEIVABLES in the trust portfolio as
collections of FINANCE CHARGE RECEIVABLES. The seller may use this discount
option to compensate for a decline in the portfolio yield, but only if there
would be sufficient principal receivables to allow for that discounting.
Exercise of the discount option would result in a larger amount of collections
of finance charge receivables and a smaller amount of collections of principal
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receivables. By doing so, the seller would reduce the likelihood that a PAY OUT
EVENT would occur as a result of a decreased portfolio yield and, at the same
time, would increase the likelihood that the seller will have to add principal
receivables to the trust.
If the discount percentage is greater than zero, an amount of collections
of principal receivables in the trust for each monthly period equal to the
product of:
- the discount percentage times
- total collections of principal receivables in the trust
will be considered collections of finance charge receivables in the trust and
allocated with all other collections of finance charge receivables in the trust.
To exercise the discount option, the seller must satisfy the conditions in
the pooling and servicing agreement, including written confirmation from each
rating agency that use of the discount option will not result in a reduction or
withdrawal of its then-existing rating of any outstanding series or class.
NEW ISSUANCES
Under any one or more series supplements, the seller may direct the trustee
to authenticate from time to time new series or issuances subject to the
conditions described below. Each new issuance will decrease the SELLER AMOUNT to
the extent of the INVESTED AMOUNT of the new series. The seller may designate,
with respect to any newly issued series:
(a) its name or designation;
(b) its initial principal amount (or method for calculation such amount)
and its invested amount in the trust;
(c) its certificate rate (or formula for the determination of it);
(d) the INTEREST PAYMENT DATE or dates and the date or dates from which
interest shall accrue;
(e) the method for allocating collections to certificateholders of the
series;
(f) any bank accounts to be used by the series and the terms governing
the operation of the bank accounts;
(g) the percentage used to calculate MONTHLY INVESTOR SERVICING FEES;
(h) the provider and terms of any form of SERIES ENHANCEMENTS in the
series;
(i) the terms on which certificates of the series may be repurchased or
remarketed to other investors;
(j) the SERIES TERMINATION DATE;
(k) the number of classes of certificates of the series, and if the
series consists of more than one class, the rights and priorities of
each class;
(l) the extent to which the certificates of the series will be issuable
in temporary or permanent global form (and, in this case, the
depositary for the global certificate or certificates, the terms and
conditions, if any, upon which the global certificates 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);
(m) whether the certificates of the series may be issued in bearer form
and any limitation imposed thereon;
(n) the priority of the series with respect to any other series;
(o) the GROUP, if any, in which the series will be included; and
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(p) any other principal terms of the series.
None of the seller, the servicer, the trustee or 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 to the public
under the prospectus supplement or other disclosure document in transactions
either registered under the Securities Act of 1933 or exempt from registration
directly, through one or more underwriters or placement agents, in fixed-price
offerings or in negotiated transactions or otherwise. See "Plan of Distribution"
in this prospectus. Any series may be issued in fully registered or book-entry
form in minimum denominations determined by the seller. The seller intends to
offer, from time to time, additional series.
The seller may designate principal terms of a series so each series has an
accumulation period or scheduled amortization period that 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 their accumulation period or scheduled amortization
period while other series are not. Collections of PRINCIPAL RECEIVABLES
otherwise allocable to series that is not amortizing or accumulating principal
will be treated as SHARED PRINCIPAL COLLECTIONS and reallocated to series that
is amortizing or accumulating principal. Moreover, each series may have the
benefits of series enhancements issued by enhancement providers different from
the providers of series enhancement with respect to any other series. The
trustee shall hold any series enhancement only on behalf of the
certificateholders of the series to which the series enhancements relates. With
respect to each series enhancement, the seller may deliver a different form of
series enhancement agreement. The seller also has the option to vary among
series the terms upon which a series may be repurchased by the seller or the
remarketed to other investors. There is no limit to the number of new issuances
the seller may cause. The trust will terminate only as provided in the pooling
and servicing agreement. There can be no assurance that the terms of any series
might not have an impact on the timing and amount of payments received by a
certificateholder of another series.
A new issuance may only occur upon the satisfaction of certain conditions
provided in the pooling and servicing agreement. The obligation of the trustee
to authenticate the certificates of the new series and to execute and deliver
the related series supplement is subject to the satisfaction of the following
conditions:
(a) on or before the tenth business day immediately preceding the date
upon which the new issuance is to occur, the seller shall have given
the trustee, the servicer, each rating agency and certain providers
of series enhancement notice of the new issuance and the date upon
which the new issuance is to occur;
(b) the seller shall have delivered to the trustee the related series
supplement, in form satisfactory to the trustee, executed by each
party to the pooling and servicing agreement other than the trustee;
(c) the seller shall have delivered to the trustee any related series
enhancement agreement executed by each of the parties to that
agreement;
(d) the trustee shall have received confirmation from each rating agency
that the new issuance will not result in a reduction or withdrawal
of the rating;
(e) the seller shall have delivered to the trustee and certain providers
of series enhancements a certificate of an authorized
representative, dated the date upon which the new issuance is to
occur, to the effect that the seller reasonably believes that the
issuance will not, based on the facts known to the representative at
the time of such certification, cause a PAY OUT EVENT to occur with
respect to any series;
(f) the seller shall have delivered to the trustee, each rating agency
and certain providers of series enhancement a TAX OPINION;
(g) the seller amount shall not be less than 2% of the total amount of
principal receivables, in each case as of the date upon which the
new issuance is to occur after giving effect to the issuance;
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(h) the balance of the principal receivables in the trust as of the end
of the next preceding monthly period shall not be less than the
REQUIRED PRINCIPAL BALANCE, as of the date upon which the new
issuance is to occur and after giving effect to the issuance; and
(i) any other conditions specified in any series supplements.
REPRESENTATIONS AND WARRANTIES
As of the series closing date specified in the accompanying prospectus
supplement, the seller will make representations and warranties to the trust
relating to the ACCOUNTS owned by it and the receivables transferred by it to
the effect, among other things that:
(a) as of the TRUST CUT-OFF DATE or the ADDITION DATE each account or
each additional account was an ELIGIBLE ACCOUNT;
(b) as of the trust-cut off date or the addition date, each of the
receivables in any account or additional account that is conveyed to
the trust on that day is an ELIGIBLE RECEIVABLE; and
(c) as of the date of creation of any new receivable, the receivable is
an eligible receivable.
If a seller breaches any representation and warranty described herein, the
breach remains uncured for 60 days, or the longer period as may be agreed to by
notice of the breach of the seller, 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 receivables are
impaired or the proceeds are not available for any reason to the trust free and
clear of any lien, then the certificateholders' interest in all receivables in
the affected account will be reassigned to the seller on the terms and
conditions set forth below and the account shall no longer be included as an
account. However, the receivables will not 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 period:
(a) the relevant representation and warranty shall be true and correct
in all material respects as if made on that day; and
(b) the seller shall have delivered to the trustee a certificate of an
authorized representative describing the nature of the breach and
the manner in which the relevant representation and warranty became
true and correct.
An ineligible receivable shall be reassigned to the relevant seller on or
before the end of the monthly period in which the assignment obligation arises
by the seller directing the servicer to deduct the portion of the ineligible
receivable that is a PRINCIPAL RECEIVABLE from the aggregate amount of the
principal receivables used to calculate the SELLER AMOUNT. In the event that the
exclusion of an ineligible receivable from the calculation of the seller amount
would cause the seller amount to be less than the REQUIRED SELLER AMOUNT, on the
distribution date following the monthly period in which the reassignment
obligation arises, the seller will make a deposit into the SPECIAL FUNDING
ACCOUNT in immediately available funds in an amount equal to the amount by which
the seller amount would be reduced below the required seller amount. Any deposit
into the special funding account, together with the reduction in the SELLER
INTEREST, in connection with the reassignment of an ineligible receivable shall
be considered a payment in full of the ineligible receivable. The reassignment
of any ineligible receivable to a seller is the sole remedy for breaching the
above-described representations and warranties with respect to the receivable
available to certificateholders of any series, or the trustee on behalf of the
certificateholders, or any provider of SERIES ENHANCEMENT.
The seller will also make representations and warranties to the trust to
the effect, among other things, that as of each series closing date:
(a) it is a banking association or corporation, as applicable, validly
existing under the laws of the jurisdiction of its organization, it
has the authority to consummate the transactions
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contemplated by the validly binding and enforceable pooling and
servicing agreement and the related series supplement of the seller;
(b) the pooling and servicing agreement constitutes either:
(i) a valid sale, transfer and assignment to the trust of the right,
title and interest of the seller in the receivables, whether then
existing or later created and in the proceeds, including proceeds
in any of the accounts established for the benefit of the
certificateholders, or
(ii) the grant of a first priority perfected security interest under
the UCC as in effect in Ohio in the receivables and the
proceeds, including proceeds in any of the accounts established
for the benefit of the certificateholders,
which is effective as to each receivable then existing on the date of this
transfer to the trust or, as to each future receivable, upon the creation
of and until the determination of the trust.
If the breach of either of the representations and warranties described in
clauses (a) and (b) above has a material adverse effect on the
certificateholders' interest of all series in the receivables transferred to the
trust by the seller, either the trustee or the certificateholders evidencing not
less than 50% of the aggregate unpaid principal amount of the certificates of
all series, by written notice to the seller and the servicing, and to the
trustee if given by the holders of the requisite percentage of certificates of
all series, may direct the seller to accept the reassignment of the receivables
transferred to the trust by the seller within 60 days of the notice, or within
the longer specified period in the notice. However, these receivables will not
be reassigned to the seller if, on any day prior the end of the 60-day or longer
period:
(a) the relevant representation and warranty shall be true and correct
in all material respects as if made on that day; and
(b) the seller shall have delivered to the trustee a certificate of an
authorized representative describing the nature of the breach and
the manner in which the relevant representation and warranty became
true and correct.
The seller will be obligated to accept the reassignment of the receivables
on the distribution date following the monthly period in which the reassignment
obligation arises. The price of the reassignment, will generally be equal to the
product of:
(A) the aggregate INVESTED AMOUNTS and enhancement investment amounts of
all series on the distribution date on which the purchase is
scheduled to be made plus accrued and unpaid interest on the unpaid
principal amount of all series and any interest amounts that were
due but not paid on a prior date and interest on the overdue
interest amounts, if the applicable series supplement so provides,
as the applicable certificate rates through the day preceding the
distribution date; and
(B) a fraction, the numerator of which is equal to the aggregate amount
of principal receivables in the trust on the distribution date that
were transferred to the trust by the seller and the denominator of
which is equal to the aggregate amount of the principal receivables
in the trust on the distribution date.
The payment of the reassignment price, in immediately available funds, will
be considered a payment in full of the receivables and the principal portion of
the fund and the interest portion of the funds will be deposited into the
special funding account and the COLLECTION ACCOUNT, respectively. If the trustee
or the requisite percentage of certificateholders of all the series gives a
notice as provided above, the obligation of the seller to make any deposit will
constitute the sole remedy after a breach of the representations and warranties
available to the certificateholders of all series, or the trustee on behalf of
the certificateholders, or any provider of series enhancement.
It is not required or anticipated that the trustee will make any initial or
periodic general examination of the receivables or any records relating to the
receivables for the purpose of establishing the presence or
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absence of defects, compliance with the seller's representations and warranties
or for any other purpose. The servicer, however, will deliver to the trustee on
or before March 31 of each year (or such other date specified in the
accompanying prospectus supplement) an opinion of counsel with respect to the
validity of the security interest of the trust in and to the receivables and
certain other components of the trust.
FUNDING PERIOD
For any series of certificates, the accompanying prospectus supplement may
specify that for a FUNDING PERIOD beginning on the closing date and ending on a
specified date before the commencement of an amortization period or accumulation
period with respect to such series, the aggregate amount of PRINCIPAL
RECEIVABLES in the trust allocable to such series may be less than the aggregate
principal amount of the certificates of such series. This pre-funding amount
will be held in a PRE-FUNDING ACCOUNT for the series pending the transfer of
additional receivables to the trust or pending the reduction of the INVESTED
AMOUNTS of other series issued by the trust. The accompanying prospectus
supplement will specify the initial invested amount with respect to the series,
the aggregate principal amount of the certificates of the series and the date by
which the invested amount is expected to equal this aggregate principal amount.
The invested amount will increase as receivables are delivered to the trust or
as the invested amounts of other series of the trust are reduced. The invested
amount may also decrease due to INVESTOR CHARGE-OFFS or the occurrence of a PAY
OUT EVENT with respect to the series as provided in the accompanying prospectus
supplement.
During the funding period, funds on deposit in the pre-funding account for
a series of certificates will be withdrawn and paid to the seller to the extent
of any increases in the invested amount. In the event that the invested amount
does not for any reason equal the targeted aggregate principal amount by the end
of the funding period, any amount remaining in the pre-funding account and any
additional amounts specified in the accompanying prospectus supplement will be
payable to the certificateholders of the series in the manner and at such time
as set forth in the accompanying prospectus supplement.
Monies in the pre-funding account will be invested by the trustee in
ELIGIBLE INVESTMENTS or will be subject to a guaranteed rate or investment
agreement or other similar arrangement. In connection with each distribution
date during the funding period, investment earnings on funds in the pre-funding
account during the related monthly period will be withdrawn from the pre-funding
account and deposited, together with any applicable payment under a guaranteed
rate or investment agreement or other similar arrangement, into the finance
charge account for distribution in respect of interest on the certificates of
the related series in the manner specified in the accompanying prospectus
supplement.
COLLECTION ACCOUNT
The servicer will establish and maintain for the benefit of the
certificateholders of each series, in the name of the trustee, on behalf of the
trust, a COLLECTION ACCOUNT, which shall be either (a) a segregated trust
account established with the corporate trust department of a SECURITIES
INTERMEDIARY or (b) a segregated account with a securities intermediary that is
an ELIGIBLE INSTITUTION. The collection account will initially be controlled by
The Bank of New York. If at any time the collection account ceases to be an
ELIGIBLE DEPOSIT ACCOUNT, the collection account shall be moved so that it will
again be qualified as an eligible deposit account. Funds in the collection
account generally will be invested in ELIGIBLE INVESTMENTS. These funds may be
invested in obligations of the bank or its affiliates, or investment companies
for which the bank or one of its affiliates serves as investment advisor, so
long as the obligations qualify as eligible investments. Any earnings (net of
losses and investment expenses) on funds in the collection account will be
treated as collections of FINANCE CHARGE RECEIVABLES with respect to the last
day of the related monthly period except as otherwise specified in any series
supplement. The servicer will have the revocable power to withdraw funds from
the collection account and to instruct the trustee to make withdrawals and
payments from the collection account for the purpose of carrying out its duties
under the pooling and servicing agreement and any series supplement. The paying
agent shall have the revocable power to withdraw funds from the collection
account for the purpose of making distributions to the certificateholders. The
paying agent shall initially be the trustee.
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ALLOCATION PERCENTAGES
Pursuant to the pooling and servicing agreement, the servicer will allocate
among the certificateholders' interest of each series and the SELLER INTEREST
all amounts collected with respect to FINANCE CHARGE RECEIVABLES and PRINCIPAL
RECEIVABLES and the DEFAULTED AMOUNT for each business day during any monthly
period as follows:
(a) collections of finance charge receivables and the defaulted amount
will at all times be allocated to the certificateholders' interest
of a series based on the floating allocation percentage of the
series; and
(b) collections of principal receivables will at all times be allocated
to the certificateholders' interest of the series based on the
principal allocation percentage of the series.
The floating allocation percentage and the principal allocation percentage
for any series will be determined as set forth in the related series supplement
and, for each series offered in this prospectus and the accompanying prospectus
supplement. Amounts not allocated to the certificateholders' interest of any
series as described above will be allocated to the seller interest.
DEPOSITS IN COLLECTION ACCOUNT
For so long as (a) the bank is the servicer under the pooling and servicing
agreement and (b) either:
(i) the bank, as the servicer, provides to the trustee a letter of
credit covering collection risk of the servicer acceptable to each
rating agency (as evidenced by a letter from each rating agency to
the effect that no withdrawal or reduction in the rating of the
series will occur) or
(ii) the bank has and maintains a certificate of deposit rating of at
least "A-1" and "P-1" (or their equivalent) by Moody's and Standard
& Poor's, respectively,
the bank may use for its own benefit all collections received with respect to
the receivables in each monthly period until the business day preceding the
related distribution date. At that time, the bank will deposit all of the
collections, to the extent described below, into the COLLECTION ACCOUNT, and the
servicer will make the deposits and payments to the ACCOUNTS and parties
described in this prospectus and in the related prospectus supplement on the
date of the deposit. In the event of the insolvency or receivership of the bank,
or, in certain circumstances, the lapse of certain time periods, the trust may
not have a perfected security interest in the collections. If the bank is no
longer the servicer or fails to maintain the required letter of credit covering
collection risk or the required certificate of deposit rating, the servicer will
make the deposits, as described below, not later than two business days after
the business day on which a record of any transaction is first recorded pursuant
to the servicer's data processing procedures. Whether the servicer is required
to make deposits of collections pursuant to the first or the second preceding
sentence:
(a) the servicer will only be required to deposit collections into the
collection account up to the aggregate amount of collections
required to be deposited into an account established for any series
or, without duplication, distributed on the related distribution
date or payment date to certificateholders of any series or to the
issuer of any SERIES ENHANCEMENT pursuant to the terms of any series
supplement or series enhancement agreement; and
(b) if at any time prior to the distribution date or payment date the
amount of collections deposited in the collection account exceeds
the amount required to be deposited pursuant to clause (a) above,
the servicer will be permitted to withdraw the excess from the
collection account.
On the earlier of:
(a) the second business day after the business day on which a record of
any transaction is first recorded pursuant to the servicer's data
processing procedures; and
(b) the date on which the servicer deposits any collections into the
collection account,
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the servicer will pay to the holder of the SELLER INTEREST:
(i) the holders' allocable portion of the collections of PRINCIPAL
RECEIVABLES; provided that the SELLER AMOUNT on that day (after
giving effect to any new receivables transferred to the trust on
that day) is greater than zero; and
(ii) the holders' allocable portion of the collections of FINANCE CHARGE
RECEIVABLES.
Any amount not allocated to the holder of the seller interest because the seller
amount is zero will be deposited in the SPECIAL FUNDING ACCOUNT until the seller
amount is greater than zero (at which time the amount will be allocated to the
holder of the seller interest) or until an accumulation period, controlled
accumulation period, rapid accumulation period, controlled amortization period,
scheduled amortization period or early amortization period commences for any
series (after which the amount will be treated as SHARED PRINCIPAL COLLECTIONS
to the extent needed to cover principal payments due to or for the benefit of
the series).
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Any series offered hereby may be included in a GROUP of series. If so
specified in the accompanying prospectus supplement, the certificateholders of a
series within a group or any class within a series may be entitled to receive
all or a portion of EXCESS FINANCE CHARGE COLLECTIONS with respect to another
series within the group or class within the series to cover any shortfalls with
respect to amounts payable from collections of FINANCE CHARGE RECEIVABLES
allocable to the series or class. However, the sharing of excess finance charge
collections among series in any group will cease if the seller shall deliver to
the trustee a certificate of an authorized representative to the effect that, in
the seller's reasonable belief, the continued sharing would have adverse
regulatory implications to the seller. After covering the shortfalls, any excess
finance charge collection will be paid to the holder of the SELLER INTEREST.
There can be no assurance that:
(a) any other series will be included in the group;
(b) there will be any excess finance charge collections with respect to
the group for any monthly period; or
(c) the seller will not at any time deliver a certificate as described
above.
See "Description of the Certificates -- Deposits in Collection Account,"
"-- Shared Excess Finance Charge Collections," "-- Defaulted Receivables;
Rebates and Fraudulent Charges" and "Credit Enhancement" in this prospectus.
SHARED PRINCIPAL COLLECTIONS
If so specified in the accompanying prospectus supplement, to the extent
that collections of PRINCIPAL RECEIVABLES and certain other amounts that are
allocated to the INVESTED AMOUNT of any series are not needed to make payments
or deposits with respect to the series, these SHARED PRINCIPAL COLLECTIONS will
be applied to cover principal payments due to or for the benefit of
certificateholders of other series. If so specified in the accompanying
prospectus supplement, the allocation of shared principal collections may be
among series within a GROUP. This reallocation will not result in a reduction in
the invested amount of the series to which the collections were initially
allocated. There can be no assurance that there will be any shared principal
collections for any monthly period.
SPECIAL FUNDING ACCOUNT
Funds on deposit in the SPECIAL FUNDING ACCOUNT will be withdrawn and paid
to the holder of the SELLER INTEREST on any distribution date to the extent
that, after giving effect to that payment, the SELLER AMOUNT exceeds the
REQUIRED SELLER AMOUNT and the amount of PRINCIPAL RECEIVABLES in the trust
exceeds the REQUIRED PRINCIPAL BALANCE on that date. However if an accumulation
period, rapid accumulation period, scheduled amortization period or early
amortization period commences with respect to any series, then any funds on
deposit in the special funding account will be released from the special funding
account,
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deposited in the COLLECTION ACCOUNT and treated as SHARED PRINCIPAL COLLECTIONS
to the extent needed to make principal payments due to or for the benefit of the
certificateholders of the series.
Funds on deposit in the special funding account will be invested by the
trustee at the direction of the servicer in ELIGIBLE INVESTMENTS. The special
funding account will be either (a) a segregated trust account established with
the corporate trust department of a SECURITIES INTERMEDIARY or (b) a segregated
account with a securities intermediary that is an ELIGIBLE INSTITUTION. Any
earnings, net of losses and investment expenses, earned on amounts on deposit in
the special funding account during any monthly period will be withdrawn from the
special funding account and treated as collections of FINANCE CHARGE RECEIVABLES
for the monthly period.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES
Receivables in any account will be charged-off as uncollectible in
accordance with the CREDIT CARD GUIDELINES and the servicer's customary and
usual policies and procedures for servicing revolving credit card and other
revolving credit account receivables comparable to the receivables. The current
policy of the bank is to charge off receivables in an account at the end of the
month in which that account becomes 120 days contractually delinquent (or sooner
in the event of receipt of notice of death or bankruptcy of the credit card
holder).
If the servicer adjusts the amount of any PRINCIPAL RECEIVABLE because of
transactions occurring in respect of a rebate or refund to a cardholder, or
because such principal receivable was created in respect of merchandise which
was refused or returned by a cardholder, then the amount of the principal
receivable in the trust with respect to the monthly period in which the
adjustment takes place will be reduced by the amount of the adjustment.
Furthermore, in the event that the exclusion of any of these receivables would
cause the SELLER AMOUNT of that time to be less than the REQUIRED SELLER AMOUNT,
the seller that transferred the PRINCIPAL RECEIVABLES to the trust shall be
required to pay an amount equal to the deficiency into the SPECIAL FUNDING
ACCOUNT.
RECORD DATE
Payments on the certificates of a series offered hereby will be made as
described in this prospectus and in the relevant prospectus supplement to the
certificateholders in whose names and certificates were registered (expected to
be Cede, as nominee of DTC) on the last day of the preceding monthly period.
However, the final payment on the certificates of a series offered hereby will
be made only upon presentation and surrender of the certificates. Distributions
will be made to DTC in immediately available funds. See "Description of the
Certificates -- Book-Entry Registration" in this prospectus.
DEFEASANCE
Under the pooling and servicing agreement, the seller may terminate its
substantive obligations with respect to the series or the trust by depositing
with the trustee, from amounts representing, or acquired with, collections of
receivables, money or ELIGIBLE INVESTMENTS sufficient to make all remaining
scheduled interest and principal payments on the series or all outstanding
series of certificates of the trust, as the case may be, on the dates scheduled
for the payments and to pay all amounts owing to any credit enhancement provider
with respect to such series or all outstanding series, as the case may be, if
this action would not result in a PAY OUT EVENT for any series. Prior to its
first exercise of its right to substitute money or eligible investments for
receivables, the seller will deliver to the trustee:
(i) an opinion of counsel to the effect that such deposit and
termination of obligations will not result in the trust being
required to register as an "investment company" within the meaning
of the Investment Company Act of 1940, as amended; and
(ii) a TAX OPINION.
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OPTIONAL TERMINATION; FINAL PAYMENT OF PRINCIPAL
The certificates of a series will be subject to optional repurchase by the
seller on any distribution date after the total INVESTED AMOUNT of the series
and the ENHANCEMENT INVESTED AMOUNT, if any, with respect to the series, is
reduced to an amount less than or equal to a percentage of the initial invested
amount specified in the related prospectus supplement, if certain conditions set
forth in the pooling and servicing agreement are met. The repurchase price will
be equal to the total invested amount of the series (less the amount, if any, on
deposit in any principal funding account with respect to the series), plus the
enhancement invested amount, if any, with respect to such series, plus accrued
and unpaid interest on the certificates and interest or other amounts payable on
the enhancement invested amount or the COLLATERAL INTEREST, if any, through the
day preceding the distribution date on which the repurchase occurs.
The certificates of each series will be retired on the day following the
date on which the final payment of principal is scheduled to be made to the
certificateholders, whether as a result of optional reassignment to the seller
or otherwise. Each prospectus supplement will specify the SERIES TERMINATION
DATE for the related series of certificates. If the invested amount is greater
than zero on the series termination date, the trustee or servicer may be
required to sell or cause to be sold certain receivables in the manner provided
in the pooling and servicing agreement and series supplement and to pay the net
proceeds of the sale and any collections on the receivables, in an amount at
least equal to the sum of the invested amount and the enhancement invested
amount, if any, with respect to the series plus accrued interest due thereon.
Unless the servicer and the holder of the SELLER INTEREST instruct the
trustee otherwise, the trust will cease to exit on the TRUST TERMINATION DATE.
Upon the termination of the trust and the surrender of the seller interest, the
trustee shall convey to the holder of the seller interest all right, title and
interest of the trust in and to the receivables and other funds of the trust.
PAY OUT EVENTS
Unless otherwise specified in the accompanying prospectus supplement, as
described above, the revolving period will continue through the date specified
in the accompanying prospectus supplement unless a PAY OUT EVENT occurs prior to
that date. A pay out event occurs with respect to all series issued by the trust
upon the occurrence of any of the following events:
(a) an INSOLVENCY EVENT occurs;
(b) the seller is unable for any reason to transfer receivables to the
trust in accordance with the provisions of the pooling and servicing
agreement; or
(c) the trust becomes an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
In addition, a pay out event may occur with respect to any series upon the
occurrence of any other event specified in the accompanying prospectus
supplement. On the date on which a pay out event is deemed to have occurred, the
early amortization period or, if so specified in the accompanying prospectus
supplement, the rapid accumulation period will commence. If, because of the
occurrence of a pay out event, the early amortization period begins earlier than
the scheduled commencement of an amortization period or prior to a scheduled
payment date, certificateholders will begin receiving distributions of principal
earlier than they otherwise would have, which may shorten the average life of
the certificates.
In addition to the consequences of a pay out event discussed above, for
only so long as the Series 1995-1 certificates are outstanding, if pursuant to
certain provisions of federal law, the seller voluntarily enters liquidation or
a receiver is appointed for the seller, on the day of such event the seller will
immediately cease to transfer PRINCIPAL RECEIVABLES to the trust and promptly
give notice to the trustee of such event. Within 15 days, the trustee will
publish a notice of the liquidation or the appointment stating that the trustee
intends to sell, dispose of, or otherwise liquidate the receivables in the trust
in a commercially reasonable manner. Unless otherwise instructed within ninety
days of this notice by certificateholders representing interests aggregating
more than 50% of the aggregate unpaid principal
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amount of each series (or if any series has more than one class, of each class,
and any other person specified in the pooling and servicing agreement or a
series supplement) issued and outstanding as well as certain holders of
interests in the SELLER INTEREST, the trustee will sell, dispose of, or
otherwise liquidate the receivables in the trust in a commercially reasonable
manner and on commercially reasonable terms. The proceeds from the sale,
disposition or liquidation of the receivables will be treated as collections of
the receivables and applied as specified above in "-- Deposits in Collection
Account" and in the accompanying prospectus supplement. If the sum of:
(a) the portion of the proceeds allocated to the certificateholders'
interest of any series; and
(b) the proceeds of any collections of the receivables in the COLLECTION
ACCOUNT allocated to the certificateholders' interest of the series
is not sufficient to pay the INVESTED AMOUNT of the series in full,
the certificateholders may incur a loss.
Once Series 1995-1, a series of certificates previously issued by the
trust, is no longer outstanding, the trustee will not liquidate the receivables
following an insolvency event.
If the only pay out event to occur is either the insolvency of the seller
or the appointment of a conservator or receiver for the seller, the conservator
or receiver may have the power to prevent the early sale, liquidation or
disposition of the receivables in the trust and the commencement of an early
amortization period or, if applicable with respect to a series as specified in
the accompanying prospectus supplement, a rapid accumulation period. In
addition, a conservator or receiver may have the power to cause the early sale
of the receivables in the trust and the early retirement of the certificates.
See "Risk Factors" in this prospectus.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer's compensation for its servicing activities and reimbursement
for its expenses will be a servicing fee payable monthly on each distribution
date in an amount equal to one-twelfth of the product of:
(a) the weighted average of the applicable servicing fee percentages
with respect to each series outstanding (based upon the applicable
servicing fee percentage for each series and the amount of
receivables serviced on behalf of each series); and
(b) the amount of PRINCIPAL RECEIVABLES in the trust on the last day of
the prior monthly period.
The servicing fee will be allocated among the SELLER INTEREST, the
certificateholders' interests of each series and, after the certificates of a
series have been paid in full, the interest represented by the ENHANCEMENT
INVESTED AMOUNT, if any, with respect to the series. The share of the servicing
fee allocable to the certificateholders' interest, which includes the
enhancement invested amount, if any, of a series offered hereby with respect to
any distribution date shall equal to one-twelfth of the product of:
(a) the SERIES SERVICING FEE PERCENTAGE specified in the related
prospectus supplement and
(b) the MONTHLY INVESTOR SERVICING FEE.
The portion of the servicing fee not so allocated to the
certificateholders' interest of a series shall be paid by the holder of the
seller interest and 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. Unless otherwise provided in any series supplement, in
the case of the first distribution date in a series, the monthly investor
servicing fee shall accrue from the series closing date. The monthly investor
servicing fee for a series will be funded from collections of FINANCE CHARGE
RECEIVABLES allocated to the series (which, if so specified in the related
prospectus supplement, may include all or a portion of the INTERCHANGE arising
in the ACCOUNTS) or, in certain limited circumstances, from amounts available
from SERIES ENHANCEMENT and other sources, if any, and will be paid on the
distribution date for each monthly period from the COLLECTION ACCOUNT (unless
the amount has been netted against deposits by the servicer to the collection
account).
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The servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the receivables including, without
limitation, expenses related to the enforcement of the receivables, payment of
the fees and disbursements of the trustee and independent certified public
accountants and other fees which are not expressly stated in the pooling and
servicing agreement to be payable by the trust, the certificateholders of a
series or the seller (other than federal, state, local and foreign income,
franchise or other taxes based on income, if any, or any interest or penalties
imposed upon the trust).
CERTAIN MATTERS REGARDING THE SELLER AND THE SERVICER
In the pooling and servicing agreement, the servicer has covenanted as to
each receivable and related account that:
(a) it will duly fulfill all obligations on its part to be fulfilled
under or in connection with the receivable or account, and will
maintain in effect all qualifications required in order to service
the receivable or account the failure to comply with which would
have a material adverse effect on the certificateholders or any
provider of SERIES ENHANCEMENT;
(b) it will not permit any rescission or cancellation of the receivables
except as ordered by a court of competent jurisdiction or other
governmental authority or in the ordinary course of business and in
accordance with the CREDIT CARD GUIDELINES;
(c) it will do nothing to substantially impair the rights of the
certificateholders in the receivables or ACCOUNTS;
(d) it will not reschedule, revise or defer payments due on the
receivables except in accordance with the credit card guidelines;
and
(e) except in connection with its enforcement or collection of an
account, it will take no action to cause any receivables to be
evidenced by any instruments (as defined in the UCC) and if any
receivable is so evidenced, it shall be reassigned or assigned to
the servicer as provided below.
Under the terms of the pooling and servicing agreement, in the event of any
of the representations, warranties or covenants of the servicer contained in
clauses (a) through (e) above with respect to any receivable or the related
account is breached, and this breach is not cured within 60 days (or a longer
period, not in excess of 150 days, as may be agreed to by the trustee) of the
earlier to occur of the discovery of the event by the servicer or receipt by the
servicer of written notice of the event given by the trustee, and as a result of
the breach the trust's rights in, to or under any receivables or proceeds in the
related account are impaired or the proceeds are not available for any reason to
the trust free and clear of any lien, then all receivables in the account or
accounts to which the event relates shall be reassigned or assigned to the
servicer on the terms and conditions set forth below. However, these receivables
cannot be reassigned or assigned to the servicer if, on any day prior to the end
of the 60-day or longer period:
(i) the relevant representation and warranty shall be true and correct,
or the relevant covenant shall have been complied with, in all
material respects; and
(ii) the servicer shall have delivered to the trustee a certificate of
an authorized representative describing the nature of the breach
and manner in which the breach was cured.
This assignment and transfer will be made when the servicer deposits an
amount equal to the amount of the receivable in the COLLECTION ACCOUNT on the
business day preceding the distribution date following the monthly period during
which the obligation arises. The amount of the deposit shall be treated as a
portion of SHARED PRINCIPAL COLLECTIONS as described under "-- Shared Principal
Collections" in this prospectus. This reassignment or transfer and assignment to
the servicer constitutes the sole remedy available to the certificateholders of
any series if the covenant or warranty of the servicer is not satisfied and the
trust's interest in the reassigned receivables shall be automatically assigned
to the servicer.
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The servicer may not resign from its obligations and duties under the
pooling and servicing agreement, except upon determination that performance of
its duties is no longer permissible under applicable law. No such resignation
will become effective until the trustee or a successor to the servicer has
assumed the servicer's responsibilities and obligations under the pooling and
servicing agreement. The bank, as initial servicer, may delegate some of its
servicing duties to an affiliate; however, this delegation will not relieve it
of its obligation to perform these duties in accordance with the pooling and
servicing agreement.
The pooling and servicing agreement provides that the servicer will
indemnify the trust and trustee from and against any loss, liability, expense,
damage or injury suffered or sustained by reason of any acts or omissions or
alleged acts or omissions of the servicer with respect to the activities of the
trust or the trustee. The servicer, however, will not indemnify:
(a) the trustee for liabilities imposed by reason of fraud, negligence, or
willful misconduct by the trustee in the performance of its duties
under the pooling and servicing agreement;
(b) the trust, the certificateholders or the CERTIFICATE OWNERS for
liabilities, cost or expenses arising from actions taken by the trustee
at the request of certificateholders;
(c) the trust, the certificateholders or the certificate owners for any
losses, claims, damages or liabilities incurred by any of them in their
capacities as investors, including without limitation, losses incurred
as a result of DEFAULTED RECEIVABLES or receivables which are written
off as uncollectible; or
(d) the trust, the certificateholders or the 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 or local income or franchise tax or any
other tax imposed on or measured by income (or any interest or
penalties with respect thereto or arising from a failure to comply
therewith) required to be paid by the trust, the certificateholders or
the certificate owners in connection with the pooling and servicing
agreement to any taxing authority.
In addition, the pooling and servicing agreement provides that, subject to
certain exceptions, as long as Series 1995-1 is outstanding, the seller will
indemnify an injured party for any losses, claims, damages or liabilities (other
than those incurred by a certificateholder as an investor in the certificates or
those which arise from any action of a certificateholder) arising out of or
based upon the arrangement created by the pooling and servicing agreement as
though the pooling and servicing agreement created a partnership under the New
York Uniform Partnership Act in which the seller is a general partner. In the
event of a transfer of servicing, the successor servicer will indemnify and hold
harmless the seller for any losses, claims, damages and liabilities of the
seller as described in this paragraph arising from the actions or omissions of
the successor servicer.
Neither the seller, the servicer nor any of their respective directors,
officers, employees or agents will be under any other liability to the trust,
trustee, certificateholders or any other person for any action taken, or for
refraining from taking any action, in good faith pursuant to the pooling and
servicing agreement. Neither the seller, the servicer nor any of their
respective directors, officers, employees or agents will be protected against
any liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence of the seller, the servicer or any such person in
the performance of its duties or by reason of reckless disregard of obligations
and duties thereunder. In addition, the pooling and servicing agreement provides
that the servicer is not under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its servicing responsibilities under
the pooling and servicing agreement and which in its opinion may expose it to
any expense or liability. However, the servicer may in its sole discretion,
undertake any legal action which it may deem necessary or desirable for the
benefits of certificateholders of any series with respect to the pooling and
servicing agreement and the rights and duties of the parties under it.
The pooling and servicing agreement provides that the seller may exchange a
portion of the SELLER CERTIFICATE, if the seller interest is held in
certificated form, for one or more supplemental certificates for transfer or
assignment, or transfer or assign a portion of the SELLER INTEREST, to a person
designated by the
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seller upon the execution and delivery of a supplement to the pooling and
servicing agreement (which is subject to any amendment to the pooling and
servicing agreement; see "-- Amendments" in this prospectus); provided that:
(a) the transfer will not result in a withdrawal or reduction of the
rating;
(b) the seller and any additional sellers' remaining interest in
PRINCIPAL RECEIVABLES shall not be less in the aggregate than 2% of
the total amount of principal receivables, in each case as of the
date of, and after giving effect to, the exchange; and
(c) prior to the exchange or transfer, the seller shall have delivered
to the trustee a TAX OPINION with respect to the transfer or
assignment of the supplemental certificate.
Any transfer or assignment of a supplemental certificate or of an interest in
the seller interest is subject to the conditions set forth in clauses (a) and
(c) above. The seller may also transfer a portion of the seller certificate or
the seller interest to certain affiliates provided that the condition set forth
in clause (c) above has been satisfied.
The seller may designate affiliates of the seller, which may be banks,
finance companies or similar organizations, to be included as additional sellers
under the pooling and servicing agreement (by means of an amendment to the
pooling and servicing agreement which will not require the consent of any
certificateholder; see "-- Amendments" in this prospectus) and, in connection
with the designation of any additional seller, the seller shall surrendering the
seller certificate, if seller currently holds its interest in the seller
interest in the form of a seller certificate, to the trustee in exchange for a
newly issued seller certificate modified to reflect such additional seller's
interest in the seller interest; provided, however, that:
(i) the conditions set forth in clauses (a) and (c) in the preceding
paragraph shall have been satisfied with respect to the designation
and issuance; and
(ii) any applicable conditions described in "Description of
Certificates -- Addition of Trust Assets" in this prospectus shall
have been satisfied with respect to the transfer of receivables or
participations by an 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 each additional seller generally
will have the same obligation and rights as a seller described in this
prospectus.
SERVICER DEFAULT
In the event of any SERVICER DEFAULT, either the trustee or
certificateholders representing interests aggregating more than 50% of the
aggregate unpaid principal amount for all series of certificates of the trust,
by written notice to the servicer (and to the trustee and certain providers of
SERIES ENHANCEMENT if given by the certificateholders), may terminate all of the
rights and obligations of the servicer under the pooling and servicing agreement
and the trustee may appoint a new servicer, called a service transfer. The
rights and interest of the seller under the pooling and servicing agreement and
in the SELLER INTEREST will not be affected by the termination. The trustee
shall as promptly as possible appoint a successor servicer. If no such servicer
has been appointed and has accepted such appointment by the time the servicer
ceases to act as servicer, all authority, power and obligations of the servicer
under the pooling and servicing agreement will pass to the trustee. If the
trustee within 60 days of receipt is unable to obtain any bids from eligible
servicers and the servicer delivers an officer's certificate to the effect that
it cannot in good faith cure the servicer default which gave rise to a transfer
of servicing, and if the trustee is legally unable to act as successor servicer,
then the trustee shall give the seller the right of first refusal to purchase
the receivables on terms equivalent to the best purchase offer as determined by
the trustee.
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The purchase price for the purchase shall be paid by the seller on a
distribution date and shall generally be equal to, with respect to each series,
the sum of:
(a) the REASSIGNMENT AMOUNT on the distribution date of the repurchase;
and
(b) the excess, if any, of:
(i) a price equivalent to the average of bids quoted on the record
date proceeding the date of repurchase (or, if such day is not a
business day, on the next business day) by at least two
recognized dealers selected by the trustee, for the purchase by
these dealers of a security which is similar to the certificates
of the series with a remaining maturity approximately equal to
the remaining maturity of the certificates of the series rated in
the rating category initially assigned to the certificates of the
series, over
(ii) the reassignment amount.
Upon the occurrence of any servicer default, the servicer shall not be
relieved from using its best efforts to perform its obligations in a timely
manner in accordance with the terms of the pooling and servicing agreement. The
servicer is required to provide the trustee, any provider of enhancement and/or
any issuer of any third-party credit enhancement, the seller and the holders of
certificates of each series issued and outstanding under the trust prompt notice
of such failure or delay by it, together with a description of the cause of such
failure or delay and its efforts to perform its obligations. The servicer shall
immediately notify the trustee in writing of any servicer default.
In the event of a servicer default, if a conservator or receiver is
appointed for the servicer and no servicer default other than such
conservatorship or receivership or the insolvency of the servicer exists, the
conservator or receiver may have the power to prevent either the trustee or the
majority of the certificateholders from effecting a service transfer.
EVIDENCE AS TO COMPLIANCE
On or before March 31 of each calendar year, the servicer is required to
cause a firm of nationally recognized independent certified public accountants
to furnish a report, to the effect that the firm has applied certain procedures
agreed upon with the servicer and examined certain documents and records
relating to the servicing of the ACCOUNTS during the servicer's preceding fiscal
year ended December 31. On the basis of these procedures, nothing came to the
attention to the firm that caused them to believe that the servicing was not
conducted in compliance with the pooling and servicing agreement and the
applicable provisions of each series supplement except for the exceptions or
errors the firm shall believe to be immaterial and other exceptions as shall be
set forth in that statement.
The servicer is also required to provide for delivery to the trustee, each
rating agency and certain providers of service enhancement an annual statement
signed by an officer of the servicer to the effect that the servicer has fully
performed its obligations under the pooling and servicing agreement throughout
the preceding year, or, if there has been a default in the performance of this
obligation, specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the trustee
may be obtained by a request in writing delivered to the trustee.
AMENDMENTS
The pooling and servicing agreement and any series supplement may be
amended (including in connection with (a) the issuance of an additional seller
certificate, (b) the addition of a participation to the trust, (c) the
designation of an additional seller or (d) the addition of additional credit
enhancements
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for a series) by the seller, the servicer and the trustee, without the consent
of certificateholders of any series then outstanding. The following conditions
apply for the amendments described in this paragraph:
(i) the seller delivers a certificate of an authorized representative
to the trustee to the effect that the seller reasonably believes
that the amendment will not adversely affect in any material
respect the interests of any certificateholder; and
(ii) the amendment will not result in a withdrawal or reduction of the
rating of any outstanding series under the trust.
The pooling and servicing agreement and any series supplement may also be
amended, once Series 1995-1 is no longer outstanding, by the seller, the
servicer and the trustee, without the consent of the certificateholders of any
series to add, modify or eliminate any provisions necessary or advisable in
order to enable the trust or any portion of the trust to (i) qualify as, and to
permit an election to be made for the trust to be treated as, a "financial asset
securitization investment trust" under the Internal Revenue Code and (ii) avoid
the imposition of state or local income or franchise taxes on the trust's
property or its income. The following conditions apply for the amendments
described in this paragraph:
(i) the seller delivers a certificate of an authorized representative
to the trustee to the effect that the seller reasonably believes
that the amendment will not adversely affect in any material
respect the interests of any certificateholder;
(ii) the amendment will not result in a withdrawal or reduction of the
rating of any outstanding series under the trust; and
(iii) the amendment must not affect the rights, duties or obligations
of the trustee under the pooling and servicing agreement.
The pooling and servicing agreement and the related series supplement may
also be amended by the seller, the servicer and the trustee with the consent of
the holders of certificates evidencing interests aggregating not less than
66 2/3% (or such other percentage specified in the accompanying prospectus
supplement) of the aggregate unpaid principal amount of certificates for all
series of the trust, for the purpose of adding any provisions to, changing in
any manner or eliminating any of the provisions of the pooling and servicing
agreement or the related series supplement or of modifying in any manner the
rights of certificateholders of any outstanding series of the trust. No such
amendment, however, may:
(a) reduce in any manner the amount of, or delay the timing of,
distributions required to be made on the related series or any
series;
(b) change the definition of or the manner of calculating the interest
of any certificateholder of the series or any certificateholder of
any other series issued by the trust;
(c) reduce the aforesaid percentage of interests the holders of which
are required to consent to any such amendment, in each case
without the consent of all certificateholders of the related
series and certificateholders of all series adversely affected; or
(d) adversely affect the rating of any series or class by any rating
agency without the consent of the certificateholders of the series
or class evidencing not less than 66 2/3% of the aggregate unpaid
principal amount of the certificates of the series or class.
In addition to being subject to amendment as described above, any series
supplement may be amended by the seller without the consent of the servicer, the
trustee or any certificateholder if the seller provides the trustee with (a) an
opinion of counsel to the effect that the amendment or modification would reduce
the risk that the trust would be treated as taxable as a publicly traded
partnership pursuant to Section 7704 of the Internal Revenue Code of 1986, as
amended and (b) a certificate that the amendment or modification would not
materially and adversely affect any certificateholder, except that the amendment
shall not be deemed effective without the trustee's consent, if the trustee's
rights, duties and obligations under the related series supplement are thereby
modified. Promptly after the effectiveness of
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the amendment, the seller shall deliver a copy of the amendment to each of the
servicer, the trustee and each rating agency described in the related series
supplement.
Promptly following the execution of any amendment to the pooling and
servicing agreement, the trustee will furnish written notice of the substance of
the amendment to each certificateholder.
TERMINATION OF THE TRUST
Unless the seller instructs the trustee otherwise, the trust will only
terminate on the TRUST TERMINATION DATE. 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.
LIST OF CERTIFICATEHOLDERS
Upon written request of certificateholders of record representing interests
in the trust aggregating not less than 10% (or such other percentage specified
in the accompanying prospectus supplement) of the aggregate unpaid principal
amount of certificates of a series, the trustee will afford the
certificateholders access during business hours to the current list of
certificateholders of the trust for purposes of communicating with other
certificateholders with respect to their rights under the pooling and servicing
agreement. See "-- Book-Entry Registration" and "-- Definitive Certificates" in
this prospectus. The pooling and servicing agreement does not provide for any
annual or other meetings of certificateholders.
THE TRUSTEE
The Bank of New York 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. However,
any certificates so held shall not be entitled to participate in any decisions
made or instructions given to the trustee by the certificateholders as a group.
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 this appointment, all rights,
powers, duties and obligations conferred or imposed upon the trustee by the
pooling and servicing agreement will 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 such separate trustee or co-trustee who shall exercise and perform such
rights, powers, duties and obligations solely at the direction of the trustee.
The trustee may resign at any time, in which event the seller will be
obligated to appoint a successor trustee. The seller may also remove the trustee
if the trustee ceases to be eligible to continue as such under the pooling and
servicing agreement or if the trustee becomes insolvent. In these circumstances,
the seller 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.
CERTIFICATEHOLDERS HAVE LIMITED CONTROL OF ACTIONS
Certificateholders of any series or class within a series may need the
consent or approval of a specified percentage of the INVESTED AMOUNT of other
series or a class of such other series to take or direct certain actions,
including to require the appointment of a successor servicer after a SERVICER
DEFAULT, to amend the pooling and servicing agreement in some cases, and to
direct a repurchase of all outstanding series after certain violations of the
seller's representations and warranties. The interests of the certificateholders
of any such series may not coincide with yours, making it more difficult for any
particular certificateholder to achieve the desired results from the vote.
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CREDIT ENHANCEMENT
GENERAL
For any series, credit enhancement may be provided with respect to one or
more classes within the series. Credit enhancement may be in the form of the
subordination of one or more classes of the certificates of such series, a
letter of credit, the establishment of a cash collateral guaranty or account, a
COLLATERAL INTEREST, a surety bond, an insurance policy, a spread account, a
reserve account, swap agreements, the use of cross support features or another
method of credit enhancement described in the accompanying prospectus
supplement, or any combination of the foregoing. If so specified in the
accompanying prospectus supplement, any form of credit enhancement may be
structured so as to be drawn upon by more than one class to the extent described
in that accompanying prospectus supplement.
The presence of credit enhancement with respect to a class is intended to
enhance the likelihood of receipt by certificateholders of the class of the full
amount of principal and interest and decrease the likelihood that the
certificateholders will experience losses. However, the credit enhancement will
not provide protection against all risks of loss and will not guarantee
repayment of the entire principal balance of the certificates and interest
thereon. If losses occur which exceed the amount covered by the credit
enhancement or which are not covered by the credit enhancement,
certificateholders will bear their allocable share of deficiencies.
If credit enhancement is provided with respect to a series, the
accompanying prospectus supplement will include a description of:
(a) the amount payable under such credit enhancement;
(b) any conditions to payment thereunder not otherwise described herein;
(c) the conditions (if any) under which the amount payable under such
credit enhancement may be reduced and under which such credit
enhancement may be terminated or replaced; and
(d) any material provision of any agreement relating to such credit
enhancement.
Additionally, the accompanying prospectus supplement may set forth certain
information with respect to any credit enhancement provider, including:
(a) a brief description of its principal business activities;
(b) its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do business;
(c) if applicable, the identity of regulatory agencies which exercise
primary jurisdiction over the conduct of its business; and
(d) its total assets, and its stockholders' or policy holders' surplus,
if applicable, and other appropriate financial information as of the
date specified in the prospectus supplement.
SUBORDINATION
One or more classes of any series may be subordinated to the extent
necessary to fund payments with respect to one or more senior classes. The
rights of the holders of any subordinated certificates to receive distributions
of principal and/or interest on any distribution date will be subordinate in
right and priority to the rights of the holders of senior certificates, but only
to the extent set forth in the related prospectus supplement. If so specified in
the related prospectus supplement, subordination may apply only in the event of
certain types of losses not covered by another credit enhancement. The related
prospectus supplement will set forth information concerning the amount of
subordination of a class or classes of subordinated certificates in a series,
the circumstances in which the subordination will be applicable, the manner, if
any, in which the amount of subordination will decrease over time, and the
conditions under
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which amounts available from payments that would otherwise be made to holders of
the subordinated certificates will be distributed to holders of senior
certificates. If collections of receivables otherwise distributable to holders
of a subordinated class of a series will be used as support for a class of
another series, the accompanying prospectus supplement will specify the manner
and conditions for applying a cross-support feature.
LETTER OF CREDIT
Support for a series or one or more classes within the series, may be
provided by one or more letters of credit. A letter of credit may provide
limited protection against certain losses in addition to or in lieu of other
credit enhancement. The issuer of the letter of credit will be obligated to
honor demands with respect to the letter of credit, to the extent of the amount
available thereunder, to provide funds under the circumstances and subject to
the conditions as are specified in the related prospectus supplement.
The maximum liability of the issuer of a letter of credit will generally be
an amount equal to a percentage specified in the related prospectus supplement
of the initial INVESTED AMOUNT of a series or a class of the series. The maximum
amount available at any time to be paid under a letter of credit will be
determined in the manner specified therein and in the related prospectus
supplement.
CASH COLLATERAL GUARANTY OR ACCOUNT
Support for a series or one or more classes thereof may be provided by a
guaranty secured by the deposit of cash or certain ELIGIBLE INVESTMENTS in a
cash collateral account reserved for the beneficiaries of the cash collateral
guaranty or by a cash collateral account alone. The amount available pursuant to
the cash collateral guaranty or the cash collateral account will be the lesser
of amounts on deposit in the cash collateral account and an amount specified in
the related prospectus supplement. The related prospectus supplement will set
forth the circumstances under which payments are made to beneficiaries of the
cash collateral guaranty from the cash collateral account or from the cash
collateral account directly.
COLLATERAL INTEREST
Support for a series or one or more classes of a series may be provided
initially by COLLATERAL INTEREST in the trust, in an amount specified in the
related prospectus supplement. The series may also have the benefit of a cash
collateral guaranty or cash collateral account with an initial amount on
deposit, if any, as specified in the related prospectus supplement which will be
increased:
(a) to the extent the seller elects, subject to certain conditions
specified in the related prospectus supplement, to apply collections
of PRINCIPAL RECEIVABLES allocable to the collateral interest to
decrease the collateral interest;
(b) to the extent collections of principal receivables allocable to the
collateral interest are required to be deposited into the cash
collateral account as specified in the related prospectus
supplement; and
(c) to the extent excess collections of FINANCE CHARGE RECEIVABLES are
required to be deposited into the cash collateral account as
specified in the related prospectus supplement.
The total amount of the credit enhancement available pursuant to the
collateral interest and, if applicable, the cash collateral guaranty or cash
collateral account will be the lesser of the sum of the collateral interest and
the amount on deposit in the cash collateral account and an amount specified in
the related prospectus supplement. The related prospectus supplement will set
forth the circumstances under which payments which otherwise would be made to
holders of the collateral interest will be distributed to holders of
certificates and, if applicable, the circumstances under which payment will be
made under the cash collateral guaranty or under the cash collateral account.
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SURETY BOND OR INSURANCE POLICY
Insurance with respect to a series or one or more classes within the series
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.
A surety bond may be purchased for the benefit of the holders of any series
or class or such series to assure distributions of interest or principal with
respect to such series or class of certificates in the manner and amount
specified in the related prospectus supplement.
SPREAD ACCOUNT
Support for a series or one or more classes thereof may be provided by the
periodic deposit of certain available excess cash flow from the trust assets
into a spread account intended to assist with subsequent distribution of
interest and principal on the certificates of such class or series in the manner
specified in the related prospectus supplement.
RESERVE ACCOUNT
Support for a series or one or more classes thereof or any enhancement
related thereto may be provided by the establishment of a reserve account. The
reserve account may be funded, to the extent provided in the related prospectus
supplement, by an initial cash deposit, the retention of certain periodic
distributions of principal or interest or both otherwise payable to one or more
classes of certificates, including the subordinated certificates, or the
provision of a letter of credit, guarantee, insurance policy or other form of
credit or any combination of each. The reserve account will be established to
assist with the subsequent distribution of principal or interest on the
certificates of a series or class of the series or another amount owing on any
enhancement thereto in the manner provided 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, consent 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.
CERTIFICATE RATINGS
Any rating of the certificates by a rating agency will indicate:
- its view on the likelihood that certificateholders will receive
required interest and principal payments; and
- its evaluation of the receivables in the trust 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;
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- 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
nationally recognized rating organization. Rating organizations other than those
requested could assign a rating to the certificates and such a rating could be
lower than any rating assigned by a rating agency chosen by the seller.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
The seller has represented and warranted in the pooling and servicing
agreement that the transfer of receivables by it to the trust is either: a valid
transfer and assignment to the trust of all right, title and interest of the
seller in and to the related receivables, except for the interest of the seller
as holder of the SELLER INTEREST, or the grant to the trust of a security
interest in the 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; and
- the interests of the holder of the seller interest.
For a discussion of the trust's rights arising from a breach of these
warranties, see "Description of the Certificates -- Representations and
Warranties" in this prospectus.
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 provisions of
Article 9 of the UCC. Therefore, the seller 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 certain limited circumstances under the UCC in which a prior or
subsequent transferee of receivables coming into existence after the closing
date could have an interest in the receivables with priority over the trust's
interest. Under the pooling and servicing agreement, however, the seller has
represented and warranted that it transferred the receivables to the trust free
and clear of the lien of any third party except those described above. In
addition, the seller has covenanted and will covenant that it will not sell,
pledge, assign, transfer or grant any lien on any receivable in the trust (or
any interest therein) other than to the trust or in connection with any transfer
of the accounts selected for the trust.
Nevertheless, a tax or governmental lien 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 the receivable. In
addition, if the FDIC were appointed as conservator or receiver of the seller,
certain administrative expenses of the conservator or receiver may have priority
over the interest of the trust in the receivable. While the seller is the
servicer, cash collections on the receivables may be held by the seller and
commingled with its funds for brief periods. If insolvency or similar
proceedings were commenced by or against the seller or, in certain
circumstances, if certain time periods were to pass, the trust may not have a
first-priority perfected security interest in these collections. If any of those
events were to occur, 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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CERTAIN MATTERS RELATING TO RECEIVERSHIP AND CONSERVATORSHIP
The seller is chartered as a national banking association and is subject to
regulation and supervision by the Office of the Comptroller of the Currency,
which is authorized to appoint the FDIC as conservator or receiver of the seller
if certain events occur relating to the seller's financial condition or the
propriety of its action. 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, provides that the security
interest granted by the seller in the receivables 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 seller; and
- the security interest was not taken in contemplation of the seller's
insolvency or with the intent to hinder, delay or defraud the seller
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 seller 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 seller.
In addition, the FDIC as conservator or receiver for the seller could
repudiate the pooling and servicing agreement. The FDIA would limit the damages
for this 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 seller. 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 seller. Therefore, if the
FDIC as conservator or receiver for the seller 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.
Upon the appointment of a conservator or receiver or upon a voluntary
liquidation with respect to the seller, the seller will promptly give notice
thereof to the trustee and a PAY OUT EVENT will occur with respect to all series
then outstanding under the trust. Newly created PRINCIPAL RECEIVABLES will not
be transferred to the trust on and after any such appointment or voluntary
liquidation, and, so long as Series 1995-1 remains outstanding, the trustee will
sell or otherwise liquidate the receivables in a commercially reasonable manner
and on commercially reasonable terms, unless otherwise instructed within a
specified period by holders of certificates representing interests aggregating
more than 50% of the aggregate unpaid principal balance of each series (or if
any series has more than one class, of each class, and any other person
specified in the pooling and servicing agreement or a series supplement), or
unless otherwise required by the FDIC as receiver or conservator of the seller.
The proceeds from the sale of the receivables would be treated as collections of
the receivables and allocated as specified in the pooling and servicing
agreement and each series supplement. This procedure could be delayed, as
described above.
If the only pay out event to occur is either the insolvency of the seller
or the appointment of a conservator or receiver for the seller, the conservator
or receiver may have the power, notwithstanding the
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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 receivable to the
trust.
See "Description of the Certificates -- Pay Out Events" in this prospectus.
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 servicer may have
the power to prevent either the trustee or the certificateholders from
appointing a successor servicer under the pooling and servicing agreement. See
"Description of Certificates -- Servicer Default" in this prospectus.
CONSUMER PROTECTION LAWS
The relationships of the cardholder and credit card issuer and the lender
are extensively regulated by federal and state consumer protection laws. With
respect to credit cards issued by the seller, the most significant laws include
the federal Truth-in-Lending, Equal Credit Opportunity, Fair Credit Reporting,
Fair Debt Collection Practice and Electronic Funds Transfer Acts as well as
applicable Ohio laws and, to the extent applicable, comparable statutes in the
other states in which cardholders reside. These statutes impose disclosure
requirements when a credit card account is advertised, when it is applied for,
when it is opened, at the end of monthly billing cycles, and at year end. In
addition, these statutes limit customer liability for unauthorized use, prohibit
certain discriminatory practices in extending credit, and impose certain
limitations on the type of account-related charges that may be assessed.
Cardholders are entitled under these laws to have payments and credits applied
to the credit card accounts promptly, to receive prescribed notices and to
require billing errors to be resolved promptly.
Certain laws, including the laws described above, may limit the bank's
ability to collect amounts owing with respect to the receivables regardless of
any act or omission on the part of the bank. For example, under the federal Fair
Credit Billing Act, a credit card issuer is subject to all claims (other than
tort claims) and defenses arising out of certain transactions in which a credit
card is used as a method of payment or extension of a credit if the obligor has
made a good faith attempt to obtain satisfactory resolution of a disagreement or
problem relative to the transaction from the person honoring the credit card,
and except in cases where there is a certain relationship between the person
honoring the card and the credit card issuer, the amount of the initial
transactions exceeds $50 and the place where the initial transaction occurred
was in the same state as the cardholder's mailing address or within 100 miles of
that address. These statutes further provide that in certain cases cardholders
cannot be held liable for, or the cardholder's liability is limited with respect
to, charges to the credit card account that result from unauthorized use of the
credit card.
Additional consumer protection laws may be enacted that would impose
requirements on the making, enforcement and collection of consumer credit loans.
Any new laws or rulings that may be adopted, and existing consumer protection
laws, may adversely affect the ability to collect on the receivables. In
addition, failure of the servicer to comply with these requirements could
adversely affect the servicer's ability to enforce the receivables.
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The trust may be liable for certain violations of consumer protection laws
that apply to the receivables, either as assignee from 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 such violations by way of
set-off against his obligation to pay the amount of receivables owing. The
seller has represented and warranted in the pooling and servicing agreement that
all of the receivables have been and will be created in compliance with the
requirements of these laws. For a discussion of the trust's rights arising from
the breach of these warranties, see "Description of the
Certificates -- Representations and Warranties" in this prospectus.
Certain jurisdictions may attempt to require out-of-state credit card
issuers to comply with the jurisdiction's consumer protection laws (including
laws limiting the charges imposed by such credit card issuers) in connection
with their operations in such jurisdictions. A successful challenge by such a
jurisdiction could have an adverse impact on the seller's credit card operations
or the yield on the receivables in the trust.
If a cardholder sought protection under federal or state bankruptcy or
debtor relief laws, a court could reduce or discharge completely the
cardholder's obligations to repay amounts due on its account and, as a result,
the related receivables would be written off as uncollectible. The
certificateholders could suffer a loss if no funds are available from credit
enhancement or other sources. See "Description of the Certificates -- Defaulted
Receivables; Rebates and Fraudulent Charges" in this prospectus.
CLAIMS AND DEFENSES OF CARDHOLDERS AGAINST THE TRUST
The UCC, the provisions of which would be applicable to the trust if it
were deemed to have acquired a security interest in the receivables transferred
to the trust (see " -- Transfer of Receivables"), provides that:
(a) unless a cardholder has made an enforceable agreement not to assert
defenses or claims arising out of a transaction, the rights of the
trust, as assignee, are subject to all the terms of the cardholder
agreement between the bank and the cardholder and any defense or
claim arising therefrom, to rights of set-off and to any other
defense or claim of the cardholder against the bank that accrues
before the cardholder receives notification of the assignment; and
(b) any cardholder is authorized to continue to pay the bank until:
(i) the cardholder receives notification, reasonably identifying the
rights assigned, that the amount due or to become due has been
assigned and that payment is to be made to the trustee or
successor servicer; and
(ii) if requested by the cardholders the trustee or successor
servicer has furnished reasonable proof of assignment.
No such agreement not to assert defenses has been entered into and no
notice of the assignment of the receivables to the trust will be sent to the
cardholders obligated on the ACCOUNTS in connection with the transfer of the
receivables to the trust.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a discussion of material federal income tax consequences
relating to the investment in a certificate offered hereunder. Additional
federal income tax considerations relevant to a particular series may be set
forth in the accompanying prospectus supplement. 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
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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 CERTIFICATES 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 of a
transaction, while a relevant factor, is 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 Internal Revenue Service 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 related prospectus supplement, Orrick, Herrington & Sutcliffe LLP, special
federal income tax counsel to the seller, is of the opinion that, under current
law as in effect on the closing date, although no transaction closely comparable
to that contemplated herein has been the subject of any Treasury regulation,
revenue ruling or judicial decision, for federal income tax purposes the
certificates offered hereunder 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 offered
hereunder are debt for federal income tax purposes.
TREATMENT OF THE TRUST
General. The pooling and servicing agreement permits the issuance of
certificates and certain other interests (including certain COLLATERAL
INTERESTS) in the trust, 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 in the trust (other than the SELLER INTEREST)
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 holder of the seller interest). Under this view, the trust
would be disregarded for federal income tax purposes. Alternatively, if some of
the certificates or other interests in the trust (other than the seller
interest) were characterized as equity, the trust might be characterized as a
separate entity owning
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the receivables, issuing its own debt, and jointly owned by the seller (or other
holder of the seller interest) and the other holders of equity interests in the
trust. However, special federal income tax counsel is of the opinion that, under
current law as in effect on the closing date, any such 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 federal income 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, such
opinion does not bind the Internal Revenue Service and thus, no assurance can be
given that such treatment will prevail. Further, such opinion is made with
respect to current law, which is subject to change. If the Internal Revenue
Service were to contend successfully that some or all of the certificates or any
other interest in the trust (other than the seller interest) were not debt
obligations for federal income tax purposes, all or a portion of the trust could
be classified as a partnership or as a publicly traded partnership taxable as a
corporation for such purposes. Because special federal income tax counsel is of
the opinion that the certificates will be characterized as debt for federal
income tax purposes and because any holder of any other interest in the trust
(other than the seller interest) generally will agree to treat that interest as
debt for such purposes, no attempt will be made to comply with any tax reporting
requirements that would apply as a result of such 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 under the publicly traded partnership provisions of the
Internal Revenue Code could cause the trust to constitute a publicly traded
partnership even if all holders of interests in publicly offered certificates
are treated as holding debt. The publicly traded partnership regulations
generally apply to taxable years beginning after December 31, 1995, and thus
could affect the classification of then-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 this grandfather provision. 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 the
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 such measures will ultimately be successful, certain of the actions that
may be necessary for avoiding the treatment of such 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.
If the trust were treated as a partnership but nevertheless were not
treated as 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 seller interest)
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 such 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
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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. 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 such 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 such
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 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 might not be entitled to any dividends received deduction in respect of
such 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 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 (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 such interest
should be included in the certificate's stated redemption price at maturity. If
sustained, such treatment should not significantly affect 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.
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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 or
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.
FOREIGN CERTIFICATE OWNERS
In general, a non-U.S. CERTIFICATE OWNER who, for United States federal
income tax purposes, is a nonresident alien individual or a foreign corporation
(a "FOREIGN PERSON"), generally will not be subject to U.S. federal income tax
on interest (including original issue discount) on a beneficial interest in a
certificate unless:
(i) the foreign person 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 in
the trust if characterized as a partnership);
(ii) the foreign person is a controlled foreign corporation that is
related to the seller (or the trust, if treated as a partnership)
through stock ownership;
(iii) the foreign person is a bank receiving interest described in
Internal Revenue Code Section 881(c)(3)(A);
(iv) such interest is contingent interest described in Internal Revenue
Code Section 871(h)(4); or
(v) the foreign person bears certain relationships to any holder of
either (x) the SELLER INTEREST (other than the seller) or (y) any
other interest in the trust not properly characterized as debt.
To qualify for the exemption from taxation, the withholding agent, who
generally is the last U.S. PERSON in the chain of payment prior to payment to a
foreign person, 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:
(i) is signed by the foreign person under penalties of perjury;
(ii) certifies that the foreign person is not a U.S. person; and
(iii) provides the name and address of, and certain additional
information concerning, the foreign person.
This statement generally may be made on a Form W-8BEN or substantially
similar substitute form, and the foreign person must inform the withholding
agent of any change in the information on the 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-8BEN or substitute form
provided by the foreign person to the organization or institution holding the
certificate on behalf of the foreign person. The U.S. Treasury Department
recently issued final Treasury regulations which will revise some of the
foregoing procedures whereby a non-U.S. certificate owner may establish an
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exemption from withholding generally beginning January 1, 2001; non-U.S.
certificate owners should consult their tax advisers concerning the impact to
them, if any, of such revised procedures.
Generally, any gain or income realized by a foreign person upon retirement
or disposition of an interest in a certificate will not be subject to U.S.
federal income tax, provided that:
(i) in the case of a certificate owner that is an individual, such
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
(ii) in the case of gain representing accrued interest, the conditions
for exemption from withholding described above are satisfied.
Certain exceptions may be applicable, and an individual foreign person should
consult a tax adviser.
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.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of principal and interest, as well as payments of proceeds from
the sale, retirement or other disposition of a certificate, may be subject to
"backup withholding" tax under the Internal Revenue Code at a rate of 31 percent
if a recipient of these payments fails to furnish to the payor certain
identifying information. Any amounts deducted and withheld would be allowed as a
credit against such recipient's United States federal income tax, provided
appropriate proof is provided under rules established by the Internal Revenue
Service. Furthermore, certain penalties may be imposed by the Internal Revenue
Service on a recipient of payments that is required to supply information but
that does not do so in the proper manner. Backup withholding will not apply with
respect to payments made to certain exempt recipients, such as corporations and
financial institutions. Information may also be required to be provided to the
Internal Revenue Service concerning payments, unless an exemption applies.
CERTIFICATE OWNERS should consult their tax advisors regarding their
qualification for exemption from backup withholding and information reporting
and the procedure for obtaining such an exemption.
STATE AND LOCAL TAXATION
General. Except as is set forth below, the discussion herein 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.
Ohio. No opinion has been requested from the Ohio Tax Commissioner with
respect to the purchase, ownership or disposition of the certificates. Each
investor should, therefore, consult a tax advisor regarding any Ohio state or
local tax consequences.
Assuming that the certificates are characterized as indebtedness for
federal income tax purposes, and the certificates, when issued, will not
represent interests in an association taxable as a corporation for federal
income tax purposes, CERTIFICATE OWNERS not otherwise subject to the Ohio
corporation franchise tax or the Ohio personal income tax will not be subject to
such taxes solely because of their ownership of the certificates.
If, however, the trust is treated as a partnership for federal income tax
purposes, and such partnership is determined to be engaged in business in Ohio,
certificate owners treated as holding equity interests in
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the partnership could be subject to the Ohio corporation franchise tax or the
Ohio personal income tax by virtue of their ownership of the certificates.
Further, if the trust is treated as an association taxable as a corporation
for federal income tax purposes or fails to qualify as an "investment
pass-through entity," and has tax nexus with Ohio, the trust could be subject to
the Ohio corporation franchise tax or the direct tax levied on a "qualifying
pass-through entity." Such taxes could result in reduced distributions to the
certificate owners. Certificate owners not otherwise subject to the Ohio
corporation franchise tax or the Ohio personal income tax would not be subject
to such taxes because of their ownership of the certificates.
ERISA CONSIDERATIONS
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 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 such
persons, unless a statutory, regulatory or administrative exemption is
available. PLANS that are governmental plans (as defined in Section 3(32) of
ERISA) and certain church plans (as defined in Section 3(33) of ERISA) are not
subject to ERISA requirements.
A violation of the prohibited transaction rules could occur if any series
of certificates were to be purchased with "plan assets" of any plan if the
seller, the trustee, any underwriters of such series or any of their affiliates
were a party in interest with respect to such plan, unless a statutory,
regulatory or administrative exemption is available or an exception applies
under a plan asset 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 such 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
Exemption 96-23 (Class Exemption for Plan Asset Transactions Determined by
In-House Asset Managers), 95-60 (Class Exemption for Certain Transactions
Involving Insurance Company General Accounts), 91-38 (Class Exemption for
Certain Transactions Involving Bank Collective Investment Funds), 90-1 (Class
Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts) and 84-14 (Class Exemption for Plan Asset Transactions Determined by
Independent Qualified Professional Asset Managers).
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 such 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 and result in
non-exempt prohibited transactions, unless one of the following exceptions
applies.
The first exception applies to a "publicly-offered security." A
publicly-offered security is a security that is:
(a) freely transferable;
(b) 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
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(c) either is:
(i) part of a class of securities registered under Section 12(b) or
12(g) of the Securities Exchange Act of 1934, as amended; or
(ii) sold to the plan as part of an offering of securities to the
public pursuant to an effective registration statement under the
Securities Act of 1933, as amended, and the class of securities
of which such security is a part is registered under the
Securities Exchange Act of 1934, as amended, within 120 days (or
such later time as may be allowed by the SEC) after the end of
the fiscal year of the issuer during which the offering of such
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.
A 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. No assurance can be given by the seller 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 none of the foregoing exceptions under the plan asset regulation were
satisfied with respect to the trust and the trust were considered to hold "plan
assets" of plans, 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.
The certificates of any series may not be purchased with "plan assets" of a
plan if the seller, the servicer, the trustee or any of their affiliates:
(a) has investment or administrative discretion with respect to such
plan assets;
(b) has authority or responsibility to give, or regularly gives,
investment advice with respect to such plan assets, for a fee and
pursuant to an agreement or understanding that such advice (i) will
serve as a primary basis for investment decisions with respect to
such plan assets, and (ii) will be based on the particular
investment needs of such plan; or
(c) unless Prohibited Transaction Class Exemption 95-60, 91-38 or 90-1
applies, is an employer maintaining or contributing to such plan.
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.
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
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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:
(i) satisfies the diversification requirement of ERISA or other
applicable law;
(ii) is in accordance with the plan's governing instruments; and
(iii) 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 bank may sell certificates:
(a) through underwriters or dealers, and
(b) directly to one or more purchaser, or
(c) through agents.
The related prospectus supplement will set forth the terms of the offering
of any certificates offered hereby, including, without limitation, the names of
any underwriters, the purchase price of the certificates and the proceeds to the
bank from the sale, any underwriting discounts and other items constituting
underwrites' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers.
If underwriters are used in a sale of any certificates of a series offered
hereby, the certificates will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices to be determined at the time of sale or at the time of commitment
therefor. These certificates may be offered to the public either through
underwriting syndicates represented by managing underwriters or by underwriters
without a syndicate. Unless otherwise set forth in the related prospectus
supplement, the obligations of the underwriters to purchase the certificates
will be subject to certain conditions precedent, and the underwriters will be
obligated to purchase all of the certificates if any of the certificates are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
Certificates of a series offered hereby may also be offered and sold, if so
indicated in the related prospectus supplement, in connection with a remarketing
upon their purchase, in accordance with a redemption or repayment pursuant to
their terms, by one or more firms acting as principals for their own accounts or
as agents for the bank. Any remarketing firm will be identified and the terms of
its agreement, if any, with the bank and its compensation will be described in
the related prospectus supplement. Remarketing firms may be deemed to be
underwriters in connection with the certificates remarketed.
Certificates may also be sold directly by the bank or through agents
designated by the bank from time to time. Any agent involved in the offer or
sale of certificates will be named, and any commissions payable by the bank to
the agent will be set forth, in the related prospectus supplement. Unless
otherwise indicated in the related prospectus supplement, the agent will act on
a best efforts basis for the period of its appointment.
Any underwriters, agents or dealers participating in the distribution of
certificates may be deemed to be underwriters, and any discounts or commissions
received by them on the sale or resale of certificates may be deemed to be
underwriting discounts and commissions, under the Securities Act. Agents and
underwriters may be entitled under agreements entered into the bank to
indemnification by the bank against certain civil liabilities, included
liabilities under the Securities Act, or to contribution with respect to
payments that the agents or underwriters may be required to make. Agents and
underwriters may be affiliates or customers of, engage in transactions with, or
perform services for, the bank or its affiliates in the ordinary course of
business.
The underwriters involved in the offering of any series of certificates may
include NatCity Investments, Inc., an affiliate of the bank, and may include
other affiliates of the bank. NatCity Investments, Inc. or other affiliates may
be involved in any series as an underwriter or an agent.
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This prospectus, together with the accompanying prospectus supplement, may
be used by NatCity Investments, Inc. or another affiliate of the bank, in
connection with offers and sales of an indeterminate amount of the certificates
in market-making transactions. In these market-making transactions, NatCity
Investments, Inc. or another affiliate of the bank may act as a principal or an
agent and the sales will be at negotiated prices related to prevailing market
prices at the time of the sale. See "Risk Factors -- It May Not Be Possible to
Find an Investor to Purchase Your Certificates" in this prospectus.
LEGAL MATTERS
Certain legal matters relating to the issuance of the certificates will be
passed upon for the seller by Charles H. Spain, Jr., Vice President and Senior
Attorney for the bank, and for the seller, the servicer and the trust by Jones,
Day, Reavis & Pogue, New York, New York, and for any underwriters, agents or
dealers by Orrick, Herrington & Sutcliffe LLP, Washington, D.C. Certain legal
matters relating to the federal tax consequences of the issuance of the
certificates will be passed upon for the seller by Orrick, Herrington &
Sutcliffe LLP, New York, New York.
REPORTS TO CERTIFICATEHOLDERS
The servicer will prepare monthly and annual reports that will contain
information about the trust. The financial information contained in the reports
will not be prepared in accordance with generally accepted accounting
principles. Unless and until definitive certificates are issued, the reports
will be sent to Cede & Co. which is the nominee of The Depository Trust Company
and the registered holder of the certificates. No financial reports will be sent
to you. See "Description of the Certificates -- Book-Entry Registration" 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
Securities and Exchange Commission. 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 SEC 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 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 on the operation
of the public reference rooms. 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. The 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 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: National City Bank, 1900 East 9th Street, Cleveland, Ohio 44114,
Attn.: Jeffrey C. Douglas; 1-800-622-4204.
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GLOSSARY OF DEFINED TERMS
Many of the terms defined below contain terms defined elsewhere in this
glossary.
"ACCOUNTS" means consumer revolving credit card accounts containing the
receivables of the trust.
"ADDITION DATE" means the date the seller delivers to the trustee an
assignment related to an addition of accounts or participations.
"ADDITIONAL INTEREST" means the collection of monthly interest, overdue
monthly interest and any interest on overdue monthly interest at the rate
specified in the accompanying prospectus supplement.
"AGGREGATE ADDITIONAL LIMIT" means the for any series:
(1) for any three consecutive monthly period commencing in January,
April, July and October of each calendar year, 15% of the number
of accounts as of the first day of the calendar year during which
the monthly periods commence; or
(2) for any twelve-month period, 20% of the number of accounts as of
the first day of the twelve-month period.
"CERTIFICATE OWNER" means an owner of beneficial interests in the
certificates.
"COLLECTION ACCOUNT" means an eligible deposit account bearing a
designation clearly indicating that the funds deposited in it are held for the
benefit of the certificateholders of each series.
"COLLATERAL INTEREST" means an uncertificated, subordinated interest in the
trust.
"CREDIT CARD GUIDELINES" means the seller's written policies and procedures
relating to the operation of its consumer revolving lending business, including
without limitation:
(1) the written policies and procedures for determining the
creditworthiness of credit card customers;
(2) the extension of credit to credit card customers; and
(3) the maintenance of credit card accounts and collection of
receivables.
These guidelines may be amended, modified or otherwise changed from time to
time.
"CUT-OFF DATE" means the date when receivables are selected from accounts
and conveyed to the trust on the basis of criteria set forth in the pooling and
servicing agreement.
"DEFAULTED AMOUNT" means, for any monthly period, an amount (not less than
zero) equal to:
(1) the amount of principal receivables that became defaulted
receivables for the monthly period, minus
(2) the sum of:
(a) the amount of any defaulted receivables that a seller or the
servicer becomes obligated to accept reassignment or assignment
during the monthly period (unless an insolvency event has
occurred with respect to the seller or servicer, in which event
the amount of the defaulted receivables will not be added to
the sum so subtracted), and
(b) the excess, if any, for the immediately preceding monthly
period of the sum computed pursuant to this clause (2) over the
amount of principal receivables that became defaulted
receivables during the monthly period.
"DEFAULTED RECEIVABLES" means, for any monthly period, the principal
receivables that were charged-off as uncollectible in the monthly period in
accordance with the credit card guidelines and the servicer's customary and
usual servicing procedures for servicing revolving credit card receivables
comparable to the receivables in the trust.
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"DEPOSITARIES" means the collection of depositaries of Clearstream and
Euroclear which hold the books containing the customers' securities accounts in
Clearstream's and Euroclear's names, respectively, and which in turn will hold
omnibus positions in customers' securities account in the depositaries' names on
the books of DTC.
"DETERMINATION DATE" means the third business day preceding each
distribution date when the servicer will calculate the aggregate invested
default amount for the preceding monthly period.
"DISCOUNT OPTION RECEIVABLES" means an amount of receivables arising in the
accounts on and after the date the seller's designation of a discount percentage
becomes effective that otherwise would have been treated as principal
receivables to be treated as finance charge receivables.
"DISCOUNT PERCENTAGE" means a fixed or variable percentage designated by
the seller exercising its discount option, at it sole discretion, of receivables
arising in the accounts on and after the date the option is exercised.
"ELIGIBLE ACCOUNT" means, as of the cut-off date (or, with respect to
additional accounts, as of their date of designation for inclusion in the
trust), each account owned by the seller:
(1)(a) which was in existence and serviced by the servicer;
(b) which is payable in United States dollars;
(c) has not been identified as an account with credit cards that
have been reported lost or stolen;
(d) has a cardholder who has provided, as his or her billing
address, an address located in the United States or its
territories or possessions or a military address;
(e) has not been, and does not have any receivables that have been
sold, pledged, assigned or otherwise conveyed to any person
(except pursuant to the pooling and servicing agreement);
(f) except as described below, does not have any defaulted
receivables; and
(g) except as described below, does not have any receivables that
have been identified as having been incurred as a result of
fraudulent use of any related credit card; or
(2) with respect to additional accounts, any revolving credit card
owned by the seller that comply with the requirements of clause
(1) above, provided, that the seller provides to the trustee
written evidence that in establishing such differences, the
ratings will not be withdrawn or reduced by the rating agencies.
Eligible accounts may include accounts, the receivables of which are
defaulted receivables, or receivables which the seller believes the related
cardholder is bankrupt or which have been identified by the cardholders as
having been incurred as a result of fraudulent use of any credit card, or has
been reported to the seller as lost or stolen; provided that:
(1) the balance of all receivables included in the 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
(2) charging privileges for the accounts have been canceled in
accordance with the credit card guidelines of the seller and will
not be reinstated by the seller or the servicer.
"ELIGIBLE DEPOSIT ACCOUNT" means either:
(1) a segregated account with an eligible institution or
(2) a segregated trust account with the corporate trust department of
a depository institution organized under the Federal or state laws
of the United States, including the District of Columbia (or any
domestic branch of foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities
of the depository institution shall
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have a credit rating from each rating agency in one of its generic
credit rating categories that signifies investment grade.
"ELIGIBLE INSTITUTION" means:
(1) a depository institution (which may be the trustee) organized
under the Federal or state laws of the United States, which at all
times:
(a) has either:
(i) a long-term unsecured debt rating of "A2" or better by
Moody's or
(ii) a certificate of deposit rating of "P-1" by Moody's,
(b) has either:
(i) a long-term unsecured debt rating of "AAA" by Standard &
Poor's or
(ii) a certificate of deposit rating of "A-1+" by Standard &
Poor's and
(c) is a member of the FDIC or
(2) any other institution that is acceptable to each rating agency.
"ELIGIBLE INVESTMENTS" collectively means:
(1) obligations fully guaranteed by the United States of America;
(2) demand deposits, time deposits or certificates of deposit of
depository institutions or trust companies, the commercial paper,
if any, of which has the highest rating from Moody's and Standard
& Poor's;
(3) commercial paper (or other short term obligations) having, at the
time of the trust's investment therein, a rating in the highest
rating category from Moody's and Standard & Poor's;
(4) demand deposits, time deposits and certificates of deposit that
are fully insured by the FDIC;
(5) notes or bankers' acceptances issued by any depository institution
or trust company described in (2) above;
(6) money market funds that have the highest rating from Moody's and
Standard & Poor's, or have otherwise been approved in writing by
each rating agency;
(7) demand deposits with an entity, the commercial paper of which has
the highest rating from Moody's and Standard & Poor's; and
(8) securities that are registered in the name of the trustee by the
issuer and identified by the trustee as held for the benefit of
the certificateholders, and consisting of shares of an open end
diversified investment company which is registered under the
Investment Company Act of 1940 and which:
(a) invests in assets exclusively in obligations of or guaranteed
by the United States of America or any instrumentality or
agency thereof having in each instance a final maturity date of
less than one year from their date of purchase or other
eligible investments,
(b) seeks to maintain a constant net asset value per share,
(c) has aggregate net assets of not less than $100,000,000 on the
date of purchase of such shares and
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(d) which each rating agency designates in writing will not result
in a withdrawal or downgrading of its then current rating of
any series rated by it; and
(9) any other investments approved in writing by each rating agency.
"ELIGIBLE RECEIVABLE" means each receivable:
(1) which has arisen under an eligible account;
(2) which was created in compliance, in all material respects, with
the credit card guidelines and all requirements of law applicable
to the seller, and pursuant to a credit card agreement which
complies in all material respects with all requirements of law
applicable to the seller;
(3) with respect to which all consents, licenses or authorizations
of, or registrations 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, creation
and performance by the seller of the related credit card
agreement have been duly obtained or given and are in full force
and effect as of the date of the creation of such receivable;
(4) as to which, at the time of its creation, the seller or the trust
had good and marketable title free and clear of all liens and
security interests arising under or through the seller (other
than certain tax liens for taxes not then due or which the seller
is contesting);
(5) that has been the subject of either a valid transfer and
assignment from the seller to the trust of all the seller's
right, title and interest in the trust or the grant of a first
priority perfected security interest in the trust (and in the
proceeds thereof), effective until the termination of the trust;
(6) which is the legal, valid and binding payment obligation of the
obligor thereon, legally enforceable against such obligor in
accordance with its terms (with certain bankruptcy-related
exceptions);
(7) which constitutes an "account" or "general intangible" under
Article 9 of the UCC;
(8) that, at the time of transfer, has not been waived or modified
except as permitted in accordance with the credit card guidelines
or as ordered by a court of competent jurisdiction or other
governmental authority;
(9) that, 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 on the account, other than defenses rising
out of applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights;
(10) as to which, at the time of its transfer to the trust, the seller
has satisfied all obligations to be fulfilled at the time it is
transferred to the trust; and
(11) as to which, at the time of its transfer to the trust, the seller
has not taken any action that, 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.
"ENHANCEMENT INVESTED AMOUNT" means, upon the availability of credit
enhancement to pay principal of the certificates of a series following a certain
pay out event, the interest of the credit enhancement provider in certain cash
flows in respect of the receivables in the trust to the extent described in the
accompanying prospectus supplement.
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"EXCESS FINANCE CHARGE COLLECTIONS" means, for any monthly period, the
excess of collections of finance charge receivables, annual membership fees and
certain other amounts allocated to the invested amount of the series or class
over the sum of:
(1) monthly interest and overdue monthly interest on the certificates
of the series or class;
(2) accrued and unpaid investor servicing fees with respect to the
series or class payable from collections of finance charge
receivables;
(3) the investor default amount with respect to the series or class;
(4) unreimbursed investor charge-offs with respect to the series or
class; and
(5) other amounts specified in the accompanying prospectus supplement.
"FINANCE CHARGE RECEIVABLES" mean the periodic finance charges, cash
advance fees, late fees, overlimit fees, discount option receivables, annual
fees and any other fees and charges billed on the accounts. Collections of
finance charge receivables will include the amount of interchange, if any, and
recoveries, if any, each allocable to any series for a monthly period.
"FOREIGN PERSON" means a nonresident alien individual or foreign
corporation.
"FUNDING PERIOD" means the period beginning on the closing date and ending
on a specified date before the commencement of an amortization period or
accumulation period for a series.
"GROUP" means the group of series each offered by related prospectus and
prospectus supplement.
"INSOLVENCY EVENT" means an event that occurs if:
(1) the seller and/or any additional sellers or any other holder of
the seller interest consents to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the seller or the holder or of or relating to all or
substantially all of its property;
(2) 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
(3) 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.
"INTERCHANGE" means 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.
"INTEREST PAYMENT DATE" means the date on which interest with respect to
the certificates is distributed.
"INVESTED AMOUNT" means, for each series of certificates, unless otherwise
specified in the related prospectus supplement, an amount, on any date, equal
to:
(1) the aggregate initial principal amount of the certificates; minus
(2) the aggregate amount of principal payments made to the
certificateholders prior to such date; minus
(3) the aggregate amount of investor charge-offs for all prior
distribution dates.
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"INVESTOR CHARGE-OFF" means, for any monthly period, and for any series or
class within the series, the amount by which:
(1) the related monthly interest and overdue monthly interest,
together with, if applicable, any additional interest as provided
for in the applicable prospectus supplement, the accrued and
unpaid investor servicing fees payable from collections of finance
charge receivables, the investor default amount and any other
required fees, exceeds
(2) amounts available to pay the amounts out of collections of finance
charge receivables, available credit enhancement amounts, if any,
and other sources specified in the accompanying prospectus
supplement, but not more than the investor default amount.
"INVESTOR SERVICING FEE" means, for any series of certificates or class
within a series, the servicing fee allocable to the invested amount with respect
to the series or class, as specified in the accompanying prospectus supplement.
"MONTHLY INVESTOR SERVICING FEE" means the sum of the invested amount with
respect to the series (less the amount, if any, on deposit in any principal
funding account) and the enhancement invested amount, if any, with respect to
the series as of the last day of the preceding monthly period.
"PAY OUT EVENT" means the events described under "Description of the
Certificates -- Pay Out Events."
"PLANS" means certain pension, profit sharing or other employee benefit
plans, individual retirement accounts or annuities and employee annuity plans
and Keogh plans.
"PRE-FUNDING ACCOUNT" means the trust account established with the trustee
holding the pre-funding amount for the benefit of the certificateholders.
"PRE-FUNDING AMOUNT" means the amount of the deficiency between the
aggregate principal amount of receivables in the trust allocable to a series and
the aggregate principal amount of certificates for that series.
"PRINCIPAL RECEIVABLES" mean the receivables which include all amounts
charged by cardholders for merchandise, services and cash advances, but does not
include defaulted receivables.
"QUALIFIED INSTITUTION" is defined as:
(1) a depository institution or trust company, which may include the
trustee;
(2) organized under the laws of the United States or any one of the
state within it;
(3) which at all times has a certificate of deposit rating of P-1 by
Moody's Investors Service, Inc. and of A-1+ by Standard & Poor's
Ratings Services or long-term unsecured debt obligation, other
than an obligation with a rating which is based on collateral or
on the credit of a person other than the institution or trust
company, rating of Aa3 by Moody's; and
(4) which has deposit insurance provided by either the Bank Insurance
Fund or the Savings Association Insurance Fund, each administered
by the FDIC.
"REASSIGNMENT AMOUNT" means, with respect to any distribution date, after
giving effect to any deposits and distributions otherwise to be made on the
distribution date, the sum of:
(1) the invested amount on the distribution date; plus
(2) monthly interest for the distribution date and any monthly
interest previously due but not distributed to the
certificateholders of the series on a prior distribution date;
plus
(3) the amount of additional interest as described in the related
prospectus supplement, if any, for the distribution date and any
additional interest previously due but not distributed to the
certificateholders of the series on a prior distribution date.
"REQUIRED PRINCIPAL BALANCE" means, for any date:
(1) the initial invested amounts of each series outstanding on that
day (provided that under certain circumstances some series may be
excluded from this calculation), minus
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(2) the aggregate principal amount on deposit in the special funding
account on that day.
However, if the only series outstanding are excluded series and a pay out event
has occurred to any series, the required principal balance means:
(1) the invested amounts of each excluded series as of the first date
on which a pay out event is deemed to have occurred; minus
(2) the aggregate principal amount on deposit in the special funding
account.
"REQUIRED SELLER AMOUNT" means, for any date, an amount equal to the
product of the required seller percentage and the sum of:
(1) the invested amount in each series; and
(2) the aggregate principal amount on deposit in the special funding
account on that day.
"REQUIRED SELLER PERCENTAGE" means 4%. However, the seller, upon 30 days'
prior notice to the trustee, each rating agency and certain providers of series
enhancement, may reduce the required seller percentage (but not below 2%),
provided that (i) such reduction will not result in a ratings effect and (ii)
the seller shall have delivered an officer's certificate stating that, in the
reasonable belief of such officer, such reduction will not, based upon facts
known to such officer at the time of such certification, cause a pay out event
to occur.
"SECURITIES INTERMEDIARY" means any entity which is a person, including a
bank or broker, that in the ordinary course of its business maintains securities
accounts for others and is acting in that capacity and which is also a
depository institution or trust company 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 having a credit rating from each
rating agency in one of its generic credit rating categories which signifies
investment grade.
"SELLER AMOUNT" means at any time of determination:
(1) an amount equal to the total amount of principal receivables and the
principal amount on deposit in the special funding account and any
principal funding account in the trust at such time; minus
(2) the aggregate invested amounts and enhancement invested amounts, if
any, for all outstanding series at such time.
"SELLER CERTIFICATE" means a certificate representing an interest in the
seller interest.
"SELLER INTEREST" means the interest in the trust not represented by the
certificates issued and outstanding under the trust or the rights, if any, of
any credit enhancement providers to receive payments under the trust.
"SERIES ENHANCEMENT" means, for any series or class of certificates, any
credit enhancement, guaranteed rate agreements, maturity liquidity facility, tax
protection agreement, interest rate cap agreement, interest rate swap agreement
or other similar arrangement for the benefit of certificateholders of the series
or class.
"SERIES TERMINATION DATE" means the latest date by which principal and
interest for the series of certificates can be paid.
"SERVICER DEFAULT" means any of the following events:
(a) failure by the servicer to make any payment, transfer or deposit,
or to give instructions to the trustee to make certain payments,
transfers or deposits, on the date the servicer is required to do
so under the pooling and servicing agreement or any series
supplement which is not cured within a five business day grace
period;
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(b) failure on the part of the servicer duly to observe or perform in
any material respect any other covenants or agreements of the
servicer which has a material adverse effect on the
certificateholders of any series or class issue and outstanding
under the trust and which continues unremedied for a period of 60
days after written notice shall have been given to the servicer by
the trustee, or to the servicer and the trustee by
certificateholders evidencing not less than 10% of the aggregate
unpaid principal amount of all certificates; or the servicer
delegates its duties under the pooling and servicing agreement,
and it continues unremedied for 15 days after written notice,
shall have given to the servicer by the trustee, or to the
servicer and the trustee by certificateholders evidencing not less
than 10% of the aggregate unpaid principal amount of the
certificates;
(c) any representation, warranty or certification made by the servicer
in the pooling and servicing agreement, or in any certificate
delivered pursuant to the pooling and servicing agreement, proves
to have been incorrect when made which has a material adverse
effect on the certificateholders of any series issued and
outstanding under the trust, and which continues to be incorrect
in any material respect for a period of 60 days after written
notice, shall have been given to the servicer by the trustee, or
to the servicer and the trustee by certificateholders evidencing
not less than 10% of the aggregate unpaid principal amount of all
certificates; or
(d) the occurrence of certain events of bankruptcy, insolvency,
conservatorship or receivership of the servicer.
Unless otherwise stated in the accompanying prospectus supplement,
notwithstanding the foregoing, a delay in or failure of performance referred to
in clause (a) above for a period of five business days, or referred to under
clause (b) or (c) for a period of 60 business days, will not constitute a
servicer default if such delay or failure could not be prevented by the exercise
of reasonable diligence by the servicer and such delay or failure was caused by
an act of God or other similar occurrence.
"SHARED PRINCIPAL COLLECTIONS" means collections of principal receivables
and certain other amounts that are allocated to the invested amount of any
series which are not needed to make payment or deposits to that series, and can
be shared with other series to cover the principal payments due.
"SPECIAL FUNDING ACCOUNT" means, if the seller amount is less than or equal
to the required seller amount or the amount of principal receivables in the
trust is less than or equal to the required principal balance, the account
established for the servicer to deposit and clearly mark funds from shared
principal collections, that might otherwise distributed to holder of the seller
interest, for the benefit of certificateholders of each series, in the name of
the trustee and on behalf of the trustee.
"SPECIAL PAYMENT DATE" means each monthly distribution date following the
beginning of an early amortization period.
"TAX OPINION" means an opinion of counsel acceptable to the trustee that
for federal income tax purposes:
(1) following a new issuance, the trust will not be deemed to be an
association (or publicly traded partnership) taxable as a
corporation;
(2) a new issuance will not affect the tax characterization as debt of
certificates of any outstanding series or class that were
characterized as debt at the time of their issuance; and
(3) a new issuance will not cause or constitute an event in which gain
or loss would be recognized by any certificateholders.
"TRUST CUT-OFF DATE" means the date prior to the issuance of the first
series when the seller will convey to the trust all existing receivables.
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"TRUST TERMINATION DATE" means the date earliest of:
(1) the day after the distribution date on which the aggregate
invested amount and enhancement invested amount or collateral
interest, if any, with respect to each series outstanding is zero;
(2) June 1, 2025; or
(3) if the receivables are sold, disposed of or liquidated following
the occurrence of an event of insolvency or receivership of the
seller, immediately following the sale, disposition or
liquidation.
"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.
"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 within the United States, 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.
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered National City
Credit Card Master Trust Asset-Backed Certificates to be issued in series from
time to time will be available only in book-entry form. Investors in these
global securities may hold such global securities through any of The Depository
Trust Company, Clearstream 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 Clearstream 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 Clearstream or Euroclear and DTC
participants holding certificates will be effected on a delivery-against-payment
basis through the respective DEPOSITARIES of Clearstream 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, Clearstream 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 Clearstream 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 Clearstream 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 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 trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
participants (other than Citibank, N.A. ("Citibank") and Morgan Guaranty Trust
Company of New York ("Morgan") as depositories for Clearstream and Euroclear,
respectively) will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
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Trading between Clearstream customers and/or Euroclear
participants. Secondary market trading between Clearstream customers or
Euroclear participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
Trading between DTC seller and Clearstream 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 Clearstream and Euroclear,
respectively) to the account of a Clearstream customer or a Euroclear
participant, the purchaser must send instructions to Clearstream or Euroclear,
as the case may be, prior to settlement date 12:30. Clearstream or Euroclear, as
the case may be, will instruct Citibank or Morgan, respectively, to receive the
global securities for 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 Clearstream customer's or
Euroclear participant's account. Credit for the global securities will appear
the next day (European time) and the cash debit will be back-valued to, and the
interest on the global securities will accrue from, the value date (which would
be the preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Clearstream or
Euroclear cash debit will be valued instead as of the actual settlement date.
Clearstream 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 Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the global securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, Clearstream customers or Euroclear participants can elect not to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Clearstream 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 Clearstream customer's or Euroclear participant's particular cost of
funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending global securities to
Citibank or Morgan for the benefit of Clearstream 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 Clearstream or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Clearstream 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 will send
instructions to Clearstream or Euroclear, as the case may be, before settlement
date 12:30. In these cases, Clearstream 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 Clearstream customer or Euroclear participant the following day, and receipt
of the cash proceeds in the Clearstream 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 Clearstream 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
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date (i.e., the trade fails), receipt of the cash proceeds in the Clearstream
customer's or Euroclear participant's account would instead be valued as of the
actual settlement date.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of global securities holding securities through
Clearstream or Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 30% U.S. withholding tax that generally applies
to payments of interest (including original issue discount) on registered debt
issued by U.S. PERSONS, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes appropriate steps to obtain an
exemption or reduced tax rate. See "Federal Income Tax Consequences" in this
prospectus.
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NATIONAL CITY CREDIT CARD MASTER TRUST
Issuer
[National City Logo]
NATIONAL CITY BANK
Seller and Servicer
SERIES 2000-1
$525,000,000
CLASS A FLOATING RATE ASSET BACKED CERTIFICATES
$36,000,000
CLASS B FLOATING RATE ASSET BACKED CERTIFICATES
------------
PROSPECTUS SUPPLEMENT
------------
UNDERWRITERS OF THE CLASS A CERTIFICATES
SALOMON SMITH BARNEY
LEHMAN BROTHERS
NATCITY INVESTMENTS, INC.
UNDERWRITER OF THE CLASS B CERTIFICATES
SALOMON SMITH BARNEY
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 CERTIFICATES IN ANY STATE WHERE THE
OFFER IS NOT PERMITTED.
WE DO NOT CLAIM THE ACCURACY OF THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AS OF ANY
DATE OTHER THAN THE DATES STATED ON THEIR RESPECTIVE COVERS.
DEALERS WILL DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS
WHEN ACTING AS UNDERWRITERS OF THE CERTIFICATES AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. IN ADDITION, UNTIL
THE DATE WHICH IS 90 DAYS AFTER THE DATE OF THIS PROSPECTUS
SUPPLEMENT, ALL DEALERS SELLING THE CERTIFICATES WILL DELIVER A
PROSPECTUS SUPPLEMENT AND PROSPECTUS.
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