AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 28, 2000
REGISTRATION NO. 333-_____
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
DAYTON HUDSON
CREDIT CARD MASTER TRUST
(Issuer of the Certificates)
(Exact name of Registrant as Specified in its Charter)
DAYTON HUDSON RECEIVABLES CORPORATION
(Originator of the Trust Described Herein)
(Exact name of Registrant as Specified in its Charter)
MINNESOTA 41-1812153
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
DAYTON HUDSON RECEIVABLES CORPORATION
80 SOUTH EIGHTH STREET
14TH FLOOR, SUITE 1401
MINNEAPOLIS, MINNESOTA 55402
(612) 370-6530
(Address, Including Zip Code, and Telephone Number, Including Area
Code, of the Registrant's Principal Executive Office)
----------------
STEPHEN C. KOWALKE
VICE PRESIDENT AND TREASURER
DAYTON HUDSON CORPORATION
777 NICOLLET MALL
MINNEAPOLIS, MINNESOTA 55402-2055
(612) 370-6948
(Name, Address Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
ANDREW M. FAULKNER
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK 10036
(212) 735-2853
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective as
determined by market conditions.
If the only securities registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
__________________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| ______________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- ---------------------------- ------------ ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Asset Backed Certificates........... $1,000,000 100% $1,000,000 $264.00
(1) Estimated solely for the purpose of calculating the Registration Fee.
</TABLE>
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
[FLAG]
The information in this prospectus supplement and prospectus is not
complete and may be changed. We cannot sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. Neither this prospectus supplement nor the prospectus is an
offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JANUARY 28, 2000
PROSPECTUS SUPPLEMENT TO PROSPECTUS, DATED ________, 2000
DAYTON HUDSON CREDIT CARD MASTER TRUST
Issuer
DAYTON HUDSON RECEIVABLES CORPORATION, Transferor
RETAILERS NATIONAL BANK, Servicer
% CLASS A ASSET BACKED CERTIFICATES, SERIES 2000-__
Principal Amount $__________
Price $__________ ( %)
Underwriters' Commissions $__________ ( %)
Proceeds to the Transferor $__________ ( %)
Certificate Rate _______ % p.a.
Interest Payment Dates monthly on the 25th
First Interest Payment Date ___________, 2000
Expected Final Payment Date ___________, 20__
THE CERTIFICATES ARE INTERESTS IN DAYTON HUDSON CREDIT CARD MASTER
TRUST AND ARE BACKED ONLY BY THE ASSETS OF THE TRUST. NONE OF THE
CERTIFICATES OR THE ASSETS OF THE TRUST ARE OBLIGATIONS OF RETAILERS
NATIONAL BANK, DAYTON HUDSON CAPITAL CORPORATION, DAYTON HUDSON RECEIVABLES
CORPORATION, OR ANY OF THEIR AFFILIATES OR ARE OBLIGATIONS INSURED BY THE
FDIC.
THESE SECURITIES ARE HIGHLY STRUCTURED. BEFORE YOU PURCHASE THESE
SECURITIES, BE SURE YOU UNDERSTAND THE STRUCTURE AND THE RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE S-12 OF THIS PROSPECTUS SUPPLEMENT.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED ON THE ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS
SUPPLEMENT AND THE ATTACHED PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The underwriters of the Class A certificates have agreed to
purchase the Class A certificates, subject to the terms and conditions in
the underwriting agreement. The Class B certificates will be retained by
Dayton Hudson Receivables Corporation.
The date of this Prospectus Supplement is __________, 2000.
TABLE OF CONTENTS
Page
WHERE TO FIND INFORMATION IN THESE
DOCUMENTS............................................................S-4
SUMMARY OF TERMS..........................................................S-5
STRUCTURAL SUMMARY........................................................S-6
SELECTED TRUST PORTFOLIO SUMMARY DATA
...................................................................S-10
RISK FACTORS.............................................................S-13
Potential Early Repayment or
Delayed Payment due to
Reduced Portfolio Yield........................................S-13
RNB May Change the Terms and
Conditions of the Accounts.....................................S-13
Accounts Added to the Trust Portfolio
May Have Different Terms
and Conditions.................................................S-14
DHRC May Not be Able to Add
Accounts to the Trust..........................................S-14
Changes to Consumer Protection
Laws May Impede RNB's
Collection Efforts.............................................S-14
Cardholders May Make Principal
Payments at Any Time...........................................S-15
Dependence on Dayton Hudson
Stores.........................................................S-15
Negative Carry......................................................S-15
Allocations of Charged-Off
Receivables Could Result in
a Loss to Your Certificates....................................S-15
Adjustments Due to Rebates,
Exchanges and Writedowns
Could Reduce Payments
to You.........................................................S-16
You May Not Be Able to
Resell Your Certificates.......................................S-16
Insolvency or Bankruptcy of
DHRC, RNB or DHCC
Could Result in Accelerated,
Delayed or Reduced Payments
to You.........................................................S-16
You Will Have Limited
Control of Trust Actions.......................................S-18
TRUST CREDIT CARD PORTFOLIO..............................................S-19
The RNB Portfolio...................................................S-19
Delinquency and Loss Experience.....................................S-19
Characteristics of the Trust
Portfolio......................................................S-20
MATURITY CONSIDERATIONS..................................................S-25
Accumulation Period.................................................S-25
Early Amortization Event............................................S-26
Paired Series.......................................................S-26
Historical Payment Rates of the
RNB Portfolio..................................................S-26
RECEIVABLE YIELD CONSIDERATIONS..........................................S-27
USE OF PROCEEDS..........................................................S-28
DESCRIPTION OF THE CLASS A
CERTIFICATES........................................................S-28
General.............................................................S-28
Interest Payments...................................................S-29
Principal Payments..................................................S-30
Postponement of Accumulation
Period.........................................................S-32
Subordination.......................................................S-32
Transfer of the Class B
Certificates...................................................S-33
Allocation Percentages..............................................S-33
Application of Collections..........................................S-34
Reallocation of Cash Flows..........................................S-41
Sharing of Excess Finance
Charge Collections.............................................S-41
Shared Principal Collections........................................S-42
Shared Excess Transferor Finance
Charge Collections and Shared
Transferor Principal Collections...............................S-42
Defaulted Receivables; Investor
Charge-Offs....................................................S-43
Principal Funding Account...........................................S-44
Reserve Account.....................................................S-45
Deposits in the Collection Account..................................S-46
Issuance of Additional Certificates.................................S-50
Paired Series.......................................................S-51
Early Amortization Events...........................................S-51
Servicing Fees and Expenses.........................................S-55
Defeasance..........................................................S-55
Optional Termination................................................S-56
Purchase of Class A Certificates
by the Transferor..............................................S-56
Series Termination..................................................S-56
GENERAL INFORMATION......................................................S-57
UNDERWRITING.............................................................S-57
OTHER SERIES ISSUED AND OUTSTANDING......................................S-60
GLOSSARY OF TERMS FOR PROSPECTUS
SUPPLEMENT..........................................................S-62
WHERE TO FIND INFORMATION IN THESE DOCUMENTS
The attached prospectus provides general information about the
Dayton Hudson Credit Card Master Trust, including terms and conditions that
are generally applicable to certificates issued by the trust. The specific
terms of the certificates are described in this prospectus supplement.
This prospectus supplement begins with several introductory
sections describing your series and the Dayton Hudson Credit Card Master
Trust in abbreviated form:
o Summary of Terms provides important amounts, dates and other
terms of your series,
o Structural Summary gives a brief introduction to the key
structural features of your series and directions for
locating further information,
o Receivables Flow Chart illustrates the flow of receivables,
o Selected Trust Portfolio Summary Data gives certain financial
information about the assets of the trust, and
o Risk Factors describes some of the risks that apply to your
certificates.
As you read through these sections, cross-references will direct
you to more detailed descriptions in the attached prospectus and elsewhere
in this prospectus supplement. You can also directly reference key topics
by looking at the table of contents in this prospectus supplement and the
attached prospectus.
You should rely only on the information contained or incorporated
by reference in this prospectus supplement and the prospectus. We have not
authorized anyone to provide you with different information.
We are not offering these certificates in any state where the
offer is not permitted.
We do not make any representation as to the accuracy of the
information in this prospectus supplement as of any date other than the
date set forth on its cover.
TO UNDERSTAND THE STRUCTURE AND TERMS OF THESE SECURITIES, YOU MUST READ
CAREFULLY THE ATTACHED PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT IN THEIR
ENTIRETY.
- ---------------------------------------------------------------------------
SUMMARY OF TERMS
Trust: Dayton Hudson Credit Card Master Trust
Transferor: Dayton Hudson Receivables Corporation--"DHRC"
Servicer: Retailers National Bank--"RNB"
Trustee: Norwest Bank Minnesota, National Association
Pricing Date: _________, ____
Closing Date: _________, ____
Clearance and Settlement: DTC/Cedelbank/Euroclear
Trust Assets: receivables originated in consumer open-end
credit card accounts of RNB and other
credit card originators, including
recoveries on charged-off receivables.
Series Structure: Amount % of Total Series
Class A $___________ __%
Class B $___________ __%
Annual Servicing Fee Rate: 2%
Credit Enhancement for Class A: subordination of Class B
Class A Certificate Rate: ___% p.a.
Interest Accrual Method: 30/360
Interest Payment Dates: monthly on the 25th
First Interest Payment Date: ______, 2000
Class A Expected Final Principal
Payment Date: ______ distribution date
Series 2000-__ Legal Final ______ distribution date
Maturity:
Commencement of
Accumulation Period
(subject to adjustment): Last day of ________
Class A CUSIP Number:
Class A Anticipated Ratings:
(Moody's/Standard & Poor's) [Aaa/AAA]
STRUCTURAL SUMMARY
This summary briefly describes certain major structural components
of Series 2000-__. To fully understand the terms of Series 2000-__ you will
need to read both this prospectus supplement and the attached prospectus in
their entirety.
THE SERIES 2000-__ CERTIFICATES
Your certificates represent the right to receive a portion of collections
on the underlying trust assets. Your certificates bear interest at the rate
stated in the summary of terms. Your certificates will also be allocated a
portion of net losses on the receivables. Any collections allocated to your
series in excess of the amount owed to you or the servicer of the
receivables will be shared with other series of certificates issued by the
trust or returned to DHRC. In no case will you receive more than the
principal and interest owed to you under the terms described in this
prospectus supplement.
The certificates are backed by interests in a pool of revolving credit card
receivables. The receivables currently arise under credit card accounts
relating to the sale of merchandise and services by retail stores owned and
operated by Dayton Hudson Corporation and its subsidiaries. RNB services
these credit card accounts.
For more information on the certificates, see "Description of the Class A
Certificates" in this prospectus supplement. For more information on the
allocation of collections to and payments to Series 2000-__, see
"Description of the Class A Certificates--Interest Payments," "--Principal
Payments" and "--Allocation Percentages" in this prospectus supplement.
DAYTON HUDSON CREDIT CARD MASTER TRUST
The trustee maintains the trust for several beneficiaries:
o the certificateholders of Series 2000-__
certificates,
o certificateholders of other series issued by
the trust,
o RNB as the holder of a participation
interest in the assets of the trust, and
o DHRC, as the transferor of the receivables to the trust.
The certificates will be one of four outstanding series issued by the
trust. Each series has a claim to a specific dollar amount of the trust's
assets, regardless of the total amount of receivables in the trust at any
time. DHRC, as holder of the transferor certificate, and RNB, as holder of
the participation, hold the remaining claims to the trust's assets. The
size of these claims fluctuate with the total amount of receivables in the
trust. DHRC, as the holder of the transferor certificate, will also have
the right to purchase your certificates at any time when the outstanding
amount of the Class A certificateholders' interest in the trust is less
than or equal to 10% of the original amount of that interest. The price
DHRC will pay for the outstanding amount of that interest will be equal to
the entire unpaid balance of that amount plus accrued and unpaid interest.
CREDIT ENHANCEMENT
Your Class A certificates feature credit enhancement by means of the
subordination of the Class B certificates. This credit enhancement is
intended to protect you from losses and shortfalls in cash flow.
The effect of subordination of the Class B certificates is that the Class B
certificates will absorb any losses allocated to Series 2000-__, and make
up any shortfalls in cash flow, before the Class A certificates are
affected. If the cash flow and the subordinated Class B certificates do not
cover all losses allocated to Series 2000-__, your payments of interest and
principal will be reduced and you may suffer a loss of principal.
For a more detailed description of the subordination provisions of Series
2000-__, see "Description of the Class A Certificates--Sub- ordination" in
this prospectus supplement.
EXPECTED FINAL PRINCIPAL PAYMENTS AND
POTENTIAL EARLIER OR LATER PAYMENTS
The Class A certificates are expected to be paid in full on the ________,
20__ payment date.
The trust expects to pay the Class A certificates in full on the expected
final payment date, if an early amortization event has not occurred. The
trust will accumulate principal collections in a principal funding account
during an "accumulation period" to pay the Class A certificates as
expected. The length of the accumulation period will be as many months as
is expected to be necessary for the accumulation of the Class A payment
amount, but will not be less than one month. The accumulation period will
end on the expected final payment date for the Class A certificates, when
the funds on deposit in the principal funding account are paid to the Class
A certificates.
If the Class A certificates are not paid in full on their expected final
payment date, the Class A certificates will begin to receive monthly
payments of principal until they are paid in full.
The certificates will mature, and any remaining principal and interest will
be payable on [ ], 20__. No further payments on the certificates will be
made after that date.
For more information on the payment of principal on the certificates and
the accumulation period, see "Description of the Class A
Certificates--Principal Payments" and "Maturity
Considerations--Accumulation Period" in this prospectus supplement.
MINIMUM YIELD ON THE RECEIVABLES; POSSIBLE EARLY PRINCIPAL REPAYMENT OF
YOUR SERIES
The Class A certificates may be repaid earlier than their expected final
payment date if collections on the underlying receivables, together with
other amounts available for payment to certificateholders, are too low. The
minimum amount that must be available for payment to your series in any
month, referred to as the base rate, is generally the weighted average of
the Class A and Class B certificate rates, plus the servicing fee rate, in
each case for the related interest period. If the average portfolio yield,
which reflects a reduction for receivable defaults for your series, for any
three consecutive months is less than the average base rate for the same
three consecutive months, an early amortization event will occur and the
trust will commence early amortization and holders of your series will
receive principal payments earlier than the expected final principal
payment date.
Your series is also subject to several other early amortization events,
which could cause your series to amortize. If your series begins to
amortize, the Class A certificates will receive monthly payments of
principal until they are fully repaid; the Class B certificates will then
receive monthly payments of principal until they are fully repaid. In that
event, your certificates may be repaid before the expected final payment
date.
For more information on early amortization events, the portfolio yield and
base rate, early principal payment and early amortization, see "Maturity
Considerations," "Description of the Class A Certificates--Principal
Payments," "--Early Amortization Events" and "--Optional Termination" in
this prospectus supplement and "Description of the Certificates--Principal"
and "--Early Amortization Events" and "The Pooling and Servicing
Agreement--Termination of the Trust" in the attached prospectus.
INCOME TAX STATUS OF CLASS A CERTIFICATES AND THE DAYTON HUDSON CREDIT CARD
MASTER TRUST
Skadden, Arps, Slate, Meagher & Flom LLP, special federal income tax
counsel to DHRC, is of the opinion that:
o under existing law the Class A
certificates will be classified as debt for
U.S. federal income tax purposes, and
o the trust will not be an association or
publicly traded partnership taxable as a
corporation for U.S. federal income tax
purposes.
For further information regarding the application of U.S. federal income
tax laws, see "Tax Matters" in the attached prospectus.
ERISA CONSIDERATIONS
The underwriters anticipate that the Class A certificates will meet the
criteria for treatment as "publicly-offered securities." If so, subject to
important considerations described under "Employee Benefit Plan
Considerations" in the attached prospectus, the Class A certificates will
be eligible for purchase by persons investing assets of employee benefit
plans or individual retirement accounts.
For further information regarding the application of ERISA, see "Employee
Benefit Plan Considerations" in the attached prospectus.
MAILING ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES
The mailing address of Dayton Hudson Receivables Corporation is 80 South
Eighth Street, 14th Floor, Suite 1401, Minneapolis, Minnesota 55402 and the
telephone number is (612) 370- 6530.
[GRAPHIC OMITTED]
SELECTED TRUST PORTFOLIO SUMMARY DATA
The chart below shows the geographic distribution of the receivables in the
trust portfolio among the 50 states and the District of Columbia. Other
than the states specifically shown in the chart, no state accounts for more
than 5% of receivables in the trust portfolio.
[Pie chart with accompanying key showing the following: CA-____%; MI-____%;
IL-____%; MN- ____%; TX-____%; other-____%]
The chart below shows the percentages of the receivables in the trust
portfolio arising under accounts within the age brackets shown
[Bar chart showing the following: 0-12 months since the account was
opened-____%; 13-24 months-____%; 25-36 months-____%; 37-48 months-____%;
49-60 months-____%; 61-120 months-____%; 121+ months- ____%.]
The chart below shows the trust yield, payment rate and net charge-off rate
for the trust portfolio for each month from January 1997 to December 1999.
[CHART]
Trust Yield Payment Rate Net Charge-Offs
January 1997
February 1997
March 1997
April 1997
May 1997
June 1997
July 1997
August 1997
September 1997
October 1997
November 1997
December 1997
January 1998
February 1998
March 1998
April 1998
May 1998
June 1998
July 1998
August 1998
September 1998
October 1998
November 1998
December 1998
January 1999
February 1999
March 1999
April 1999
May 1999
June 1999
July 1999
August 1999
September 1999
October 1999
November 1999
December 1999
The "trust yield" for any month means the total amount of finance
charges and fees collected in that month, expressed as an annualized
percentage of the average of the end of the billing cycle balance of
principal receivables outstanding in that month.
The "payment rate" for any month is the total payments collected
during each month as a percentage of total outstanding trust receivables at
the beginning of the month.
The amount of "net charge-offs" for any month is the amount of
charged-off receivables recorded in the month, net of any recoveries from
earlier charge-offs on receivables in the trust portfolio, expressed
as an annualized percentage of the average of the end of the billing cycle
balance of principal receivables outstanding in that month.
RISK FACTORS
You should consider the following risk factors in deciding whether
to purchase the Class A certificates described in this prospectus
supplement.
POTENTIAL EARLY REPAYMENT OR
DELAYED PAYMENT DUE TO REDUCED
PORTFOLIO YIELD If there is a decline in the amount
of the receivables collected by the trust
or another early amortization event, an
early amortization of the certificates may
occur and you will receive principal
payments earlier than the expected final
payment date. If the average portfolio
yield, which reflects a reduction for
receivable defaults for Series 2000-__, for
any three consecutive months is less than
the average base rate for the same three
consecutive months, an "early amortization
event" will occur for Series 2000-__. If
this occurs, the early amortization of
Series 2000-__ will commence, and you will
receive principal payments earlier than the
expected final principal payment date.
Moreover, if principal collections on
receivables allocated to other series or
the transferor are available to be applied
to an early amortization of any outstanding
certificates, the period during which that
early amortization occurs may be
substantially shortened.
Conversely, any reduction in collections
may cause the period necessary to repay
your certificates to go beyond the expected
final payment date of your certificates.
The following factors could result in
reduced collections:
RNB MAY CHANGE THE TERMS
AND CONDITIONS OF THE
ACCOUNTS RNB will sell receivables arising under
specified credit card accounts to DHCC
which will sell those receivables to DHRC
which will transfer those receivables to
the trust, but RNB will continue to own
those accounts. As the owner of those
accounts, RNB retains the right to change
various terms and conditions of those
accounts, including finance charges and
other fees it charges and the required
minimum monthly payment. Certain changes in
the terms of the accounts may reduce the
amount of receivables arising under the
accounts, reduce the portfolio yield,
reduce the amount of collections on those
receivables or otherwise alter payment
patterns.
ACCOUNTS ADDED TO THE TRUST
PORTFOLIO MAY HAVE DIFFERENT
TERMS AND CONDITIONS So long as certain conditions are
satisfied, DHRC will automatically
designate additional accounts for the trust
portfolio and transfer the receivables in
those accounts to the trust. Any new
accounts and receivables may have different
terms and conditions than the accounts and
receivables already in the trust. Credit
card accounts purchased by RNB or
originated by other credit card originators
may be included as additional accounts, if
certain conditions are satisfied. The new
accounts and receivables may perform
differently over time than the accounts and
receivables already in the trust and could
reduce the amount of collections allocated
to your series.
DHRC MAY NOT BE ABLE TO
ADD ACCOUNTS TO THE TRUST If DHRC's percentage interest in the
accounts of the trust falls to a minimum
level, currently 2%, DHRC will be required
to maintain that level by designating
additional accounts for the trust portfolio
and transferring the receivables in those
accounts to the trust. DHRC may not be able
to designate additional accounts to be
added to the trust portfolio when required.
If DHRC fails to designate additional
accounts when required, an early
amortization event will occur and you could
receive payment of principal sooner than
expected.
CHANGES TO CONSUMER
PROTECTION LAWS MAY IMPEDE
RNB'S COLLECTION EFFORTS Federal and state consumer protection laws
regulate the creation and enforcement of
consumer loans, including credit card
accounts and receivables. Changes or
additions to those laws or failure to
comply with those laws could make it more
difficult for RNB to collect payments on
the receivables or could reduce the finance
charges and other fees that RNB can charge
on credit card account balances, or could
render some receivables uncollectible.
Receivables that do not comply with
consumer protection laws may not be valid
or enforceable in accordance with their
terms against the obligor on those
receivables. RNB, DHCC and DHRC each make
representations and warranties relating to
the validity and enforceability of the
receivables arising under the accounts in
the trust portfolio. No other party will
examine the receivables or the related
records for the purpose of determining the
presence or absence of defects, compliance
with representations and warranties or for
any other purpose. The only remedy if any
representation or warranty is violated, and
the violation continues beyond the period
of time DHRC has to correct the violation,
is that DHRC must accept reassignment of
the receivables affected by the violation,
subject to certain conditions. See "The
Pooling and Servicing
Agreement--Representations and Warranties"
and "Legal Aspects of the
Receivables--Consumer Protection Laws" in
the attached prospectus.
CARDHOLDERS MAY MAKE
PRINCIPAL PAYMENTS AT
ANY TIME The receivables transferred to the
trust may be paid at any time. We cannot
assure the creation of additional
receivables in those accounts or that any
particular pattern of cardholder payments
will occur.
DEPENDENCE ON DAYTON
HUDSON STORES Retailing is highly competitive. Dayton
Hudson Corporation and its subsidiaries
compete not only with other discount and
traditional department stores in the area
in which they operate but with direct
marketers and numerous types of retail
outlets, including on-line retailers. The
Dayton Hudson Stores may not continue to
generate new receivables at the same rate
as in previous years. Dayton Hudson
Corporation may decide at any time to
transfer all or any portion of the business
or assets of the Dayton Hudson Stores. The
Dayton Hudson Stores currently accept most
major credit cards. A significant decline
in the amount of new receivables generated
by the accounts in the trust could result
in reduced collections on those
receivables. See "Maturity Considerations"
in this prospectus supplement.
NEGATIVE CARRY Any amounts deposited in the special
funding account and the principal funding
account may be invested in investments
earning a rate that is less than the yield
from collections of finance charge
receivables and that may be less than the
base rate, resulting in a reduction of
amounts available to make payments to
certificateholders.
ALLOCATIONS OF CHARGED-OFF RECEIVABLES
COULD RESULT IN A LOSS TO YOUR CERTIFICATES
RNB will write off as uncollectible some
portion of the receivables arising in
accounts in the trust portfolio. Each class
of certificates will be allocated a portion
of those charged-off receivables. If the
amount of charged-off receivables allocated
to any class of certificates exceeds the
amount of other funds available for
reimbursement of those charge-offs--which
could occur if the limited amount of Class
B certificates is reduced to zero--the
holders of the Class A certificates may not
receive the full amount of principal and
interest due to them. See "Trust Credit
Card Portfolio--Delinquency and Loss
Experience" and "Description of the Class A
Certificates--Reallocation of Cash Flows,"
"--Application of Collections" and
"--Defaulted Receivables; Investor
Charge-Offs" in this prospectus supplement.
ADJUSTMENTS DUE TO REBATES,
EXCHANGES AND WRITEDOWNS
COULD REDUCE PAYMENTS TO YOU A portion of the receivables will not be
collected as a result of rebates,
exchanges, write-downs and similar
occurrences. DHRC will be obligated to make
payments to compensate the holders of the
certificates for the amount of receivables
which become uncollectible for these
reasons. If DHRC fails to make any of these
payments, the amount of the resulting
insufficiency will be allocated to DHRC's
interest. If the amount of DHRC's interest
does not cover this insufficiency, the
available credit enhancement may be reduced
and you may not receive the full amount of
principal and interest due.
YOU MAY NOT BE ABLE TO
RESELL YOUR CERTIFICATES The underwriters may
assist in resales of your certificates but
they are not required to do so. A secondary
market for the certificates may not
develop. If a secondary market does
develop, it might not continue or it might
not be sufficiently liquid to allow you to
resell any of your certificates.
INSOLVENCY OR BANKRUPTCY OF
DHRC, RNB OR DHCC COULD
RESULT IN ACCELERATED, DELAYED
OR REDUCED PAYMENTS TO YOU The receivables in which you have an
interest are conveyed to the trust by DHRC.
DHRC acquires them from DHCC which in turn
acquired the receivables from RNB. In each
instance, the conveyances are intended to
be treated as sales. However, a court could
conclude that DHRC, DHCC or RNB still owns
the receivables and that the trust only
holds a security interest in the
receivables. The receivables may then be
subject to tax or other governmental liens
and to administrative expenses of the
bankruptcy or bank receivership proceeding
of a predecessor in interest of those
receivables. Furthermore, a bankruptcy
trustee or a creditor may attempt to cause
a predecessor in interest of the
receivables or DHRC to be substantively
consolidated with DHRC or the trust.
Recharacterization as a pledge or
substantive consolidation can delay or even
reduce payments on your certificates.
RNB is chartered as a national banking
association and is subject to regulation
and supervision by the Office of the
Comptroller of the Currency. If RNB becomes
insolvent or is in an unsound condition,
the Comptroller is authorized to appoint
the FDIC as receiver. Under these
circumstances, the FDIC could:
o require the trustee of the trust to go
through an administrative claims
procedure to establish its right to
payments collected on the receivables in
the trust,
o request a stay of proceedings relating to
the trust's claims against RNB, or
o repudiate the pooling agreement and limit
the trust's resulting claim against the
receivables to "actual direct
compensatory damages" measured as of the
date of receivership.
See "Legal Aspects of the
Receivables--Matters Relating to Bankruptcy
or Receivership" in the attached
prospectus.
If the FDIC were to take any of those
actions, payments on your certificates
could be delayed and possibly reduced.
If specified events related to the
conservatorship or receivership of RNB, or
the bankruptcy or insolvency of DHCC or
DHRC were to occur then an early
amortization event would occur for all
outstanding series.
The conservator or receiver may have the
power:
o regardless of the terms of the pooling
agreement:
- to prevent the beginning of an early
amortization period or rapid
accumulation period,
- to prevent the early sale of the
receivables and termination of the
trust,
- to require new principal receivables to
continue being transferred to the
trust,
- to require the trustee of the trust to
go through an administrative claims
procedure to establish its right to
payments collected on the receivables
in the trust, or
- to repudiate the pooling agreement
which establishes the trust and limit
the trust's resulting claim, or
o regardless of the instructions of the
certificateholders:
- to require the early sale of the
trust's receivables,
- to require termination of the trust and
retirement of the trust's certificates
including your series, or
- to prohibit the continued transfer of
principal receivables to the trust.
YOU WILL HAVE LIMITED
CONTROL OF TRUST ACTIONS You will have limited voting rights
relating to actions of the trust and the
trustee. You will not have the right to
vote to direct the trustee to take any
actions other than the right to vote to
declare an early amortization event or a
servicer default.
TRUST CREDIT CARD PORTFOLIO
Defined terms are indicated by boldface type. Both the attached
prospectus and this prospectus supplement contain a glossary of important
terms where definitions can be found.
THE RNB PORTFOLIO
The following information reflects the composition and historical
performance of the RNB portfolio of credit card accounts. However, the
amounts presented also include a small amount of receivables in some Dayton
Hudson Corporation commercial accounts not included in the RNB portfolio.
The trust portfolio is the same as the RNB portfolio. In addition, the
composition of the RNB portfolio reflects the expansion of Target, one of
Dayton Hudson Corporation's retail operating chains, to 44% of the RNB
portfolio at year end 1999. See "Retailers National Bank's Credit Card
Business" in the attached prospectus for a description of RNB's credit card
business.
DELINQUENCY AND LOSS EXPERIENCE
The following table provides the delinquency experience for the
RNB portfolio as of the indicated dates. In the following table:
o "Number of Days Delinquent" means the number of days
following the original billing due date, for example, 30
to 59 days delinquent means that the minimum payment was
not received 30 or more days after the original billing
due date but within 60 days of such due date,
o "Delinquent Amount" represents the sum of the outstanding
amount of receivables that are delinquent in each
delinquency category at the end of the various monthly
billing cycle periods; these amounts may differ from the
amount of delinquencies in each delinquency category on
the last day of the month, and
o the percentages result from dividing the "Delinquent
Amount" by the sum of billed balances at the end of the
various monthly billing cycle periods during the month
ending on the specified date.
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE
FOR RNB PORTFOLIO
(DOLLARS IN THOUSANDS)
AS OF DECEMBER 31,
------------------------------------------------------------------------------------------
1999 1998 1997
----------------------------- ----------------------------- -----------------------------
NUMBER OF DAYS DELINQUENT DELINQUENT DELINQUENT
DELINQUENT AMOUNT % AMOUNT % AMOUNT %
- ------------------- ---------------- ------------ ---------------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
30 to 59 Days...... $86,847 3.22% $81,317 3.22% $82,830 3.37%
60 to 89 Days...... 43,567 1.62 40,453 1.60 36,879 1.50
90 Days or More.... 89,050 3.31 78,186 3.10 76,217 3.10
---------------- ------------ ---------------- ------------ ---------------- ------------
TOTAL......... $219,464 8.15% $199,956 7.92% $195,926 7.97%
================ ============ ================ ============ ================ ============
</TABLE>
The following table provides the loss experience for the RNB
portfolio for the indicated periods. "Average Receivables Outstanding" is
the average for each month from January through December of the
indicated year of the sum of receivables outstanding at the end of the
billing cycles in that month; these amounts may differ from the average of
month-end receivables outstanding. "Gross Charge-Offs" shown exclude
charge-offs of finance charge receivables and late payment fees.
"Recoveries" exclude finance charge receivables and late payment fee
recoveries and include sales tax recoveries and are net of collection
agency fees.
<TABLE>
<CAPTION>
LOSS EXPERIENCE
FOR RNB PORTFOLIO
(DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1999 1998 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
Average Receivables Outstanding.......................... $2,342,611 $2,237,722 $2,100,064
Gross Charge-Offs........................................ 191,044.. 200,289.. 182,196
Recoveries............................................... 28,997 27,415 25,332
Net Charge-Offs.......................................... 162,047. 172,874. 156,864
Net Charge-Offs as a Percentage of 6.92% 7.73% 7.47%
Average Principal Receivables
Outstanding...........................................
</TABLE>
As of December 31, 1999, accounts 30 or more days delinquent were
8.15% of total receivables compared with 7.92% and 7.97% of total
receivables as of December 31, 1998 and 1997, respectively. Delinquencies
are a leading indicator of future charge-offs.
For the 12 month period ended December 31, 1999, net charge-offs
as a percentage of average receivables outstanding were 6.92% compared with
7.73% and 7.47% for the year ended December 31, 1998 and 1997,
respectively. Delinquencies and charge-offs depend on a variety of factors,
including
o general economic conditions and trends in consumer bankruptcy filings,
o the availability of other sources of credit,
o terms and conditions of the accounts, and
o growth and maturity of the portfolio.
CHARACTERISTICS OF THE TRUST PORTFOLIO
The assets of the trust include credit card receivables generated
through accounts that DHRC has designated as trust accounts. The trust
accounts are:
o accounts designated when the trust was established,
o AUTOMATIC ADDITIONAL ACCOUNTS automatically added to the trust
as they are created, and
o SUPPLEMENTAL ACCOUNTS that have been designated since the trust
was established.
To date, no SUPPLEMENTAL ACCOUNTS have been added to the trust. DHRC is
permitted to add accounts, and at times is required to add accounts, to the
trust. DHRC can remove accounts from the trust if the conditions to removal
are satisfied. As a result, the composition of the trust is expected to
change over time. See "The Receivables" in the attached prospectus for a
general description of the receivables in the trust.
The receivables and the accounts in the trust portfolio, as of the
end of the day on _____ ___, 1999:
o included approximately $____ billion of receivables, representing
the total receivables balance at the close of the ______ ___, 1999
billing cycle periods for Mervyn's and actual ______ ___, 1999
receivables balances for the Department Stores and Target,
o included approximately $____ billion of PRINCIPAL RECEIVABLES and
$____ billion of FINANCE CHARGE RECEIVABLES, with FINANCE CHARGE
RECEIVABLES making up approximately ___% of the total receivables,
o had an average receivables balance of $_____, excluding accounts
with a zero balance,
o had an average credit limit of $_____, of which the average
receivables balance represented approximately ___%, excluding
accounts with a zero balance,
o had an average account age of ___ months,
o had billing addresses in all 50 states, the District of Columbia
and in U.S. territories and possessions and on U.S. military
bases, and less than 1% of the obligors have billing addresses
outside of the United States, and
o included the following approximate percentages of outstanding
PRINCIPAL RECEIVABLES balances from Dayton Hudson Corporation's
retail operating chains: Target ___%, the Department Stores ___%,
and Mervyn's ___%.
The following tables summarize characteristics of the trust
portfolio as of the end of the day on _____ ___, 1999. Because the
composition of the trust portfolio may change in the future, these tables
are not necessarily indicative of the composition of the trust portfolio at
any later time.
<TABLE>
<CAPTION>
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER RECEIVABLES RECEIVABLES
ACCOUNT BALANCE RANGE ACCOUNTS OF ACCOUNTS OUTSTANDING OUTSTANDING
- -------------------------- ------------ ------------- ------------------ --------------
<S> <C> <C> <C> <C>
Credit Balance................................ % $ %
$0............................................
$0.01 to $500.00..............................
$500.01 to $1,000.00..........................
$1,000.01 to $3,000.00........................
$3,000.01 to $5,000.00........................
$5,000.01 to $10,000.00.......................
Over $10,000.00...............................
------------ ------------- ------------------ --------------
TOTAL................................ % $ %
============ ============= ================== ==============
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER RECEIVABLES RECEIVABLES
CREDIT LIMIT RANGE ACCOUNTS OF ACCOUNTS OUTSTANDING OUTSTANDING
- --------------------- ------------ ------------- ------------------ --------------
$0 to $199................................... % $ %
$200 to $399.................................
$400 to $499.................................
$500 to $699.................................
$700 to $999.................................
$1,000 to $1,499.............................
$1,500 to $2,999.............................
$3,000 to $4,999.............................
$5,000 to $9,999.............................
$10,000 to $14,999...........................
$15,000 to $24,999...........................
Over $24,999.................................
------------ ------------- ------------------ --------------
TOTAL............................... % $ %
============ ============= ================== ==============
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER RECEIVABLES RECEIVABLES
NUMBER OF DAYS DELINQUENT ACCOUNTS OF ACCOUNTS OUTSTANDING OUTSTANDING
- ------------------------------ ------------ ------------- ------------------ --------------
Current...................................... % $ %
1 to 29 days.................................
30 to 59 days................................
60 to 89 days................................
90 days or more..............................
------------ ------------- ------------------ --------------
TOTAL............................... % $ %
============ ============= ================== ==============
In "Composition by Account Age" below, "Account Age" is determined
by the number of months elapsed since the account was originally opened.
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER RECEIVABLES RECEIVABLES
ACCOUNT AGE ACCOUNTS OF ACCOUNTS OUTSTANDING OUTSTANDING
- --------------- ------------ ------------- ------------------ --------------
Less than or equal to 1 year................. % $ %
Over 1 year to 2 years.......................
Over 2 years to 3 years......................
Over 3 years to 5 years......................
Over 5 years.................................
------------ ------------- ------------------ --------------
TOTAL............................... % $ %
============ ============= ================== ==============
In "Composition of Accounts by Top Five States," "Other" means not in excess of 5% of the
percentage of total number of accounts and includes U.S. military, U.S. territories and non-U.S. accounts.
COMPOSITION OF ACCOUNTS
BY TOP FIVE STATES
TRUST PORTFOLIO
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER RECEIVABLES RECEIVABLES
STATE ACCOUNTS OF ACCOUNTS OUTSTANDING OUTSTANDING
- ------ ------------ ------------- ------------------ --------------
California................................... % $ %
Michigan.....................................
Illinois.....................................
Minnesota....................................
Texas........................................
Other........................................
------------ ------------- ------------------ --------------
TOTAL............................... % $ %
============ ============= ================== ==============
</TABLE>
MATURITY CONSIDERATIONS
The Class A certificates are scheduled to receive principal on the
____________ DISTRIBUTION DATE. Principal may be paid earlier if an EARLY
AMORTIZATION EVENT occurs. Final payment of principal may also be delayed
if this series is paired with another series.
ACCUMULATION PERIOD
Collections of PRINCIPAL RECEIVABLES for the Class A certificates
will be deposited in the PRINCIPAL FUNDING ACCOUNT until the amount
deposited in this account is equal to the CLASS A INVESTED AMOUNT. On each
DISTRIBUTION DATE, the CLASS A PRINCIPAL to be deposited in the PRINCIPAL
FUNDING ACCOUNT will generally be the least of:
o the PRINCIPAL ALLOCATION PERCENTAGE of PRINCIPAL
RECEIVABLES collected during the previous MONTHLY PERIOD
plus the SHARED PRINCIPAL COLLECTIONS and SHARED
TRANSFEROR PRINCIPAL COLLECTIONS allocated to the Class A
certificates,
o the CLASS A CONTROLLED DEPOSIT AMOUNT, and
o the CLASS A ADJUSTED INVESTED AMOUNT.
The ability of the trust to distribute payments of principal on
the final payment date may depend on one or more of the following factors:
o the monthly payment rates on the receivables may vary due
to the following:
- cardholders fail to make a required minimum payment,
- cardholders pay only the minimum required amount,
- cardholders pay off the entire outstanding balance,
- seasonal purchasing, and
- payment habits of cardholders, and
o the amount of outstanding receivables, charge-offs and
new borrowings may vary due to:
- changes in credit terms and conditions,
- seasonal variations,
- changes in cardholders,
- the availability of other sources of credit,
- legal factors,
- general economic conditions,
- spending and borrowing habits of individual
cardholders, and
- other factors, and
o the potential issuance by the trust of additional series.
EARLY AMORTIZATION EVENT
If an EARLY AMORTIZATION EVENT occurs, you will receive payments
of principal on each SPECIAL PAYMENT DATE after the MONTHLY PERIOD in which
the event has occurred. These payments will continue until the earlier of
the payment in full of the INVESTED AMOUNT or the SERIES 2000-__
TERMINATION DATE. The average life and maturity of your certificates can be
significantly reduced if an EARLY AMORTIZATION EVENT occurs. See
"Description of the Class A Certificates--Early Amortization Events" for
additional discussion.
PAIRED SERIES
The transferor may cause the trust to issue another series after
the ACCUMULATION PERIOD begins that will be paired with your series. The
outstanding principal amount of that paired series may vary and the
interest rate for that series will be established on its date of issuance.
If an early amortization event occurs for the other paired series before
payment is made in full on your certificates, the final payment of
principal on your certificates may be delayed. For example, the denominator
of the PRINCIPAL ALLOCATION PERCENTAGE may increase if an early
amortization event occurs on the other paired series. This could cause a
reduction of the percentage of collections of PRINCIPAL RECEIVABLES for
your series. See "Description of the Class A Certificates--Paired Series"
for additional discussion.
HISTORICAL PAYMENT RATES OF THE RNB PORTFOLIO
The following table provides you with the highest and lowest and
average cardholder monthly payment rates for the RNB portfolio during any
month in the periods shown. These payment rates are calculated as total
payments collected during each month as a percentage of total outstanding
trust receivables at the beginning of the month, calculated on a sum of
billing cycles basis. Monthly averages are shown as an arithmetic average
of the payment rate for each month during the indicated period. Payment
rates shown in this table are based on total cash payments toward principal
and finance charges made by cardholders. Merchant fees and deferred billing
fees are not included in the total cash payments. The trust portfolio is
the same as the RNB portfolio.
<TABLE>
<CAPTION>
SUMMARY PAYMENT RATE INFORMATION
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
2000 1999 1998
--------------------- ---------------------- -----------------------
PAYMENT RATES
---------------------- -----------------------
<S> <C> <C> <C>
Highest Monthly Rate..................... % % %
Lowest Monthly Rate...................... % % %
Average Monthly Rate..................... % % %
</TABLE>
Because the future composition of the portfolios may change over
time, this table does not necessarily indicate the composition or
performance of the RNB portfolio or the trust portfolio at any later time.
RECEIVABLE YIELD CONSIDERATIONS
Gross revenues from finance charges and fees collected from
accounts in the RNB portfolio for each of the three calendar years 1999,
1998 and 1997 and for the ____ months ended on ______ ___, 2000 and ______
___, 1999 are set forth in the following table. In the following table:
o all figures represent amounts billed to customers after
deductions due to charge-offs, fraud, returned goods,
customer disputes or other customer service adjustments,
o "Average Principal Receivables Outstanding" is the
average of the end of the billing cycle balance of
PRINCIPAL RECEIVABLES outstanding in each month from
January through December of the year, which may differ
from the month-end receivables outstanding,
o "Finance Charges and Fees" include finance charges, late
fees, return check fees, credit division miscellaneous
income, and RNB merchant fees and deferred billing fees,
o "Yield from Finance Charges and Fees" is calculated as a
percentage of "Average Principal Receivables
Outstanding,"
o historical yield figures are calculated on a billed
basis, and
o the percentages reflected for the _____ months ended
______ ___, 2000 and ______ ___, 1999 are annualized
figures.
<TABLE>
<CAPTION>
REVENUE EXPERIENCE
RNB PORTFOLIO
(DOLLARS IN THOUSANDS)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2000 1999 1998
------------------ ------------------ ------------------
Average Principal Receivables
<S> <C> <C> <C>
Outstanding......................................... $ $ $
Finance Charges and Fees................................
Yield from Finance Charges % % %
and Fees............................................
</TABLE>
USE OF PROCEEDS
The net proceeds from the sale of the Class A certificates will be
paid to DHRC. DHRC will use the net proceeds for general corporate
purposes.
DESCRIPTION OF THE CLASS A CERTIFICATES
The following is a summary of the material provisions of the Class
A certificates. This summary is not a complete description of the terms of
the Class A certificates. You should refer to "Description of the
Certificates" and "The Pooling and Servicing Agreement" in the attached
prospectus as well as the Pooling Agreement and the Series 2000-__
Supplement for a complete description.
GENERAL
The Class A certificates will be issued under the POOLING
AGREEMENT and the SERIES 2000-__ SUPPLEMENT. Each Class A certificate
represents the right to receive allocations of cardholder payments that
have been received from receivables transferred to the trust. In
particular, the certificates will be allocated:
o a percentage of collections of FINANCE CHARGE RECEIVABLES
that will be a floating percentage for so long as an
EARLY AMORTIZATION EVENT does not occur,
o a floating percentage of DEFAULTED AMOUNTS that will
reduce your INVESTED AMOUNT if not paid from collections
of FINANCE CHARGE RECEIVABLES or REALLOCATED CLASS B
PRINCIPAL COLLECTIONS,
o during the REVOLVING PERIOD, a floating percentage of
collections of PRINCIPAL RECEIVABLES, and
o during the ACCUMULATION PERIOD or the EARLY AMORTIZATION
PERIOD, a percentage of collections of PRINCIPAL
RECEIVABLES determined based on a fraction whose
numerator will be fixed at the end of the REVOLVING
PERIOD.
In addition to representing the right to payment from collections
of FINANCE CHARGE RECEIVABLES and PRINCIPAL RECEIVABLES allocated to your
series, each Class A certificate also represents the right to receive
payments from:
o EXCESS FINANCE CHARGE COLLECTIONS,
o EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS,
o SHARED PRINCIPAL COLLECTIONS, and
o SHARED TRANSFEROR PRINCIPAL COLLECTIONS.
Class A certificates will also be entitled to amounts in the
PRINCIPAL FUNDING ACCOUNT and the RESERVE ACCOUNT, and the series share of
amounts in the SPECIAL FUNDING ACCOUNT and the COLLECTION ACCOUNT, and
investment earnings on amounts in these accounts.
Class A certificates will be issued in $1,000 denominations and
will be available only in book-entry form through DTC. As described in the
attached prospectus, as long as the Class A certificates are held in
book-entry form, you will only be able to transfer your Class A
certificates through the facilities of DTC. You will receive payments and
notices through DTC and its participants. Payments of interest and
principal will be made on each DISTRIBUTION DATE to Class A
certificateholders in whose names certificates are registered on the RECORD
DATE, to the extent of available funds.
The Series 2000-__ certificates are included in GROUP I. The
series listed under "Other Series Issued and Outstanding" are also included
in GROUP I. Additional series issued by the trust may also be included in
GROUP I. See "Description of the Certificates--Investor Percentage" in the
attached prospectus.
The trust has also issued the TRANSFEROR CERTIFICATE and a
PARTICIPATION. DHRC initially will own the TRANSFEROR CERTIFICATE. RNB owns
the PARTICIPATION. DHRC may transfer the TRANSFEROR CERTIFICATE in whole or
in part under the limitations and conditions described in the POOLING
AGREEMENT. See "Description of the Certificates--The Transferor
Certificate" in the attached prospectus.
INTEREST PAYMENTS
If you purchase Class A certificates you will receive from
available funds a payment of CLASS A MONTHLY INTEREST plus CARRYOVER CLASS
A INTEREST on the 25th day of each month that the Class A certificates are
outstanding. If that date is not a business day you will be paid on the
next business day.
On each DISTRIBUTION DATE, you will receive an interest payment
based on the interest rate for your Class A certificates and the
outstanding balance of your Class A certificates as follows:
Interest on the Class A certificates for each DISTRIBUTION DATE
will be paid to you by multiplying:
o the CLASS A CERTIFICATE RATE which is ___% per annum, by
o the outstanding principal balance of the Class A
certificates as of the last day of the preceding MONTHLY
PERIOD, by
o a fraction equal to 30 divided by 360.
If you do not receive your interest in full on any DISTRIBUTION
DATE, you will be paid the shortfall on the next succeeding DISTRIBUTION
DATE together with interest on the shortfall amount if there are funds
available to make that payment.
Interest payments will be funded from:
o FINANCE CHARGE RECEIVABLES allocated to your series for
the related MONTHLY PERIOD, and
o to the extent FINANCE CHARGE RECEIVABLES allocated to
your series are insufficient to pay the interest, from:
- EXCESS FINANCE CHARGE COLLECTIONS allocated to
your series
- EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS
allocated to your series, and
- REALLOCATED CLASS B PRINCIPAL COLLECTIONS.
PRINCIPAL PAYMENTS
Principal payments on the Class A certificates will be funded
from:
o collections of PRINCIPAL RECEIVABLES allocated to your
series, plus
o SHARED PRINCIPAL COLLECTIONS allocated to your series,
plus
o SHARED TRANSFEROR PRINCIPAL COLLECTIONS allocated to your
series.
If there is a shortfall in the amount of collections of FINANCE
CHARGE RECEIVABLES available to pay the CLASS A REQUIRED AMOUNT,
collections of PRINCIPAL RECEIVABLES allocated to the Class B certificates
will be reallocated to pay the shortfall amount. These REALLOCATED CLASS B
PRINCIPAL COLLECTIONS will not be available to make principal payments to
the Class A certificates unless they are applied to cover INVESTOR DEFAULT
AMOUNTS, INVESTOR CHARGE-OFFS or unpaid ADJUSTMENT PAYMENTS. Collections of
PRINCIPAL RECEIVABLES allocated to your series but not needed to make
payments to your series may be reallocated to other series.
Revolving Period. During the REVOLVING PERIOD no principal
payments will be made to Class A certificateholders. The REVOLVING PERIOD
begins on the CLOSING DATE and ends on the day before the ACCUMULATION
PERIOD or EARLY AMORTIZATION PERIOD begins. On each DISTRIBUTION DATE
during the REVOLVING PERIOD, collections of PRINCIPAL RECEIVABLES allocated
to your series will be:
o treated as REALLOCATED CLASS B PRINCIPAL COLLECTIONS used
to pay the CLASS A REQUIRED AMOUNT,
o treated as SHARED PRINCIPAL COLLECTIONS used to pay
principal to other series,
o paid to DHRC, or
o if the rating agencies have confirmed that a requested
reduction of the CLASS B INVESTED AMOUNT will not result
in a RATINGS EFFECT, used to reduce the CLASS B INVESTED
AMOUNT.
Accumulation Period. During the ACCUMULATION PERIOD, collections
of PRINCIPAL RECEIVABLES will be deposited in the PRINCIPAL FUNDING ACCOUNT
on each DISTRIBUTION DATE in an amount equal to CLASS A PRINCIPAL which
will generally be equal to the least of:
o the PRINCIPAL ALLOCATION PERCENTAGE of PRINCIPAL
RECEIVABLES collected during the previous MONTHLY PERIOD
plus the SHARED PRINCIPAL COLLECTIONS and SHARED
TRANSFEROR PRINCIPAL COLLECTIONS allocated to the Class A
certificates.,
o the CLASS A CONTROLLED DEPOSIT AMOUNT, and
o the CLASS A ADJUSTED INVESTED AMOUNT.
On the CLASS A EXPECTED FINAL PAYMENT DATE, the trustee will pay
to Class A certificateholders the amount on deposit in the PRINCIPAL
FUNDING ACCOUNT. If an EARLY AMORTIZATION EVENT occurs during the
ACCUMULATION PERIOD, the amount on deposit in the PRINCIPAL FUNDING ACCOUNT
will be paid to Class A certificateholders on the first SPECIAL PAYMENT
DATE.
During the ACCUMULATION PERIOD until the final principal payment
to Class A certificateholders, the portion of principal collections not
applied to CLASS A PRINCIPAL will generally be treated as SHARED PRINCIPAL
COLLECTIONS or, under specified circumstances, deposited in the SPECIAL
FUNDING ACCOUNT.
Early Amortization Period. On each SPECIAL PAYMENT DATE during the
EARLY AMORTIZATION PERIOD:
o the Class A certificateholders will be entitled to
receive collections for the related MONTHLY PERIOD until
the earlier of:
- the date the CLASS A INVESTED AMOUNT has been
paid in full, and
- the SERIES 2000-__ TERMINATION DATE, and
o after payment in full of the CLASS A INVESTED AMOUNT,
Class B certificateholders will be entitled to receive
collections for the related MONTHLY PERIOD until the
earlier of:
- the date the CLASS B INVESTED AMOUNT has been
paid in full, and
- the SERIES 2000-__ TERMINATION DATE.
POSTPONEMENT OF ACCUMULATION PERIOD
The ACCUMULATION PERIOD is scheduled to last 12 months. However,
the servicer may elect to extend the REVOLVING PERIOD and postpone the
start of the ACCUMULATION PERIOD. The servicer may make this election only
if the number of months needed to fund the PRINCIPAL FUNDING ACCOUNT to pay
the Class A certificates is less than 12. On the third business day before
each DISTRIBUTION DATE beginning in _________, ____ until the ACCUMULATION
PERIOD begins, the servicer will determine the length of the ACCUMULATION
PERIOD needed to fund the PRINCIPAL FUNDING ACCOUNT to allow the CLASS A
INVESTED AMOUNT to be paid in full on the CLASS A EXPECTED FINAL PAYMENT
DATE. In making this determination, the servicer is required to assume
that:
o the principal payment rate will be no greater than the
lowest monthly payment rate for the previous 12 months,
o no additional series will be issued,
o the total amount of PRINCIPAL RECEIVABLES will remain the
same throughout the ACCUMULATION PERIOD, and
o no EARLY AMORTIZATION EVENT will occur for any series.
If the number of months determined to be required to fund the
PRINCIPAL FUNDING ACCOUNT is less than 12 months, the servicer may elect to
postpone the start of the ACCUMULATION PERIOD so that the number of months
included in the ACCUMULATION PERIOD will be equal to or exceed the length
of the required ACCUMULATION PERIOD as determined by the servicer. After
making an election to postpone the start of the ACCUMULATION PERIOD but
before the ACCUMULATION PERIOD begins, the Servicer may elect to further
postpone the start of the ACCUMULATION PERIOD or be required to extend the
ACCUMULATION PERIOD in accordance with the requirements described above.
The length of the ACCUMULATION PERIOD will not be less than one month.
SUBORDINATION
The Class B certificates will be subordinated to the Class A
certificates. At the closing, the Class B certificates will not have a
stated interest rate and will not be entitled to payments of interest.
Principal payments on the Class B certificates will not begin until the
Class A certificates have been paid in full unless:
o DHRC requests a reduction of the CLASS B INVESTED AMOUNT
during the REVOLVING PERIOD, and
o the rating agencies confirm that a reduction will not
result in a RATINGS EFFECT.
If there are insufficient funds on any DISTRIBUTION DATE to pay the CLASS A
REQUIRED AMOUNT, principal payments allocable to Class B certificateholders
will be reallocated to cover amounts due on the Class A certificates and
the CLASS B INVESTED AMOUNT will be reduced. If these REALLOCATED CLASS B
PRINCIPAL COLLECTIONS are not sufficient to fund the remaining CLASS A
REQUIRED AMOUNT, then the CLASS B INVESTED AMOUNT will be reallocated to
the Class A certificates as needed to absorb reductions in the INVESTED
AMOUNT of your series due to DEFAULTED AMOUNTS. The CLASS B INVESTED AMOUNT
may be reimbursed from subsequent collections of FINANCE CHARGE
RECEIVABLES.
TRANSFER OF THE CLASS B CERTIFICATES
DHRC will initially retain the Class B certificates. DHRC may sell
all or a portion of the Class B certificates. If DHRC does sell the Class B
certificates, DHRC will enter into an agreement with the trustee that will
specify the interest rate for the Class B certificates as well as other
relevant provisions of those certificates. DHRC can only sell Class B
certificates if:
o DHRC notifies the trustee, the servicer and the rating
agencies of the proposed transfer of the Class B
certificates,
o the rating agencies advise the trustee that the transfer
will not have a RATINGS EFFECT,
o no EARLY AMORTIZATION EVENT occurs before the transfer,
o DHRC delivers an officer's certificate to the trustee
stating that the transferor believes that the transfer
will not cause an EARLY AMORTIZATION EVENT to occur, and
o the transferor delivers a tax opinion to the trustee
regarding the transfer.
ALLOCATION PERCENTAGES
For each MONTHLY PERIOD, the servicer will allocate collections of
FINANCE CHARGE RECEIVABLES, PRINCIPAL RECEIVABLES and all DEFAULTED AMOUNTS
among:
o your series,
o the interests of certificateholders for all other series
issued and outstanding,
o the TRANSFEROR'S INTEREST, and
o the interests of the holders of any PARTICIPATIONS.
The trustee will use the FLOATING ALLOCATION PERCENTAGE to
allocate to your series DEFAULTED AMOUNTS and collections of FINANCE CHARGE
RECEIVABLES. The trustee will use the PRINCIPAL ALLOCATION PERCENTAGE to
allocate to your series collections of PRINCIPAL RECEIVABLES.
The FLOATING ALLOCATION PERCENTAGE as determined at any time is
generally a proportionate share equal to a fraction:
o whose numerator is the ADJUSTED INVESTED AMOUNT at the
end of the previous month, and
o whose denominator is the total amount of PRINCIPAL
RECEIVABLES at the end of the previous month.
If an EARLY AMORTIZATION EVENT occurs, the numerator and denominator of the
FLOATING ALLOCATION PERCENTAGE used for purposes of allocating collections
of FINANCE CHARGE RECEIVABLES will be fixed at the relevant amounts
outstanding at the end of the month before the month during which the EARLY
AMORTIZATION EVENT occurs.
The PRINCIPAL ALLOCATION PERCENTAGE as determined at any time is
generally equal to a fraction:
o whose numerator during the REVOLVING PERIOD is the
INVESTED AMOUNT at the end of the previous month and,
during the ACCUMULATION PERIOD or the EARLY AMORTIZATION
PERIOD, is the INVESTED AMOUNT at the end of the
REVOLVING PERIOD, and
o whose denominator is the total amount of PRINCIPAL
RECEIVABLES at the end of the previous month or, for the
ACCUMULATION PERIOD or the EARLY AMORTIZATION PERIOD when
no other series are outstanding, at the end of the
REVOLVING PERIOD.
APPLICATION OF COLLECTIONS
Payment of Interest, Fees and Other Items. On each DISTRIBUTION
DATE, AVAILABLE SERIES 2000-__ FINANCE CHARGE COLLECTIONS for the related
MONTHLY PERIOD will be applied in the following order:
o to pay CLASS A MONTHLY INTEREST and CARRYOVER CLASS A
INTEREST,
o to pay the MONTHLY SERVICING FEE,
o an amount equal to the total CLASS A INVESTOR DEFAULTED
AMOUNT for that DISTRIBUTION DATE will be:
- treated as SHARED PRINCIPAL COLLECTIONS during
the REVOLVING PERIOD, and
- during the ACCUMULATION PERIOD, on and before
the date the CLASS A INVESTED AMOUNT is paid in
full or available in the PRINCIPAL FUNDING
ACCOUNT, deposited in the PRINCIPAL FUNDING
ACCOUNT or during the EARLY AMORTIZATION PERIOD
deposited in the COLLECTION ACCOUNT for payment
to Class A certificateholders,
o an amount equal to the total CLASS B INVESTOR DEFAULTED
AMOUNT for that DISTRIBUTION DATE will be:
- treated as SHARED PRINCIPAL COLLECTIONS during
the REVOLVING PERIOD, and
- during the ACCUMULATION PERIOD, on and before
the date the CLASS A INVESTED AMOUNT is paid in
full or available in the PRINCIPAL FUNDING
ACCOUNT, deposited in the PRINCIPAL FUNDING
ACCOUNT or during the EARLY AMORTIZATION PERIOD
deposited in the COLLECTION ACCOUNT for payment
to Class A certificateholders or Class B
certificateholders,
o an amount equal to the SERIES 2000-__ ALLOCATION
PERCENTAGE of any ADJUSTMENT PAYMENT that DHRC is
required but fails to make under the POOLING AGREEMENT
will be:
- treated as SHARED PRINCIPAL COLLECTIONS during
the REVOLVING PERIOD,
- during the ACCUMULATION PERIOD, on and before
the date an amount equal to the CLASS A INVESTED
AMOUNT is paid in full or deposited in the
PRINCIPAL FUNDING ACCOUNT, deposited in the
PRINCIPAL FUNDING ACCOUNT or during the EARLY
AMORTIZATION PERIOD deposited in the COLLECTION
ACCOUNT for payment to Class A
certificateholders or Class B
certificateholders,
o an amount equal to the unreimbursed CLASS A INVESTOR
CHARGE-OFFS, if any, will be applied to reimburse CLASS A
INVESTOR CHARGE-OFFS, and this amount will be:
- treated as SHARED PRINCIPAL COLLECTIONS during
the REVOLVING PERIOD, and
- during the ACCUMULATION PERIOD, on and before
the date an amount equal to the CLASS A INVESTED
AMOUNT is paid in full or deposited in the
PRINCIPAL FUNDING ACCOUNT, deposited in the
PRINCIPAL FUNDING ACCOUNT or during the EARLY
AMORTIZATION PERIOD deposited in the COLLECTION
AMOUNT for payment to Class A
certificateholders,
o an amount equal to the unreimbursed reductions in the
CLASS B INVESTED AMOUNT because of CLASS B INVESTOR
CHARGE-OFFS and REALLOCATED CLASS B PRINCIPAL
COLLECTIONS, if any, will be:
- treated as SHARED PRINCIPAL COLLECTIONS during
the REVOLVING PERIOD, and
- during the ACCUMULATION PERIOD, on and before
the date an amount equal to the CLASS A INVESTED
AMOUNT is paid in full or deposited in the
PRINCIPAL FUNDING ACCOUNT, deposited in the
PRINCIPAL FUNDING ACCOUNT or during the EARLY
AMORTIZATION PERIOD deposited in the COLLECTION
ACCOUNT for payment to Class A certificateholders
or Class B certificateholders,
o to pay CLASS B MONTHLY INTEREST and CARRYOVER CLASS B
INTEREST, if any,
o on each DISTRIBUTION DATE from and after the RESERVE
ACCOUNT FUNDING DATE, but before the date the RESERVE
ACCOUNT is terminated, an amount up to the excess, if
any, of the REQUIRED RESERVE ACCOUNT AMOUNT over the
AVAILABLE RESERVE ACCOUNT AMOUNT, will be deposited in
the RESERVE ACCOUNT, and
o the balance, if any, will constitute EXCESS FINANCE
CHARGE COLLECTIONS.
The following diagram provides you with an outline of the
allocation of collections of FINANCE CHARGE RECEIVABLES. This diagram is a
simplified demonstration of the allocation and payment provisions contained
in this prospectus supplement and the attached prospectus.
[GRAPHIC?OMITTED]
Excess Finance Charge Collections. On each DISTRIBUTION DATE,
EXCESS FINANCE CHARGE COLLECTIONS allocated to Series 2000-__ will be
applied in the following order:
o to pay the REQUIRED AMOUNT, if any, and
o as EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS.
EXCESS FINANCE CHARGE COLLECTIONS from Series 2000-__ will be
applied in the following order:
o to pay certificateholders of other series in GROUP I to
the extent of any shortfalls,
o to pay any unpaid expenses or liabilities of the trust,
and
o as EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS.
Excess Transferor Finance Charge Collections. On each DISTRIBUTION
DATE, the trustee will apply EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS
allocated to your series in the following order:
o to pay the REQUIRED AMOUNT remaining after applying
EXCESS FINANCE CHARGE COLLECTIONS, and
o as SHARED TRANSFEROR PRINCIPAL COLLECTIONS.
Payment of Principal. On each DISTRIBUTION DATE during the
REVOLVING PERIOD, the product of:
o the PRINCIPAL ALLOCATION PERCENTAGE, and
o collections of PRINCIPAL RECEIVABLES for that
DISTRIBUTION DATE,
will be treated as SHARED PRINCIPAL COLLECTIONS except that any reduction
of the required CLASS B INVESTED AMOUNT during the REVOLVING PERIOD will be
paid to Class B certificateholders.
On each DISTRIBUTION DATE related to the ACCUMULATION PERIOD,
collections of PRINCIPAL RECEIVABLES allocated to Class A
certificateholders equal to CLASS A PRINCIPAL but not more than the CLASS A
CONTROLLED DEPOSIT AMOUNT will be deposited in the PRINCIPAL FUNDING
ACCOUNT for payment to Class A certificateholders on the CLASS A EXPECTED
FINAL PAYMENT DATE.
On each SPECIAL PAYMENT DATE after the CLASS A EXPECTED FINAL
PAYMENT DATE and, if earlier, after an EARLY AMORTIZATION EVENT occurs, the
trustee will apply the amount on deposit in the COLLECTION ACCOUNT and
available for payment of principal in the following order:
o an amount equal to CLASS A PRINCIPAL to Class A
certificateholders,
o after the CLASS A INVESTED AMOUNT has been paid, an
amount equal to CLASS B PRINCIPAL to Class B
certificateholders, and
o an amount equal to the excess, if any, will be treated as
SHARED PRINCIPAL COLLECTIONS.
On each DISTRIBUTION DATE during the ACCUMULATION PERIOD or EARLY
AMORTIZATION PERIOD, funds on deposit in the SPECIAL FUNDING ACCOUNT
distributable to Series 2000-__ will be applied in the following order:
o until the CLASS A INVESTED AMOUNT is paid in full, to
Class A certificateholders in an amount equal to the
lesser of:
- the shortfall in amounts to be paid from
collections of PRINCIPAL RECEIVABLES for Series
2000-__, and
- the amount allocated to Series 2000-__ under the
POOLING AGREEMENT,
but not more than CLASS A PRINCIPAL, less amounts to be
deposited in the COLLECTION ACCOUNT, and
o on and after the DISTRIBUTION DATE on which the CLASS A
INVESTED AMOUNT is paid in full, to Class B
certificateholders in an amount not to exceed:
- the CLASS B INVESTED AMOUNT, less
- amounts to be deposited in the COLLECTION ACCOUNT.
You will receive the final payment of principal and interest on
the Class A certificates no later than _______. After _______ the trust
will have no further obligation to pay principal or interest on the Class A
certificates.
The following diagram provides you with an outline of the
allocation of collections of PRINCIPAL RECEIVABLES. This diagram is a
simplified demonstration of the allocation and payment provisions contained
in this prospectus supplement and the attached prospectus.
[GRAPHIC?OMITTED]
REALLOCATION OF CASH FLOWS
For each DISTRIBUTION DATE, the servicer will calculate the CLASS
A REQUIRED AMOUNT, which is generally equal to the excess, if any, of (1)
CLASS A MONTHLY INTEREST, CARRYOVER CLASS A INTEREST, the CLASS A SERVICING
FEE and the CLASS A INVESTOR DEFAULTED AMOUNT plus the portion of any
unpaid ADJUSTMENT PAYMENTS allocated to the Class A certificates over (2)
the AVAILABLE SERIES 2000-__ FINANCE CHARGE COLLECTIONS plus any available
EXCESS FINANCE CHARGE COLLECTIONS from other series, plus EXCESS TRANSFEROR
FINANCE CHARGE COLLECTIONS allocable to your series.
The CLASS A REQUIRED AMOUNT will be paid from REALLOCATED CLASS B
PRINCIPAL COLLECTIONS. If REALLOCATED CLASS B PRINCIPAL COLLECTIONS are not
sufficient to fund the CLASS A REQUIRED AMOUNT, then the CLASS B INVESTED
AMOUNT will be reduced to the extent of the INVESTOR DEFAULTED AMOUNT plus
the SERIES 2000-__ ALLOCATION PERCENTAGE of any unpaid ADJUSTMENT PAYMENTS
but in no event shall it be reduced below zero. The CLASS A INVESTED AMOUNT
will be reduced by the excess, if any, of the INVESTOR DEFAULTED AMOUNT
plus the SERIES 2000-__ ALLOCATION PERCENTAGE of any unpaid ADJUSTMENT
PAYMENTS over the amount of the reductions, if any, to the CLASS B INVESTED
AMOUNT to fund the CLASS A REQUIRED AMOUNT.
Any reduction in the CLASS A INVESTED AMOUNT will have the effect
of slowing or reducing the return of principal and interest to Class A
certificateholders. If the CLASS B INVESTED AMOUNT is reduced to zero,
Class A certificateholders will bear directly the credit and other risks
associated with their interests in the trust. See "--Defaulted Receivables;
Investor Charge-Offs" for additional discussion.
Reductions of the CLASS A INVESTED AMOUNT and the CLASS B INVESTED
AMOUNT described in the three preceding paragraphs will be reimbursed, and
the CLASS A INVESTED AMOUNT and the CLASS B INVESTED AMOUNT increased, on
later DISTRIBUTION DATES to the extent of:
o AVAILABLE SERIES 2000-__ FINANCE CHARGE COLLECTIONS,
o EXCESS FINANCE CHARGE COLLECTIONS from other series, and
o EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS available
for that purpose on each DISTRIBUTION DATE.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS
Collections of FINANCE CHARGE RECEIVABLES--and other amounts
treated like collections of FINANCE CHARGE RECEIVABLES--in excess of the
amount required to make payments or deposits for the certificates of your
series will be made available to other series included in GROUP I whose
allocation of collections of FINANCE CHARGE RECEIVABLES is not sufficient
to make their required payments or deposits. We call these amounts EXCESS
FINANCE CHARGE COLLECTIONS. If the certificates of your series require more
collections of FINANCE CHARGE RECEIVABLES than allocated through the
INVESTOR PERCENTAGE, you will have access to collections of FINANCE CHARGE
RECEIVABLES--and other amounts treated like finance charge
collections--from other series in GROUP I. Each series that is part of
GROUP I and has a shortfall will receive a share of the total amount of
EXCESS FINANCE CHARGE COLLECTIONS available for that month based on the
amount of the shortfall for that series divided by the total shortfall for
all series in GROUP I for that same month. EXCESS FINANCE CHARGE
COLLECTIONS remaining after payment of all shortfalls for other series in
GROUP I will be treated as EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS.
EXCESS FINANCE CHARGE COLLECTIONS cover shortfalls in amounts payable from
collections of FINANCE CHARGE RECEIVABLES by using EXCESS FINANCE CHARGE
COLLECTIONS from other series which would otherwise be paid to DHRC.
SHARED PRINCIPAL COLLECTIONS
Collections of PRINCIPAL RECEIVABLES allocated to the Series
2000-__ certificateholders' interest in excess of:
o during the REVOLVING PERIOD, the amount of REALLOCATED
CLASS B PRINCIPAL COLLECTIONS,
o during the ACCUMULATION PERIOD, the CLASS A CONTROLLED
DEPOSIT AMOUNT and the amount of REALLOCATED CLASS B
PRINCIPAL COLLECTIONS, and
o during the EARLY AMORTIZATION PERIOD, the INVESTED AMOUNT
of the certificates,
will be made available to other series whose allocation of principal
collections is not sufficient to make payments or deposits required to be
made from principal collections allocated to those series. We call these
collections SHARED PRINCIPAL COLLECTIONS. If your certificates require more
principal collections than allocated through the INVESTOR PERCENTAGE, you
will share in the excess available from other series in GROUP I. Each
series that is part of GROUP I and has a shortfall will receive a share of
the total amount of SHARED PRINCIPAL COLLECTIONS available for that month
based on the amount of the shortfall for that series divided by the total
shortfall for all series in GROUP I for that same month.
If SHARED PRINCIPAL COLLECTIONS exceed shortfalls for all series,
the trustee will distribute the remaining amount to DHRC to the extent that
the TRANSFEROR AMOUNT exceeds the REQUIRED RETAINED TRANSFEROR AMOUNT or
deposit it into the SPECIAL FUNDING ACCOUNT.
SHARED PRINCIPAL COLLECTIONS cover PRINCIPAL SHORTFALLS of the
Series 2000-__ certificates by using collections of PRINCIPAL RECEIVABLES
that would have been paid to DHRC and, in specified circumstances, may
allow the length of the ACCUMULATION PERIOD to be shortened. This type of
reallocation of collections of PRINCIPAL RECEIVABLES will not result in a
reduction in the INVESTED AMOUNT of the series to which the collections
were initially allocated. There can be no assurance that there will be any
SHARED PRINCIPAL COLLECTIONS for any MONTHLY PERIOD.
If SHARED PRINCIPAL COLLECTIONS are not sufficient to cover
PRINCIPAL SHORTFALLS for your series, SHARED TRANSFEROR PRINCIPAL
COLLECTIONS will be applied as described below.
SHARED EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS AND SHARED TRANSFEROR
PRINCIPAL COLLECTIONS
EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS are collections of
FINANCE CHARGE RECEIVABLES allocable to the TRANSFEROR'S INTEREST in excess
of the amounts necessary to make required payments for any SUPPLEMENTAL
CERTIFICATES, and all other collections of FINANCE CHARGE RECEIVABLES paid
to DHRC, even those initially allocated to series of investor certificates.
These collections will be applied to cover any remaining shortfalls in
amounts payable from FINANCE CHARGE RECEIVABLES for this series and each
other series as designated in the applicable SERIES SUPPLEMENT, based upon
the amount of the shortfall, if any, of each series.
Any EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS remaining after
covering shortfalls for all designated series will be treated as SHARED
TRANSFEROR PRINCIPAL COLLECTIONS. EXCESS TRANSFEROR FINANCE CHARGE
COLLECTIONS cover shortfalls in amounts payable from collections of FINANCE
CHARGE RECEIVABLES and EXCESS FINANCE CHARGE COLLECTIONS that are allocable
to Series 2000-__ by using collections of FINANCE CHARGE RECEIVABLES which
would otherwise be paid to DHRC, including those from series not in GROUP I.
SHARED TRANSFEROR PRINCIPAL COLLECTIONS are collections of
PRINCIPAL RECEIVABLES allocated to the TRANSFEROR'S INTEREST but not due to
the holder of any SUPPLEMENTAL CERTIFICATE and other amounts payable to the
transferor from collections of PRINCIPAL RECEIVABLES plus the amount of
EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS remaining after being applied
to amounts payable from collections of FINANCE CHARGE RECEIVABLES. The
SHARED TRANSFEROR PRINCIPAL COLLECTIONS will be allocated to cover
shortfalls in amounts payable from collections of PRINCIPAL RECEIVABLES
that have not been covered out of the SHARED PRINCIPAL COLLECTIONS for this
series and each other series entitled to receive SHARED TRANSFEROR
PRINCIPAL COLLECTIONS. If the total PRINCIPAL SHORTFALL remaining after
applying SHARED PRINCIPAL COLLECTIONS exceeds the amount of SHARED
TRANSFEROR PRINCIPAL COLLECTIONS for any MONTHLY PERIOD, SHARED TRANSFEROR
PRINCIPAL COLLECTIONS will be allocated among each designated series, based
on the respective remaining PRINCIPAL SHORTFALLS of those series. If SHARED
TRANSFEROR PRINCIPAL COLLECTIONS exceed PRINCIPAL SHORTFALLS remaining
after applying SHARED PRINCIPAL COLLECTIONS, the balance will be paid to
DHRC. SHARED TRANSFEROR PRINCIPAL COLLECTIONS cover PRINCIPAL SHORTFALLS
for Series 2000-__ certificates remaining after applying SHARED PRINCIPAL
COLLECTIONS by using collections that would have been paid to DHRC and, in
specified circumstances, may allow the length of the ACCUMULATION PERIOD to
be shortened.
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
The INVESTOR DEFAULTED AMOUNT represents the investor's share of
receivables charged-off as uncollectible. On or before the third business
day before each DISTRIBUTION DATE, the servicer will calculate the INVESTOR
DEFAULTED AMOUNT for your series by multiplying:
o the FLOATING ALLOCATION PERCENTAGE for that month, by
o the total amount of receivables in trust portfolio
accounts that were charged-off as uncollectible for that
month.
The INVESTOR DEFAULTED AMOUNT will be further allocated:
o to Class A--as the CLASS A INVESTOR DEFAULTED
AMOUNT--based on the CLASS A FLOATING ALLOCATION
PERCENTAGE, and
o to Class B--as the CLASS B INVESTOR DEFAULTED
AMOUNT--based on the CLASS B FLOATING ALLOCATION
PERCENTAGE.
The CLASS A INVESTOR DEFAULTED AMOUNT for each MONTHLY PERIOD will be paid
from:
o AVAILABLE SERIES 2000-__ FINANCE CHARGE COLLECTIONS,
o EXCESS FINANCE CHARGE COLLECTIONS from other series
allocated to Series 2000-__,
o EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS allocated to
Series 2000-__, and
o REALLOCATED CLASS B PRINCIPAL COLLECTIONS.
The CLASS B INVESTOR DEFAULTED AMOUNT for each MONTHLY PERIOD will be paid
from:
o AVAILABLE SERIES 2000-__ FINANCE CHARGE COLLECTIONS,
o EXCESS FINANCE CHARGE COLLECTIONS allocated to Series
2000-__, and
o EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS allocated to
Series 2000-__.
If on any DISTRIBUTION DATE, the REQUIRED AMOUNT exceeds the sum of:
o EXCESS FINANCE CHARGE COLLECTIONS allocable to Series
2000-__,
o EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS allocable to
Series 2000-__, and
o REALLOCATED CLASS B PRINCIPAL COLLECTIONS,
then the CLASS B INVESTED AMOUNT will be reduced by the amount of that
excess but not more than the INVESTOR DEFAULTED AMOUNT plus the SERIES
2000-__ ALLOCATION PERCENTAGE of any unpaid ADJUSTMENT PAYMENTS for that
DISTRIBUTION DATE. This type of reduction is called a CLASS B INVESTOR
CHARGE-OFF. If this reduction causes the CLASS B INVESTED AMOUNT to be a
negative number, then:
o the CLASS B INVESTED AMOUNT will be reduced to zero, and
o the CLASS A INVESTED AMOUNT will be reduced by the amount
by which the CLASS B INVESTED AMOUNT would have been
reduced below zero,
but not more than the INVESTOR DEFAULTED AMOUNT plus the SERIES 2000-__
ALLOCATION PERCENTAGE of any unpaid ADJUSTMENT PAYMENTS for that
DISTRIBUTION DATE less the amount of the reduction of the CLASS B INVESTED
AMOUNT. This type of reduction is called a CLASS A INVESTOR CHARGE-OFF.
PRINCIPAL FUNDING ACCOUNT
Under the SERIES 2000-__ SUPPLEMENT, the trustee will establish
and maintain a PRINCIPAL FUNDING ACCOUNT in which it will collect CLASS A
PRINCIPAL during the ACCUMULATION PERIOD.
Amounts collected in the PRINCIPAL FUNDING ACCOUNT will be used to
pay principal to Class A certificateholders on the earlier of:
o the CLASS A EXPECTED FINAL PAYMENT DATE, and
o if an EARLY AMORTIZATION EVENT occurs during the
ACCUMULATION PERIOD, the first SPECIAL PAYMENT DATE.
Amounts on deposit in the PRINCIPAL FUNDING ACCOUNT will be
invested until the following DISTRIBUTION DATE by the trustee in ELIGIBLE
INVESTMENTS. The proceeds from these investments will be deposited in the
COLLECTION ACCOUNT on each DISTRIBUTION DATE and applied as AVAILABLE
SERIES 2000-__ FINANCE CHARGE COLLECTIONS.
RESERVE ACCOUNT
The trustee will establish the RESERVE ACCOUNT that it will use to
fund investment earnings shortfalls during the ACCUMULATION PERIOD. On and
after the RESERVE ACCOUNT FUNDING DATE, the trustee will begin to deposit
FINANCE CHARGE COLLECTIONS into this account until the account balance
equals the REQUIRED RESERVE ACCOUNT AMOUNT.
DHRC will invest money on deposit in this account in ELIGIBLE
INVESTMENTS. Investment earnings, net of expenses and losses, will be
retained in this account. Interest and investment income in this account in
excess of the REQUIRED RESERVE ACCOUNT AMOUNT on each TRANSFER DATE will be
withdrawn and applied as AVAILABLE SERIES 2000-__ FINANCE CHARGE
COLLECTIONS.
On each TRANSFER DATE during the ACCUMULATION PERIOD and on the
first TRANSFER DATE during the EARLY AMORTIZATION PERIOD, the servicer will
withdraw from the RESERVE ACCOUNT and apply as AVAILABLE SERIES 2000-__
FINANCE CHARGE COLLECTIONS the lesser of:
o the amount available to be withdrawn from the RESERVE
ACCOUNT, and
o the PRINCIPAL FUNDING INVESTMENT SHORTFALL for that
TRANSFER DATE.
The RESERVE ACCOUNT will end on the earliest to occur of:
o the termination date of the trust,
o the date the CLASS A INVESTED AMOUNT is paid in full, and
o if the ACCUMULATION PERIOD has not begun, the occurrence
of an EARLY AMORTIZATION EVENT, and
o if the ACCUMULATION PERIOD has begun, the earlier of:
- the first TRANSFER DATE for the EARLY
AMORTIZATION PERIOD, and
- the CLASS A EXPECTED FINAL PAYMENT DATE.
Upon termination of this account, funds in this account will be applied
according to the priority of payments specified under "--Application of
Collections--Payment of Interest, Fees and Other Items."
DEPOSITS IN THE COLLECTION ACCOUNT
The servicer will generally deposit all collections received from
the receivables in each MONTHLY PERIOD into the COLLECTION ACCOUNT not
later than two business days after the date of processing unless the
conditions described below are satisfied. RNB, as servicer, may use for its
own benefit all collections received from the receivables in each MONTHLY
PERIOD until the business day preceding the related DISTRIBUTION DATE if:
o RNB gives the trustee a letter of credit covering
collection risk of the servicer acceptable to each rating
agency, or
o Dayton Hudson has and maintains a commercial paper rating
of at least "A-1" by Standard & Poor's and at least "P-1"
by Moody's.
RNB currently has not given a letter of credit to the trustee and
Dayton Hudson currently does not maintain the required rating for use of
the collections.
Revolving Period. For each date of processing during the REVOLVING
PERIOD, the servicer shall allocate:
o to Series 2000-__ certificateholders and deposit in the
COLLECTION ACCOUNT an amount equal to the product of:
- the FLOATING ALLOCATION PERCENTAGE on that date
of processing, and
- the total amount of collections of FINANCE
CHARGE RECEIVABLES on that date of processing;
except that for each MONTHLY PERIOD, that amount will only be
deposited until the time the amount deposited in the COLLECTION
ACCOUNT equals the sum of:
- CLASS A MONTHLY INTEREST,
- CLASS B MONTHLY INTEREST, if any,
- CARRYOVER INTEREST, if any, and
- if RNB is not the servicer, the servicing fee
due on the next DISTRIBUTION DATE, and
o to Series 2000-__ certificateholders an amount equal to
the product of:
- the PRINCIPAL ALLOCATION PERCENTAGE on that date
of processing, and
- the total amount of collections of PRINCIPAL
RECEIVABLES on that date of processing,
and pay that amount to DHRC as the holder of the TRANSFEROR
CERTIFICATE, except that the amount to be paid to the holder of
the TRANSFEROR CERTIFICATE on any date of processing will be
applied in the following order:
o if any other PRINCIPAL SHARING SERIES is outstanding and
in its AMORTIZATION PERIOD, deposited in the COLLECTION
ACCOUNT to be applied, if necessary, as SHARED PRINCIPAL
COLLECTIONS on the related DISTRIBUTION DATE, and
o paid to the holder of the TRANSFEROR CERTIFICATE only if
on that date of processing the TRANSFEROR AMOUNT, minus
the interest represented by any SUPPLEMENTAL CERTIFICATE,
is greater than the REQUIRED RETAINED TRANSFEROR AMOUNT
after all PRINCIPAL RECEIVABLES have been transferred to
the trust on that day. Otherwise, funds will be deposited
in the SPECIAL FUNDING ACCOUNT until the TRANSFEROR
AMOUNT, minus the interest represented by any
SUPPLEMENTAL CERTIFICATE, is at least equal to the
REQUIRED RETAINED TRANSFEROR AMOUNT.
These amounts will be paid to the holder of the TRANSFEROR CERTIFICATE
during a MONTHLY PERIOD subject to the obligation of the transferor to make
an amount equal to the REALLOCATED CLASS B PRINCIPAL COLLECTIONS for each
MONTHLY PERIOD available on the related DISTRIBUTION DATE.
Accumulation Period. For each date of processing during the
ACCUMULATION PERIOD, the servicer will allocate:
o to Series 2000-__ certificateholders and deposit in the
COLLECTION ACCOUNT an amount equal to the product of:
- the FLOATING ALLOCATION PERCENTAGE on that date
of processing, and
- the total amount of collections of FINANCE
CHARGE RECEIVABLES on that date of processing;
except that for each MONTHLY PERIOD, this amount will only be
deposited until the time the amount deposited in the COLLECTION
ACCOUNT equals the sum of:
- CLASS A MONTHLY INTEREST,
- CLASS B MONTHLY INTEREST, if any,
- CARRYOVER INTEREST, if any, and
- if RNB is not the servicer, the servicing fee
due on the next DISTRIBUTION DATE, and
o before the payment in full of the CLASS A INVESTED
AMOUNT, to Series 2000-__ certificateholders and deposit
in the COLLECTION ACCOUNT an amount equal to the product
of:
- the PRINCIPAL ALLOCATION PERCENTAGE on that date
of processing, and
- the total amount of collections of PRINCIPAL
RECEIVABLES on that date of processing;
except that if these amounts for the same MONTHLY PERIOD are more
than the CLASS A CONTROLLED DEPOSIT AMOUNT for the related
DISTRIBUTION DATE, then that excess will be applied in the
following order:
o if any other PRINCIPAL SHARING SERIES is outstanding and
in its AMORTIZATION PERIOD, deposited in the COLLECTION
ACCOUNT to be applied, if necessary, as SHARED PRINCIPAL
COLLECTIONS on the related DISTRIBUTION DATE, and
o paid to the holder of the TRANSFEROR CERTIFICATE if the
TRANSFEROR AMOUNT, minus the interest represented by any
SUPPLEMENTAL CERTIFICATE, is greater than the REQUIRED
RETAINED TRANSFEROR AMOUNT after all PRINCIPAL
RECEIVABLES have been transferred to the trust on that
day. Otherwise, funds will be deposited in the SPECIAL
FUNDING ACCOUNT until the TRANSFEROR AMOUNT, minus the
interest represented by any SUPPLEMENTAL CERTIFICATE, is
at least equal to the REQUIRED RETAINED TRANSFEROR
AMOUNT.
These amounts will be paid to the holder of the TRANSFEROR CERTIFICATE
during a MONTHLY PERIOD subject to the obligation of the transferor to make
an amount equal to the REALLOCATED CLASS B PRINCIPAL COLLECTIONS for each
MONTHLY PERIOD available on the related DISTRIBUTION DATE.
Early Amortization Period. For each date of processing during the
EARLY AMORTIZATION PERIOD, the servicer will allocate:
o to Series 2000-__ certificateholders and deposit in the
COLLECTION ACCOUNT an amount equal to the product of:
- the FLOATING ALLOCATION PERCENTAGE on that date
of processing, and
- the total amount of collections of FINANCE
CHARGE RECEIVABLES on that date of processing,
and
o to Series 2000-__ certificateholders and deposit in the
COLLECTION ACCOUNT an
amount equal to the product of:
- the PRINCIPAL ALLOCATION PERCENTAGE on that date
of processing, and
- the total amount of collections of PRINCIPAL
RECEIVABLES on that date of processing;
except that after the date that collections equal to the INVESTED
AMOUNT have been deposited in the COLLECTION ACCOUNT for payment
to Series 2000-__ certificateholders, this amount will be applied
in the following order:
o if any other PRINCIPAL SHARING SERIES is outstanding and
in its AMORTIZATION PERIOD, deposited in the COLLECTION
ACCOUNT to be applied, if necessary, as SHARED PRINCIPAL
COLLECTIONS on the related DISTRIBUTION DATE, and
o paid to the holder of the TRANSFEROR CERTIFICATE if the
TRANSFEROR AMOUNT, minus the interest represented by any
SUPPLEMENTAL CERTIFICATE, is greater than the REQUIRED
RETAINED TRANSFEROR AMOUNT after all PRINCIPAL
RECEIVABLES have been transferred to the trust on that
day. Otherwise funds will be deposited in the SPECIAL
FUNDING ACCOUNT.
During the REVOLVING PERIOD and the ACCUMULATION PERIOD, the
servicer will allocate to Class A certificateholders and deposit in the
COLLECTION ACCOUNT on each TRANSFER DATE an amount equal to the sum of:
o the amount equal to:
- the lesser of:
o the sum of:
- the product of (1) the FLOATING ALLOCATION
PERCENTAGE for the preceding MONTHLY PERIOD and
(2) the total amount of collections of FINANCE
CHARGE RECEIVABLES for the related MONTHLY
PERIOD,
- the amount of EXCESS FINANCE CHARGE COLLECTIONS
allocated to Series 2000-__ for the related
MONTHLY PERIOD, and
- the amount of EXCESS TRANSFEROR FINANCE CHARGE
COLLECTIONS allocated to Series 2000-__ for the
related MONTHLY PERIOD, and
o the total of the amounts to be paid on the related
DISTRIBUTION DATE described under "--Application of
Collections--Payment of Interest, Fees and Other Items,"
less
- the daily amounts retained in the COLLECTION
ACCOUNT during the related MONTHLY PERIOD as
described above for the REVOLVING PERIOD and the
ACCUMULATION PERIOD, respectively,
o the excess of the amount of REALLOCATED CLASS B PRINCIPAL
COLLECTIONS over the amount of collections of PRINCIPAL
RECEIVABLES retained in the COLLECTION ACCOUNT as
described above for the REVOLVING PERIOD and the
ACCUMULATION PERIOD,
o an amount equal to the portion allocable to Series
2000-__ of shortfalls in amounts payable from collections
of FINANCE CHARGE RECEIVABLES relating to other series in
GROUP I. This amount cannot exceed the EXCESS FINANCE
CHARGE COLLECTIONS for the related DISTRIBUTION DATE,
o an amount equal to the amount of SHARED PRINCIPAL
COLLECTIONS to be applied for the benefit of other
PRINCIPAL SHARING SERIES from amounts that were
originally allocated to Series 2000-__ not to exceed:
- during the REVOLVING PERIOD, the PRINCIPAL
ALLOCATION PERCENTAGE of collections of
PRINCIPAL RECEIVABLES for the related MONTHLY
PERIOD, or
- during the ACCUMULATION PERIOD, the PRINCIPAL
ALLOCATION PERCENTAGE of collections of
PRINCIPAL RECEIVABLES for the related MONTHLY
PERIOD less the amount of those collections
applied to pay CLASS A PRINCIPAL on the related
DISTRIBUTION DATE, and
o the amount of SHARED TRANSFEROR PRINCIPAL COLLECTIONS to
be applied to make payments of CLASS A PRINCIPAL and
CLASS B PRINCIPAL on the related DISTRIBUTION DATE.
On the CLOSING DATE, DHRC will make a deposit to the COLLECTION
ACCOUNT in the amount of $[ ] to be allocated to the Series 2000-__
certificates and applied as AVAILABLE SERIES 2000-__ FINANCE CHARGE
COLLECTIONS.
ISSUANCE OF ADDITIONAL CERTIFICATES
During the REVOLVING PERIOD, the transferor may, subject to
certain conditions, cause the trustee to issue additional certificates.
When issued, the additional certificates will be identical in all material
respects to the other outstanding certificates and will be entitled to the
benefits of the POOLING AGREEMENT and the SERIES 2000-__ SUPPLEMENT.
Upon any additional issuance:
o the CLASS A INVESTED AMOUNT and the CLASS B INVESTED
AMOUNT each shall be increased proportionately, and
o the CLASS A CONTROLLED ACCUMULATION AMOUNT shall be
increased to reflect any additional principal amount of
Class A certificates represented by the additional
certificates.
Additional certificates will be issued under the following
conditions:
o before the date they are issued, the transferor will have
given the trustee, the servicer and the rating agencies
notice of the date and terms of the additional issuance,
o the total amount of PRINCIPAL RECEIVABLES will equal or
exceed the REQUIRED PRINCIPAL BALANCE after the
additional issuance,
o the transferor will have received written notice from
each rating agency that the additional issuance will not
cause a RATINGS EFFECT,
o the transferor will have delivered to the trustee a
certificate which states that, the transferor believes
that the additional issuance will not have a material
adverse effect on the Class A certificates or Class B
certificates,
o as of the date of the additional issuance, the amount of
unreimbursed CLASS A INVESTOR CHARGE-OFFS and CLASS B
INVESTOR CHARGE-OFFS shall be zero, and
o the transferor will have delivered to the trustee a tax
opinion relating to the additional issuance.
PAIRED SERIES
The Series 2000-__ certificates may be paired with one or more
other series. The paired series either:
o will be prefunded with an initial deposit in a
PRE-FUNDING ACCOUNT up to the initial principal balance
of that paired series, or
o will have a variable principal amount.
Any PRE-FUNDING ACCOUNT will be for the benefit of the paired series. As
principal is paid to the Series 2000-__ certificates, either:
o in the case of a prefunded paired series, an equal amount
of funds on deposit in any PRE-FUNDING ACCOUNT for that
paired series will be released to DHRC, or
o in the case of a paired series with a variable principal
amount, an interest in that paired series up to the
amount paid to your series may be sold by the trust.
The invested amount in the trust of that paired series will
increase by an amount equal to the principal paid on your series. Upon
payment of the Series 2000-__ certificates, assuming no unreimbursed
charge-offs for any related paired series, the total invested amount of the
related paired series will have been increased by an amount up to the total
amount paid to Series 2000-__ certificateholders since the issuance of that
paired series.
EARLY AMORTIZATION EVENTS
The REVOLVING PERIOD shall continue until the earlier of:
o the start of the ACCUMULATION PERIOD, or
o the occurrence of an EARLY AMORTIZATION EVENT.
The following chart indicates whether each EARLY AMORTIZATION EVENT is an
event which automatically triggers an EARLY AMORTIZATION PERIOD or an event
which requires the vote of a majority of the certificateholders or the
trustee to trigger an EARLY AMORTIZATION PERIOD.
<TABLE>
<CAPTION>
REQUIRES A AUTOMATICALLY
MAJORITY VOTE OF CAUSES AN EARLY
CERTIFICATEHOLDERS AMORTIZATION OF
EARLY AMORTIZATION EVENTS OR THE TRUSTEE SERIES 2000-__
- -------------------------
------------------- ------------------
<S> <C> <C>
1. The transferor fails to make a payment or deposit when required to X
under the POOLING AGREEMENT or the SERIES 2000-___ SUPPLEMENT within
five business days after the required date.
2. The sale, pledge, assignment or transfer by the transferor or grant of X
any lien on any receivable other than as permitted under the POOLING
AGREEMENT or the SERIES 2000-__ SUPPLEMENT.
3. The transferor fails to observe or perform any covenant or agreement X
and that failure has a material adverse effect on you and the
failure continues unremedied for 60 days after written notice to the
transferor.
4. The transferor makes a representation or warranty in the POOLING AGREEMENT or X
the SERIES 2000-___ SUPPLEMENT that was materially incorrect when made and that
continues to be materially incorrect for 60 days after written notice to the
transferor and as a result you are materially and adversely affected, unless the
transferor accepts designation of the related receivables as INELIGIBLE RECEIVABLES.
5. The average of the PORTFOLIO YIELDS for three consecutive MONTHLY X
PERIODs is less than the average of the BASE RATES for the same
period.
6. DHCC or the transferor fails to transfer receivables under ADDITIONAL X
ACCOUNTS or PARTICIPATIONS when required under the POOLING AGREEMENT
or the CLASS B INVESTED AMOUNT is less than 5% of the initial INVESTED
AMOUNT.
7. A SERVICER DEFAULT occurs which has a material adverse effect on you. X
8. Any of RNB, DHCC or any holder of the TRANSFEROR CERTIFICATE or the transferor X
admits in writing its inability to pay its debts, or is subject to a
bankruptcy proceeding that with respect to the transferor or any
holder of the TRANSFEROR CERTIFICATE is in effect and not dismissed
for 60 days or enters receivership or conservatorship or otherwise becomes
subject to an insolvency event.
9. The transferor becomes unable to transfer receivables to the trust in accordance X
with the POOLING AGREEMENT.
10. The trust becomes subject to regulation as an "investment company" under the X
Investment Company Act.
11. The amount in the SPECIAL FUNDING ACCOUNT as a percentage of the sum X
of (1) the total amount of PRINCIPAL RECEIVABLES plus (2) the
balance of the SPECIAL FUNDING ACCOUNT, shall equal or exceed 30% on
the last day of three consecutive MONTHLY PERIODS.
12. The TRANSFEROR AMOUNT is less than the REQUIRED RETAINED TRANSFEROR AMOUNT. X
</TABLE>
SERVICING FEES AND EXPENSES
The MONTHLY SERVICING FEE allocable to your series shall equal
one-twelfth of the product of:
o 2%, and
o an amount equal to:
- the sum of the CLASS A ADJUSTED INVESTED AMOUNT
and the CLASS B INVESTED AMOUNT at the end of
the MONTHLY PERIOD second preceding the related
DISTRIBUTION DATE, minus
- the product of the amount, if any, on deposit in
the SPECIAL FUNDING ACCOUNT as of the last day
of the MONTHLY PERIOD second preceding that
DISTRIBUTION DATE and the FLOATING ALLOCATION
PERCENTAGE for that MONTHLY PERIOD.
The portion of the MONTHLY SERVICING FEE allocable to Class A
certificateholders is the CLASS A SERVICING FEE. The portion of the MONTHLY
SERVICING FEE allocable to Class B certificateholders is the CLASS B
SERVICING FEE. The remainder of the servicing fee will be paid from amounts
allocable to the holder of the TRANSFEROR CERTIFICATE, holders of
PARTICIPATIONS or the certificateholders of other series. The trust, the
trustee or the Series 2000-__ certificateholders will not be liable for the
share of the servicing fee to be paid from amounts allocable to the holder
of the TRANSFEROR CERTIFICATE, holders of PARTICIPATIONS or the
certificateholders of any other series.
DEFEASANCE
On any date before the EARLY AMORTIZATION PERIOD that:
o the transferor has deposited:
- in the PRINCIPAL FUNDING ACCOUNT, an amount
equal to the outstanding principal balance of
the Class A certificates, and
- in the RESERVE ACCOUNT, an amount equal to or
greater than the CLASS A COVERED AMOUNT, as
estimated by the transferor, for the period from
the date of the deposit to the PRINCIPAL FUNDING
ACCOUNT through the CLASS A EXPECTED FINAL
PAYMENT DATE,
o the transferor has delivered to the trustee an opinion of
counsel that the 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 and that following the deposit
none of the trust, the RESERVE ACCOUNT or the PRINCIPAL
FUNDING ACCOUNT will be considered to be an association,
or publicly traded partnership, taxable as a corporation,
o the transferor has delivered to the trustee, a
certificate of an officer of the transferor stating that
it believes that the deposit and termination of its
obligations will not constitute an EARLY AMORTIZATION
EVENT or any event that would cause an EARLY AMORTIZATION
EVENT to occur, and
o a RATINGS EFFECT has not occurred;
then the Series 2000-__ certificates will no longer be entitled to the
security interest of the trust in the receivables and, except those set
forth in the first bullet above, the other trust assets, and the INVESTOR
PERCENTAGES applicable to the allocation to the Series 2000-__
certificateholders of collections of PRINCIPAL RECEIVABLES, FINANCE CHARGE
RECEIVABLES and the DEFAULTED AMOUNT will be reduced to zero. Upon the
satisfaction of these conditions, the CLASS B INVESTED AMOUNT will be
reduced to zero.
OPTIONAL TERMINATION
The Class A certificates may be repurchased by the transferor
after the CLASS A INVESTED AMOUNT is less than or equal to 10% of the CLASS
A INITIAL INVESTED AMOUNT. The purchase price for the Class A certificates
will equal:
o the CLASS A INVESTED AMOUNT, plus
o accrued and unpaid interest on the unpaid principal
amount of the Class A certificates through the day
preceding that DISTRIBUTION DATE at the CLASS A
CERTIFICATE RATE.
PURCHASE OF CLASS A CERTIFICATES BY THE TRANSFEROR
The transferor may purchase Class A certificates in the secondary
market and request that the trustee cancel those Class A certificates and
reduce the CLASS A INVESTED AMOUNT by a corresponding amount.
SERIES TERMINATION
RNB will solicit bids for the sale of some of the PRINCIPAL
RECEIVABLES together with the related FINANCE CHARGE RECEIVABLES if the
INVESTED AMOUNT is greater than zero on the DISTRIBUTION DATE two months
before the SERIES 2000-___ TERMINATION DATE. The amount of receivables to
be sold will not be more than 110% of the INVESTED AMOUNT on the SERIES
2000-__ TERMINATION DATE. DHRC will be allowed to participate in, and to
receive a copy of, each bid submitted in connection with any bidding
process. RNB will determine:
o which bid is the highest cash purchase offer, and
o the amount of collections that will be available in the
COLLECTION ACCOUNT on the SERIES 2000-__ TERMINATION DATE
for distribution to you.
RNB will sell these receivables on the SERIES 2000-__ TERMINATION
DATE to the bidder who provided the highest cash bid and will deposit the
proceeds in the COLLECTION ACCOUNT for allocation to your certificates. You
will incur a loss if the proceeds of the sale, together with the amount of
collections available in the COLLECTION ACCOUNT, are less than the CLASS A
ADJUSTED INVESTED AMOUNT plus accrued and unpaid interest on your
certificates.
GENERAL INFORMATION
Copies of the POOLING AGREEMENT, the SERIES 2000-___ SUPPLEMENT,
the annual report of independent certified public accountants described in
"The Pooling and Servicing Agreement--Evidence as to Compliance" in the
attached prospectus, the documents listed under "Where You Can Find More
Information" and the reports to certificateholders referred to under
"Reports to Certificateholders" and "Description of the
Certificates--Reports to Certificateholders" in the attached prospectus may
be obtained ___________. Financial information regarding DHRC is included
in the consolidated financial statements of ___________ in its Annual
Report on Form 10-K for the fiscal year ended [December 31, 1999].
The certificates, the POOLING AGREEMENT and the SERIES 2000-___
SUPPLEMENT are governed by the laws of the State of Delaware.
UNDERWRITING
DHRC has agreed to sell to the underwriters listed below the
amount of Class A certificates indicated next to each underwriter's name.
Each underwriter has agreed to purchase that amount of the Class A
certificates.
PRINCIPAL
AMOUNT OF
CLASS A
UNDERWRITERS CERTIFICATES
------------- --------------------
.................................................... $
....................................................
....................................................
....................................................
--------------------
Total...................................... $
====================
The purchase commitment of the underwriters may be increased or
ended if any underwriter defaults. The price to public, underwriters'
discounts and commission, the concessions that the underwriters may allow
to some dealers, and the discounts that those dealers may reallow to other
dealers, each expressed as a percentage of the principal amount of the
Class A certificates, shall be as follows:
<TABLE>
<CAPTION>
UNDERWRITING SELLING
PRICE TO DISCOUNT AND CONCESSIONS, REALLOWANCE
PUBLIC COMMISSIONS NOT TO EXCEED NOT TO EXCEED
----------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Class A certificates..................... % % % %
</TABLE>
After the offering is completed, DHRC will receive the proceeds,
after deduction of the underwriting and other expenses, listed below:
<TABLE>
<CAPTION>
PROCEEDS TO
DHRC
(AS % OF THE
PRINCIPAL AMOUNT UNDERWRITING
PROCEEDS TO OF THE CLASS A DISCOUNTS AND
DHRC CERTIFICATES) COMMISSIONS
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Class A certificates.......................... $ % $
</TABLE>
After the public offering, the public offering price and other
selling terms may be changed by the underwriters. Additional offering
expenses are estimated to be $________.
Any underwriter may engage in the following transactions, to the
extent permitted by Regulation M under the Securities Exchange Act:
o over-allotment transactions, which involve syndicate
sales in excess of the offering size creating a syndicate
short position,
o stabilizing transactions, which permit bids to purchase
the Class A certificates so long as the stabilizing bids
do not exceed a specified maximum,
o syndicate covering transactions, which involve purchases
of the Class A certificates in the open market after the
distribution has been completed to cover syndicate short
positions, and
o penalty bids, which permit the underwriters to reclaim a
selling concession from a syndicate member when the Class
A certificates originally sold by the syndicate member
are purchased in a syndicate covering transaction.
The use of the above transactions may cause the price of the Class
A certificates to be higher than it would otherwise be. These transactions,
if or once commenced, may be stopped without notice.
Each underwriter has represented and agreed that:
o it has only issued or passed on and will only issue or
pass on in the United Kingdom any document received by it
in connection with the issue of the Class A certificates
to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996, as amended, or
who is a person to whom the document may otherwise
lawfully be issued or passed on,
o it has complied and will comply with all provisions of
the Financial Services Act 1986 and other laws and
regulations for anything done by it which apply to the
Class A certificates in, from or otherwise involving the
United Kingdom, and
o if that underwriter is an authorized person under the
Financial Services Act 1986, it has only promoted and
will only promote, as that term is defined in Regulation
1.02 of the Financial Services (Promotion of Unregulated
Schemes) Regulations 1991, to any person in the United
Kingdom the scheme described in this prospectus
supplement if that person is of a kind described either
in Section 76(2) of the Financial Services Act 1986 or in
Regulation 1.04 of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991.
DHRC may indemnify the underwriters against liabilities which
include liabilities under the securities laws. DHRC may also contribute to
payments the underwriters may be required to make on these liabilities.
The underwriters and their respective affiliates have engaged and
may in the future engage in investment banking or commercial banking
transactions with DHCC, DHRC and their affiliates.
OTHER SERIES ISSUED AND OUTSTANDING
The trust has previously issued three other series that remain
outstanding. The table below discusses the principal characteristics of
these series. For more specific information relating to any series, any
prospective investor should contact the transferor at (612) 370-6530. The
transferor will provide, without charge, to any prospective purchaser of
the certificates, a copy of the disclosure documents for any previous
publicly issued series.
<TABLE>
<CAPTION>
SERIES 1996-1 VARIABLE FUNDING CERTIFICATES
<S> <C>
Class A Invested Amount as of [pricing date for Series 2000-___].....................................$[100,000,000]
Class A Maximum Investment Amount....................................................................$[100,000,000]
Class B Invested Amount as of [pricing date for Series 2000-___]......................................$[17,647,059]
Certificate Rate...........................................................................................Variable
Commencement of Amortization Period......................................[January 26, 2001] (subject to adjustment)
Annual Servicing Fee Percentage..................................................................................2%
Scheduled Series Termination Date.........................................December 25, 2001 (subject to adjustment)
Series Issuance Date................................................................................August 28, 1996
</TABLE>
<TABLE>
<CAPTION>
SERIES 1997-1
1. CLASS A CERTIFICATES
<S> <C>
Class A Initial Invested Amount........................................................................$400,000,000
Certificate Rate..............................................................................................6.25%
Class A Controlled Accumulation Amount...............................................................$33,333,333.34
Commencement of Accumulation Period.........................................October 7, 2001 (subject to adjustment)
Annual Servicing Fee Rate........................................................................................2%
Credit Support..................................................Subordination of Series 1997-1 Class B Certificates
Class A Expected Final Payment Date................................................................October 25, 2002
Scheduled Series Termination Date...................................................................August 25, 2005
Series Issuance Date...............................................................................October 15, 1997
2. CLASS B CERTIFICATES
Class B Initial Invested Amount........................................................................$122,875,817
Annual Servicing Fee Rate........................................................................................2%
Scheduled Series Termination Date...................................................................August 25, 2005
Series Issuance Date...............................................................................October 15, 1997
</TABLE>
<TABLE>
<CAPTION>
SERIES 1998-1
1. CLASS A CERTIFICATES
<S> <C>
Class A Initial Invested Amount........................................................................$400,000,000
Certificate Rate..............................................................................................5.90%
Class A Controlled Accumulation Amount...............................................................$33,333,333.34
Commencement of Accumulation Period............................................July 7, 2002 (subject to adjustment)
Annual Servicing Fee Rate........................................................................................2%
Credit Support..................................................Subordination of Series 1998-1 Class B Certificates
Class A Expected Final Payment Date...................................................................July 25, 2003
Scheduled Series Termination Date......................................................................May 25, 2006
Series Issuance Date................................................................................August 12, 1998
2. CLASS B CERTIFICATES
Class B Initial Invested Amount........................................................................$122,875,817
Annual Servicing Fee Rate........................................................................................2%
Scheduled Series Termination Date......................................................................May 25, 2006
Series Issuance Date................................................................................August 12, 1998
</TABLE>
GLOSSARY OF TERMS FOR PROSPECTUS SUPPLEMENT
"ACCUMULATION PERIOD" means for Series 2000-__, the period:
o beginning on the first day of the _____ 20___ Monthly
Period, and
o ending on the earliest of:
- the date an Early Amortization Event occurs,
- the end of the _____ 20___ Monthly Period, and
- the Trust Termination Date; and
during which collections of Principal Receivables up to the Class A
Invested Amount are accumulated in a Principal Funding Account for payment
to Class A certificateholders on the Class A Expected Final Payment Date.
"ADJUSTED INVESTED AMOUNT" means for any business day, an amount
equal to:
o the Class A Adjusted Invested Amount on that day, plus
o the Class B Invested Amount on that day.
"AVAILABLE RESERVE ACCOUNT AMOUNT" equals for any Transfer Date,
the lesser of:
o the amount on deposit in the Reserve Account, before any
deposits or withdrawals to that account on that date, and
o the Required Reserve Account Amount on that date.
"AVAILABLE SERIES 2000-__ FINANCE CHARGE COLLECTIONS" means for
any Distribution Date, the sum of:
o the Floating Allocation Percentage of collections of
Finance Charge Receivables
from the preceding Monthly Period,
o any available investment earnings on amounts on deposit
in the Principal Funding Account and the Reserve Account,
and
o the lesser of the Principal Funding Investment Shortfall
and the Available Reserve Account Amount for the related
Monthly Period
allocated and distributed to Series 2000-__ as indicated under "Description
of the Class A Certificates-- Application of Collections."
"AVAILABLE SHARED PRINCIPAL COLLECTIONS" means for any Monthly
Period, Shared Principal Collections available to be allocated to the
Series 2000-__ certificates from each other series that has a controlled or
scheduled amortization or accumulation period beginning after the ________
Distribution Date.
"BASE RATE" means for any Monthly Period, the annualized
percentage equivalent of the sum of:
o a fraction:
- whose numerator is the sum of the Class A
Monthly Interest, and the Class B Monthly
Interest for the related Interest Period, and
- whose denominator is the Invested Amount on the
last business day of that Monthly Period, and
o a fraction:
- whose numerator is the Monthly Servicing Fee for
that Monthly Period, and
- whose denominator is the Invested Amount on the
last business day of the preceding Monthly
Period.
"CARRYOVER CLASS A INTEREST" means for any Distribution Date:
o any Class A Monthly Interest due but not paid on any
previous Distribution Date, plus
o any Class A Additional Interest.
"CARRYOVER CLASS B INTEREST" means for any Distribution Date:
o any Class B Monthly Interest due but not paid on any
previous Distribution Date, plus
o any Class B Additional Interest.
"CARRYOVER INTEREST" means for any Distribution Date, the sum of
Carryover Class A Interest and Carryover Class B Interest.
"CLASS A ADDITIONAL INTEREST" means for any Distribution Date, an
amount equal to one-twelfth of the product of:
o the excess, if any, of Class A Monthly Interest for the
preceding Distribution Date over the amount available to
be paid to Class A certificateholders relating to
interest on that preceding Distribution Date, and
o the sum of the Class A Certificate Rate plus 2% per
annum.
"CLASS A ADJUSTED INVESTED AMOUNT" means for any business day, an
amount equal to:
o the Class A Invested Amount, minus
o the total amount on deposit in the Principal Funding
Account on that day.
"CLASS A CERTIFICATE RATE" means a rate of ____% per annum.
"CLASS A CONTROLLED ACCUMULATION AMOUNT" means for any
Distribution Date during the Accumulation Period, $__________; except if
the servicer postpones the start of the Accumulation Period:
o the Class A Controlled Accumulation Amount will exceed
the amount stated above and will be determined by the
servicer according to the Pooling Agreement, and
o the sum of the Class A Controlled Accumulation Amounts
for all Distribution Dates for that modified Accumulation
Period shall not be less than the Class A Invested
Amount.
This amount may be increased if the trust issues additional certificates.
"CLASS A CONTROLLED DEPOSIT AMOUNT" means for any Distribution
Date during the Accumulation Period, an amount equal to:
o the Class A Controlled Accumulation Amount, plus
o any Class A Deficit Controlled Accumulation Amount for
the preceding Distribution Date.
"CLASS A COVERED AMOUNT" equals for any Interest Period,
one-twelfth of the product of:
o the Class A Certificate Rate for that Interest Period,
and
o the balance of the Principal Funding Account on the first
day of that Interest Period.
"CLASS A DEFICIT CONTROLLED ACCUMULATION AMOUNT" means on each
Distribution Date during the Accumulation Period, the excess, if any, of:
o the Class A Controlled Deposit Amount for that
Distribution Date over
o the amount distributed from the Collection Account as
Class A Principal for that Distribution Date.
"CLASS A EXPECTED FINAL PAYMENT DATE" means the ________
Distribution Date.
"CLASS A FLOATING ALLOCATION PERCENTAGE" means for any Monthly
Period, the percentage equivalent of a fraction:
o whose numerator equals the Class A Adjusted Invested
Amount on the last business day of:
- the preceding Monthly Period, or in the case of
the first Monthly Period, the Closing Date,
during the Revolving Period or the Accumulation
Period for collections of Finance Charge
Receivables and at all times for Defaulted
Amounts, and
- the Monthly Period before an Early Amortization
Event occurs during the Early Amortization
Period for collections of Finance Charge
Receivables, and
o whose denominator equals the greater of:
- the sum of Principal Receivables in the trust
and any amount on deposit in the Special Funding
Account on the last business day of the same
Monthly Period used to determine the numerator,
and
- the sum of the numerators used to calculate the
applicable allocation percentages for
collections of Finance Charge Receivables for
all classes of all series and Participations
then outstanding.
"CLASS A INITIAL INVESTED AMOUNT" means $_____.
"CLASS A INVESTED AMOUNT" means for any date, an amount equal to:
o the Class A Initial Invested Amount, minus
o the total amount of principal paid to Class A
certificateholders before that date, minus
o the excess, if any, of the total amount of Class A
Investor Charge-Offs for all previous Distributions Dates
over the total amount of any reimbursements of Class A
Investor Charge-Offs for all Distribution Dates before
that date, plus
o the amount of any increase in the Class A Invested Amount
because of the issuance of additional certificates, minus
o the amount of any reduction in the Class A Invested
Amount because of the purchase by the transferor and
later cancellation of Class A certificates.
"CLASS A INVESTOR CHARGE-OFF" means for any Monthly Period, the
amount by which the Class A Invested Amount is reduced after the Class B
Invested Amount has been reduced to zero because of Investor Charge-Offs
resulting from the allocation of the Investor Defaulted Amount and the
Series 2000-__ Allocation Percentage of any unpaid Adjustment Payments.
"CLASS A INVESTOR DEFAULTED AMOUNT" means a portion of the
Investor Defaulted Amount that is allocated to Class A certificateholders
on each Distribution Date in an amount equal to the product of:
o the Class A Floating Allocation Percentage for the
related Monthly Period, and
o the Defaulted Amount for that Monthly Period.
"CLASS A MONTHLY INTEREST" means for any Distribution Date, an
amount equal to one-twelfth of the product of:
o the Class A Certificate Rate, and
o the outstanding principal balance of the Class A
certificates on the last business day of the preceding
Monthly Period;
except for the initial Distribution Date, Class A Monthly Interest will
equal $__________.
"CLASS A PERCENTAGE" means the percentage equivalent of a
fraction:
o whose numerator is the Class A Adjusted Invested Amount,
and
o whose denominator is the Series Invested Amount.
"CLASS A PRINCIPAL" for any Distribution Date relating to the
Accumulation Period or the Early Amortization Period will equal the sum of:
o an amount equal to the product of the Principal
Allocation Percentage and the total amount of collections
of Principal Receivables for the preceding Monthly
Period,
o any amount on deposit in the Special Funding Account that
is distributable to the Class A certificates for the
preceding Monthly Period,
o the amount, if any, that is allocated to the Class A
certificates as described under "Description of the Class
A Certificates--Application of Collections--Payment of
Interest, Fees and Other Items,"
o the amount of Shared Principal Collections allocated to
the Class A certificates for the preceding Monthly
Period, and
o the amount of Shared Transferor Principal Collections
allocated to the Class A certificates for the preceding
Monthly Period;
except for:
o any Distribution Date during the Accumulation Period,
Class A Principal may not exceed the Class A Controlled
Deposit Amount for that Distribution Date,
o any Distribution Date, Class A Principal may not exceed
the Class A Adjusted Invested Amount, and
o the Series 2000-__ Termination Date, Class A Principal
shall be an amount equal to the Class A Adjusted Invested
Amount.
"CLASS A REQUIRED AMOUNT" means the amount required to be paid for
the benefit of the Class A certificates described under "Description of the
Class A Certificates--Reallocation of Cash Flows."
"CLASS A SERVICING FEE" means the share of the Monthly Servicing
Fee allocable to Class A certificateholders for any Distribution Date equal
to the product of:
o the Class A Percentage, and
o the Monthly Servicing Fee;
except for the first Distribution Date, the Class A Servicing Fee
will be $_______.
"CLASS B ADDITIONAL INTEREST" means for any Distribution Date on
and after the setting of an interest rate for the Class B certificates, an
amount equal to one-twelfth of the product of:
o the excess, if any, of Class B Monthly Interest for the
preceding Distribution Date over the amount available to
be paid to Class B certificateholders relating to
interest on that preceding Distribution Date, and
o the sum of the interest rate set for the Class B
certificates plus 2% per annum.
"CLASS B FLOATING ALLOCATION PERCENTAGE" means for any Monthly
Period, the percentage equivalent of a fraction:
o whose numerator equals the Class B Invested Amount on the
last business day of:
- the preceding Monthly Period, or in the case of
the first Monthly Period, the Closing Date,
during the Revolving Period or the Accumulation
Period for collections of Finance Charge
Receivables and during any period for Defaulted
Amounts, and
- the Monthly Period before an Early Amortization
Event occurs during the Early Amortization
Period for collections of Finance Charge
Receivables, and
o whose denominator equals the greater of:
- the sum of Principal Receivables in the trust
and any amount on deposit in the Special Funding
Account on the last business day of the same
Monthly Period used to determine the numerator,
and
- the sum of the numerators used to calculate the
applicable allocation percentages for
collections of Finance Charge Receivables for
all classes of all series and Participations
then outstanding.
"CLASS B INITIAL INVESTED AMOUNT" means $______.
"CLASS B INVESTED AMOUNT" means for any date, an amount equal to:
o the Class B Initial Invested Amount, minus
o the total amount of principal paid to Class B
certificateholders before that date, minus
o the total amount of Class B Investor Charge-Offs for all
previous Distribution Dates, minus
o the total amount of Reallocated Class B Principal
Collections for all previous Distribution Dates for which
the Class B Invested Amount has been reduced for those
previous dates, plus
o the sum of any reimbursed Class B Investor Charge-Offs
and Reallocated Class B Principal Collections, plus
o the amount of any increase in the Class B Invested Amount
because of the issuance of additional certificates.
"CLASS B INVESTOR CHARGE-OFF" means for any Monthly Period, the
amount by which the Class B Invested Amount is reduced because of Investor
Charge-Offs resulting from the application of Reallocated Principal
Collections and the allocation of the Investor Defaulted Amount, and the
Series 2000-__ Allocation Percentage of any unpaid Adjustment Payments in
excess of Reallocated Class B Principal Collections.
"CLASS B INVESTOR DEFAULTED AMOUNT" means a portion of the
Investor Defaulted Amount that is allocated to Class B certificateholders
on each Distribution Date in an amount equal to the product of:
o the Class B Floating Allocation Percentage for the
related Monthly Period, and
o the Defaulted Amount for that Monthly Period.
"CLASS B MONTHLY INTEREST" means, initially, zero. However, DHRC
may, after issuing the Series 2000-__ certificates, set an interest rate
for the Class B certificates without the consent of Class A
certificateholders.
"CLASS B PERCENTAGE" means the percentage equivalent of a
fraction:
o whose numerator is the Class B Invested Amount, and
o whose denominator is the Series Invested Amount.
"CLASS B PRINCIPAL" for any Distribution Date relating to the
Accumulation Period or the Early Amortization Period, on or after the
Distribution Date on which the Class A Invested Amount is paid in full,
will equal the lesser of:
o the sum of:
- an amount equal to the product of the Principal
Allocation Percentage and collections of
Principal Receivables minus the amount of
Reallocated Class B Principal Collections for
the preceding Monthly Period,
- any amount on deposit in the Special Funding
Account that is distributable to the Class B
certificates for the preceding Monthly Period,
- the amount, if any, that is allocated to the
Class B certificates as described under
"Description of the Class A
Certificates--Application of
Collections--Payment of Interest, Fees and Other
Items,"
- the amount, if any, of principal allocable to
the Class A certificates for the payment of
Class A Principal, but remaining after
distributions have been made to Class A
certificateholders,
- the amount of Shared Principal Collections
allocated to the Class B certificates for the
preceding Monthly Period, and
- the amount of Shared Transferor Principal
Collections allocated to the Class B
certificates for the preceding Monthly Period,
and
o the Class B Invested Amount;
except for the Series 2000-__ Termination Date, Class B Principal shall be
an amount equal to the Class B Invested Amount.
"CLASS B SERVICING FEE" means the share of the Monthly Servicing
Fee allocable to Class B certificateholders for any Distribution Date equal
to the product of:
o the Class B Percentage, and
o the Monthly Servicing Fee;
except for the first Distribution Date, the Class B Servicing Fee will be
$_______.
"CLOSING DATE" means _______ ___, 2000.
"DISTRIBUTION DATE" means the 25th day of each month, or if the
25th day is not a business day, the next business day.
"EARLY AMORTIZATION EVENT" means any of the events described under
"Description of the Class A Certificates--Early Amortization Events."
"EARLY AMORTIZATION PERIOD" means for Series 2000-__, the period:
o beginning on the earlier of the day an Early Amortization
Event occurs or the Class A Expected Final Payment Date
if the Class A Invested Amount has not been paid in full
on that date, and
o ending on the earlier of:
- the date the Invested Amount has been paid in
full, and
- the Series 2000-__ Termination Date; and
during which collections of Principal Receivables allocable to Series
2000-__ will be paid on each Special Payment Date to certificateholders.
"FLOATING ALLOCATION PERCENTAGE" means the Class A Floating
Allocation Percentage plus the Class B Floating Allocation Percentage.
"GROUP I" means the group of series under the trust to which the
Series 2000-__ certificates belong.
"INTEREST PERIOD" means in relation to any Distribution Date, the
period from the previous Distribution Date through the day before that
Distribution Date, except the first Interest Period begins on the Closing
Date and ends on the day before the first Distribution Date.
"INVESTED AMOUNT" means the sum of the Class A Invested Amount and
the Class B Invested Amount.
"INVESTOR CHARGE-OFF" means for any Monthly Period for Series
2000-__ the sum of the Class A Investor Charge-Offs and the Class B
Investor Charge-Offs.
"INVESTOR DEFAULTED AMOUNT" means for any Monthly Period, an
amount equal to the product of the Defaulted Amount and the Floating
Allocation Percentage as of the related Distribution Date.
"MONTHLY INTEREST" means Class A Monthly Interest and Class B
Monthly Interest.
"MONTHLY SERVICING FEE" means for any Distribution Date, the
amount determined as described under "Description of the Class A
Certificates--Servicing Fees and Expenses."
"PORTFOLIO YIELD" means for any Monthly Period, the annualized
percentage equivalent of a fraction:
o whose numerator is the sum of:
- the total amount of Available Series 2000-__
Finance Charge Collections for that Monthly
Period, minus
- the total Investor Defaulted Amount for that
Monthly Period and the Series 2000-__ Allocation
Percentage of any Adjustment Payments not made
on or before the related Distribution Date, and
o whose denominator is the Invested Amount as of the last
business day of the preceding Monthly Period.
"PRINCIPAL ALLOCATION PERCENTAGE" means for any Monthly Period,
the percentage equivalent of a fraction:
o whose numerator equals:
- during the Revolving Period, the Invested Amount
as of the last day of the immediately preceding
Monthly Period, and
- during the Accumulation Period, the Invested
Amount as of the last day of the Revolving
Period;
provided that on the date of issuance of any new series
during the Accumulation Period, this amount may be
reduced by DHRC to an amount not less than the greater
of:
o the Adjusted Invested Amount on that date, and
o the amount that would result in a Principal
Allocation Percentage that when multiplied by
collections of Principal Receivables for the
preceding Monthly Period would equal:
- the Class A Controlled Deposit Amount for that
Monthly Period plus 10% of the Class A
Controlled Accumulation Amount or, if that date
is on or after the Class A Expected Final
Payment Date and the Class A Invested Amount has
been paid in full, the Class B Invested Amount,
minus
- the amount of any Available Shared Principal
Collections for that Monthly Period, and
- during the Early Amortization Period, the
Invested Amount as of the last day of the
Revolving Period or, if less, the last numerator
used to calculate the Principal Allocation
Percentage in the Accumulation Period, if any,
and
o whose denominator equals the greater of:
- if only one series is outstanding:
o during the Revolving Period, the sum of the
total amount of Principal Receivables in the
trust and the principal amount on deposit in the
Special Funding Account as of the last day of
the immediately preceding Monthly Period, and
o during the Accumulation Period and the Early
Amortization Period, the sum of the total amount
of Principal Receivables in the trust and the
principal amount on deposit in the Special
Funding Account as of the last day of the
Revolving Period, and
if more than one series is outstanding, the sum of:
o the total amount of Principal Receivables in the
trust, plus
o the principal amount on deposit in the Special
Funding Account as of the last day of the
immediately preceding Monthly Period, and
- the sum of the numerators used to calculate the
Principal Allocation Percentages for all series
and Participations outstanding as of the date of
determination.
"PRINCIPAL FUNDING ACCOUNT" means an Eligible Deposit Account held
for the benefit of the Class A certificateholders in which collections of
Principal Receivables allocated to the Class A certificateholders are
accumulated during the Accumulation Period as described under "Description
of the Class A Certificates--Principal Funding Account."
"PRINCIPAL FUNDING INVESTMENT PROCEEDS" means on each Distribution
Date during the Accumulation Period:
o the investment earnings on funds in the Principal Funding
Account, minus
o investment expenses and losses,
for the related Interest Period.
"PRINCIPAL FUNDING INVESTMENT SHORTFALL" means for any
Distribution Date during the Accumulation Period, the deficiency that
occurs if the Principal Funding Investment Proceeds are less than the Class
A Covered Amount for the related Interest Period.
"PRINCIPAL SHARING SERIES" means a series that, under the terms of
its Series Supplement, is entitled to receive Shared Principal Collections.
"REALLOCATED CLASS B PRINCIPAL COLLECTIONS" means for each Monthly
Period, collections of Principal Receivables allocable to the Class B
certificates for that Monthly Period in an amount not to exceed the greater
of:
o the Class B Invested Amount, and
o the amount applied to fund the Class A Required Amount,
if any.
"RECORD DATE" means the last business day of the calendar month
preceding a Distribution Date which is the day a certificateholder must be
the registered holder of a certificate to receive a payment on that
Distribution Date.
"REQUIRED AMOUNT" means for any Monthly Period, the amount by
which:
o the sum of (1) Monthly Interest and Carryover Interest,
(2) Monthly Servicing Fee, (3) the Investor Defaulted
Amount, (4) the Series 2000-__ Allocation Percentage of
Adjustment Payments not made on or before the related
Distribution Date, (5) unreimbursed Investor Charge-Offs
and unreimbursed Reallocated Class B Principal
Collections and (6) the amount by which the Required
Reserve Account Amount is less than the Available Reserve
Account Amount, exceeds
o the Available Series 2000-__ Finance Charge Collections.
"REQUIRED RESERVE ACCOUNT AMOUNT" means for any Distribution Date
on or after the Reserve Account Funding Date, an amount specified by the
transferor.
"REQUIRED RETAINED TRANSFEROR'S PERCENTAGE" means 2% as may be
adjusted from time to time under the Series 2000-__ Supplement.
"RESERVE ACCOUNT" means an Eligible Deposit Account in which the
servicer will deposit the Required Reserve Account Amount on or after the
Reserve Account Funding Date to provide additional funds from which to make
payments of interest on the certificates during the Accumulation Period.
"RESERVE ACCOUNT FUNDING DATE" means the date specified by the
transferor for the start of funding of the Reserve Account.
"SERIES 2000-__ ALLOCATION PERCENTAGE" means on any date of
determination, the percentage equivalent of a fraction:
o whose numerator is the Series Invested Amount, and
o whose denominator is the sum of the invested amounts, or
adjusted invested amounts, as applicable, of all then
outstanding series.
"SERIES 2000-__ SUPPLEMENT" means the supplement to the Pooling
Agreement relating to the Series 2000-__ certificates.
"SERIES 2000-__ TERMINATION DATE" means the ______ Distribution Date
"SERIES INVESTED AMOUNT" means for any date, an amount equal to
the sum of the Class A Adjusted Invested Amount and the Class B Invested
Amount on that date.
"SPECIAL PAYMENT DATE" means each Distribution Date following:
o the Monthly Period in which an Early Amortization Event
occurs, and
o the Class A Expected Final Payment Date.
==============================================================================
Prospectus Supplement
DAYTON HUDSON CREDIT CARD MASTER TRUST
SERIES 2000-__
[$------------]
[---%]
CLASS A
ASSET BACKED CERTIFICATES
DAYTON HUDSON RECEIVABLES CORPORATION
Transferor
RETAILERS NATIONAL BANK
Servicer
You should rely only on the information contained or incorporated
by reference in this prospectus supplement and the prospectus. We have not
authorized anyone to provide you with different information.
We are not offering these certificates in any state where the
offer is not permitted.
Dealers will deliver a prospectus supplement and prospectus when
acting as underwriters of these certificates and with respect to their
unsold allotments or subscriptions. In addition, all dealers selling these
certificates will deliver a prospectus supplement and prospectus until
________ ___, 2000.
==============================================================================
[START FLAG]
The information in this prospectus is not complete and may be changed. We
cannot sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
[END FLAG]
SUBJECT TO COMPLETION, DATED JANUARY 28, 2000
Prospectus
DAYTON HUDSON CREDIT CARD MASTER TRUST
Issuer
DAYTON HUDSON RECEIVABLES CORPORATION
Transferor
RETAILERS NATIONAL BANK
Servicer
ASSET BACKED SECURITIES
[START TEXT BOX]
A security is not a deposit and neither the securities nor the
underlying accounts or receivables are insured or guaranteed by the FDIC or
any other governmental agency.
The securities will represent an interest in the trusts only and do not
represent interests in or recourse obligations of Retailers National Bank,
Dayton Hudson Capital Corporation or Dayton Hudson Receivables Corporation
or any of their affiliates.
This prospectus may be
used to offer and sell any
series of securities only if
accompanied by the
prospectus supplement for
that series.
[END TEXT BOX]
THE TRUST--
o may periodically issue asset backed certificates in one or more series
with one or more classes, and
o will own--
o receivables in a portfolio of consumer open end credit card
accounts,
o payments due on those receivables, and
o other property described in this prospectus and in the prospectus
supplement.
THE SECURITIES--
o will represent interests in the trust and will be paid only from the
assets of the trust,
o offered by this prospectus will be rated in one of the four highest
rating categories by at least one nationally recognized statistical
rating organization,
o may have one or more forms of enhancement, and
o will be issued as part of a series which may include one or more
classes of securities and enhancement.
THE SECURITYHOLDERS--
o will receive interest and principal payments from a varying percentage
of credit card account collections.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED ON THE ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS
AND THE ATTACHED PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is _______, 2000
TABLE OF CONTENTS
Page
OVERVIEW OF THE INFORMATION IN THIS
PROSPECTUS AND THE PROSPECTUS
SUPPLEMENT..............................................................4
THE DAYTON HUDSON CREDIT CARD
MASTER TRUST............................................................5
DAYTON HUDSON CORPORATION....................................................5
RETAILERS NATIONAL BANK......................................................6
DAYTON HUDSON CAPITAL CORPORATION............................................6
DAYTON HUDSON RECEIVABLES CORPORATION........................................6
RETAILERS NATIONAL BANK'S CREDIT CARD
BUSINESS................................................................7
Credit Card Business....................................................7
DHC Guest Credit........................................................7
Marketing Programs and Account
Origination.........................................................8
RNB's Underwriting Processes and
Authorizations......................................................8
Servicing of Accounts...................................................9
Delinquency and Collections Procedures
for RNB Credit Cards...............................................10
Year 2000 Readiness Disclosure.........................................10
THE RECEIVABLES.............................................................11
Addition of Accounts...................................................11
Removal of Accounts....................................................12
Additional Information in the
Prospectus Supplement..............................................13
MATURITY CONSIDERATIONS.....................................................13
DESCRIPTION OF THE CERTIFICATES.............................................14
Form of Your Certificates..............................................16
DTC ...................................................................16
Cedelbank..............................................................18
Euroclear..............................................................19
Book-Entry Registration................................................20
Definitive Certificates................................................23
Initial Settlement.....................................................24
Secondary Market Trading...............................................24
Investor Percentage....................................................27
Interest...............................................................28
Principal..............................................................29
Discount Option........................................................29
The Transferor Certificate.............................................30
New Issuances..........................................................31
Collection Account.....................................................33
Deposits in Collection Account.........................................34
Sharing of Excess Finance Charge
Collections and Excess Transferor
Finance Charge Collections.........................................35
Shared Principal Collections and
Transferor Principal Collections...................................36
Special Funding Account................................................37
Paired Series..........................................................38
Funding Period.........................................................38
Defaulted Receivables..................................................39
Dilution...............................................................39
Early Amortization Events..............................................40
Defeasance.............................................................40
Reports to Certificateholders..........................................41
List of Certificateholders.............................................42
ENHANCEMENT.................................................................42
Specific Forms of Enhancement..........................................44
THE POOLING AND SERVICING AGREEMENT.........................................47
Conveyance of Receivables..............................................47
Addition of Trust Assets...............................................48
Removal of Accounts....................................................51
Representations and Warranties.........................................52
Indemnification........................................................56
Collection and Other Servicing
Procedures.........................................................57
Servicing Compensation and Payment of
Expenses...........................................................58
Servicer Covenants.....................................................59
Certain Matters Regarding the
Servicer...........................................................60
Servicer Default ......................................................60
Evidence as to Compliance..............................................62
Amendments.............................................................62
Trustee................................................................64
Termination of the Trust...............................................65
THE BANK RECEIVABLES PURCHASE
AGREEMENT AND THE RECEIVABLES
PURCHASE AGREEMENT ....................................................65
Sale of the Receivables................................................65
Representations and Warranties.........................................67
Covenants..............................................................69
Transfer of Accounts and Assumption
of RNB's, DHCC's and DHRC's
Obligations........................................................70
Amendment..............................................................71
Termination............................................................72
SECURITY RATINGS............................................................72
LEGAL ASPECTS OF THE RECEIVABLES............................................73
Transfer of Receivables................................................73
Matters Relating to Bankruptcy or
Receivership.......................................................74
Consumer Protection Laws...............................................76
Claims and Defenses of Cardholders
Against the Trust..................................................78
TAX MATTERS.................................................................80
Tax Characterization of the Trust......................................81
Tax Considerations Relating
to Certificateholders..............................................82
Non-U.S. Certificate Owners............................................85
Information Reporting and
Backup Withholding.................................................88
State and Local Taxation...............................................89
EMPLOYEE BENEFIT PLAN CONSIDERATIONS........................................90
Regulation Under ERISA and the Tax
Code...............................................................90
Final Regulation Issued by the DOL.....................................90
Exemptions to Prohibited Transactions..................................91
Special Considerations for Insurance
Companies..........................................................92
General Investment Considerations......................................92
PLAN OF DISTRIBUTION FOR THE OFFERED
CERTIFICATES...........................................................93
LEGAL MATTERS...............................................................94
REPORTS TO CERTIFICATEHOLDERS...............................................94
WHERE YOU CAN FIND MORE INFORMATION.........................................94
GLOSSARY OF TERMS FOR PROSPECTUS............................................96
OVERVIEW OF THE INFORMATION IN THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT
We provide information to you about the securities in two separate
documents that progressively provide more detail: (1) this prospectus,
which provides general information, some of which may not apply to a
particular series of securities, including your series, and (2) the
prospectus supplement, which will describe the specific terms of your
series of securities, including:
o the timing and amount of interest and principal payments;
o information about the receivables;
o information about enhancement for each offered class;
o credit ratings; and
o the method for selling the securities.
You should rely only on the information provided in this
prospectus and the prospectus supplement, including the information
incorporated by reference. We have not authorized anyone to provide you
with different information.
We include cross-references in this prospectus and in the
prospectus supplement to captions in these materials where you can find
further related discussions. The preceding table of contents and the table
of contents included in the prospectus supplement provide the pages these
captions are located.
You can find a glossary of the defined terms that appear in this
document in bold faced type under the caption "Glossary of Terms for
Prospectus" beginning on page 88 in this prospectus.
THE DAYTON HUDSON CREDIT CARD MASTER TRUST
The Dayton Hudson Credit Card Master Trust was formed when DHRC,
as the transferor of the receivables, RNB, as the servicer and originator
of the receivables, and Norwest Bank Minnesota, National Association, as
trustee, entered into the POOLING AGREEMENT. The POOLING AGREEMENT is
governed by the laws of the State of Delaware. The trust was formed to
issue certificates representing interests in a pool of credit card
receivables held by the trust. Certificates issued by the trust will be
issued in amounts, at prices and on terms to be determined at the time of
sale as described in the attached prospectus supplement.
The trust will only engage in the following business activities:
o acquiring and holding receivables,
o issuing series of certificates, PARTICIPATIONS, and a
TRANSFEROR CERTIFICATE,
o making payments on these certificates and PARTICIPATIONS,
o obtaining any credit enhancement or entering into any
enhancement contract necessary to issue certificates, and
o engaging in related activities.
Because of the restricted nature of its activities, we do not
expect that the claims against the trust will ever exceed the value of its
assets.
DAYTON HUDSON CORPORATION
Dayton Hudson is one of America's largest general merchandise
retailers with 1,245 stores in 44 states as of October 30, 1999. Dayton
Hudson currently conducts its store operations through three retail
operating divisions operating under five brand names (Dayton Hudson
Stores):
o Target,
o Department Stores (operating Dayton's, Hudson's and
Marshall Field's stores), and
o Mervyn's.
The Dayton Company was founded in 1902 and Dayton Hudson was
formed in 1969 through the merger of the Dayton Company and J.L. Hudson
Company. In 1962, the Dayton Company started Target, an upscale discounter.
In 1978, Dayton Hudson acquired Mervyn's department stores. In 1990, Dayton
Hudson acquired Marshall Field & Co. Dayton Hudson is a public company and
is listed on the New York Stock Exchange and the Pacific Stock Exchange
under the symbol DH. On January 12, 2000, the Board of Directors of Dayton
Hudson approved a change of its name to Target Corporation. This change
will be effective January 30, 2000.
Dayton Hudson's revenues and net earnings for the past three years
are as follows (in millions):
1998 1997 1996
-------------- -------------- --------------
Revenues $ 30,951 $ 27,757 $ 25,371
Net Earnings $935 $751 $463
RETAILERS NATIONAL BANK
RNB is chartered as a national banking association and is subject
to regulation and supervision by the Office of the Comptroller of the
Currency. RNB is a wholly owned subsidiary of Dayton Hudson. It was formed
on January 7, 1994, to streamline Dayton Hudson's credit operations by
eliminating inefficiencies associated with the different retail credit
regulations of the various states in which Dayton Hudson operates. RNB
issues and services the proprietary credit cards of the Dayton Hudson
Stores.
DAYTON HUDSON CAPITAL CORPORATION
DHCC, formerly known as the Dayton Hudson Investment Corporation,
was formed in Minnesota on September 27, 1994, for general business
purposes. DHCC is a wholly owned subsidiary of Dayton Hudson.
DAYTON HUDSON RECEIVABLES CORPORATION
DHRC is a wholly owned subsidiary of DHCC. Its executive offices
are located at 80 South Eighth Street, 14th Floor, Suite 1401, Minneapolis,
Minnesota 55402. It was formed in Minnesota on May 15, 1995 for the
purposes of:
o issuing certificates including the certificates offered by
this prospectus and each prospectus supplement,
o buying, holding and selling receivables, and
o engaging in other related activities.
DHCC and DHRC's board of directors do not intend to change these
business purposes.
RETAILERS NATIONAL BANK'S CREDIT CARD BUSINESS
CREDIT CARD BUSINESS
The Dayton Hudson Stores have offered proprietary credit to their
customers for over 80 years. Although Dayton Hudson Stores accept VISA,
MasterCard, Discover Card and American Express, RNB credit cards
represented approximately 15% of the total sales of Dayton Hudson Stores in
1999. Currently, the receivables conveyed to the trust are generated from
transactions made by consumers using RNB credit cards to purchase products
from Dayton Hudson Stores. These transactions primarily take place in the
Dayton Hudson Stores and on-line through websites established by the Dayton
Hudson Stores. Receivables may also be generated from transactions not
involving purchases from Dayton Hudson Stores. RNB may test and introduce
new credit card products from time to time. Credit cards issued by RNB in
the future may contain terms different from RNB's current credit cards.
RNB's current credit cards are listed in the table below showing their
composition in the receivables pool.
RETAILERS NATIONAL BANK COMPOSITION OF RECEIVABLES
CREDIT CARDS POOL
AS OF DECEMBER 31, 1999
- ------------------------------- ----------------------------------
Target 43%
The Department Stores 29%
Mervyn's 28%
RNB credit cards are offered under the brand name of the Dayton
Hudson Store through which the account was opened.
DHC GUEST CREDIT
RNB has contracted with the Guest Credit Operations of Dayton
Hudson Corporation to provide certain services to the RNB credit cards
including:
o marketing,
o underwriting,
o authorizations,
o guest service,
o collections, and
o systems support.
MARKETING PROGRAMS AND ACCOUNT ORIGINATION
In-Store Account Solicitation. The major vehicle used by RNB for
in-store account origination is "instant credit." Applicants provide a
limited amount of information, including name, address, and social security
number, which allows the credit underwriting department to access their
credit bureau report and to score their application. For identification
purposes, applicants must also present a valid picture identification and
major credit card. At the Target stores, store team members obtain this
information and enter it into a terminal located at the guest service desk.
In Mervyn's and the Department Stores, the same information is entered by
the store team member directly into the point-of-sale terminal.
New Accounts. Application information on all new accounts is
entered into a new account processing system. Each application is
source-coded to allow future tracking of activation rates, sales trends,
delinquencies and charge-offs for various new account sources and
promotional programs. Opening a new credit card account may entitle the
cardholder to discounts on purchases.
For approved applications, the account is automatically
established, a credit card is generated at RNB in Sioux Falls, South Dakota
and then mailed along with the terms of the account to the new cardholders.
For instant credit accounts, a temporary card is issued which can be used
immediately for purchases. RNB also takes applications on-line through the
Dayton Hudson Stores' websites.
Stimulation of Account Usage. Each of the Dayton Hudson Stores
operates various account loyalty and purchase frequency reward programs.
Target encourages cardholder usage by contributing an amount equal to 1% of
cardholder purchases to the cardholder's designated K-12 school. Account
usage is stimulated at Mervyn's and in the Department Stores by rewarding
cardholders with discounts on future purchases. Additional account loyalty
and reward programs may be used in the future.
In addition, as part of its retail marketing strategy, RNB, in
cooperation with the Dayton Hudson Stores, periodically offers various
deferred billing programs through the credit cards. Cardholders can
purchase merchandise in select departments without incurring finance
charges on those purchases for one or several months, except for a minimum
purchase requirement. Average deferred balances represented approximately
3% of total average customer accounts receivable in 1998. The Dayton Hudson
Stores currently pay RNB a deferred billing fee of 12% per annum of
deferred balances.
RNB'S UNDERWRITING PROCESSES AND AUTHORIZATIONS
Account Underwriting and Credit Guidelines. RNB develops or adopts
systems and specifications for underwriting and authorizations. It
contracts with DHC Guest Credit for services, including the implementation
of these systems and of the underwriting and authorization specifications.
RNB's underwriting process involves the purchase of credit bureau
information for each applicant. RNB obtains credit reports from one of
three credit bureaus:
o Experian, Inc.,
o Equifax Credit Information Services, Inc., or
o Trans Union Corp.,
based on the applicant's mailing address and the perceived strength of each
credit bureau service in that geographic region. The information obtained
is electronically fed into proprietary scoring models developed for RNB to
develop a credit score. RNB periodically analyzes performance trends of
accounts originated at different score levels as compared to projected
performance, and adjusts the minimum score or the opening limit to manage
risk.
Ongoing Credit Monitoring. To monitor and control the quality of
its portfolio of credit cards, RNB uses behavioral scoring models to score
each active account on its monthly cycle date. The behavioral scoring
models are used to dynamically evaluate whether or not credit limits should
be increased or decreased. RNB relies heavily on its behavioral scoring
models combined with credit bureau information as a predictor of future
loss probability.
Credit Authorization. Point-of-sale terminals in Dayton Hudson
Stores have an on-line connection with RNB's credit authorization system
and allow real-time updating of accounts. Every sales transaction is passed
through a proprietary authorization system which looks at a variety of
behavioral and risk factors to determine whether each transaction should be
approved "as is," with a credit limit increase, or with an over credit
limit allowance.
SERVICING OF ACCOUNTS
RNB performs at its offices in Sioux Falls the majority of full
application new account data entry, review of new account worklists, all
billing statement preparation and mailing, the production and mailing of
the credit cards, the mailed communication of adverse credit decisions, and
the mailing of collection letters. Credit card production is performed in a
secured environment, including a separately alarmed secure area and audit
procedures that are designed to maintain an accurate count of all cards
produced, stored, destroyed and mailed.
RNB sends monthly billing statements to cardholders. Statement
mailing is highly automated, utilizing pre-sorting, bar coding and an
on-site postal representative to increase efficiency. The billing
statements present the total amount due and show the allocation among
principal, current fees, current finance charges, and the minimum payment
due. Under the account agreement and as allowed by law, late fees and
returned check fees are also added to a cardholder's outstanding balance.
No issuance, annual, over credit limit, or transaction fees are charged to
any cardholders. The processing of cardholder remittances is serviced by
DHC Guest Credit in Minneapolis, Minnesota, using automated payment
processing equipment and systems.
Finance charges are calculated by multiplying the daily balance
during a billing period by the daily periodic rate and adding these daily
calculations together, subject to a minimum finance charge of 50 cents.
Finance charges are assessed from the date of purchase, although a grace
period of approximately 30 days is available to avoid the finance charge if
the account is paid in full by the due date.
The annual finance charge rate currently is a fixed rate which
ranges from 21.0% to 21.6% depending on the cardholder's state mailing
address. RNB may change finance charge rates at any time at its discretion,
subject to applicable law. Late payment fees of $20 are assessed each month
on accounts that are five or more days delinquent in payment.
The RNB accounts generally have a minimum payment of the greater
of $10 or 5% of the outstanding balance. Currently, most Target card
accounts have a minimum payment of the greater of $20 or 10% of the
outstanding balance.
DELINQUENCY AND COLLECTIONS PROCEDURES FOR RNB CREDIT CARDS
Efforts to collect delinquent receivables are made for RNB by the
DHC Guest Credit collection department and, if necessary, by collection
agencies and outside attorneys. The collection department consists of
approximately 600 full-time equivalents. New collectors undergo training
which includes courses in professional debt collection, collection laws and
regulations and negotiating skills. These courses are also available on a
"refresher" basis for experienced collectors.
An account is considered delinquent if the minimum payment due is
not received by the billing due date. At that time, the account is given a
status of one day delinquent. Under current policies, a message requesting
payment is printed on a cardholder's billing statement after a scheduled
payment has been missed. Soon after an account becomes delinquent, a
proprietary collection model automatically scores the risk of the account
and assigns a collection strategy to the account. The strategy dictates the
contact schedule and collections priority for the account.
DHC Guest Credit currently engages law firms in Minnesota,
Wisconsin, Michigan and Illinois to initiate legal action on accounts
meeting certain criteria. Between 1,200 and 1,300 accounts per month are
referred to various law firms in those states to assist in collection
efforts.
Accounts which become 180 days delinquent are charged off.
Accounts may be re-aged during delinquency, however, if the obligor
demonstrates a willingness and ability to repay by making at least three
consecutive minimum payments and other conditions are satisfied.
YEAR 2000 READINESS DISCLOSURE
Dayton Hudson began mitigating the risks associated with the year
2000 date conversion in 1993. In 1997, Dayton Hudson established a
corporate-wide, comprehensive plan of action that has, to date, achieved an
uninterrupted transition into the year 2000. This project included three
major elements: information technology (IT) systems; non-IT, or embedded
technology, systems; and relationships with our key business partners. The
project was divided into five phases: awareness, assessment, renovation,
validation and implementation. Dayton Hudson completed all phases for the
three elements of the project prior to January 1, 2000.
Dayton Hudson continues to test and monitor its IT systems and
non-IT systems for year 2000 date conversion and related issues. To date,
it has not experienced any material systems issues associated with the date
rollover, nor has it experienced any material problems relating to its
critical business partners. Dayton Hudson continues to monitor its systems
for such issues in order to address them promptly, should they arise.
Dayton Hudson's year 2000 transition plan included a number of
activities. For the IT systems, Dayton Hudson assessed both existing and
newly implemented hardware, application software and operating systems.
Dayton Hudson began addressing non-IT systems, or embedded
technology/infrastructure, risks at its stores, distribution centers and
headquarters facilities early in its initiative. In planning for the most
reasonably likely worst case scenarios, Dayton Hudson addressed all
three major elements in its project. Dayton Hudson plans to allocate
internal resources and retain dedicated consultants and vendor
representatives to take action, if necessary.
Dayton Hudson contacted its critical business partners, assessed
their year 2000 readiness and finalized the development of contingency
plans, as considered necessary. Although Dayton Hudson values its
established relationships with key vendors, substitute products for most of
the goods it sells in its stores may be obtained from other vendors.
However, the lead time involved in sourcing certain goods may result in
temporary shortages of relatively few items. Dayton Hudson also recognizes
the risks if other key suppliers in areas such as utilities,
communications, transportation, banking and government are not ready for
the year 2000, and has developed contingency plans to minimize the
potential adverse impacts of these risks.
RNB's systems are supported by Dayton Hudson. As a result, the
foregoing discussion of Dayton Hudson's year 2000 readiness applies to the
status of RNB's year 2000 readiness as well.
THE RECEIVABLES
The receivables in the trust include PRINCIPAL RECEIVABLES and
FINANCE CHARGE RECEIVABLES. These receivables are generated from eligible
accounts selected by RNB from the RNB portfolio to be conveyed to the
trust.
ADDITION OF ACCOUNTS
RNB has sold to DHCC, DHCC has sold to DHRC and DHRC has
transferred to the trust, all receivables existing in each initial account
on the CUT-OFF DATE. Each company has also agreed to sell or transfer
receivables existing in any AUTOMATIC ADDITIONAL ACCOUNT on the date of its
creation and receivables generated in the initial accounts and the
AUTOMATIC ADDITIONAL ACCOUNTS after these dates.
At any time after the AUTOMATIC ADDITION TERMINATION DATE or the
AUTOMATIC ADDITION SUSPENSION DATE and before the RESTART DATE, DHRC has
the right, and in some cases the obligation, to assign additional
qualifying consumer open end credit card accounts to the trust. All
receivables in these SUPPLEMENTAL ACCOUNTS are then conveyed to the trust,
whether these receivables already exist or are later created.
Under the Bank Receivables Purchase Agreement and the Receivables
Purchase Agreement, RNB has the obligation to sell receivables to DHCC and
DHCC has the obligation to sell receivables to DHRC to allow DHRC to
satisfy its obligations and to exercise its options under the POOLING
AGREEMENT. The accounts must meet eligibility requirements, as specified in
the POOLING AGREEMENT, as of the date DHRC designates that receivables in
those accounts will be included in the trust. According to the eligibility
requirements, RNB will represent and warrant to DHCC, DHCC will represent
and warrant to DHRC and DHRC will represent and warrant to the trust that:
o the account has not been, and does not have:
- any receivables that have been, sold, pledged or
assigned to any person except according to the
POOLING AGREEMENT,
- any receivables that are DEFAULTED RECEIVABLES, and
- any receivables identified as having been incurred
because of fraudulent use of any related credit
cards, and
o for any receivable existing under these accounts, the
receivable:
- has arisen under an eligible account,
- was created in compliance with the CREDIT CARD
GUIDELINES, and
- at the time of transfer to the trust is not under any
right of rescission, setoff, counterclaim or other
defense except for bankruptcy- and equity-related
defenses and adjustments permitted by the POOLING
AGREEMENT.
There can be no assurance that all the accounts will continue to
meet the applicable eligibility requirements throughout the life of the
trust. See "The Pooling and Servicing Agreement--Representations and
Warranties" for a detailed discussion.
It is possible that ADDITIONAL ACCOUNTS will not be accounts of
the same type previously included in the trust. There can be no assurance
that ADDITIONAL ACCOUNTS will be of the same credit quality as the initial
accounts. ADDITIONAL ACCOUNTS may contain receivables which consist of
fees, charges and amounts that are different from the fees, charges and
amounts described in this prospectus. ADDITIONAL ACCOUNTS may also have
different credit limits, balances and ages. As a result, there can be no
assurance that the accounts will continue to have the characteristics
described in this prospectus as ADDITIONAL ACCOUNTS are added. In addition,
the inclusion in the trust of ADDITIONAL ACCOUNTS with lower periodic
finance charges may have the effect of reducing the TRUST PORTFOLIO YIELD.
DHRC intends to file with the SEC, on behalf of the trust, a current report
on Form 8-K for any addition of SUPPLEMENTAL ACCOUNTs or removal of
accounts which would have a material effect on the composition of the
accounts. See "The Pooling and Servicing Agreement--Addition of Trust
Assets" and "--Removal of Accounts" for a description of the conditions to
addition and removal of accounts.
REMOVAL OF ACCOUNTS
DHRC may also designate accounts as REMOVED ACCOUNTS. The
receivables in the REMOVED ACCOUNTS will be removed from the trust and
reassigned to DHRC. Any account with any receivable that becomes a
DEFAULTED RECEIVABLE will become a REMOVED ACCOUNT. Throughout the term of
the trust, the trust portfolio will consist of the initial accounts plus
any ADDITIONAL ACCOUNTS minus any REMOVED ACCOUNTS and plus any
PARTICIPATION INTERESTS. See "The Pooling and Servicing Agreement--Removal
of Accounts" for a description of the conditions to any removal of
accounts.
ADDITIONAL INFORMATION IN THE PROSPECTUS SUPPLEMENT
The prospectus supplement for each series of certificates will
provide information about the trust portfolio. This information will
include:
o the total amount of receivables,
o the amount of PRINCIPAL RECEIVABLES,
o the amount of FINANCE CHARGE RECEIVABLES,
o the average receivable balance of the accounts,
o the composition of the trust portfolio by account balances,
o the composition of the trust portfolio by credit limits,
o the composition of the trust portfolio by delinquency
period,
o the composition of the trust portfolio by account age,
o the composition of the trust portfolio by geographic
distribution of accounts, and
o the delinquency and loss statistics relating to the
accounts.
MATURITY CONSIDERATIONS
Following the REVOLVING PERIOD, each series of certificates is
expected to begin to accumulate principal or begin to distribute principal
to certificateholders. The attached prospectus supplement describes the
conditions under which the ACCUMULATION PERIOD or an AMORTIZATION PERIOD
will begin for your class of certificates.
Principal will accumulate in a funding account if your series
features a CONTROLLED ACCUMULATION PERIOD or RAPID ACCUMULATION PERIOD and
one of these principal ACCUMULATION PERIODS begins. As described in the
attached prospectus supplement, during a CONTROLLED ACCUMULATION PERIOD on
each DISTRIBUTION DATE an amount of principal, up to the amount specified,
will be set aside in the funding account. If an EARLY AMORTIZATION EVENT or
a similar event described in the related prospectus supplement occurs and
your series features a RAPID ACCUMULATION PERIOD, the full amount of
principal available to your series will be deposited in a funding account,
up to the amount specified in the related prospectus supplement. This
accumulated principal will be paid to you on the EXPECTED FINAL PAYMENT
DATE for your class of certificates, or earlier if an AMORTIZATION PERIOD
begins before your first EXPECTED FINAL PAYMENT DATE. Note that although
your series may feature an ACCUMULATION PERIOD, your class of certificates
may not make use of it.
Principal will be paid to you in increments, up to the amount
specified in the attached prospectus supplement, if your class of
certificates features a CONTROLLED AMORTIZATION PERIOD and this period
begins. Your class of certificates might also begin to pay principal to you
if the attached prospectus supplement specifies that your class will begin
early amortization. Early amortization will begin, for all classes of your
series, when an EARLY AMORTIZATION EVENT occurs. Principal will be paid to
you only on a DISTRIBUTION DATE during any AMORTIZATION PERIOD.
The prospectus supplement provides the following information about
maturity:
o the date any ACCUMULATION PERIOD or AMORTIZATION PERIOD is
scheduled to begin,
o the principal amount of the payments expected or available
for each period,
o the priority of accumulations and payments among the
classes of each series,
o any EARLY AMORTIZATION EVENTS that may cause a RAPID
ACCUMULATION PERIOD or an EARLY AMORTIZATION PERIOD,
o historical data showing payments by cardholders and total
charge-offs, and
o other information about the RNB portfolio.
We can give you no assurance that principal will be available when
expected, either to accumulate or to pay you. Collection of principal may
or may not be constant from month to month or be similar to any historical
experience. Collections may be affected by seasonality, by changes in
payment habits of cardholders or by general economic conditions. A slowdown
in the payment rate may extend the expected life of your certificates if
principal is collected more slowly. This may affect your anticipated yield
to maturity. Also, the occurrence of any EARLY AMORTIZATION EVENT may
substantially shorten the average life of your certificates. You may find
it difficult to reinvest funds in an instrument with a comparable interest
rate if the certificates are paid sooner than anticipated.
DESCRIPTION OF THE CERTIFICATES
Following is a summary describing the material provisions common
to each series of certificates. If you are purchasing certificates, the
attached prospectus supplement describes any series-specific provisions
supplementing the information in this prospectus. Each series of
certificates will be issued through the POOLING AGREEMENT and a supplement
to that agreement. This prospectus and the attached prospectus supplement
do not contain all information about your certificates. For a detailed
description of the certificates, also read the POOLING AGREEMENT and the
SERIES SUPPLEMENT.
The certificates offered through this prospectus and the attached
prospectus supplement will be issued in "series" consisting of one or more
"classes," which may be senior to other classes. Each series of
certificates will represent an interest in the trust distinct from the
TRANSFEROR CERTIFICATE and any other series of certificates issued by the
trust. Each class of a series will evidence the right to receive a
specified portion of principal and finance charge collections on
receivables in the trust portfolio. Each class of a series may differ from
other classes in some aspects, including:
o maturity date,
o interest rate, and
o availability and amount of enhancement.
Payments will be made to certificateholders in whose names the certificates
were registered on the RECORD DATES specified in the attached prospectus
supplement.
For each series of certificates, the INVESTED AMOUNT on any date
generally will be equal to the initial INVESTED AMOUNT for that series
reduced by:
o the amount of principal paid to the related
certificateholders,
o the amount of unreimbursed INVESTOR CHARGE-OFFS and
reallocated principal collections for that series, and
o the amount of any reduction in the INVESTED AMOUNT because
of the purchase by DHRC and later cancellation of any
certificates.
The INVESTED AMOUNT may further be adjusted by:
o the amount of principal on deposit in any specified
account, and
o any other amount stated in the related prospectus
supplement.
Each series of certificates may consist of one or more classes,
one or more of which may be senior certificates and one or more of which
may be subordinated certificates. Each class of a series will have the
right to receive a specified portion of each distribution of principal or
interest or both. DHRC currently owns the TRANSFEROR CERTIFICATE. The
TRANSFEROR CERTIFICATE represents the undivided interest in the trust not
represented by the certificates or any PARTICIPATION or the rights of any
enhancement providers to receive payments from the trust. The holder of the
TRANSFEROR CERTIFICATE will have the right to a percentage of all
collections on the receivables in the trust.
Certificates offered through this prospectus and the attached
prospectus supplement will be:
o represented by certificates registered in the name of a DTC
nominee,
o available for purchase in minimum denominations and
integral multiples of $1,000, and
o available for purchase in book-entry form only.
The certificates in book-entry form, in which you will hold a beneficial
interest as described under "--Book-Entry Registration," are "global
securities." The attached prospectus supplement will specify if:
o your series of certificates, or one or more classes of your
series, may be issued in a different form, and
o your certificates have any other characteristics different
from those listed above.
The attached prospectus supplement may state that application will
be made to list your series or class of certificates on the Luxembourg
Stock Exchange or another exchange.
FORM OF YOUR CERTIFICATES
The following description of the form of your certificates
includes how they are transferred and how the trust makes payments to you.
One or more of the following clearing systems performs transactions in your
certificates:
o The Depository Trust Company or "DTC,"
o Cedelbank, societe anonyme or "CEDELBANK," and
o the system operated by Morgan Guaranty Trust Company of New
York's Brussels, Belgium office referred to as "EUROCLEAR."
DTC provided the information in this section concerning DTC and
its book-entry system. DHRC has not independently verified the accuracy of
this information.
DTC has informed DHRC that its nominee is Cede & Co. or "Cede."
Cede is expected to be the holder of record of each class of certificates
offered under this prospectus. This means that you, as an owner of
certificates, will only be entitled to a DEFINITIVE CERTIFICATE
representing your interest in the issued certificates under specified
circumstances. Instead, you will own certificates through a book-entry
record maintained by DTC. All references in this document to:
o distributions, reports, notices and statements will be made
to DTC or Cede, as the registered holder of the
certificates, for distribution to you following DTC
procedures, and
o actions by certificateholders refer to actions taken by DTC
upon instructions from DTC PARTICIPANTS.
You may hold your certificates through DTC in the U.S., CEDELBANK
or EUROCLEAR in Europe or in any other manner described in the attached
prospectus supplement. You may hold your certificates directly with one of
these systems if you are a participant in the system, or indirectly through
organizations which are participants. Descriptions of the clearing systems
follow.
DTC
DTC is:
o a limited-purpose trust company organized under the New
York Banking Law,
o a "banking organization" within the meaning of the New York
Banking Law,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and
o a "clearing agency" registered under the Securities
Exchange Act of 1934, as
amended.
DTC performs various services for its participating organizations, referred
to as DTC PARTICIPANTS. These services include:
o holding securities that DTC PARTICIPANTS deposit with it,
and
o providing a system where DTC PARTICIPANTS may clear and
settle securities transactions, including transfers and
pledges, in deposited securities through electronic
book-entry changes in their accounts, so there is no
physical movement of securities certificates.
DTC PARTICIPANTS:
o include securities brokers and dealers, banks, trust
companies, and clearing corporations, and
o may include other organizations, including the underwriters
of any series of certificates issued through this document.
A number of DTC PARTICIPANTS, the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. own DTC. Securities brokers and dealers, banks, trust
companies and other financial organizations that clear through or maintain
a custodial relationship with a DTC PARTICIPANT, either directly or
indirectly, have indirect access to the DTC system. The rules applicable to
DTC and its DTC PARTICIPANTS are on file with the SEC.
DTC management is aware that some computer applications and
systems used for processing data were written using two digits rather than
four to define the year, and so may not recognize a date using "00" as the
year 2000. This could result in the inability of these systems to properly
process transactions with dates in the year 2000 and beyond. DTC has
developed and is implementing a program to address this problem so that its
applications and systems continue to function properly as they relate to:
o the timely payment of principal and interest and other
distributions to securityholders,
o book-entry deliveries, and
o settlement of trades within DTC.
This program includes a technical assessment and a remediation plan, each
of which is complete. Additionally, DTC plans to implement a testing phase
of this program which is expected to be completed within appropriate time
frames.
In addition, DTC:
o is contacting and will continue to contact third-party
vendors that provide services to DTC to determine the
extent of their year 2000 compliance, and
o will develop contingency plans as it considers appropriate
to address failures in year 2000 compliance on the part of
third-party vendors.
However, there can be no assurance that the systems of third-party vendors
will be timely converted and will not adversely affect the proper
functioning of DTC's services.
CEDELBANK
CEDELBANK is incorporated under the laws of Luxembourg as a
professional depository and:
o holds securities for CEDELBANK CUSTOMERS,
o provides a system where CEDELBANK CUSTOMERS may clear and
settle securities transactions through electronic
book-entry changes in their accounts, so there is no
physical movement of securities certificates,
o settles transactions in any of 36 currencies, including
U.S. dollars,
o provides for CEDELBANK CUSTOMERS, among other services,
safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending
and borrowing, and
o deals with domestic securities markets in over 30 countries
through established depository and custodial relationships.
CEDELBANK has established an electronic bridge with Morgan Guaranty's
Brussels, Belgium office, acting as EUROCLEAR operator, to facilitate
settlement of trades between CEDELBANK and EUROCLEAR. CEDELBANK currently
accepts over 110,000 securities issues on its books. As a professional
depository, CEDELBANK is regulated by the Luxembourg Commission for the
Supervision of the Financial Sector, which supervises Luxembourg banks.
CEDELBANK CUSTOMERS:
o are recognized financial institutions around the world,
including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and other
organizations,
o may include the underwriters of any series of certificates
issued through this document, and
o in the U.S., are limited to securities brokers, dealers and
banks.
Currently, CEDELBANK has approximately 2,000 customers located in over 80
countries, including all major European countries, Canada and the United
States. Banks, brokers, dealers, trust companies and other organizations
that clear through or maintain a custodial relationship with a CEDELBANK
CUSTOMER, either directly or indirectly, have indirect access to CEDELBANK.
EUROCLEAR
The EUROCLEAR system was created in 1968:
o to hold securities of its participating organizations,
referred to as EUROCLEAR PARTICIPANTS, and
o to clear and settle transactions between EUROCLEAR
PARTICIPANTS through simultaneous electronic book-entry
delivery against payment, so there is:
- no need for physical movement of securities
certificates, and
- no risk from lack of simultaneous transfers of
securities and cash.
The EUROCLEAR system's various services include:
o settlement of transactions in any of 34 currencies,
including U.S. dollars, and
o securities lending and borrowing and interfaces with
domestic markets in several countries similar to the
arrangements for cross-market transfers with DTC.
The EUROCLEAR system is operated by Morgan Guaranty's Brussels, Belgium
office, acting as EUROCLEAR operator, under contract with the Euroclear
Clearance System, S.C., a Belgian cooperative corporation, which
establishes policy for the EUROCLEAR system on behalf of EUROCLEAR
PARTICIPANTS. EUROCLEAR PARTICIPANTS:
o include central banks and other banks, securities brokers
and dealers and other professional financial
intermediaries, and
o may include the underwriters of any series of certificates
offered through this document.
Other firms that clear through or maintain a custodial relationship with a
EUROCLEAR PARTICIPANT, either directly or indirectly, have indirect access
to the EUROCLEAR system.
The EUROCLEAR operator conducts all operations for EUROCLEAR, and
holds all EUROCLEAR securities clearance accounts and cash accounts. The
EUROCLEAR operator is the Belgian branch of a New York banking corporation
which is a member bank of the Federal Reserve System. It is regulated and
examined by the Board of Governors of the Federal Reserve System and the
New York State Banking Department, as well as the Belgian Banking
Commission.
The Terms and Conditions Governing Use of EUROCLEAR and the
related Operating Procedures of the EUROCLEAR system and applicable Belgian
law govern:
o securities clearance accounts and cash accounts with the
EUROCLEAR operator,
o transfers of securities and cash within the EUROCLEAR
system,
o withdrawal of securities and cash from the EUROCLEAR
system, and
o receipts of payments for securities in the EUROCLEAR
system.
The EUROCLEAR system holds all securities (1) on a fungible basis and (2)
without knowledge of the actual owners holding through EUROCLEAR
PARTICIPANTS and to whose accounts the securities are credited. The
EUROCLEAR operator acts under these terms and conditions only on behalf of
EUROCLEAR PARTICIPANTS and has no record of or relationship with persons
holding through EUROCLEAR PARTICIPANTS.
BOOK-ENTRY REGISTRATION
Cede, as DTC's nominee, holds the global securities. CEDELBANK
will hold omnibus positions on behalf of CEDELBANK CUSTOMERS, while
EUROCLEAR will do the same on behalf of EUROCLEAR PARTICIPANTS, through
customers' securities accounts in CEDELBANK'S and EUROCLEAR'S names on the
books of each of their depositaries. These depositaries will, in turn, hold
these positions in customers' securities accounts in the depositaries'
names on DTC's books.
Transfers between:
o DTC PARTICIPANTS occur under the DTC rules, and
o CEDELBANK CUSTOMERS and EUROCLEAR PARTICIPANTS occur in the
ordinary way under their applicable rules and operating
procedures.
Cross-market transfers occur through DTC, under its rules, on behalf of
CEDELBANK or EUROCLEAR by each of their depositaries, whether between
persons holding securities directly or indirectly:
o through DTC, on the one hand, and
o through CEDELBANK CUSTOMERS or EUROCLEAR PARTICIPANTS, on
the other hand.
However, these cross-market transactions will require delivery of
instructions to CEDELBANK or EUROCLEAR by the counterparty in its system
under either clearing system's rules and procedures, and within its
established European time deadlines. CEDELBANK or EUROCLEAR will, if the
transaction meets its settlement requirements, deliver instructions to its
depositary to take action to accomplish final settlement on its behalf by:
o delivering or receiving securities in DTC, and
o making or receiving payment under normal procedures for
same-day funds settlement applicable to DTC.
CEDELBANK CUSTOMERS and EUROCLEAR PARTICIPANTS may not deliver instructions
directly to the depositaries.
Because of time-zone differences, credits of securities in
CEDELBANK or EUROCLEAR due to a transaction with a DTC PARTICIPANT will be
made during the subsequent securities settlement processing, dated the
business day following the DTC settlement date. These credits or any other
transactions in the securities settled during that processing will be
reported to the relevant CEDELBANK CUSTOMERS or EUROCLEAR PARTICIPANTS on
that day. Cash received in CEDELBANK or EUROCLEAR because of sales of
securities by or through a CEDELBANK CUSTOMER or a EUROCLEAR PARTICIPANT:
o will be received with value on the DTC settlement date, and
o will only be available in the relevant CEDELBANK or
EUROCLEAR cash account only as of the business day
following settlement in DTC.
Your purchases of certificates under the DTC system must be made
by or through DTC PARTICIPANTS, which will receive a credit for the
certificates on DTC's records. Your ownership interest is, in turn,
recorded on the DTC PARTICIPANTS' and indirect participants' records. You
will not receive written confirmation from DTC of their purchase, but you
can expect to receive written confirmation providing details of the
transaction, as well as periodic statements of your holdings, from the DTC
PARTICIPANT or indirect participant through which you entered into the
transaction. Transfers of ownership interests in the certificates are
accomplished by entries made on the books of DTC PARTICIPANTS acting on
behalf of you and other certificateholders. You will not receive
certificates representing your ownership interest in the certificates
offered through this document, unless use of the book-entry system for
these certificates has ended.
DTC registers all certificates deposited with it by DTC
PARTICIPANTS in the name of its nominee, Cede, to make all later transfers
of certificates easier. The deposit of certificates with DTC and their
registration in the name of Cede will not change beneficial ownership of
the certificates. DTC has no knowledge of the actual owners of the
certificates; its records reflect only the identity of the DTC PARTICIPANTS
to whose accounts the certificates are credited, which may or may not be
the actual certificate owners. DTC PARTICIPANTS remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by:
o DTC to DTC PARTICIPANTS,
o DTC PARTICIPANTS to indirect participants, and
o DTC PARTICIPANTS and indirect participants to
certificateholders,
will be governed by arrangements among them, under any applicable statutory
or regulatory requirements.
Neither DTC nor Cede will consent or vote on these certificates.
Under its usual procedures, DTC mails an omnibus proxy to DHRC as soon as
possible after the record date. In this way, DTC assigns Cede's consenting
or voting rights to those DTC PARTICIPANTS to whose accounts these
certificates are credited on the relevant record date.
For each DISTRIBUTION DATE:
o the trustee makes principal and interest payments on the
certificates to DTC, and
o DTC credits each of those payments to DTC PARTICIPANTS'
accounts on that date according to each of the
participants' holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on
that date.
Payments by any DTC PARTICIPANT to certificateholders will be:
o governed by standing instructions and customary practices,
as is the case with securities held for the accounts of
customers in bearer form or registered in "street name,"
and
o the responsibility of that DTC PARTICIPANT and not of DTC,
the trustee or DHRC, under any applicable statutory or
regulatory requirements.
The responsibility for:
o payment of principal and interest to DTC belongs to the
trustee,
o disbursement of these payments to DTC PARTICIPANTS belongs
to DTC, and
o disbursement of these payments to certificateholders
belongs to DTC PARTICIPANTS and indirect participants.
DTC may stop providing its services as securities depository for
these certificates at any time by giving reasonable notice to DHRC or the
trustee. If this occurs and if a successor securities depository is not
obtained, DEFINITIVE CERTIFICATES will be printed and delivered. DHRC may
decide to end use of the system of book-entry transfers through DTC or a
successor securities depository. If so, DEFINITIVE CERTIFICATES will be
delivered to each certificateholder. See "--Definitive Certificates" for a
description of the circumstances under which the trust will issue
Definitive Certificates to you.
CEDELBANK or EUROCLEAR will credit distributions on certificates
held through it to the cash accounts of CEDELBANK CUSTOMERS or EUROCLEAR
PARTICIPANTS under its rules and procedures, to the extent received by its
depositary. These distributions will require tax reporting under relevant
U.S. tax laws and regulations as described under "Tax Matters." CEDELBANK
or the EUROCLEAR operator will take any other action permitted to be taken
by a certificateholder under the POOLING AGREEMENT on behalf of a CEDELBANK
CUSTOMER or EUROCLEAR PARTICIPANT:
o only under its relevant rules and procedures, and
o to the extent its depositary can carry out those actions on
its behalf through DTC.
Although DTC, CEDELBANK and EUROCLEAR have agreed to the
procedures above to provide a system that makes transfers of certificates
among their participants or customers easier:
o they are under no obligation to perform or continue to
perform these procedures, and
o they may stop these procedures at any time.
DEFINITIVE CERTIFICATES
The certificates offered through this prospectus will be initially
issued in book-entry form. DEFINITIVE CERTIFICATES in fully registered,
certificated form will not be issued to any party except DTC or its nominee
unless:
o DHRC advises the trustee in writing:
- that DTC is no longer willing or able to discharge
properly its responsibilities as depository for this
series of certificates, and the trustee or DHRC is
unable to locate a qualified successor,
- that it chooses to end the book-entry system through
DTC, or
o after a SERVICER DEFAULT occurs:
- certificateholders representing (1) not less than 50%
or (2) another percentage specified in the attached
prospectus supplement of the total unpaid principal
amount of the certificates advise the trustee and DTC
through DTC PARTICIPANTS in writing that the
continuation of a book-entry system through DTC or
its successor is no longer in the best interests of
the certificateholders.
If any of these events occurs, DTC must notify all DTC
PARTICIPANTS of the availability through DTC of DEFINITIVE CERTIFICATES.
Once DTC gives the definitive certificate representing these certificates
and instructions for re-registration to the trustee:
o the trustee will issue the certificates as DEFINITIVE
CERTIFICATES, and
o afterwards, the trustee will recognize the holders of these
DEFINITIVE CERTIFICATES as holders under the POOLING
AGREEMENT.
The trustee then makes payments:
o directly to holders of DEFINITIVE CERTIFICATES under the
procedures provided in this prospectus and in the POOLING
AGREEMENT, and
o on each DISTRIBUTION DATE, to holders in whose names the
DEFINITIVE CERTIFICATES were registered at the close of
business on the related RECORD DATE.
If you own DEFINITIVE CERTIFICATES, payments will be made by check
and mailed to you at an address maintained by the trustee.
The final payment will be made only when a certificate is
presented and surrendered at the office or agency specified in the notice
of final distribution to certificateholders, whether it is:
o a DEFINITIVE CERTIFICATE, or
o a certificate registered in the name of DTC or its nominee.
The trustee will provide this notice to registered certificateholders no
later than the fifth day of the month in which the final distribution will
occur.
DEFINITIVE CERTIFICATES will be transferable and exchangeable at
the office of the transfer agent and registrar, which shall initially be
the trustee. The transfer agent and registrar will impose no service charge
but may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection with the transfer or exchange.
The transfer agent and registrar shall not be required to register the
transfer or exchange of DEFINITIVE CERTIFICATES for a period of fifteen
days preceding the due date for any payment on the DEFINITIVE CERTIFICATES.
INITIAL SETTLEMENT
Each class of certificates offered under this prospectus and the
attached prospectus supplement will be held in book-entry form by DTC in
the name of its nominee, Cede. Investors' interests in the certificates
will be represented through financial institutions acting on their behalf
as direct and indirect participants in DTC. As a result, CEDELBANK and
EUROCLEAR will hold positions on behalf of their customers or participants
through their respective depositaries, which will hold positions in
accounts as DTC PARTICIPANTS.
Custody accounts of investors who elect to hold certificates
through DTC will be credited with their holdings against payment in
same-day funds on the settlement date.
Investors who elect to hold certificates through CEDELBANK or
EUROCLEAR accounts will follow the settlement procedures that apply to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Certificates will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
SECONDARY MARKET TRADING
Trading between DTC Participants. Secondary market trading between
investors holding certificates through DTC will be conducted according to
the rules and procedures for U.S. corporate debt obligations. Secondary
market trading between DTC PARTICIPANTS will be settled in same-day funds.
Trading between Cedelbank Customers and/or Euroclear Participants.
Secondary market trading between investors holding certificates through
CEDELBANK and EUROCLEAR will be conducted in the ordinary way under:
o their normal rules and operating procedures, and
o conventional eurobond practice (which means a seven
calendar day settlement).
Secondary market trading between CEDELBANK CUSTOMERS or EUROCLEAR
PARTICIPANTS will be settled using the procedures for conventional
eurobonds in same-day funds.
Trading between DTC seller and Cedelbank or Euroclear purchaser.
Transfers of certificates from the account of a DTC PARTICIPANT to the
account of a CEDELBANK CUSTOMER or a EUROCLEAR PARTICIPANT usually occur as
follows:
o the purchaser sends instructions to CEDELBANK or EUROCLEAR
through that customer or participant at least one business
day before settlement,
o CEDELBANK or EUROCLEAR instructs its depositary to receive
the securities against payment, which includes interest
accrued on the securities from and including the last
coupon payment date to and excluding the settlement date,
o that depositary credits payments to the DTC PARTICIPANT'S
account against delivery of the securities, and
o after settlement has been completed, the depositary credits
securities to the relevant clearing system, which, in turn,
under its usual procedures, credits those securities to
that customer's or participant's account.
The securities credit will appear the next day, European time, and the cash
debit will be back-valued to, and the interest on the securities will
accrue from, the value date--which would be the preceding day when
settlement occurred in New York. If settlement is not completed on the
intended value date, which means the trade fails, the CEDELBANK or
EUROCLEAR cash debit will be valued instead as of the actual settlement
date.
CEDELBANK CUSTOMERS or EUROCLEAR PARTICIPANTS will need to make
available to each of their clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing
lines of credit, as they would for any settlement occurring within
CEDELBANK or EUROCLEAR. Under this approach, they may take on credit
exposure to CEDELBANK or EUROCLEAR until the securities are credited to
their accounts one day later.
As an alternative, if CEDELBANK or EUROCLEAR has extended a line
of credit to them, CEDELBANK CUSTOMERS or EUROCLEAR PARTICIPANTS can elect
not to pre-position funds and allow that credit line to be drawn upon to
finance settlement. Under this procedure, CEDELBANK CUSTOMERS or EUROCLEAR
PARTICIPANTS purchasing securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the securities were credited
to their accounts. However, interest on the securities would accrue from
the value date. So, the investment income on the securities earned during
that one-day period may substantially reduce or offset the amount of the
overdraft charges, although this result will depend on each CEDELBANK
CUSTOMER'S or EUROCLEAR PARTICIPANT'S particular cost of funds.
Since the settlement is taking place during New York business
hours, DTC PARTICIPANTS can use their usual procedures for sending
securities to their depositaries for the benefit of CEDELBANK CUSTOMERS or
EUROCLEAR PARTICIPANTS. The sale proceeds will be available to the DTC
seller on the settlement date. In this way, to the DTC PARTICIPANT a
cross-market transaction will settle no differently than a trade between
two DTC PARTICIPANTS.
Trading between Cedelbank or Euroclear seller and DTC purchaser.
Due to time zone differences in their favor, CEDELBANK CUSTOMERS and
EUROCLEAR PARTICIPANTS may use their customary procedures for transfers of
securities by a clearing system, through its depositary, to a DTC
Participant. Trading usually occurs as follows:
o the seller sends instructions to CEDELBANK or EUROCLEAR
through a CEDELBANK CUSTOMER or EUROCLEAR PARTICIPANT at
least one business day before settlement,
o CEDELBANK or EUROCLEAR instructs its depositary to deliver
the bonds to the DTC PARTICIPANT'S account against payment,
which includes interest accrued on the securities from and
including the last coupon payment date to and excluding the
settlement date, and
o the payment is reflected in the account of that customer or
participant the next day, and receipt of the cash proceeds
in that customer's or participant's account is back-valued
to the value date--the preceding day when settlement
occurred in New York.
Should the CEDELBANK CUSTOMER or EUROCLEAR PARTICIPANT have a line of
credit with its clearing system and elect to be in debit in anticipation of
receipt of the sale proceeds in its account, the back-valuation will cancel
out any overdraft charges incurred over that one-day period. If settlement
is not completed on the intended value date, which means the trade fails,
receipt of the cash proceeds in the CEDELBANK CUSTOMER'S or EUROCLEAR
PARTICIPANT'S account would instead be valued as of the actual settlement
date. Finally, day traders that use CEDELBANK or EUROCLEAR and that
purchase securities from DTC PARTICIPANTS for delivery to CEDELBANK
CUSTOMERS or EUROCLEAR PARTICIPANTS should note that these trades would
automatically fail on the sale side unless affirmative action were taken.
At least three techniques should be readily available to eliminate this
potential problem:
o borrowing through CEDELBANK or EUROCLEAR for one day--until
the purchase side of the day trade is reflected in their
CEDELBANK or EUROCLEAR accounts--under the clearing
system's customary procedure,
o borrowing the securities in the U.S. from a DTC PARTICIPANT
no later than one day before settlement which would give
the securities sufficient time to be reflected in their
CEDELBANK or EUROCLEAR account to settle the sale side of
the trade, or
o staggering the value dates for the buy and sell sides of
the trade so that the value date for the purchase from the
DTC PARTICIPANT is at least one day before the value date
for the sale to the CEDELBANK CUSTOMER or EUROCLEAR
PARTICIPANT.
INVESTOR PERCENTAGE
The assets of the trust are allocated among:
o certificateholders of each series,
o providers of uncertificated enhancement backed by
receivables,
o the holders of PARTICIPATIONS, and
o the holder of the TRANSFEROR CERTIFICATE.
Each series issued by the trust is backed by an amount of
PRINCIPAL RECEIVABLES and amounts on deposit in various trust bank
accounts. The attached prospectus supplement may describe how your series'
INVESTED AMOUNT will be adjusted by the amount of funds deposited in a bank
account or accounts or in any other way. The INVESTED AMOUNT can vary from
period to period, and on any date is generally equal to:
(initial INVESTED AMOUNT on the series' CLOSING DATE) - (total
principal payments made to the series' certificateholders) -
(total unreimbursed charge-offs and reallocated principal
collections for the series) - (the amount of any DHRC purchase and
subsequent cancellation of any certificates)
Any COLLATERAL INVESTED AMOUNT in a series will also be included
in that series' INVESTED AMOUNT. If your series includes a COLLATERAL
INVESTED AMOUNT, a description will be included in the attached prospectus
supplement. During each series' REVOLVING PERIOD, the INVESTED AMOUNT is
expected to remain constant to the extent noted in the attached prospectus
supplement unless certificates are purchased by DHRC.
The total INVESTED AMOUNT in the trust is the sum of the INVESTED
AMOUNTS for all series issued from the trust.
The certificates of each series represent undivided interests in
the assets of the trust, including the right to each series' INVESTOR
PERCENTAGE of all cardholder payments on receivables in the trust.
Certificateholders of each series will receive varying amounts of
collections of principal and finance charges each month, and will also be
allocated a varying portion of receivables in defaulted accounts written
off during each month. Principal collections, finance charge collections
and receivables in defaulted accounts may be allocated to your series in
different ways: the attached prospectus supplement will describe how the
various INVESTOR PERCENTAGES are calculated. If your series includes
multiple classes of certificates, collections allocated to your series may
be further allocated among each class.
As a certificateholder, your right to collections is limited to
the amounts needed to make required payments to you. Collections allocated
to your series or your class of certificates might be reallocated. The
attached prospectus supplement and the POOLING AGREEMENT explain how
collections will be allocated to, or reallocated from, your certificates.
Each series of certificates may be included in a group of series.
Series in a group may share excess principal collections, finance charge
collections or both among themselves. The attached prospectus supplement
will state if your series is in a group and, if it is, what other series in
your group were outstanding on your series' CLOSING DATE. In addition, the
attached prospectus supplement will state if classes of your series are
entitled to SHARED TRANSFEROR PRINCIPAL COLLECTIONS and EXCESS TRANSFEROR
FINANCE CHARGE COLLECTIONS.
Each series of certificates represents interests in the trust
only, and does not represent interests in or recourse obligations of RNB,
DHCC or DHRC or any of their affiliates. A certificate is not a deposit and
neither the certificates nor the underlying trust accounts or receivables
are insured or guaranteed by the FDIC or any other governmental agency.
INTEREST
Interest will accrue from the CLOSING DATE on the related
certificate principal balance, or other amount specified in the related
prospectus supplement, at the CERTIFICATE RATE. The CERTIFICATE RATE may be
a fixed, floating or variable rate as specified in the related prospectus
supplement. Interest will be distributed to certificateholders on the
DISTRIBUTION DATES specified in the related prospectus supplement.
Interest payments on any DISTRIBUTION DATE will most likely be
funded from collections of FINANCE CHARGE RECEIVABLES allocated to the
certificateholders' interest during the previous MONTHLY PERIOD. Interest
payments on any DISTRIBUTION DATE may also be funded from:
o investment earnings on funds held in accounts of the trust,
o collections of FINANCE CHARGE RECEIVABLES allocated
initially to certificateholders of other series or DHRC as
holder of the TRANSFEROR CERTIFICATE,
o any applicable enhancement, if necessary, or
o other amounts as specified in the related prospectus
supplement.
If the DISTRIBUTION DATES for payment of interest for a series or
class occur less frequently than monthly, any collections or other amounts
may be deposited in one or more trust accounts for distribution to the
certificateholders of that series or class. Each class may have a separate
INTEREST FUNDING ACCOUNT if a series has more than one class of
certificates.
The prospectus supplement relating to each series of certificates
and each class will describe:
o the amounts and sources of interest payments to be made,
o the CERTIFICATE RATE, and
o for a series or class bearing interest at a floating or a
variable CERTIFICATE RATE:
- the dates and the manner for determining the
CERTIFICATE RATES, and
- the formula, index or other method by which the
CERTIFICATE RATES are determined.
PRINCIPAL
No principal payments will be made to the certificateholders of a
series during the REVOLVING PERIOD, except to the extent specified in the
related prospectus supplement. Principal will be paid to the
certificateholders in the amounts and on the DISTRIBUTION DATES specified
in the related prospectus supplement or will be accumulated in a PRINCIPAL
FUNDING ACCOUNT for later distribution to certificateholders on the
EXPECTED FINAL PAYMENT DATE during:
o the CONTROLLED AMORTIZATION PERIOD,
o the PRINCIPAL AMORTIZATION PERIOD,
o the ACCUMULATION PERIOD,
o the EARLY AMORTIZATION PERIOD, or
o the RAPID ACCUMULATION PERIOD.
Principal payments for any series or class will be funded from
collections of PRINCIPAL RECEIVABLES received during the related MONTHLY
PERIOD or periods allocated to that series or shared from other series or
from DHRC as holder of the TRANSFEROR CERTIFICATE and from other sources as
specified in the related prospectus supplement. These payments will be
allocated to the certificateholders' interest of the related series or
class. If a series has more than one class of certificates, the
certificateholders of one or more classes may receive payments of principal
at different times. The related prospectus supplement will describe the
manner, timing and priority of payments of principal to certificateholders
of each class.
Funds on deposit in any PRINCIPAL FUNDING ACCOUNT for any series
may have a guaranteed rate or investment agreement or other arrangement.
This is intended to assure a specified rate of return on the investment of
the funds. A principal guaranty or other similar arrangement may be used to
enhance the likelihood of the payment in full of the principal amount of a
series of certificates or class at the end of the ACCUMULATION PERIOD.
DISCOUNT OPTION
Under the POOLING AGREEMENT, DHRC may assign a specified fixed or
floating percentage of the amount of PRINCIPAL RECEIVABLES from the
accounts to be treated as FINANCE CHARGE RECEIVABLES. The circumstances
under which DHRC may exercise its option to discount PRINCIPAL RECEIVABLES
may include a time when the TRUST PORTFOLIO YIELD is declining and
PRINCIPAL RECEIVABLES are available in sufficient quantity to allow for
discounting. DHRC may increase, reduce or eliminate the DISCOUNT PERCENTAGE
for DISCOUNT OPTION RECEIVABLES from the accounts on and after the date of
the change, without notice to or consent of the certificateholders.
DHRC must give 30 days' notice in writing to the servicer, the
trustee and each rating agency of any increase, reduction or elimination of
the DISCOUNT PERCENTAGE. The increase, reduction or elimination will become
effective on the date specified in the notice after DHRC delivers to the
trustee a certificate of an authorized officer stating that the increase,
reduction or elimination will not cause an EARLY AMORTIZATION EVENT or an
event which with notice or the lapse of time would cause an EARLY
AMORTIZATION EVENT to occur. DHRC, the servicer and the trustee must also
receive written notice from each rating agency that an increase of the
DISCOUNT PERCENTAGE will not have a RATINGS EFFECT if this increase would
cause the DISCOUNT PERCENTAGE to exceed 3%.
Collections on the date of processing during the time the DISCOUNT
OPTION is in effect will be considered collections of FINANCE CHARGE
RECEIVABLES in an amount equal to the product of:
o a fraction whose numerator is the amount of DISCOUNT OPTION
RECEIVABLES and whose denominator is the amount of all
PRINCIPAL RECEIVABLES, including DISCOUNT OPTION
RECEIVABLES, at the end of the previous MONTHLY PERIOD, and
o collections of PRINCIPAL RECEIVABLES, before any reduction
for FINANCE CHARGE RECEIVABLES which are DISCOUNT OPTION
RECEIVABLES.
Any designation of DISCOUNT OPTION RECEIVABLES would result in an
increase in the amount of FINANCE CHARGE RECEIVABLES and a corresponding
increase in the PORTFOLIO YIELD for each series and a reduction in the
amount of PRINCIPAL RECEIVABLES and a lower payment rate of collections
from PRINCIPAL RECEIVABLES. For this reason, the effect on
certificateholders will be to:
o decrease the likelihood of an EARLY AMORTIZATION EVENT
based on a reduction of the average PORTFOLIO YIELD for any
designated period to a rate below the average BASE RATE,
o increase the likelihood that the transferor will be
required to add PRINCIPAL RECEIVABLES to the trust, and
o increase the likelihood of an EARLY AMORTIZATION EVENT if
additional PRINCIPAL RECEIVABLES were not available to
balance the reduction in the total amount of PRINCIPAL
RECEIVABLES.
THE TRANSFEROR CERTIFICATE
The certificate evidencing the TRANSFEROR'S INTEREST in the trust
is referred to as the TRANSFEROR CERTIFICATE. The POOLING AGREEMENT
provides that the transferor may exchange a portion of the TRANSFEROR
CERTIFICATE for one or more SUPPLEMENTAL CERTIFICATES representing an
interest in the TRANSFEROR'S INTEREST for transfer or assignment to a
person named by the transferor after the execution and delivery of a
supplement to the POOLING AGREEMENT, only if:
o the transfer will not result in a RATINGS EFFECT,
o the TRANSFEROR AMOUNT, excluding the interest represented
by any SUPPLEMENTAL CERTIFICATE, will not be less than the
REQUIRED RETAINED TRANSFEROR AMOUNT as of the date of the
exchange, and
o the transferor delivers to the trustee and each rating
agency a tax opinion.
Any subsequent transfer or assignment of a SUPPLEMENTAL
CERTIFICATE will require a tax opinion and cannot result in a RATINGS
EFFECT.
NEW ISSUANCES
The POOLING AGREEMENT allows the transferor to direct the trustee
to issue a new series. Each new issuance will have the effect of decreasing
the TRANSFEROR AMOUNT by the INVESTED AMOUNT.
The transferor, the servicer, the trustee and the trust are not
required to and do not intend to obtain the consent of, or allow prior
review by, any certificateholder of any outstanding series to issue any
additional series. The transferor may offer any series to the public under
a prospectus or other disclosure document in transactions either registered
under the Securities Act of 1933, as amended, or exempt from registration.
Each new series may be offered:
o directly, through one or more underwriters or placement
agents,
o in fixed-price offerings, or
o in negotiated transactions or otherwise.
Any new series may be issued in fully registered or book-entry
form in minimum denominations determined by the transferor.
Under the POOLING AGREEMENT, the transferor may designate
principal terms so that each series has an ACCUMULATION PERIOD, a
CONTROLLED AMORTIZATION PERIOD, or a PRINCIPAL AMORTIZATION PERIOD. In
addition, one or more series may be in their ACCUMULATION PERIOD,
CONTROLLED AMORTIZATION PERIOD or PRINCIPAL AMORTIZATION PERIOD while other
series are not.
The related prospectus supplement specifies if collections of
PRINCIPAL RECEIVABLES otherwise available to a series that is not
amortizing or accumulating principal may be treated as SHARED PRINCIPAL
COLLECTIONS and reallocated to a series that is amortizing or accumulating
principal. In addition, collections of PRINCIPAL RECEIVABLES and FINANCE
CHARGE RECEIVABLES otherwise payable to the transferor may be designated to
be paid to the certificateholders of the applicable series. Each series may
have the benefits of enhancement issued by enhancement providers different
from the enhancement providers used in any other series. Under the POOLING
AGREEMENT, the trustee will hold the enhancement only on behalf of the
certificateholders of the series to which the enhancement is given. For
each enhancement, the transferor may deliver a different form of
enhancement agreement.
The transferor also has the option under the POOLING AGREEMENT to
vary among series the terms on which a series may be repurchased by the
transferor or remarketed to other investors. There is no limit to the
number of new issuances the transferor may issue under the POOLING
AGREEMENT. The trust will end only as described in the POOLING AGREEMENT.
There can be no assurance that the terms of any series might not have an
impact on the timing and amount of payments received by a certificateholder
of another series.
A new issuance may only be issued after the satisfaction of the
conditions given in the POOLING AGREEMENT and under the related SERIES
SUPPLEMENT. The obligation of the trustee to authenticate the certificates
of each new series and to execute and deliver the related SERIES SUPPLEMENT
must satisfy the following conditions:
o the transferor gives the trustee, the servicer and each
rating agency written notice of the new issuance and its
date of issuance, at least five business days before the
date of the new issuance,
o the transferor delivers to the trustee the related SERIES
SUPPLEMENT, in a form satisfactory to the trustee, executed
by each party to the POOLING AGREEMENT except the trustee,
o the transferor delivers to the trustee the related
enhancement agreement, if any, executed by each party to
that agreement,
o the transferor, the servicer, and the trustee receive
confirmation from each rating agency that the new issuance
will not result in a RATINGS EFFECT,
o the transferor delivers to the trustee and enhancement
providers, if any, a certificate of an authorized officer,
dated the date of the new issuance, stating that the
transferor reasonably believes that the issuance will not,
based on the facts known to the officer at the time of the
certification, cause an EARLY AMORTIZATION EVENT to occur
for any series,
o the transferor delivers to the trustee and each rating
agency an opinion of counsel acceptable to the trustee that
for federal income tax purposes:
- following the new issuance the trust will not be
considered to be an association, or publicly traded
partnership, taxable as a corporation,
- the new issuance will not adversely affect the tax
classification as debt of certificates of any
outstanding series or class that were properly
classified as debt at the time of their issuance, and
- the new issuance will not cause or become an event in
which gain or loss would be recognized by holders of
certificates classified as debt at the time of their
issuance,
o the TRANSFEROR AMOUNT, excluding the interest represented
by any SUPPLEMENTAL CERTIFICATE, will not be less than the
REQUIRED RETAINED TRANSFEROR AMOUNT on the date of the new
issuance, and
o any other conditions specified in any SERIES SUPPLEMENT.
After satisfying these conditions, the trustee will execute the
SERIES SUPPLEMENT and issue to the transferor the certificates of the new
series for execution and redelivery to the trustee for authentication.
The POOLING AGREEMENT provides that, under any one or more
supplements to the POOLING AGREEMENT, the transferor may require the
trustee to issue on behalf of the trust one or more PARTICIPATIONS, to be
delivered to or at the order of the transferor, but only if:
o the issuance will not result in a RATINGS EFFECT,
o the TRANSFEROR AMOUNT, excluding the interest represented
by any SUPPLEMENTAL CERTIFICATE, will not be less than the
REQUIRED RETAINED TRANSFEROR AMOUNT, and
o the transferor delivers to the trustee and each rating
agency a tax opinion, dated the date of the issuance.
Any PARTICIPATION may be transferred or exchanged upon the
satisfaction of the first and third bullet points above. Each PARTICIPATION
will entitle its holder to a specified PARTICIPATION PERCENTAGE of all
collections of PRINCIPAL RECEIVABLES and FINANCE CHARGE RECEIVABLES and any
other trust assets to the extent specified in the PARTICIPATION SUPPLEMENT.
The trust has issued a PARTICIPATION to RNB.
COLLECTION ACCOUNT
The servicer has established and will maintain in the name of the
trust and for the benefit of the certificateholders of each series, an
ELIGIBLE DEPOSIT ACCOUNT called the COLLECTION ACCOUNT. An ELIGIBLE DEPOSIT
ACCOUNT is either:
o a segregated account with an ELIGIBLE INSTITUTION, or
o a segregated trust account with the corporate trust
department of a depository institution or any domestic
branch of a foreign bank having securities rated as
investment grade from each rating agency.
An ELIGIBLE INSTITUTION means:
o a United States depository institution which at all times:
- has a rating by Moody's of either a long-term
unsecured debt rating of "A2" or better or a
certificate of deposit rating of "P-1",
- has a rating by Standard & Poor's of either a
long-term unsecured debt rating of "AAA" or a
certificate of deposit rating of "A-1+", and
- is a member of the FDIC, or
o any other institution that is acceptable to each rating
agency.
The COLLECTION ACCOUNT will initially be maintained with the
trustee. If at any time the COLLECTION ACCOUNT cannot be maintained as an
ELIGIBLE DEPOSIT ACCOUNT, the COLLECTION ACCOUNT will be moved so that it
will again be qualified as an ELIGIBLE DEPOSIT ACCOUNT. Funds in the
COLLECTION ACCOUNT will be invested in the following ELIGIBLE INVESTMENTS:
o obligations fully guaranteed by the United States,
o demand deposits, time deposits or certificates of deposit
of depository institutions or trust companies having at the
time of investment the highest short term debt rating from
Moody's and Standard & Poor's,
o commercial paper, or other short-term obligations, having,
at the time of the trust's investment, a rating in the
highest rating category from Moody's and Standard & Poor's,
o demand deposits, time deposits and certificates of deposit
which are fully insured by the FDIC,
o notes or bankers' acceptances issued by any depository
institution or trust company having the highest rating from
Moody's and Standard & Poor's,
o time deposits with an entity having the highest rating from
Moody's and Standard & Poor's, and
o any other investments approved in writing by each rating
agency which would not cause the trust to become an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Any earnings, net of losses and investment expenses, on funds in
the COLLECTION ACCOUNT will be treated as collections of FINANCE CHARGE
RECEIVABLES on the last day of the MONTHLY PERIOD. The servicer has the
revocable power to withdraw funds from the COLLECTION ACCOUNT and to
instruct the trustee to make withdrawals and payments from the COLLECTION
ACCOUNT for the purpose of carrying out its duties under the POOLING
AGREEMENT and the SERIES SUPPLEMENTS. Under the POOLING AGREEMENT, a paying
agent will be appointed having the revocable power to withdraw funds from
the COLLECTION ACCOUNT to make distributions to the certificateholders. The
paying agent will initially be the trustee.
DEPOSITS IN COLLECTION ACCOUNT
The servicer will generally deposit all collections received from
the receivables in each MONTHLY PERIOD into the COLLECTION ACCOUNT not
later than two business days after the date of processing unless the
conditions described below are satisfied. The servicer will make the
deposits and payments to the accounts and parties described in the related
prospectus supplement on the date of the deposit. RNB, as servicer, may use
for its own benefit all collections received from the receivables in each
MONTHLY PERIOD until the business day preceding the related DISTRIBUTION
DATE if RNB:
o gives the trustee a letter of credit covering collection
risk of the servicer acceptable to each rating agency, or
o Dayton Hudson has and maintains a commercial paper rating
of at least "A-1" by Standard & Poor's and at least "P-1"
by Moody's.
RNB currently has not given a letter of credit and Dayton Hudson
does not currently maintain the required rating for use of the collections.
The transferor may not have a perfected security interest in the
collections held by RNB if RNB goes into insolvency or receivership or with
the lapse of time periods. The servicer will only be required to deposit
collections into the COLLECTION ACCOUNT up to the total 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 enhancement under the terms of any SERIES SUPPLEMENT. If at any time
before the DISTRIBUTION DATE or payment date the amount of collections
deposited in the COLLECTION ACCOUNT exceeds the amount required to be so
deposited the servicer will be permitted to withdraw the excess from the
COLLECTION ACCOUNT.
SHARING OF EXCESS FINANCE CHARGE COLLECTIONS AND EXCESS TRANSFEROR
FINANCE CHARGE COLLECTIONS
The related prospectus supplement specifies if the
certificateholders of a series or any class may be entitled to receive all
or a portion of EXCESS FINANCE CHARGE COLLECTIONS of another series
included in the same group of series to cover any shortfalls on amounts
payable from collections of FINANCE CHARGE RECEIVABLES allocable to that
series or class. EXCESS FINANCE CHARGE COLLECTIONS for any MONTHLY PERIOD
will equal the excess of collections of FINANCE CHARGE RECEIVABLES and
other amounts allocated to the certificateholders' interest of a series or
class over the sum of:
o interest accrued for the current month and overdue Monthly
Interest on the certificates,
o accrued and unpaid monthly servicing fees,
o the INVESTOR DEFAULTED AMOUNT,
o unreimbursed INVESTOR CHARGE-OFFS, and
o other amounts specified in the related prospectus
supplement.
EXCESS FINANCE CHARGE COLLECTIONS will be applied to cover any
shortfalls to amounts payable from collections of FINANCE CHARGE
RECEIVABLES allocable to any other series in the same group. EXCESS FINANCE
CHARGE COLLECTIONS will be distributed evenly to each series based on the
amount of the shortfall, if any, to each other series in that group. While
any series offered may be included in a group, there can be no assurance
that any other series will be included in that group or that there will be
any EXCESS FINANCE CHARGE COLLECTIONS available to that group for any
MONTHLY PERIOD.
The servicer allocates to the transferor collections of FINANCE
CHARGE RECEIVABLES allocable to the TRANSFEROR'S INTEREST exceeding the
amounts necessary to make required payments to any SUPPLEMENTAL
CERTIFICATES. All other amounts otherwise payable to the transferor from
collections of FINANCE CHARGE RECEIVABLES will be applied to cover any
shortfalls, after the servicer applies EXCESS FINANCE CHARGE COLLECTIONS,
in amounts payable from collections of FINANCE CHARGE RECEIVABLES allocable
to each series. The EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS will be
applied to cover any shortfalls regardless of whether the collections were
initially allocated to DHRC, as the transferor, or to any series. These
collections will be distributed evenly based upon the amount of the
remaining shortfall to each other series designated in the applicable
SERIES SUPPLEMENT as being entitled to receive EXCESS TRANSFEROR FINANCE
CHARGE COLLECTIONS.
Any EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS remaining after
covering shortfalls to all designated series will be treated as SHARED
TRANSFEROR PRINCIPAL COLLECTIONS. EXCESS TRANSFEROR FINANCE CHARGE
COLLECTIONS permit coverage of shortfalls to amounts payable from
collections of FINANCE CHARGE RECEIVABLES and EXCESS FINANCE CHARGE
COLLECTIONS allocable to a series by using collections of FINANCE CHARGE
RECEIVABLES which would otherwise be paid to the transferor.
SHARED PRINCIPAL COLLECTIONS AND SHARED TRANSFEROR PRINCIPAL COLLECTIONS
The related prospectus supplement will specify if collections of
PRINCIPAL RECEIVABLES for any MONTHLY PERIOD allocated to the
certificateholders' interest of that series, after required distributions
for that series, will be available to other series. The servicer will
determine SHARED PRINCIPAL COLLECTIONS as follows:
o the amount of collections of PRINCIPAL RECEIVABLES for any
MONTHLY PERIOD, plus
o other amounts described in the SERIES SUPPLEMENT of that
series, allocated to that series remaining after covering
the required deposits and distributions and any similar
amount remaining for any other series, plus
o the amount of any payment received by the trustee from the
holder of any PARTICIPATION or any increase in the
principal amount of the PARTICIPATION.
The servicer will allocate the SHARED PRINCIPAL COLLECTIONS to
cover any principal distributions to certificateholders and deposits to
PRINCIPAL FUNDING ACCOUNTS for any series that are either scheduled or
permitted and that have not been covered out of the investor principal
collections and other amounts for that series. If these PRINCIPAL
SHORTFALLS exceed SHARED PRINCIPAL COLLECTIONS for any MONTHLY PERIOD,
SHARED PRINCIPAL COLLECTIONS will be allocated evenly among the applicable
series based on the respective PRINCIPAL SHORTFALLS of each series. To the
extent that SHARED PRINCIPAL COLLECTIONS exceed PRINCIPAL SHORTFALLS, the
balance will be allocated to the holder of the TRANSFEROR CERTIFICATE, but
only if:
o the TRANSFEROR AMOUNT, excluding the interest represented
by any SUPPLEMENTAL CERTIFICATE, is greater than the
REQUIRED RETAINED TRANSFEROR AMOUNT, or
o in all other circumstances the SHARED PRINCIPAL COLLECTIONS
will be deposited in the SPECIAL FUNDING ACCOUNT.
Any reallocation of collections of PRINCIPAL RECEIVABLES will not
result in a reduction in the INVESTED AMOUNT of the series to which
collections were initially allocated. There can be no assurance that there
will be any SHARED PRINCIPAL COLLECTIONS in any MONTHLY PERIOD.
The servicer will determine the amount of any SHARED TRANSFEROR
PRINCIPAL COLLECTIONS. SHARED TRANSFEROR PRINCIPAL COLLECTIONS is the
amount of collections of PRINCIPAL RECEIVABLES for any MONTHLY PERIOD
allocated to the TRANSFEROR'S INTEREST but not due to the holder of any
SUPPLEMENTAL CERTIFICATE and other amounts payable to the transferor from
collections of PRINCIPAL RECEIVABLES, plus the amount of EXCESS TRANSFEROR
FINANCE CHARGE COLLECTIONS remaining after being applied to amounts payable
from collections of FINANCE CHARGE RECEIVABLES. This determination will be
made regardless of whether the collections were initially allocated to the
transferor or any series.
The servicer will allocate the SHARED TRANSFEROR PRINCIPAL
COLLECTIONS to cover any PRINCIPAL SHORTFALLS that have not been covered
out of the SHARED PRINCIPAL COLLECTIONS. If PRINCIPAL SHORTFALLS remaining
after applying SHARED PRINCIPAL COLLECTIONS exceed SHARED TRANSFEROR
PRINCIPAL COLLECTIONS for any MONTHLY PERIOD, SHARED TRANSFEROR PRINCIPAL
COLLECTIONS will be allocated evenly among each series based on the
respective remaining PRINCIPAL SHORTFALLS of each series.
To the extent that SHARED TRANSFEROR PRINCIPAL COLLECTIONS exceed
PRINCIPAL SHORTFALLS remaining after applying the SHARED PRINCIPAL
COLLECTIONS, the balance will be paid to the holder of the TRANSFEROR
CERTIFICATE. SHARED TRANSFEROR PRINCIPAL COLLECTIONS permit coverage of
PRINCIPAL SHORTFALLS remaining after applying SHARED PRINCIPAL COLLECTIONS
by using collections that would have been paid to the transferor and in
some circumstances may allow the length of the ACCUMULATION PERIOD to be
shorter. There can be no assurance that there will be any SHARED TRANSFEROR
PRINCIPAL COLLECTIONS in any MONTHLY PERIOD.
SPECIAL FUNDING ACCOUNT
The servicer will establish and maintain in the name of the trust,
for the benefit of the certificateholders of all series, a SPECIAL FUNDING
ACCOUNT which will be an ELIGIBLE DEPOSIT ACCOUNT. Whenever the TRANSFEROR
AMOUNT, excluding the interest represented by any SUPPLEMENTAL CERTIFICATE,
would otherwise be less than the REQUIRED RETAINED TRANSFEROR AMOUNT, funds
otherwise payable to the transferor will be deposited in the SPECIAL
FUNDING ACCOUNT on each business day until the TRANSFEROR AMOUNT, excluding
the interest represented by any SUPPLEMENTAL CERTIFICATE, is at least equal
to the REQUIRED RETAINED TRANSFEROR AMOUNT.
Funds on deposit in the SPECIAL FUNDING ACCOUNT will be withdrawn
and paid to the transferor to the extent that following the distribution
the TRANSFEROR AMOUNT, excluding the interest represented by any
SUPPLEMENTAL CERTIFICATE, will continue to exceed the REQUIRED RETAINED
TRANSFEROR AMOUNT. The SERIES SUPPLEMENT may provide for the payments to be
made to certificateholders instead of the transferor. Deposits in and
withdrawals from the SPECIAL FUNDING ACCOUNT may be made on a daily basis.
Funds on deposit in the SPECIAL FUNDING ACCOUNT will be invested
by the trustee at the direction of the servicer in ELIGIBLE INVESTMENTS
selected by the servicer. All net investment income earned on amounts in
the SPECIAL FUNDING ACCOUNT during each MONTHLY PERIOD will be withdrawn
from the SPECIAL FUNDING ACCOUNT and treated as collections of FINANCE
CHARGE RECEIVABLES for that MONTHLY PERIOD.
PAIRED SERIES
Each series may be paired with another series only if specified in
the attached prospectus supplement. A paired series is a series which has
been paired with a previously issued series and has an INVESTED AMOUNT that
increases as the INVESTED AMOUNT of the previously issued series decreases,
or any series designated as a paired series in the related SERIES
SUPPLEMENT. The prospectus supplement will specify the relationship between
the paired series.
FUNDING PERIOD
The related prospectus supplement may specify a FUNDING PERIOD
that begins on the CLOSING DATE and ends on a specified date before the
start of an AMORTIZATION PERIOD or an ACCUMULATION PERIOD. During the
FUNDING PERIOD, the total amount of PRINCIPAL RECEIVABLES in the trust may
be less than the total principal amount of the certificates of that series.
The amount of this deficiency will be held in a trust account established
with the trustee for the benefit of the certificateholders of that series
awaiting the transfer of additional PRINCIPAL RECEIVABLES to the trust or
awaiting the reduction of the INVESTED AMOUNTS of other series.
The related prospectus supplement for a series will define:
o the initial INVESTED AMOUNT on the CLOSING DATE,
o the total principal amount, and
o the date when the INVESTED AMOUNT is expected to equal the
total principal amount.
The INVESTED AMOUNT will increase as receivables are delivered to
the trust or as the INVESTED AMOUNTS of other series are reduced. The
INVESTED AMOUNT may also decrease due to INVESTOR CHARGE-OFFS as described
in the related prospectus supplement.
During the FUNDING PERIOD, funds on deposit in the PRE-FUNDING
ACCOUNT for a series of certificates will be withdrawn and paid to the
transferor to the extent there are any increases in the INVESTED AMOUNT. If
the INVESTED AMOUNT does not for any reason equal the full INVESTED AMOUNT
by the end of the FUNDING PERIOD, any amount remaining in the PRE-FUNDING
ACCOUNT and any additional amounts specified in the related prospectus
supplement will be payable to the certificateholders of that series
described in the related prospectus supplement.
The related prospectus supplement specifies if monies in the
PRE-FUNDING ACCOUNT:
o are invested by the trustee in ELIGIBLE INVESTMENTS,
o have a guaranteed rate, or
o have an investment agreement or other similar arrangement.
In connection with each DISTRIBUTION DATE during the FUNDING
PERIOD, investment earnings on funds in the PRE-FUNDING ACCOUNT will be
withdrawn from the PRE-FUNDING ACCOUNT and deposited, together with any
other payment under a guaranteed rate or investment agreement or other
similar arrangement, into the COLLECTION ACCOUNT for distribution as
interest on the certificates of that series as specified in the related
prospectus supplement.
DEFAULTED RECEIVABLES
The DEFAULTED AMOUNT for any MONTHLY PERIOD will be an amount, not
less than zero, equal to the amount of DEFAULTED RECEIVABLES for each day
in that MONTHLY PERIOD minus the sum of:
o the amount of any DEFAULTED RECEIVABLES for which the
TRANSFEROR AMOUNT is reduced because of the assignment of a
principal balance of zero for purposes of determining the
total amount of PRINCIPAL RECEIVABLES or for which the
servicer becomes obligated to accept assignment during that
MONTHLY PERIOD, in either case because of a breach of a
representation, warranty or covenant contained in the
POOLING AGREEMENT,
o the total amount of recoveries received in the MONTHLY
PERIOD for both FINANCE CHARGE RECEIVABLES and PRINCIPAL
RECEIVABLES which were previously charged-off as
uncollectible, and
o the excess, if any, for the immediately preceding MONTHLY
PERIOD of the total amount subtracted under these bullet
points over the amount of PRINCIPAL RECEIVABLES that became
DEFAULTED RECEIVABLES.
Receivables in any account will be charged-off as uncollectible
under the CREDIT CARD GUIDELINES. This policy is currently to charge off
the receivables in an account when that account becomes 180 days
delinquent. DEFAULTED RECEIVABLES are automatically removed from the trust
and may be sold after reconveyance to DHRC.
DILUTION
The amount of the PRINCIPAL RECEIVABLES in the trust will be
reduced if:
o the servicer adjusts downward the amount of any PRINCIPAL
RECEIVABLE (except INELIGIBLE RECEIVABLES that have been or
are to be reassigned to the transferor), because of a
rebate, refund, counterclaim, defense, error, fraudulent
charge or counterfeit charge to a cardholder,
o the PRINCIPAL RECEIVABLE was created out of merchandise
that was refused or returned by a cardholder, or
o the servicer adjusts downward the amount of any PRINCIPAL
RECEIVABLE without receiving collections or charging off
the amount as uncollectible.
The transferor will be required to pay an amount equal to the
deficiency into the SPECIAL FUNDING ACCOUNT if the exclusion of any
receivables would cause the TRANSFEROR AMOUNT, excluding the interest
represented by any SUPPLEMENTAL CERTIFICATE, at that time to be less than
the REQUIRED RETAINED TRANSFEROR AMOUNT.
EARLY AMORTIZATION EVENTS
An EARLY AMORTIZATION EVENT for each series would occur
automatically when:
o RNB, DHCC, DHRC, or any holder of the TRANSFEROR
CERTIFICATE is bankrupt, insolvent or enters receivership,
o the trust becomes an "investment company" within the
meaning of the Investment Company Act,
o the TRANSFEROR AMOUNT, except for any interest from any
SUPPLEMENTAL CERTIFICATE, is less than the REQUIRED
RETAINED TRANSFEROR AMOUNT, or
o the transferor becomes unable for any reason to transfer
receivables to the trust.
The related prospectus supplement for any series may specify
additional EARLY AMORTIZATION EVENTS that apply to that series.
The EARLY AMORTIZATION PERIOD or the RAPID ACCUMULATION PERIOD, if
specified for a series, will begin on the date an EARLY AMORTIZATION EVENT
occurs. Certificateholders may begin receiving distributions of principal
earlier than expected if the EARLY AMORTIZATION PERIOD or the RAPID
ACCUMULATION PERIOD begins before the series CONTROLLED AMORTIZATION
PERIOD, the PRINCIPAL AMORTIZATION PERIOD or before an EXPECTED FINAL
PAYMENT DATE. This may shorten the average life of the certificates.
DEFEASANCE
The transferor may, at its option, be discharged from its
obligations on any series or all outstanding series under the following
conditions:
o the transferor deposits ELIGIBLE INVESTMENTS with the
trustee, under an irrevocable trust agreement, which
provides for scheduled payment of principal and interest
sufficient to pay and discharge all remaining scheduled
interest and principal payments on all outstanding
certificates of the defeased series and any amounts owing
to any enhancement providers,
o the transferor delivers to the trustee a tax opinion on the
deposit of ELIGIBLE INVESTMENTS and the termination of
obligations,
o the transferor delivers to the trustee an opinion of
counsel stating that the deposit and termination of
obligations will not result in the trust being regulated as
an "investment company" within the meaning of the
Investment Company Act,
o the transferor delivers to the trustee a certificate of an
officer of the transferor stating that the transferor
reasonably believes that the deposit and termination of its
obligations will not cause an EARLY AMORTIZATION EVENT or
cause any event that would cause an EARLY AMORTIZATION
EVENT to occur, and
o a RATINGS EFFECT will not occur.
The transferor may then cause collections from the defeased series
to be used to buy ELIGIBLE INVESTMENTS rather than additional receivables.
REPORTS TO CERTIFICATEHOLDERS
The servicer will provide to the trustee and each rating agency,
by the third business day before each DISTRIBUTION DATE, a monthly report
providing the following information:
o the total amount of PRINCIPAL RECEIVABLES and FINANCE
CHARGE RECEIVABLES as of the end of that MONTHLY PERIOD,
o the INVESTED AMOUNT for each series and the INVESTED AMOUNT
allocated to each class,
o the FLOATING ALLOCATION PERCENTAGE and PRINCIPAL ALLOCATION
PERCENTAGE,
o the amount of collections of PRINCIPAL RECEIVABLES and
FINANCE CHARGE RECEIVABLES processed during that MONTHLY
PERIOD and the portion allocated to the certificateholders'
interest,
o the total outstanding balance of accounts which were 30,
60, 90 and 120 days or more delinquent at the end of the
MONTHLY PERIOD,
o the DEFAULTED AMOUNT and the portion allocated to the
certificateholders' interest,
o the amount, if any, of charge-offs on the
certificateholders' interest and the portion allocable to
each class,
o the monthly servicing fee,
o the PORTFOLIO YIELD, and
o the BASE RATE.
On each payment date, the monthly report will include the
following additional information about the other outstanding series:
o the total amount distributed,
o the amount of principal distributed,
o the amount of interest distributed, and
o the excess of unpaid principal balance over the INVESTED
AMOUNT as of the
RECORD DATE.
On each DISTRIBUTION DATE the trustee will provide each
certificateholder of record with a copy of the monthly report. The servicer
and the trustee will not be required to provide any reports directly to
beneficial owners. See "--Book-Entry Registration" for a general
description of DTC procedures.
On or before January 31 of each calendar year, the trustee will
provide to any certificateholder of record during the preceding year a
statement containing the information required to be given by an issuer of
debt under the Internal Revenue Code along with any other customary
information which is necessary to allow the certificateholders to prepare
their tax returns. See "Tax Matters" for a detailed discussion.
LIST OF CERTIFICATEHOLDERS
Certificateholders representing 10% or more of the total unpaid
principal amount of the certificates of a series, or of all outstanding
series, may request access to the current list of certificateholders of the
series, or of all outstanding series, for purposes of communicating with
other certificateholders about their rights under the POOLING AGREEMENT,
any SERIES SUPPLEMENT or the certificates. See "--Book-Entry Registration"
and "--Definitive Certificates" for a description of the circumstances in
which Definitive Certificates may be issued.
The POOLING AGREEMENT does not provide for any annual or other
meetings of certificateholders.
ENHANCEMENT
The related prospectus supplement will state if the trust provides
enhancement for one or more classes of a series, including your series,
offered by this prospectus. If so, any form of enhancement may be
structured so as to be drawn upon by more than one class to the extent
described in that prospectus supplement.
The type, characteristics and amount of enhancement for any series
or class:
o will be determined based on several factors, including the
characteristics of the receivables and accounts included in
the trust portfolio as of the CLOSING DATE for that series
and the desired rating for each class, and
o will be established on the basis of requirements of each
rating agency rating the certificates of that series or
class.
Enhancement may be in the form of:
o the subordination of one or more classes of the
certificates of a series,
o the establishment of any cash collateral guaranty or
account,
o a COLLATERAL INVESTED AMOUNT,
o a letter of credit,
o a surety bond,
o an insurance policy,
o a guaranteed rate agreement,
o a maturity guaranty facility,
o a tax protection agreement,
o an interest rate swap or cap,
o a spread account,
o a reserve account,
o the use of cross-support features, or
o any combination of the foregoing.
Enhancement will not provide protection against all risks of loss
or guarantee repayment of the entire principal balance of the certificates
and/or payment of interest. If losses occur which exceed the amount covered
by enhancement or which are not covered by enhancement, certificateholders
will bear their allocable share of deficiencies.
If enhancement is provided for a series or class of certificates,
the related prospectus supplement will describe:
o the amount payable under the enhancement,
o any additional conditions to payment under enhancement not
described in this prospectus,
o the conditions, if any, under which:
- the amount payable under enhancement may be reduced, and
- enhancement may be ended or replaced, and
o any material provision of any agreement relating to
enhancement.
The related prospectus supplement may also provide information
about any enhancement provider, including:
o a brief description of its principal business activities,
o its principal place of business, place of incorporation and
the jurisdiction under which it is chartered or licensed to
do business,
o if applicable, the identity of regulatory agencies which
exercise primary jurisdiction over the conduct of its
business, and
o its total assets, and its stockholders' or policy holders'
surplus, if applicable, and other appropriate financial
information as of the date specified in the related
prospectus supplement.
The related prospectus supplement may specify if enhancement for a
series may be available to pay principal of the series' certificates after
EARLY AMORTIZATION EVENTS occur for that series. If so, the enhancement
provider may have an interest in cash flows relating to the receivables, to
the extent described in the related prospectus supplement.
SPECIFIC FORMS OF ENHANCEMENT
The related prospectus supplement will also specify the manner and
to what extent the following forms of enhancement or other enhancement
applies to your series of certificates or any class of your series:
SUBORDINATION
One or more classes of certificates of any series may be
subordinated as described in the related prospectus supplement to the
extent necessary to fund payments on the senior certificates. The rights of
the holders of any subordinated certificates to receive distributions of
principal and/or interest on any DISTRIBUTION DATE for that series will be
subordinated in right and priority to the rights of the holders of senior
certificates, but only to the extent described in the related prospectus
supplement. The related prospectus supplement may specify if subordination
may apply only for some types of losses not covered by another enhancement.
The related prospectus supplement will also provide information concerning:
o the amount of subordination of a class or classes of
subordinated certificates in a series,
o the circumstances in which subordination will be
applicable,
o the manner, if any, in which the amount of subordination
will decrease over time, and
o the conditions under which amounts available from payments
that would otherwise be made to holders of subordinated
certificates will be distributed to holders of senior
certificates.
If collections of receivables otherwise distributable to holders
of a subordinated class of a series will be used as support for a class of
another series, the related prospectus supplement will specify the manner
and conditions for applying this cross-support feature.
CASH COLLATERAL GUARANTY OR ACCOUNT
Support for a series or one or more classes of certificates may be
provided by:
o a CASH COLLATERAL GUARANTY secured by the deposit of cash
or some eligible investments in a CASH COLLATERAL ACCOUNT
reserved for the beneficiaries of the CASH COLLATERAL
GUARANTY, or
o a CASH COLLATERAL ACCOUNT alone.
The amount available from the CASH COLLATERAL GUARANTY or the CASH
COLLATERAL ACCOUNT will be the lesser of (1) amounts on deposit in the CASH
COLLATERAL ACCOUNT and (2) an amount specified in the related prospectus
supplement. The related prospectus supplement will describe the
circumstances under which payments are made to beneficiaries of the CASH
COLLATERAL GUARANTY from the CASH COLLATERAL ACCOUNT or from the CASH
COLLATERAL ACCOUNT directly.
COLLATERAL INVESTED AMOUNT
An undivided interest in the trust called the COLLATERAL INVESTED
AMOUNT, in an amount initially equal to the percentage of the certificates
of a series specified in the prospectus supplement for that series, may
initially provide support for a series or one or more classes of
certificates. That series may also have the benefit of a CASH COLLATERAL
GUARANTY or CASH COLLATERAL ACCOUNT with an initial amount on deposit in
that account, if any, as specified in the related prospectus supplement
which will be increased to the extent:
o DHRC chooses, under the conditions specified in the related
prospectus supplement, to apply principal collections
allocable to the COLLATERAL INVESTED AMOUNT to decrease the
COLLATERAL INVESTED AMOUNT,
o principal collections allocable to the COLLATERAL INVESTED
AMOUNT are required to be deposited into the CASH
COLLATERAL ACCOUNT as specified in the related prospectus
supplement, and
o excess finance charge collections are required to be
deposited into the CASH COLLATERAL ACCOUNT as specified in
the related prospectus supplement.
The total amount of enhancement available from the COLLATERAL
INVESTED AMOUNT and, if applicable, the CASH COLLATERAL GUARANTY or CASH
COLLATERAL ACCOUNT will be the lesser of the sum of:
o the COLLATERAL INVESTED AMOUNT and the amount on deposit in
the CASH COLLATERAL ACCOUNT, and
o an amount specified in the related prospectus supplement.
The related prospectus supplement will describe the circumstances
under which:
o payments which otherwise would be made to holders of the
COLLATERAL INVESTED AMOUNT will be distributed to holders
of certificates, and
o if applicable, payment will be made under the CASH
COLLATERAL GUARANTY or under the CASH COLLATERAL ACCOUNT.
LETTER OF CREDIT
One or more letters of credit may provide support for a series or
one or more classes of certificates. The letter of credit may provide
limited protection against some losses in addition to or instead of other
enhancement. The issuer of the letter of credit will be obligated to honor
demands as to the letter of credit, to the extent of the amount available
under the letter of credit, to provide funds under the circumstances and
under the conditions specified in the related prospectus supplement.
SURETY BOND OR INSURANCE POLICY
A surety bond may be purchased for the benefit of the holders of
any series or class of certificates to assure distributions of interest or
principal for that series or class in the manner and amount specified in
the related prospectus supplement.
One or more insurance companies may provide insurance, to a series
or one or more classes of certificates, to guarantee, for one or more
classes of that series, distributions of interest or principal in the
manner and amount specified in the related prospectus supplement.
SPREAD ACCOUNT
Support for a series or one or more classes of certificates may be
provided by the periodic deposit of available excess cash flow from the
trust assets into a spread account, intended to assist with subsequent
distribution of interest and principal on that series or class in the
manner specified in the related prospectus supplement.
RESERVE ACCOUNT
The establishment of a RESERVE ACCOUNT provides support for a
series or one or more classes of certificates. The RESERVE ACCOUNT may be
funded, to the extent provided in the related prospectus supplement, by:
o an initial cash deposit,
o the retention of excess cash,
o periodic distributions of principal or interest or both
otherwise payable to one or more classes of certificates,
including subordinated certificates,
o the provision of a letter of credit, guarantee, insurance
policy or other form of credit, or
o any combination of these items.
The RESERVE ACCOUNT will assist with the subsequent distribution
of principal or interest on that series or class in the manner provided in
the related prospectus supplement.
THE POOLING AND SERVICING AGREEMENT
CONVEYANCE OF RECEIVABLES
Under the POOLING AGREEMENT, DHRC has transferred to the trust its
interest in:
o all receivables and proceeds existing on and after the
CUT-OFF DATE in the initial accounts and all receivables
and proceeds existing on and after each ADDITION DATE in
any AUTOMATIC ADDITIONAL ACCOUNTS,
o any merchant fees and deferred billing fees,
o the Receivables Purchase Agreement, and
o the Bank Receivables Purchase Agreement.
DHRC must indicate in its computer records that the receivables
from any transfer of receivables to the trust after the AUTOMATIC ADDITION
TERMINATION DATE or the AUTOMATIC ADDITION SUSPENSION DATE and before the
RESTART DATE, have been conveyed to the trust. DHRC must also file all
Uniform Commercial Code financing statements. DHRC will then provide the
trustee with a computer file, microfiche list or printed list containing an
accurate and complete list of each initial account, ADDITIONAL ACCOUNT and
SUPPLEMENTAL ACCOUNT showing:
o the account number,
o the total outstanding amount, and
o the total amount of PRINCIPAL RECEIVABLES.
The physical documentation relating to the accounts or the
receivables will not be stamped or marked to show the transfer of
receivables to the trust. RNB will retain all other records or agreements
about the accounts or the receivables.
ADDITION OF TRUST ASSETS
Accounts will be designated to have their receivables added to the
trust automatically as they are originated and the receivables in these
accounts will be immediately sold by the CREDIT CARD ORIGINATOR to DHCC.
These receivables will then be sold by DHCC to DHRC and then transferred by
DHRC to the trust. Each AUTOMATIC ADDITIONAL ACCOUNT will be included as an
account from the date it is created, and all existing and future
receivables in these accounts will be transferred to the trust after being
purchased by DHRC.
DHRC may elect at any time to end or suspend the inclusion of
accounts that would otherwise be AUTOMATIC ADDITIONAL ACCOUNTS by
delivering to the trustee, the rating agencies and the servicer, 10 days'
written notice of this election. DHRC will be permitted to continue
designating AUTOMATIC ADDITIONAL ACCOUNTS if the AGGREGATE ADDITION LIMIT
would not be exceeded because of the inclusion of the AUTOMATIC ADDITIONAL
ACCOUNTS as accounts. If the AGGREGATE ADDITION LIMIT would be exceeded,
DHRC will not be permitted to continue designating AUTOMATIC ADDITIONAL
ACCOUNTS unless:
o the DEFAULT PERCENTAGE is less than 10.5%, and
o the PAYMENT RATE PERCENTAGE is greater than or equal to
10.0%, and
o the TRUST PORTFOLIO YIELD less the BASE RATE (three month
average) is greater than or equal to 1.5%.
In any event, the number of accounts to be included as AUTOMATIC ADDITIONAL
ACCOUNTS for the related six-month period must be less than or equal to 30%
of the number of accounts as of the first day of the six-month period,
unless such inclusion will not cause a RATINGS EFFECT.
DHRC intends to continue automatically adding accounts. If DHRC
stops the automatic designation of new accounts, DHRC will not restart
designating AUTOMATIC ADDITIONAL ACCOUNTS until a date specified in a
written notice given by DHRC to the trustee. DHRC will specify in the
notice that on the RESTART DATE the conditions described above will be
satisfied on the RESTART DATE.
The AGGREGATE ADDITION LIMIT is intended to limit the extent to
which DHRC, by designating AUTOMATIC ADDITIONAL ACCOUNTS, may alter the
composition of the accounts without rating agency consent.
DHRC must make an addition to the trust on the required
designation date if, on the last business day of any MONTHLY PERIOD,
either:
o the TRANSFEROR AMOUNT, excluding the interest represented
by any SUPPLEMENTAL CERTIFICATE, is less than the REQUIRED
RETAINED TRANSFEROR AMOUNT, or
o the amount of PRINCIPAL RECEIVABLES in the trust is less
than the REQUIRED PRINCIPAL BALANCE.
DHRC will not be required to add receivables in ADDITIONAL
ACCOUNTS if the TRANSFEROR AMOUNT, excluding the interest represented by
any SUPPLEMENTAL CERTIFICATE, equals or exceeds the REQUIRED RETAINED
TRANSFEROR AMOUNT or the total amount of PRINCIPAL RECEIVABLES in the trust
equals or exceeds the REQUIRED PRINCIPAL BALANCE before the proposed
ADDITION DATE.
The receivables to be added will be from receivables generated
from accounts owned by RNB or another CREDIT CARD ORIGINATOR.
Alternatively, PARTICIPATIONS or certificates of undivided interests in a
pool of assets primarily from open end credit card receivables originated
by RNB or another CREDIT CARD ORIGINATOR may be added to the trust. These
PARTICIPATION INTERESTS may, for example, include rights in DHRC's
interests in other trusts which have as their primary assets open end
credit card receivables originated by RNB or another CREDIT CARD
ORIGINATOR. Any PARTICIPATION INTERESTS transferred to the trust must be
registered under the Securities Act or held for at least the Securities Act
Rule 144(k) holding period before transfer to the trust. PARTICIPATION
INTERESTS can be added to the trust only upon satisfaction of the
conditions specified in the POOLING AGREEMENT. There are currently no
PARTICIPATION INTERESTS held by the trust.
In connection with an addition of a SUPPLEMENTAL ACCOUNT or
PARTICIPATION INTEREST, RNB or another CREDIT CARD ORIGINATOR may sell to
DHCC or DHRC, DHCC if it has purchased will then sell to DHRC and DHRC will
then transfer to the trust the receivables from these accounts on the
following conditions:
o on or before the tenth business day before any addition,
DHRC has given the trustee, the servicer, each rating
agency and the enhancement providers, if any, written
notice that the receivables from SUPPLEMENTAL ACCOUNTS or
PARTICIPATION INTERESTS will be included as trust assets,
o for SUPPLEMENTAL ACCOUNTS, on or before the date the
receivables are added to the trust, DHRC has delivered to
the trustee a written assignment and a computer file,
microfiche list or printed list containing a true and
complete list of these SUPPLEMENTAL ACCOUNTS specifying for
each account its account number, the total amount
outstanding in the account and the total amount of
PRINCIPAL RECEIVABLES outstanding in the account,
o for an addition other than a required addition, DHRC has
received confirmation from each rating agency that the
addition will not result in a RATINGS EFFECT,
o for a required addition which exceeds the AGGREGATE
ADDITION LIMIT, DHRC has provided Standard & Poor's at
least 10 business days' written notice of each addition and
Standard & Poor's has notified DHRC that the addition will
not result in a RATINGS EFFECT, and
o on or before the date any receivables or PARTICIPATION
INTERESTS are added to the trust, DHRC has delivered to the
trustee and enhancement providers, if any, a certificate of
an authorized officer stating that:
- the SUPPLEMENTAL ACCOUNTS are eligible accounts, and
- DHRC reasonably believes that:
o the addition will not cause an EARLY AMORTIZATION
EVENT for any series based on the facts known to the
officer at the time of the certification, and
o no selection procedure was used by DHRC that would
result in a selection of SUPPLEMENTAL ACCOUNTS, from
the available eligible accounts owned by RNB, that
would have a result that would be materially less
favorable to the interests of the certificateholders
of any series on the date of the addition than a
random selection.
DHRC may direct that the PRINCIPAL RECEIVABLES in the ADDITIONAL
ACCOUNTS be treated as outstanding on the last day of the MONTHLY PERIOD
preceding the MONTHLY PERIOD in which the addition is made for purposes of
calculating FLOATING ALLOCATION PERCENTAGES and PRINCIPAL ALLOCATION
PERCENTAGES. This direction may be made on the ADDITION DATE only if all
collections from the ADDITIONAL ACCOUNTS for the current MONTHLY PERIOD are
deposited in the COLLECTION ACCOUNT.
Following any addition, the servicer will distribute collections
to the certificateholders' interest of each series and the TRANSFEROR
AMOUNT for the balance of that MONTHLY PERIOD, including the collections
deposited on the ADDITION DATE. Each interest receives the same
distribution of FINANCE CHARGE RECEIVABLES, PRINCIPAL RECEIVABLES and
DEFAULTED AMOUNTS that it would have received if the ADDITIONAL ACCOUNTS
had been included in the trust for the entire MONTHLY PERIOD in which the
addition occurred.
RNB or its affiliates may originate or acquire portfolios of open
end credit card accounts. The receivables in an acquired portfolio, or a
PARTICIPATION INTEREST, may be sold to DHCC, and later sold to DHRC and
then transferred to the trust. These sales must meet the conditions for
additions of SUPPLEMENTAL ACCOUNTS or PARTICIPATION INTERESTS.
ADDITIONAL ACCOUNTS or PARTICIPATION INTERESTS may include
accounts originated using criteria different from those that were applied
to the initial accounts. These accounts may have been originated at a later
date or may have been part of a portfolio of open end credit card accounts
that were not part of the RNB portfolio as of the CUT-OFF DATE. Some of
these accounts may have been acquired from other institutions. ADDITIONAL
ACCOUNTS and accounts included in PARTICIPATION INTERESTS may not be of the
same type as those previously included in the trust. For these reasons,
there can be no assurance that the ADDITIONAL ACCOUNTS or PARTICIPATION
INTERESTS will be of the same credit quality or have the same payment
characteristics as the initial accounts or the ADDITIONAL ACCOUNTS
previously included in the trust.
ADDITIONAL ACCOUNTS of a type different from the initial accounts
may consist of fees, charges and amounts that are different from the
FINANCE CHARGE RECEIVABLES and PRINCIPAL RECEIVABLES in the initial RNB
portfolio. PARTICIPATION INTERESTS may be added to the trust. The servicer
will designate the portions of funds collected or to be collected for these
receivables or PARTICIPATION INTERESTS to be treated for purposes of the
POOLING AGREEMENT as PRINCIPAL RECEIVABLES and FINANCE CHARGE RECEIVABLES.
REMOVAL OF ACCOUNTS
DHRC has the right to require reassignment to itself, or another
company designated by it, of all of the trust's rights in and to the
receivables from REMOVED ACCOUNTS or PARTICIPATION INTERESTS under the
following conditions:
o on or before ten business days before the removal date,
DHRC gives the trustee, the servicer, each rating agency
and any enhancement provider written notice of the removal
including the date for removal of the REMOVED ACCOUNTS and
PARTICIPATION INTERESTS,
o on or before ten business days after the removal date, DHRC
delivers to the trustee a computer file, microfiche list or
printed list containing an accurate and complete list of
the REMOVED ACCOUNTS specifying the account number, the
total amount outstanding in the account and the total
amount of PRINCIPAL RECEIVABLES outstanding in the account,
o DHRC will represent and warrant that as of the removal date
the list of REMOVED ACCOUNTS delivered to the trustee is
accurate and complete in all material respects,
o DHRC receives confirmation from each rating agency that the
removal will not result in a RATINGS EFFECT,
o DHRC delivers to the trustee and any enhancement provider
entitled under the SERIES SUPPLEMENT a certificate of an
authorized officer, dated the removal date, stating that
DHRC reasonably believes that:
- the removal will not cause an EARLY AMORTIZATION
EVENT to occur for any series based on the facts then
known to such officer, and
- no selection procedure materially adverse to the
interests of the certificateholders has been used in
removing REMOVED ACCOUNTS from any pool of accounts
or PARTICIPATION INTERESTS of a similar type, and
o DHRC pays the fair market value of the receivables in the
REMOVED ACCOUNTS to the trust.
The removal can occur for a number of reasons including a
determination by DHRC that the trust contains more receivables than DHRC is
obligated to retain in the trust under the POOLING AGREEMENT and any SERIES
SUPPLEMENTS and a determination that DHRC does not desire to obtain
additional financing through the trust at that time.
After satisfying the above conditions, the trustee will execute
and deliver to DHRC or its designee a written reassignment. The trustee
will then be considered to sell, transfer, assign, set over and otherwise
convey to DHRC or its designee, all of its rights in the receivables
arising in the REMOVED ACCOUNTS or PARTICIPATION INTERESTS.
Also, on the date when any receivable in an account becomes a
DEFAULTED RECEIVABLE, the trustee will automatically transfer to DHRC, all
of its rights to the DEFAULTED RECEIVABLES, any FINANCE CHARGE RECEIVABLES
which have been charged off as uncollectible in that account, and all
monies due or to become due and proceeds in that account. Each account with
a DEFAULTED RECEIVABLE will be a REMOVED ACCOUNT and the date for removal
will be the first date that any receivable in that account became a
DEFAULTED RECEIVABLE. Collections received from the cardholder or from the
sale of the defaulted account will be treated as collections of PRINCIPAL
RECEIVABLES.
REPRESENTATIONS AND WARRANTIES
On the CLOSING DATE, DHRC will represent and warrant to the trust
that:
o on the CUT-OFF DATE for each initial account, on the date
of creation for each AUTOMATIC ADDITIONAL ACCOUNT, and on
the ADDITION CUT-OFF DATE for each SUPPLEMENTAL ACCOUNT,
each account that DHRC classifies as an "eligible account"
will satisfy the requirements of an eligible account,
o on the CUT-OFF DATE for each initial account, on the date
of creation for each AUTOMATIC ADDITIONAL ACCOUNT, and on
the ADDITION CUT-OFF DATE for each SUPPLEMENTAL ACCOUNT,
each receivable that DHRC classifies as an "eligible
receivable" will satisfy the requirements of an ELIGIBLE
RECEIVABLE, and
o on the date of creation of any new receivable, that
receivable will be an ELIGIBLE RECEIVABLE.
A receivable will be designated an INELIGIBLE RECEIVABLE and will
be assigned a principal balance of zero for the purpose of determining the
total amount of PRINCIPAL RECEIVABLES on any day that any representation or
warranty of DHRC is not true and correct in any material respect for any
receivables transferred to the trust by DHRC and, as a result:
o the receivables become DEFAULTED RECEIVABLES, or
o the trust's rights in and to those receivables or the
proceeds of those receivables are impaired or are not
available to the trust free and clear of any lien.
DHRC may cure any breach of a representation or warranty of
eligibility within 60 days after the earlier to occur of the discovery by
DHRC or the receipt by DHRC of written notice given by the trustee of the
breach. These receivables will not be considered INELIGIBLE RECEIVABLES and
these PRINCIPAL RECEIVABLES will be included in determining the total
PRINCIPAL RECEIVABLES in the trust if, on any day before the end of the
period:
o the relevant representation and warranty is true and
correct in all material respects as if made on that day,
and
o DHRC has delivered to the trustee a certificate of an
authorized officer describing the nature of the breach and
the manner in which the representation and warranty became
true and correct.
On and after the date of its designation as an INELIGIBLE
RECEIVABLE, each INELIGIBLE RECEIVABLE will not be given credit in
determining the total amount of PRINCIPAL RECEIVABLES used to calculate the
TRANSFEROR AMOUNT, the FLOATING ALLOCATION PERCENTAGE and the PRINCIPAL
ALLOCATION PERCENTAGE. On the first DISTRIBUTION DATE following the MONTHLY
PERIOD in which the reassignment obligation arises, DHRC will deposit into
the SPECIAL FUNDING ACCOUNT an amount equal to the REQUIRED RETAINED
TRANSFEROR AMOUNT less the TRANSFEROR AMOUNT (which has been reduced by the
amount of the INELIGIBLE RECEIVABLE and which excludes the interest
represented by any SUPPLEMENTAL CERTIFICATE). The payment of the deposit
amount will be considered payment in full of all of the INELIGIBLE
RECEIVABLES. The obligation of DHRC to make these deposits is the sole
remedy for any breach of the representations and warranties for the
receivable available to certificateholders of any series, the trustee on
behalf of certificateholders, or any enhancement provider.
DHRC will also make representations and warranties to the trust
that as of the CLOSING DATE:
o it is a corporation validly existing and in good standing
under the laws of the State of Minnesota,
o it has the authority to consummate the transactions
contemplated by the POOLING AGREEMENT and the related
SERIES SUPPLEMENT and each of these agreements constitutes
a valid, binding and enforceable agreement of DHRC,
o the transfer of receivables by it to the trust under the
POOLING AGREEMENT is either a valid transfer and assignment
to the trust of all right, title and interest of DHRC in
and to the receivables and the proceeds or the grant of a
security interest under the UCC in the receivables, and
o the transfer of the proceeds for each receivable then
existing on the date of its transfer to the trust or, for
each receivable arising later, upon its creation, is
either:
- a valid transfer and assignment to the trust of all
right, title and interest of
DHRC in and to the proceeds, or
- the grant of a security interest under the UCC in the
proceeds,
which will be enforceable in each case except as
enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting the
enforcement of creditors' rights and by general
principles of equity, whether considered in a suit at
law or in equity.
If DHRC breaches these representations and warranties and that
breach has a material adverse effect on the certificateholders' interest in
the receivables, either:
o the trustee or the holders of certificates evidencing not
less than 50% of the total unpaid principal amount of the
certificates of all series, by written notice to DHRC and
the servicer and to the trustee, may direct DHRC to accept
the reassignment of the receivables transferred to the
trust by DHRC within 60 days of the notice, or within a
longer period specified in the notice, or
o the receivables will not be reassigned to DHRC if, on any
day before the end of a 60-day or longer period:
- the relevant representation and warranty is true and
correct in all material respects as if made on that
day, and
- DHRC has delivered to the trustee a certificate of an
authorized officer describing the nature of the
breach and the manner in which the relevant
representation and warranty became true and correct.
DHRC must accept the reassignment of these receivables on the
first DISTRIBUTION DATE following the MONTHLY PERIOD in which the
reassignment obligation arises. The price for the reassignment will equal:
o the total INVESTED AMOUNT for all outstanding series,
o amounts invested by enhancement providers, if any, of all
series on the
DISTRIBUTION DATE on which the purchase is scheduled to be made,
o interest payable to certificateholders on that DISTRIBUTION
DATE,
o any interest amounts that were due but not paid on an
earlier DISTRIBUTION DATE, and
o interest on the overdue interest amounts, if the applicable
SERIES SUPPLEMENT so provides, at the applicable
CERTIFICATE RATES through the day before that DISTRIBUTION
DATE.
The payment of the reassignment price will be considered a payment
in full of the receivables and those funds will be deposited into the
COLLECTION ACCOUNT. If the trustee or the required percentage of
certificateholders of all series gives a notice, the obligation of DHRC to
make any deposit will be the only remedy for a breach of the
representations and warranties available to certificateholders of all
series, the trustee on behalf of these certificateholders, or any
enhancement provider.
An eligible account is an open end credit card account, which is
not a commercial account, owned by the CREDIT CARD ORIGINATOR as of the
CUT-OFF DATE for the initial account, on the date of creation for an
AUTOMATIC ADDITIONAL ACCOUNT, or as of the ADDITION CUT-OFF DATE for a
SUPPLEMENTAL ACCOUNT, and:
o is in existence and serviced at the facilities of the
CREDIT CARD ORIGINATOR or any of its affiliates,
o is payable in United States dollars,
o has not been identified as an account where the credit
cards were reported to the CREDIT CARD ORIGINATOR as lost
or stolen,
o has not been, and does not have any receivables that have
been, sold, pledged, assigned or otherwise conveyed to any
person unless the pledge or assignment is released on or
before the CLOSING DATE or the ADDITION DATE,
o lacks any receivables that are DEFAULTED RECEIVABLES,
o lacks any receivables that have been identified as having
been incurred because of fraudulent use of any related
credit card, and
o 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 United States military
address, except, as of any date of determination, up to 4%
of the number of accounts in the trust portfolio may have
cardholders who have provided addresses outside of that
jurisdiction.
As to a SUPPLEMENTAL ACCOUNT, the addition of this account, other
than a required addition, would not have a RATINGS EFFECT.
An ELIGIBLE RECEIVABLE is a receivable:
o which was created in an eligible account,
o which was created under the CREDIT CARD GUIDELINES and all
requirements of law, and under a cardholder agreement which
follows all requirements of law which may apply to the
CREDIT CARD ORIGINATOR; provided, however, any failure to
follow such laws would have a material adverse effect on
certificateholders,
o which has obtained or received all consents, licenses,
approvals or authorizations of, or registrations with, any
governmental authority required for the creation of the
receivable or the execution, delivery and performance by
the CREDIT CARD ORIGINATOR of the related credit card
agreement and such items are in full force and effect as of
the date of the creation of the receivable,
o to which DHRC or the trust has good title free and clear of
all liens and security interests at the time of its
transfer to the trust, other than any lien for municipal or
other local taxes,
o which has been validly transferred and assigned from DHRC
to the trust or was granted a security interest,
o which is the legal, valid and binding payment obligation of
the cardholder at and after the time of transfer to the
trust, legally enforceable against the cardholder under its
terms,
o which is recognized as an "account," a "general intangible"
or "chattel paper" as defined in Article 9 of the UCC,
o which has not been waived or modified at the time of its
transfer to the trust, except as permitted by the POOLING
AGREEMENT,
o which is not under any right of rescission, setoff,
counterclaim or other defense of the cardholder at the time
of its transfer to the trust, including the defense of
usury, other than bankruptcy or other debtor relief and
equity-related defenses and adjustments permitted by the
POOLING AGREEMENT to be made by the servicer,
o for which DHRC has satisfied all obligations to be
fulfilled at the time it is
transferred to the trust, and
o for which DHRC has not taken any action which, or failed to
take any action the omission of which, would, at the time
of its transfer to the trust, impair the rights of the
trust or the certificateholders.
It is not required or anticipated that the trustee will make any
initial or periodic general examination of any documents or records of the
receivables or the accounts for the purpose of:
o establishing the presence or absence of defects,
o ensuring compliance with DHRC's representations and
warranties, or
o for any other purpose.
In addition, it is not anticipated or required that the trustee
make any initial or periodic general examination of the servicer for the
purpose of establishing the compliance by the servicer with its
representations or warranties or the performance by the servicer of its
obligations under the POOLING AGREEMENT or for any other purpose. The
servicer, however, will deliver to the trustee on or before March 31 of
each calendar year an opinion of counsel as to the validity of the interest
of the trust in and to the receivables and other components of the trust.
INDEMNIFICATION
The POOLING AGREEMENT provides that the servicer will indemnify
the trust and the trustee from and against any loss, liability, expense,
damage or injury suffered or sustained, from the servicer's actions or
omissions relating to the trust.
Under the POOLING AGREEMENT, DHRC and any holder of the TRANSFEROR
CERTIFICATE, excluding any SUPPLEMENTAL CERTIFICATE or PARTICIPATION, have
agreed to be liable directly to an indemnitee for the entire amount of any
losses, claims, damages or liabilities relating to or based on:
o the arrangement created by the POOLING AGREEMENT, or
o the actions of the servicer
taken as though the POOLING AGREEMENT created a partnership under the
Delaware Revised Uniform Partnership Act in which DHRC and any holder were
general partners, to the extent that the trust assets that would remain
after the certificateholders and enhancement providers, if any, were paid
in full would be insufficient to pay those amounts.
This liability for losses, claims, damages or liabilities excludes
those incurred by a certificateholder in the capacity of an investor in the
certificates of any series because of the performance of the receivables,
market fluctuations, a shortfall or failure to make payment under any
enhancement or other similar market or investment risks associated with
ownership of certificates. The servicer will indemnify and hold harmless
DHRC and any holder of a TRANSFEROR CERTIFICATE, excluding any SUPPLEMENTAL
CERTIFICATE or PARTICIPATION, for any losses, claims, damages and
liabilities of DHRC and the holder relating to the actions or omissions of
the servicer.
Except as already mentioned, none of DHRC, any holder of the
TRANSFEROR CERTIFICATE, the servicer or any of their directors, officers,
employees or agents will be under any other liability to the trust, the
trustee, the holders of certificates of any series, any enhancement
provider or any other person for any action taken, or for refraining from
taking any action, in good faith under the POOLING AGREEMENT. However, none
of DHRC, any holder of the TRANSFEROR CERTIFICATE, the servicer or any of
their 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 any person in the performance
of their duties or by reason of reckless disregard of the person's
obligations and duties under the POOLING AGREEMENT.
The servicer is also not under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its
servicing responsibilities under the POOLING AGREEMENT. The servicer may,
in its own discretion, undertake any legal action which it may believe is
necessary or desirable for the benefit of holders of certificates of any
series relating to the POOLING AGREEMENT and the rights and duties of the
parties to that agreement and the interest of those certificateholders.
COLLECTION AND OTHER SERVICING PROCEDURES
The servicer is responsible for servicing, collecting, enforcing
and administering the receivables under the CREDIT CARD GUIDELINES.
Servicing activities to be performed by the servicer include:
o collecting and recording payments,
o communicating with cardholders,
o collection activities for delinquent accounts,
o evaluating the increase of credit limits and the issuance
of credit cards,
o providing billing and tax records, if any, to cardholders,
and
o maintaining internal records to each account.
Managerial and custodial services performed by the servicer on
behalf of the trust include:
o providing assistance in any inspections of the documents
and records relating to the accounts and receivables by the
trustee under the POOLING AGREEMENT,
o maintaining the agreements, documents and files relating to
the accounts and receivables under the credit guidelines as
custodian for the trust, and
o providing data processing and reporting services for
certificateholders of any series and on behalf of the
trustee.
Under the POOLING AGREEMENT, RNB, as servicer, has the right to
delegate any of its responsibilities and obligations as servicer to any of
its affiliates and to any third-party service providers that agree to
conduct RNB's servicing duties under the POOLING AGREEMENT and the CREDIT
CARD GUIDELINES.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
As compensation for its servicing activities and as reimbursement
for its expenses for any MONTHLY PERIOD, the servicer will receive a
servicing fee payable monthly on each DISTRIBUTION DATE in an amount equal
to one-twelfth of the product of:
o the weighted average of the servicing fee rate as specified
in the applicable SERIES SUPPLEMENT, and
o the amount of PRINCIPAL RECEIVABLES in the trust on the
last day of the previous MONTHLY PERIOD.
The share of the servicing fee for any particular series and the
amount invested by any enhancement provider, if any, will be determined by
the provisions of the applicable SERIES SUPPLEMENT. The share of the
servicing fee for any MONTHLY PERIOD not allocated to a particular series
will be paid from amounts allocated to the holder of the TRANSFEROR
CERTIFICATE and any holder of a PARTICIPATION on that DISTRIBUTION DATE.
None of the trust, the trustee, the certificateholders of any series or any
enhancement provider will be directly liable to pay the share of the
servicing fee for any MONTHLY PERIOD to be paid by any holder of the
TRANSFEROR CERTIFICATE or any holder of a PARTICIPATION.
Each month, the servicer will pay from its servicing compensation
any expenses incurred in connection with servicing the receivables
including:
o expenses related to the enforcement of the receivables,
o payment of the fees and disbursements of the trustee and
independent accountants,
and
o other fees that are not expressly stated in the POOLING
AGREEMENT to be payable by the trust, the
certificateholders of a series or DHRC (except federal,
state, local and foreign income, franchise or other taxes
or any interest or penalties imposed upon the trust).
If RNB is acting as servicer and fails to pay the fees and
disbursements of the trustee, the trustee will be entitled to receive the
portion of the servicing fee that is equal to the unpaid amounts.
Certificateholders will not be liable to the trustee for the servicer's
failure to pay those amounts, and any amounts so paid to the trustee will
be treated as paid to the servicer for all other purposes of the POOLING
AGREEMENT.
SERVICER COVENANTS
In the POOLING AGREEMENT, the servicer covenants that:
o it will duly fulfill all obligations on its part to be
fulfilled under or relating to the receivables and the
related accounts, and will maintain in effect all
qualifications required by law to service the receivables
and the related accounts, the failure to comply with which
would have a material adverse effect on the interests of
the certificateholders,
o under the POOLING AGREEMENT, it will not permit any
rescission or cancellation of a receivable except as
ordered by a court of competent jurisdiction or other
governmental authority or in the ordinary course of
business and under the CREDIT CARD GUIDELINES,
o it will not do, or omit to do, anything that would
substantially impair the rights of the certificateholders
in any receivable or account,
o it will not reschedule, revise or defer payments due on the
receivables except in the ordinary course of its business
and under the CREDIT CARD GUIDELINES, and
o 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 instrument, except an instrument
that, together with one or more other writings, constitutes
chattel paper, and if any receivable is so evidenced, it
will be reassigned or assigned to the servicer.
If any of the representations, warranties or covenants of the
servicer for any receivable or the related account are breached the
servicer can cure the breach within 60 days of the earlier to occur of the
discovery of that breach by the servicer or receipt by the servicer of
written notice of that breach given by the trustee. The trustee, however,
may agree to a cure period of up to 150 days. If the breach is not cured,
all receivables in the account or accounts to which the breach relates will
be reassigned or assigned to the servicer if because of the breach the
trust's rights in and to any of the receivables are impaired or the
proceeds are not available to the trust free and clear of any lien.
Receivables will not be reassigned or assigned to the servicer if
the breach is cured such that the relevant representation and warranty is
true and correct, or the relevant covenant has been complied with, in all
material respects. The servicer must deliver to the trustee a certificate
of an authorized officer describing the nature of the breach and the manner
in which the breach was cured.
Any 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 before the DISTRIBUTION DATE after the MONTHLY
PERIOD during which the obligation arises. The amount of the deposit will
be treated as SHARED PRINCIPAL COLLECTIONS. This reassignment or transfer
and assignment to the servicer is the only remedy available to the
certificateholders of any series if a covenant or warranty of the servicer
is not satisfied. The trust's interest in any reassigned receivables will
be automatically assigned to the servicer. See "Description of the
Certificates--Shared Principal Collections and Transferor Principal
Collections" for more information about these collections.
CERTAIN MATTERS REGARDING THE SERVICER
The servicer may not resign from its obligations and duties under
the POOLING AGREEMENT, except:
o on the determination that its duties are no longer
permissible under applicable law, or
o as may be required for any merger or consolidation of the
servicer or the conveyance or transfer of all or
substantially all of the servicer's assets.
No resignation will become effective until the trustee or a
successor to the servicer has assumed the servicer's responsibilities and
obligations under the POOLING AGREEMENT. RNB may also transfer its
servicing obligations to an affiliate and be relieved of its obligations
and duties under the POOLING AGREEMENT.
Any person with whom the servicer may be merged or consolidated or
any person resulting from any merger or consolidation to which the servicer
is a party, or any person succeeding to the business of the servicer, will
be the successor to the servicer under the POOLING AGREEMENT.
SERVICER DEFAULT
A SERVICER DEFAULT refers to:
o any failure by the servicer to make any payment, transfer
or deposit or to give instructions or notice to the trustee
as required by the POOLING AGREEMENT or any
SERIES SUPPLEMENT on or before the date occurring five
business days after the date the payment, transfer or
deposit or instruction or notice is required to be made or
given,
o failure by the servicer to observe or perform any other
covenants or agreements of the servicer as described in the
POOLING AGREEMENT or any SERIES SUPPLEMENT which has a
material adverse effect on the interests of the
certificateholders of any series or class, regardless of
whether funds are available from any enhancement, and which
continues unremedied for 60 days after written notice was
given to the servicer requiring that the situation be
remedied,
o delegation by the servicer of its duties under the POOLING
AGREEMENT in a manner not permitted by the POOLING
AGREEMENT, which delegation continues unremedied for 15
days after the date written notice was given to the
servicer requiring that the situation be remedied,
o any representation, warranty or certification made by the
servicer in the POOLING AGREEMENT or any SERIES SUPPLEMENT
or in any certificate delivered under the POOLING AGREEMENT
or any SERIES SUPPLEMENT which proves to have been
incorrect when made, and has a material adverse effect on
the rights of the certificateholders of any series or
class, regardless of whether funds are available from any
enhancement, and which continues unremedied for 60 days
after written notice was given to the servicer requiring
that the situation be remedied, or
o the occurrence of some events of bankruptcy, insolvency or
receivership of the servicer.
If the delay or failure was caused by an act of God or other
similar occurrence and could not be prevented by the use of reasonable
diligence, the servicer is allowed an additional 60 days to remedy the
situation, however, in the case of a failure to make payment, transfer or
deposit, or notice, the servicer is allowed an additional five days to
remedy the situation before a servicer default occurs.
The servicer agrees to provide the trustee, each rating agency,
enhancement providers, if any, the holder of the TRANSFEROR CERTIFICATE and
the certificateholders of each series with a description of any failure or
delay by it to perform its obligation, together with its notice to the
trustee. The servicer shall not be relieved from using its best efforts to
perform its obligations in a timely manner after a servicer default occurs.
If a SERVICER DEFAULT occurs, the trustee may end all of the
rights and obligations of the servicer under the POOLING AGREEMENT by
sending a termination notice, in writing, to the servicer.
Certificateholders holding certificates comprising more than 50% of the
total unpaid principal amount of all outstanding series may also end all
the rights and obligations of the servicer under the POOLING AGREEMENT by
sending termination notices, in writing, to the servicer, the trustee and
to any enhancement providers. If the trustee within 60 days of receipt of a
termination notice is unable to obtain any bids from eligible successor
servicers and the servicer delivers an officer's certificate stating that
the servicer cannot in good faith cure the SERVICER DEFAULT that gave rise
to the termination notice, then the trustee will offer DHRC the right at
its option to purchase the certificateholders' interest for all series.
The purchase price for the purchase will be paid on the DISTRIBUTION DATE
occurring in the month after receipt of the termination notice and will
equal, after allowing for any deposits and distributions to be made on that
DISTRIBUTION DATE, the PORTFOLIO REASSIGNMENT PRICE.
The trustee will appoint a successor servicer after giving a
termination notice. All rights, authority, power and obligations of the
servicer under the POOLING AGREEMENT will pass to and be vested in the
trustee if:
o no successor servicer is appointed by the trustee, or
o no successor servicer has accepted the appointment by the
time the servicer stops acting as servicer.
Before any successor servicer is appointed, the trustee will seek
to obtain bids from potential servicers meeting eligibility requirements
described in the POOLING AGREEMENT to serve as a successor servicer for
servicing compensation not more than the servicing fee. The rights and
interest of DHRC as holder of the TRANSFEROR CERTIFICATE will not be
affected by any termination notice or appointment of a successor servicer.
EVIDENCE AS TO COMPLIANCE
The POOLING AGREEMENT requires the servicer to furnish an annual
report prepared by a firm of nationally recognized independent public
accountants stating:
o that the firm has applied some procedures agreed upon with
the servicer and examined specified documents and records
relating to the servicing of the accounts during the
servicer's preceding fiscal year, and
o that, on the basis of the agreed upon procedures, nothing
came to the attention of the firm that caused them to
believe that the servicing was not conducted in compliance
with the POOLING AGREEMENT and the applicable provisions of
each SERIES SUPPLEMENT except for exceptions or errors as
the firm believes to be immaterial and any other exceptions
as described in the report.
The POOLING AGREEMENT requires DHRC to deliver to the trustee,
each rating agency and enhancement providers, if any, an annual statement
stating that the servicer has performed its obligations in all material
respects under the POOLING AGREEMENT throughout the preceding fiscal year.
If there has been a default in the performance of any obligation during the
preceding year, the annual statement will specify the nature and status of
the default.
Both the report and the statement are expected to be provided
within ninety days after the servicer's and DHRC's fiscal year which both
end on December 31 of each calendar year. 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 AGREEMENT and each SERIES SUPPLEMENT may be amended
without the consent of the certificateholders of any series to:
o add covenants, restrictions or conditions of the transferor
as considered by DHRC's board of directors and the trustee
to be for the benefit or protection of the
certificateholders,
o make the occurrence, or the occurrence and continuance, of
a default in any additional covenants, restrictions or
conditions a default or EARLY AMORTIZATION EVENT and to
provide for grace periods, immediate enforcement or limits
on available remedies to the added default,
o fix any ambiguity or correct or supplement any provision
that may be defective or inconsistent with any other
provision,
o surrender any right or power of the transferor,
o issue a SUPPLEMENTAL CERTIFICATE or PARTICIPATION,
o add a PARTICIPATION INTEREST to the trust,
o designate an additional transferor,
o provide additional enhancement for the benefit of
certificateholders of any series,
o enable the trust or a portion of the trust to elect to
qualify as a financial asset securitization investment
trust or comparable tax entity for the securitization of
financial assets, or
o add, change or eliminate any provisions or modify in any
manner the rights of certificateholders of any series then
issued and outstanding, only if:
- the transferor delivers to the trustee a certificate
of an authorized officer stating that the transferor
reasonably believes based on facts then known that
the amendment will not adversely affect in any
material respect the interests of any
certificateholder,
- except for adding covenants, restrictions or
conditions and fixing any ambiguity or correcting or
supplementing a provision or surrendering any right
or power of the transferor, the amendment will not
result in a RATINGS EFFECT, and
- a tax opinion is provided.
The POOLING AGREEMENT and each SERIES SUPPLEMENT may also be
amended at any time by the transferor, the servicer and the trustee with
the consent of the holders of certificates that represent at least 66 2/3%
of the total unpaid principal amount of the certificates of all adversely
affected series. Any amendment may add any provisions, change or eliminate
any provisions, or modify in any manner the rights of the
certificateholders in the affected series.
However, without the consent of each affected certificateholder,
no amendment may:
o reduce the amount of or delay the timing of any
distributions to be made to certificateholders or deposits
of amounts to be so distributed or the amount available
under any enhancement except to amend the terms of an EARLY
AMORTIZATION EVENT,
o change the definition or the manner of calculating the
interest on any certificate, or
o reduce the percentage required to consent to any amendment.
The trustee will provide written notice of the substance of any
amendment requiring the consent of certificateholders. The notice will be
sent to each certificateholder as soon as possible after any amendment
becomes effective.
TRUSTEE
Norwest Bank Minnesota, National Association is the trustee under
the POOLING AGREEMENT. The Corporate Trust Department of the trustee is
located at Norwest Center, Sixth and Marquette, Minneapolis, Minnesota
55479-0069.
The trustee and its affiliates may:
o enter into normal banking and trust relationships with the
transferor, the servicer and their affiliates,
o hold certificates of any series in its name but will not be
allowed to participate in any decisions or instructions to
be given to the trust by certificateholders as a group,
o appoint a co-trustee or separate trustees for all or any
part of the trust, or
o resign at any time.
If the trustee appoints a co-trustee or separate trustees, all
rights, powers, duties and obligations of the trustee will be conferred or
imposed on the trustee and each separate trustee or co-trustee jointly. In
any jurisdiction in which the trustee is incompetent or unqualified to
perform some acts, those rights, powers, duties and obligations will be
conferred or imposed on each separate trustee or co-trustee individually.
If so, each separate trustee or co-trustee will exercise and perform those
rights, powers, duties and obligations only at the direction of the
trustee.
If the trustee resigns, DHRC will be required to appoint a
successor trustee. The trustee may also be removed by the servicer if the
trustee becomes ineligible to continue as a trustee under the POOLING
AGREEMENT or if the trustee becomes insolvent. The servicer will then be
required to appoint a successor trustee. Any resignation or removal of the
trustee and appointment of a successor trustee will not become effective
until the successor trustee accepts the appointment.
TERMINATION OF THE TRUST
Unless DHRC instructs the trustee otherwise, the trust will end on
the TRUST TERMINATION DATE. Once the trust has ended, all right, title and
interest in and to the receivables and other funds of the trust will be
conveyed and transferred to the holder of the TRANSFEROR CERTIFICATE, any
SUPPLEMENTAL CERTIFICATE and any PARTICIPATION except for amounts in
accounts maintained by the trust for the final payment of principal and
interest to certificateholders.
THE BANK RECEIVABLES PURCHASE AGREEMENT
AND THE RECEIVABLES PURCHASE AGREEMENT
The transfers of the receivables from RNB to DHCC and from DHCC to
DHRC before being transferred to the trust are governed by the following
agreements:
o the Bank Receivables Purchase Agreement, dated as of
September 13, 1995, between DHCC, as purchaser of the
receivables and RNB, as seller of the receivables, and
o the Receivables Purchase Agreement, dated as of September
13, 1995, between DHRC, as purchaser of the receivables,
and DHCC, as seller of the receivables.
The Bank Receivables Purchase Agreement governs the transfer from
RNB to DHCC. The Receivables Purchase Agreement governs the transfer of the
receivables from DHCC to DHRC. DHRC could also enter into other purchase
agreements directly with CREDIT CARD ORIGINATORS.
SALE OF THE RECEIVABLES
Bank Receivables Purchase Agreement. Under the Bank Receivables
Purchase Agreement, RNB sold to DHCC all of its right, title and interest
in and to:
o the receivables existing at the close of business on the
CUT-OFF DATE and later created at any time from the initial
accounts until the end of the trust,
o the receivables existing on each ADDITION DATE and later
created at any time from any AUTOMATIC ADDITIONAL ACCOUNTS
until the end of the trust,
o any merchant fees and deferred billing fees,
o all recoveries from the initial accounts and from the
AUTOMATIC ADDITIONAL ACCOUNTS,
o all recoveries from specific DEFAULTED RECEIVABLES, and
o all monies due or to become due, all amounts received, and
all proceeds under the Bank Receivables Purchase Agreement.
In connection with any sale of the receivables to DHCC after the
AUTOMATIC ADDITION TERMINATION DATE or the AUTOMATIC ADDITION SUSPENSION
DATE and before the RESTART DATE, RNB will indicate in its computer files
or other relevant microfiche or printed records that the receivables were
sold to DHCC by RNB and that these receivables have been sold by DHCC to
DHRC and then transferred by DHRC to the trust. Additionally, RNB will
provide to DHCC a computer file, a microfiche list or a printed list
containing an accurate and complete list showing each account identified by
account number and by total outstanding balance on each account as of the
AUTOMATIC ADDITION TERMINATION DATE, the AUTOMATIC ADDITION SUSPENSION DATE
or the ADDITION CUT-OFF DATE.
RNB will also indicate in its computer files or other records that
receivables in REMOVED ACCOUNTS have been repurchased by RNB. The records
and agreements of the accounts and receivables are not segregated by RNB
from other documents and agreements relating to other credit card accounts
and receivables and are not stamped or marked to reflect the sale or
transfer of the receivables to DHCC. The computer records, other relevant
microfiche or printed records of RNB will be marked to evidence the sale or
transfer after the AUTOMATIC ADDITION TERMINATION DATE or the AUTOMATIC
ADDITION SUSPENSION DATE and before the RESTART DATE. DHCC, as purchaser,
has filed one or more UCC financing statements meeting the requirements of
state law in the jurisdictions which are necessary to perfect the transfer
of the receivables. See "Legal Aspects of the Receivables" for more
discussion.
Under the Bank Receivables Purchase Agreement, RNB will be
required to, and DHCC is required to cause RNB to, designate SUPPLEMENTAL
ACCOUNTS under the POOLING AGREEMENT to be included as trust accounts. See
"The Pooling and Servicing Agreement--Addition of Trust Assets" for
information on the conditions to any addition of accounts.
Receivables Purchase Agreement. Under the Receivables Purchase
Agreement, DHCC sold to DHRC all of its right, title and interest in and to:
o the receivables existing at the close of business on the
CUT-OFF DATE and later created at any time from the initial
accounts until the end of the trust,
o the receivables existing on each ADDITION DATE and later
created at any time from
any AUTOMATIC ADDITIONAL ACCOUNTS until the end of the trust,
o any merchant fees and deferred billing fees,
o all recoveries from the initial accounts and from the
AUTOMATIC ADDITIONAL ACCOUNTS,
o all recoveries from specific DEFAULTED RECEIVABLES,
o all monies due or to become due, all amounts received, and
all proceeds under the Receivables Purchase Agreement, and
o the Bank Receivables Purchase Agreement.
In connection with any sale of the receivables to DHRC after the
AUTOMATIC ADDITION TERMINATION DATE or the AUTOMATIC ADDITION SUSPENSION
DATE and before the RESTART DATE, DHCC will indicate in its computer files
or other relevant microfiche or printed records that the receivables were
sold to DHRC by DHCC and that these receivables were then transferred by
DHRC to the trust. Additionally, DHCC will provide to DHRC a computer file,
a microfiche list or a printed list containing an accurate and complete
list showing each account identified by account number and by total
outstanding balance on each account as of the AUTOMATIC ADDITION
TERMINATION DATE, the AUTOMATIC ADDITION SUSPENSION DATE or the ADDITION
CUT-OFF DATE.
DHCC will also indicate in its computer files or other records
that receivables in REMOVED ACCOUNTS have been repurchased by DHCC. The
records and agreements of the accounts and receivables are not segregated
by DHCC from other documents and agreements relating to other credit card
accounts and receivables and are not stamped or marked to reflect the sale
or transfer of the receivables to DHCC. The computer records, other
relevant microfiche or printed records of DHCC will be marked to evidence
the sale or transfer after the AUTOMATIC ADDITION TERMINATION DATE or the
AUTOMATIC ADDITION SUSPENSION DATE and before the RESTART DATE. DHCC, as
seller, has filed one or more UCC financing statements meeting the
requirements of state law in the jurisdictions which are necessary to
perfect the transfer of the receivables. See "Legal Aspects of the
Receivables" for more discussion.
Under the Receivables Purchase Agreement, DHCC will be required
to, and DHRC is required to cause DHCC to, designate SUPPLEMENTAL ACCOUNTS
under the POOLING AGREEMENT to be included as trust accounts. See "The
Pooling and Servicing Agreement--Addition of Trust Assets" for information
on the conditions to any addition of accounts.
REPRESENTATIONS AND WARRANTIES
Bank Receivables Purchase Agreement. In the Bank Receivables
Purchase Agreement, RNB represents and warrants to DHCC as of the CLOSING
DATE and on each ADDITION DATE that:
o RNB is a national banking association validly existing and
in good standing under the laws of the United States, and
has full corporate power, authority and legal right to
execute, deliver and perform its obligations under the Bank
Receivables Purchase Agreement,
o the Bank Receivables Purchase Agreement constitutes a valid
and binding obligation of RNB, enforceable against RNB
under its terms, according to customary bankruptcy- and
equity-related exceptions,
o RNB is the legal and beneficial owner of all right, title
and interest in and to each receivable, subject, on the
CLOSING DATE, to any participation interest in the
receivables held by DHCC,
o RNB has the full right, power and authority to transfer the
receivables under the Bank Receivables Purchase Agreement,
o the Bank Receivables Purchase Agreement, or the
SUPPLEMENTAL CONVEYANCE for SUPPLEMENTAL ACCOUNTS, to be
delivered by RNB, forms a valid transfer and assignment to
DHCC of all right, title and interest of RNB in and to:
- the receivables,
- all monies due or to become due, and
- all related proceeds, and
o on the first CUT-OFF DATE for each initial account, on the
date of creation for each AUTOMATIC ADDITIONAL ACCOUNT, and
on the ADDITION CUT-OFF DATE for each SUPPLEMENTAL ACCOUNT:
- each account classified as an "eligible account" by
RNB in any document or report delivered under the
Bank Receivables Purchase Agreement will satisfy the
requirements for an eligible account, and
- each receivable classified as an "eligible
receivable" by RNB in any document or report
delivered under the Bank Receivables Purchase
Agreement will satisfy the requirements for an
ELIGIBLE RECEIVABLE.
If any representation or warranty is not true and correct in any
material way as of the date specified in the Bank Receivables Purchase
Agreement and, as a result, the value of the receivable used to determine
the total PRINCIPAL RECEIVABLES in the trust is reduced to zero, then, the
total principal balance of that receivable under the Bank Receivables
Purchase Agreement will be changed to show that the receivable was an
INELIGIBLE RECEIVABLE when sold. If so, RNB will repay to DHCC the amount
of the purchase price originally paid to RNB less the amount of any
collections already received from this receivable.
If any representation or warranty described above is not true and
correct in any material way on the date specified in the Bank Receivables
Purchase Agreement and, as a result, RNB is required to accept a
reassignment of all of the receivables transferred to the trust by paying
the PORTFOLIO REASSIGNMENT PRICE, RNB will be required to accept a
reassignment of DHCC's interest in those receivables. RNB will also be
required to deposit to the COLLECTION ACCOUNT an amount equal to the
PORTFOLIO REASSIGNMENT PRICE on the next DISTRIBUTION DATE.
Receivables Purchase Agreement. In the Receivables Purchase
Agreement, DHCC represents and warrants to DHRC as of the CLOSING DATE and
on each ADDITION DATE that, among other things:
o DHCC is a corporation validly existing and in good standing
under the laws of the State of Minnesota, and has full
corporate power, authority and legal right to execute,
deliver and perform its obligations under the Receivables
Purchase Agreement,
o the Receivables Purchase Agreement constitutes a valid and
binding obligation of DHCC, enforceable against DHCC under
its terms, according to customary bankruptcy- and
equity-related exceptions,
o DHCC is the legal and beneficial owner of all right, title
and interest in and to each
receivable,
o DHCC has the full right, power and authority to transfer
the receivables under the Receivables Purchase Agreement,
o the Receivables Purchase Agreement or the SUPPLEMENTAL
CONVEYANCE for SUPPLEMENTAL ACCOUNTS, to be delivered by
DHCC, forms a valid transfer and assignment to DHRC of all
right, title and interest of DHCC in and to:
- the receivables,
- all monies due or to become due, and
- all related proceeds, and
o on the first CUT-OFF DATE for each initial account, on the
date of creation for each AUTOMATIC ADDITIONAL ACCOUNT, and
on the ADDITION CUT-OFF DATE for each SUPPLEMENTAL ACCOUNT:
- each account classified as an "eligible account" by
DHCC in any document or report delivered under the
Receivables Purchase Agreement will satisfy the
requirements for an eligible account, and
- each receivable classified as an "eligible
receivable" by DHCC in any document or report
delivered under the Receivables Purchase Agreement
will satisfy the requirements for an ELIGIBLE
RECEIVABLE.
If any representation or warranty is not true and correct in any
material way as of the date specified in the Receivables Purchase Agreement
and, as a result, the value of the receivable used to determine the total
PRINCIPAL RECEIVABLES in the trust is reduced to zero, then, the total
principal balance of that receivable under the Receivables Purchase
Agreement will be changed to show that the receivable was an INELIGIBLE
RECEIVABLE when sold. If so, DHCC will repay to DHRC the amount of the
purchase price originally paid to DHCC less the amount of any collections
already received from this receivable.
If any representation or warranty described above is not true and
correct in any material way on the date specified in the Receivables
Purchase Agreement and, as a result, DHRC is required to accept a
reassignment of all of the receivables transferred to the trust by paying
the PORTFOLIO REASSIGNMENT PRICE, DHCC will be required to accept a
reassignment of DHRC's interest in those receivables. DHCC will also be
required to deposit into the COLLECTION ACCOUNT an amount equal to the
PORTFOLIO REASSIGNMENT PRICE on the next DISTRIBUTION DATE.
COVENANTS
Bank Receivables Purchase Agreement. It is the intention of RNB
and DHCC that the transfer of the receivables by RNB to DHCC under the Bank
Receivables Purchase Agreement be viewed as an absolute sale of the
receivables by RNB to DHCC. This transfer is not intended to be a pledge of
the receivables by RNB to DHCC to secure a debt or other obligation of RNB.
The Bank Receivables Purchase Agreement will also be considered a security
agreement within the meaning of Article 9 of the UCC and the conveyance
described in the POOLING AGREEMENT will be considered a grant by RNB to
DHCC of a "security interest" within the meaning of Article 9 of the UCC in
all of RNB's right, title and interest in and to the receivables.
RNB may reduce the annual percentage rates of the periodic finance
charges assessed on the receivables, reduce other fees charged on any of
the accounts or change the other terms of the accounts as required by law
or as RNB may determine to be appropriate. However, RNB may not otherwise
take these actions if, either:
o as a result of a reduction or change it is reasonably
expected that the reduction or change will cause an EARLY
AMORTIZATION EVENT to occur for that series, or
o a reduction or change:
- when RNB owns a comparable segment of receivables, is
not applied to the comparable segment of consumer
open end credit accounts owned by RNB with the same
characteristics as the receivables that are being
reduced or changed, and
- when RNB does not own a comparable segment of
receivables will be made with the intent to benefit
DHRC over the certificateholders or to materially
adversely affect the certificateholders, unless
restricted by an endorsement, sponsorship, or other
agreement between DHRC and an unrelated third party
or by the terms of the accounts.
Receivables Purchase Agreement. It is the intention of DHCC and
DHRC that the transfer of the receivables by DHCC to DHRC under the
Receivables Purchase Agreement be viewed as an absolute sale of the
receivables by DHCC to DHRC. This transfer is not intended to be a pledge
of the receivables by DHCC to DHRC to secure a debt or other obligation of
DHCC. The Receivables Purchase Agreement will also be considered a security
agreement within the meaning of Article 9 of the UCC and the conveyance
described in the POOLING AGREEMENT will be considered a grant by DHCC to
DHRC of a "security interest" within the meaning of Article 9 of the UCC in
all of DHCC's right, title and interest in and to the receivables.
TRANSFER OF ACCOUNTS AND ASSUMPTION OF RNB'S, DHCC'S AND DHRC'S OBLIGATIONS
RNB, DHCC and DHRC may transfer all or a portion of RNB's consumer
open end credit card accounts and the related receivables upon the
satisfaction of various conditions. The transfer must include:
o all of the accounts,
o RNB's, DHCC's and DHRC's remaining interest in the
receivables arising under the accounts, and
o all servicing functions and other obligations under the
Receivables Purchase Agreement, the Bank Receivables
Purchase Agreement and the POOLING AGREEMENT.
This transfer may be to another entity which may or may not be an
entity that is affiliated with RNB, DHCC or DHRC. The Receivables Purchase
Agreement, the Bank Receivables Purchase Agreement and the POOLING
AGREEMENT allow RNB, DHCC and DHRC to assign, convey and transfer the
ASSIGNED ASSETS and the ASSUMED OBLIGATIONS to the assuming entity, without
the consent or approval of certificateholders if the following conditions
are met:
o the assuming entity, the trustee and any of RNB, DHCC or
DHRC have entered into an assumption agreement providing
for the assuming entity to assume the ASSUMED OBLIGATIONS,
including the obligations under the Receivables Purchase
Agreement, the Bank Receivables Purchase Agreement and the
POOLING AGREEMENT, to transfer the receivables generated by
the accounts to any of DHCC, DHRC or the trust, as the case
may be,
o all filings required to perfect the interest of DHCC, DHRC
or the trustee in the receivables generated by the accounts
were made and copies have been delivered to the trustee,
o DHCC, DHRC or the trustee, as the case may be, has received
written notice from each rating agency that the transfer
and assumption will not have a RATINGS EFFECT, and copies
of the notice were sent to the servicer and the trustee,
o DHCC, the transferor, or the trustee, as the case may be,
has received an opinion of counsel as to matters specified
by DHCC, DHRC or the trustee, and
o the trustee has received a tax opinion.
The Receivables Purchase Agreement, the Bank Receivables Purchase
Agreement and the POOLING AGREEMENT provide that the parties to each
document may enter into amendments to that document to permit a transfer
and assumption without the consent of the certificateholders. After any
permitted transfer and assumption, RNB and DHCC will have no further
liability or obligation under the Receivables Purchase Agreement, the Bank
Receivables Purchase Agreement and the POOLING AGREEMENT, other than any
liabilities that existed before the transfer. RNB and DHCC will remain
liable for all representations, warranties and covenants made by them
before the transfer.
AMENDMENT
The Bank Receivables Purchase Agreement may be amended by DHCC and
RNB without the consent of the certificateholders. The Receivables Purchase
Agreement may be amended by DHRC and DHCC without the consent of the
certificateholders. No amendment to either the Receivables Purchase
Agreement or the Bank Receivables Purchase Agreement will be allowed to
cause a RATINGS EFFECT.
TERMINATION
The Bank Receivables Purchase Agreement will end upon the mutual
agreement of the parties to that agreement. The Receivables Purchase
Agreement will end immediately after the trust has ended. Additionally, if
a bankruptcy trustee or receiver is appointed for DHCC or another
liquidation event occurs, DHCC will immediately stop selling receivables to
DHRC and promptly give notice of the event to DHRC and to the trustee.
SECURITY RATINGS
Any rating of the certificates by a rating agency will indicate:
o its view on the likelihood that certificateholders will
receive required interest and principal payments, and
o its evaluation of the receivables and the availability of
any enhancement for the
certificates.
Among the things a rating will not indicate are:
o the likelihood that an EARLY AMORTIZATION EVENT will occur,
o the likelihood that a United States withholding tax will be
imposed on non-U.S. certificateholders,
o the marketability of the certificates
o the market price of the certificates, or
o whether the certificates are an appropriate investment for
you.
A rating will not be a recommendation to buy, sell or hold the
certificates. A rating may be lowered or withdrawn at any time by a rating
agency.
DHRC will request a rating of the certificates offered by this
prospectus and the prospectus supplement from at least one rating agency.
It will be a condition to the issuance of the certificates of each series
or class offered by this prospectus and the related prospectus supplement
that they be rated in one of the four highest rating categories by at least
one nationally recognized rating organization selected by DHRC to rate any
series. The rating or ratings applicable to the certificates of each series
or class offered by this prospectus will be provided in the related
prospectus supplement. Rating agencies other than those requested could
assign a rating to the certificates and that rating could be lower than any
rating assigned by a rating agency chosen by DHRC.
LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
The transfer of the receivables by DHRC to the trust constitutes
either a valid transfer and assignment of all of DHRC's interest in and to
the receivables or a grant of a security interest in the receivables. See
"The Pooling and Servicing Agreement--Representations and Warranties."
The receivables are accounts, general intangibles or chattel paper
for purposes of the UCC. Both the transfer and assignment of accounts and
the transfer of accounts as security for an obligation are treated under
Article 9 of the UCC as creating a security interest. The filing of a
financing statement is required to perfect the trust's interest. If a
transfer of general intangibles is considered the creation of a security
interest, rather than a sale, Article 9 of the UCC applies and the filing
of one or more financing statements is also required to perfect the trust's
security interest. Financing statements covering the receivables of the
trust will be filed under the UCC.
If a transfer of general intangibles is treated as a sale, the UCC
is not applicable and no further action is required to protect the trust's
interest. Although the priority of general intangibles that come into
existence after the initial closing date in this case is not as clear, RNB,
DHCC and DHRC believe that it would not be consistent for a court to give
the trust less favorable treatment if the transfer of the receivables is
considered to be a sale than if it were considered to be creating a
security interest.
There are some limited circumstances under the UCC in which an
earlier or later transferee of receivables could have an interest in the
receivables with priority over the trust's interest. Under the POOLING
AGREEMENT, DHRC will represent and warrant that it has transferred the
receivables to the trust free and clear of all liens and security interests
other than tax liens and the interest of DHRC as holder of the TRANSFEROR
CERTIFICATE. In addition, DHRC will covenant that it will not sell, pledge,
assign or transfer, or grant, create, incur, assume or suffer to exist any
lien on, any receivable except to the trust or in connection with any
transfer of the accounts selected for the trust. A tax or other
governmental lien on DHRC's property arising before a receivable comes into
existence also may have priority over the interest of the trust in the
receivable. There is a good possibility that the trust may not have a
perfected security interest in any of the receivables created after the
filing of a petition for relief by or against DHCC or DHRC under the U.S.
bankruptcy code or after the appointment of a receiver or conservator for
RNB. It is anticipated that the trust will either own or have a perfected
security interest in receivables existing on the date of filing a petition
by or against DHCC or DHRC under the U.S. bankruptcy code or after the date
of appointment of a receiver or conservator for RNB and will be able to
make payments of principal and interest on the investor certificates,
although there can be no assurance that any of these payments would be
timely.
Because the trust's interest in the receivables is dependent upon
DHRC's interest in the receivables, which is dependent upon DHCC's interest
in the receivables, any negative change in the priority or perfection of
DHRC's or DHCC's security interest would correspondingly affect the trust's
interest in the affected receivables. In addition, if a receiver or
conservator were appointed for RNB, some administrative expenses of the
receiver or conservator also may have priority over the interest of the
trust in those receivables. While RNB is the servicer, some cash
collections on the receivables may be held by RNB and commingled with its
funds for brief periods, and if an insolvency event occurs, the trust may
not have a perfected interest in the commingled collections.
MATTERS RELATING TO BANKRUPTCY OR RECEIVERSHIP
RNB has represented and warranted to DHCC, and DHCC has
represented and warranted to DHRC that the sale of the receivables is a
valid sale. In addition, RNB, DHCC and DHRC have treated and will treat the
transfer of the receivables as a sale. DHCC has taken or will take all
actions that are required by the UCC to perfect DHCC's and DHRC's ownership
interest in the receivables. If DHCC were to become a debtor in a
bankruptcy case and a creditor or trustee-in-bankruptcy of the debtor or
the debtor itself were to take the position that the sale of receivables
from DHCC to DHRC should be recharacterized as a pledge of the receivables
to secure a borrowing from that debtor, then delays in payments of
collections of receivables to DHRC, to the trust and to certificateholders
could occur and reductions in the amount of those payments could result.
The FDIC may be appointed a conservator or receiver of RNB. In
that capacity, the FDIC has the power to repudiate or disaffirm the
obligations of the transferor under the POOLING AGREEMENT or to request a
stay of any judicial action or proceeding involving RNB.
A valid perfected security interest of DHCC should be enforceable,
to the extent of DHCC's "actual direct compensatory damages," regardless of
the insolvency of RNB or the appointment of a receiver or conservator for
RNB if:
o RNB granted a security interest in the receivables to DHCC,
DHCC granted a security interest in the receivables to DHRC
and DHRC granted a security interest in the receivables to
the trust,
o the interest was validly perfected before RNB's insolvency,
o the interest was not taken or granted in contemplation of
RNB's insolvency or with the intent to hinder, delay or
defraud RNB or its creditors,
o each of the Bank Receivables Purchase Agreement, the
Receivables Purchase Agreement and the POOLING AGREEMENT is
continuously a record of RNB, and
o each of the Bank Receivables Purchase Agreement, the
Receivables Purchase Agreement and the POOLING AGREEMENT
represents a bona fide and arm's length transaction
undertaken for adequate consideration in the ordinary
course of business.
If so, payments to the trust should not be open to an automatic
stay of payment or to recovery by the FDIC as unperfected or unenforceable.
The FDIC has the right to require the trustee to establish its right to
payments by submitting to and completing the administrative claims
procedure established under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989. The conservator or receiver has the right to
request a stay of proceedings as to RNB. This could result in delays in
payments on the certificates and possible losses to you.
The amount that the FDIC is required to pay is limited to your
"actual direct compensatory damages" determined as of the date of the
FDIC's appointment as receiver. There is not a statutory definition of
"actual direct compensatory damages." The staff of the FDIC takes the
position that upon repudiation or disaffirmation these damages would not
include interest accrued to the date of actual repudiation or
disaffirmation. Under the FDIC interpretation, you would receive interest
only through the date of the appointment of the receiver. Since the FDIC
may delay actual repudiation or disaffirmation for up to 180 days following
its appointment as receiver, you may not receive the full amount of
interest owing to you under the certificates. There is one reported federal
district court decision that construes the term "actual direct compensatory
damages." This 1993 court case construed the term, in the context of the
repudiation of zero coupon bonds, to mean the fair market value of those
bonds as of the date of repudiation. You would not be compensated for the
period between the appointment of the receiver and the date of repudiation
under either interpretation.
In a 1993 decision, Octagon Gas Systems, Inc. v. Rimmer, 997 F.2d
948 (10th Cir. 1993), cert. denied, 114 S. Ct. 554 (1993), the United
States Court of Appeals for the 10th Circuit suggested that even where a
transfer of accounts from a seller to a buyer constitutes a "true sale,"
the accounts would nevertheless constitute property of the seller's
bankruptcy estate in a bankruptcy of the seller. If DHCC or DHRC were to
become part of a bankruptcy proceeding or RNB were to become subject to
receivership and a court were to follow the Octagon court's reasoning,
certificateholders might experience delays in payment and possibly losses
in their investment in the certificates. Counsel has advised DHRC that the
facts of the Octagon case are distinguishable from those in the sale
transactions between RNB and DHCC, DHCC and DHRC and between DHRC and the
trust and that the reasoning of the Octagon case appears to be inconsistent
with established precedent and the UCC. Also, because RNB, DHCC, DHRC, the
trust and the transaction governed by the POOLING AGREEMENT do not have any
particular link to the 10th Circuit, it is unlikely that RNB, DHCC, or DHRC
would be subject to an insolvency proceeding in the 10th Circuit. For this
reason, the Octagon case should not be binding precedent on a court or
receiver in an insolvency proceeding involving the receivables.
In addition, if DHCC were to become a debtor in a bankruptcy case
and a creditor or trustee-in-bankruptcy of the debtor or the debtor itself
were to request a court to order DHCC substantively consolidated with DHRC,
delays in payments on the investor certificates could result. Should the
bankruptcy court rule in favor of any creditor, trustee-in-bankruptcy or
debtor, reductions in payments could result.
DHRC has taken or will take all actions that are required under
the UCC to perfect the trust's interest in the receivables. DHRC has also
warranted to the trust that the trust will have a first priority interest
in the receivables and, with some exceptions, in the proceeds as well.
However, a tax or government lien on property of RNB, DHCC or DHRC which
predates the time a receivable is conveyed to the trust may have priority
over the interest of the trust in that receivable. DHRC's articles of
incorporation state that it shall not file a voluntary petition for relief
under the U.S. bankruptcy code without the unanimous affirmative vote of
all of its directors, including the independent directors. According to the
POOLING AGREEMENT, the trustee will covenant that it will not at any time
institute against DHRC any bankruptcy, reorganization or other proceedings
under any federal or state bankruptcy or similar law. In addition, other
steps have been or will be taken to avoid DHRC's becoming a debtor in a
bankruptcy case. Aside from these steps, if DHRC were to become a debtor in
a bankruptcy case, and a bankruptcy trustee for DHRC or a creditor of DHRC
were to take the position that the transfer of the receivables from DHRC to
the trust should be recharacterized as a pledge of the receivables, then
delays in payments on the certificates and, should the court rule in favor
of the trustee or any creditor, reductions in the amount of the payments
could result.
DHRC has been structured in a manner intended to reduce the
likelihood of the voluntary or involuntary application for relief under the
U.S. bankruptcy code or similar applicable state laws. DHRC is also
structured to avoid the substantive consolidation of DHRC with DHCC. DHRC
is a separate, special purpose subsidiary, whose articles of incorporation
contain limitations on the nature of DHRC's business and restrictions on
the ability of DHRC to commence voluntary or involuntary cases or
proceedings under these laws without the unanimous vote of all its
directors. Additionally, DHRC does not intend to file, and DHCC has agreed
that it will not file, a voluntary petition for relief under the U.S.
bankruptcy code or any similar state laws as to DHRC.
If DHRC were to become a debtor in a bankruptcy case causing an
EARLY AMORTIZATION EVENT to occur, then, under the POOLING AGREEMENT,
additional PRINCIPAL RECEIVABLES would not be transferred to the trust. On
the occurrence of some events of bankruptcy, insolvency or receivership, if
no EARLY AMORTIZATION EVENT except the commencement of the bankruptcy or
similar event exists, the trustee-in-bankruptcy may have the power to
continue to require DHRC to transfer new receivables to the trust and to
prevent the commencement of the EARLY AMORTIZATION PERIOD or, if applicable
for any series as specified in the related prospectus supplement, the RAPID
ACCUMULATION PERIOD.
Specified events of insolvency, conservatorship or receivership of
the servicer will result in a SERVICER DEFAULT, which will result in an
EARLY AMORTIZATION EVENT. A conservator or receiver of the servicer may
have the power to prevent the trustee and the certificateholders from
appointing a successor servicer if no SERVICER DEFAULT exists except the
commencement of a bankruptcy or similar event.
Payments made on repurchases of receivables by RNB or DHRC may be
recoverable by RNB or DHRC, or by a creditor, conservator, receiver or a
trustee-in-bankruptcy of RNB or DHRC, as a preferential transfer from RNB
or DHRC if these payments are made within one year before the filing of a
bankruptcy case as to RNB or DHRC.
CONSUMER PROTECTION LAWS
The relationship of the cardholder and credit card issuer is
extensively regulated by federal and state consumer protection and related
laws. For credit cards issued by RNB, the most significant laws include:
o the federal Truth-in-Lending Act,
o the Fair Credit Billing Act,
o the Fair Debt Collection Practices Act,
o the Equal Credit Opportunity Act,
o the Fair Credit Reporting Act,
o the Electronic Funds Transfer Act,
o the National Banking Act, and
o applicable state laws.
Claims may be brought under these statutes by private consumers as
well as federal and state regulators. These statutes impose disclosure
requirements when a credit card account is advertised, when it is opened,
at the end of monthly billing cycles and at year end and, in addition,
prohibit discriminatory practices in extending credit and impose
limitations on the type of account-related charges that may be assessed.
Federal law requires credit card issuers to disclose to consumers:
o the interest rates,
o cardholder fees,
o grace periods, and
o balance calculation methods.
In addition, cardholders are entitled under current laws to have
payments and credits applied to the credit card account promptly, to
receive prescribed notices and to require billing errors to be resolved
promptly.
Some laws, including the laws described above, may limit RNB's
ability to collect amounts owing on the receivables regardless of any act
or omission on the part of RNB. For example, under the federal Fair Credit
Billing Act, a credit card issuer is open to all claims, other than tort
claims, and defenses arising out of transactions in which a credit card is
used as a method of payment or extension of credit if:
o the obligor has made a good faith attempt to obtain
satisfactory resolution of a disagreement or problem
relative to the transaction from the person honoring the
credit card, and
o except in cases where there is a relationship between the
person honoring the card and the credit card issuer, the
amount of the initial transaction exceeds $50 and the place
where the initial transaction occurred was in the same
state as the cardholder's mailing address or within 100
miles of that address.
These statutes further provide that in some cases cardholders
cannot be held liable for, or the cardholder's liability is limited to,
charges to the credit card account that result from unauthorized use of the
credit card.
Additional consumer protection laws may be enacted that would
impose requirements on the making, enforcement and collection of consumer
credit loans. In particular, on May 5, 1999, an amendment to the federal
Truth-in-Lending Act was passed by the House of Representatives as part of
the bankruptcy reform bill and referred to the Senate. This amendment,
among other things, requires disclosure:
o on the time it would take the consumer to repay a balance
if the consumer makes only the minimum payments,
o on when any introductory rate will expire, as well as the
rate that will then apply and
o in internet based solicitations identical to that contained
in direct mail solicitations.
In addition, on May 4, 1999, President Clinton proposed similar legislation
to require additional disclosure in credit card bills and solicitations.
Although the proposed legislation have not been enacted, there can
be no assurance that a similar bill will not become law in the future. The
potential effect of any legislation which limits the amount of finance
charges and fees that may be charged on credit cards could be to reduce the
PORTFOLIO YIELD on the accounts. If the PORTFOLIO YIELD is reduced, an
EARLY AMORTIZATION EVENT may occur, and the EARLY AMORTIZATION PERIOD would
commence. Any new laws or rulings that may be adopted, and existing
consumer protection laws, may adversely affect the ability to collect on
the receivables. In addition, failure of the servicer to comply with those
requirements could adversely affect the servicer's ability to enforce the
receivables.
Some jurisdictions may attempt to require out-of-state credit card
issuers to comply with their consumer protection laws in connection with
their operations in those jurisdictions. These laws may include a
limitation on the charges imposed by credit card issuers. If it were
determined that out-of-state credit card issuers must comply with a
jurisdiction's laws limiting the charges imposed by credit card issuers,
those actions could have an adverse impact on RNB's credit card operations.
Application of federal and state bankruptcy and debtor relief laws,
including the Soldiers' and Sailors' Civil Relief Act of 1940, would affect
the interests of the holders of the certificates if the protection provided
to debtors under those laws result in any receivables of the trust being
written off as uncollectible.
The trust may be liable for violations of consumer protection laws
that apply to the receivables transferred to it, either as assignee from
DHRC for obligations arising before the transfer or as a party directly
responsible for obligations arising after the transfer. In addition, a
cardholder may be entitled to assert these violations by way of set-off
against his or her obligation to pay the amount of receivables owing. DHRC
will warrant to the trust in the POOLING AGREEMENT that all receivables
transferred to the trust have been and will be created in compliance with
the requirements of these laws. See "The Pooling and Servicing
Agreement--Representations and Warranties" for additional discussion.
CLAIMS AND DEFENSES OF CARDHOLDERS AGAINST THE TRUST
The UCC provides that unless a cardholder has made an enforceable
agreement not to assert defenses or claims arising out of a transaction,
the rights of the trust are limited by:
o all the terms of the cardholder agreement between RNB and
the cardholder,
o any defense or claim of the cardholder,
o rights of set-off, and
o any other defense or claim of the cardholder against RNB
that accrues before the cardholder receives notification of
the assignment.
The UCC also provides that any cardholder is authorized to
continue to pay RNB until:
o the cardholder receives notification, reasonably
identifying the rights assigned, that the amount due or to
become due has been assigned and that payment is to be made
to the trustee or successor servicer, and
o if requested by the cardholders, the trustee or successor
servicer has furnished reasonable proof of assignment.
No agreement as to defenses has been entered into and no notice of
the assignment of the receivables to the trust will be sent to the
cardholders obligated on the accounts in connection with the transfer of
the receivables to the trust.
TAX MATTERS
The following general discussion summarizes the material U.S.
federal income tax consequences relating to the purchase, ownership and
disposition of a certificate. This discussion applies only to certificates
offered under this Prospectus. This summary deals primarily with U.S.
CERTIFICATE OWNERS who acquire their certificates at their original issue
price in the original issuance of those certificates and who hold their
certificates as capital assets.
This discussion is based on present provisions of the Internal
Revenue Code of 1986, as amended, the proposed, temporary and final
Treasury regulations under the tax code, and administrative rulings or
pronouncements and judicial decisions:
o all as in effect on the date of this prospectus, and
o all of which are subject to change, possibly with
retroactive effect.
This discussion does not address all of the tax consequences that
may be relevant to a certificateholder because of that certificateholder's
particular circumstances. It does not address the U.S. federal income tax
consequences that may be relevant to some types of certificateholders that
are subject to special treatment under the tax code, including:
o dealers in securities or currencies,
o financial institutions,
o tax-exempt entities,
o life insurance companies,
o persons holding certificates as a part of a hedging,
integrated, conversion or constructive sale transaction or
a straddle, or
o persons whose functional currency is not the U.S. dollar.
Also, the following discussion does not consider the alternative minimum
tax consequences, if any, of the investment in the certificates, or the
state, local or foreign tax consequences of the investment. Each
prospective certificateholder is urged to consult its own tax advisor in
determining the federal, state, local and foreign income and any other tax
consequences of the purchase, ownership and disposition of a certificate.
The trust will not ask the IRS for a ruling regarding any of the
U.S. federal income tax consequences discussed in this prospectus. As a
result, the trust can give no assurance that the IRS will not take
positions contrary to those described below. Opinions of counsel are not
binding on the IRS or the courts. In addition, the opinions of Skadden,
Arps, Slate, Meagher & Flom LLP described below are based on the
representations and assumptions described in those opinions, including, but
not limited to, the assumption that all of the relevant parties will comply
with the terms of the POOLING AGREEMENT, the SERIES SUPPLEMENT, the
Receivables Purchase Agreement, and the Bank Receivables Purchase
Agreement. The conclusions of tax counsel described in the opinions and the
discussion of the U.S. federal income tax consequences in this prospectus
may not be accurate:
o if those representations are inaccurate, and/or
o if the relevant parties fail to comply with the terms of
these agreements.
TAX CHARACTERIZATION OF THE TRUST
The transferor anticipates that Skadden, Arps, Slate, Meagher &
Flom LLP will furnish an opinion to the transferor, in relation to the
issuance of certificates of any series offered by this Prospectus, that the
trust will not be classified as an association or as a publicly traded
partnership taxable as a corporation for U.S. federal income tax purposes.
The opinion will be based on the assumptions and qualifications described
in that opinion and on certain representations or covenants. As discussed
in the previous paragraph, however, this opinion is not binding on the IRS
and no assurance can be given that this characterization will prevail. See
the last two paragraphs of this subsection for discussion of possible
alternative characterizations of the trust.
The assumptions and qualifications described in the opinion will
include:
o an assumption that any secondary transactions entered into
for any certificates or other interests in the trust, like
the deposit of certificates into a second trust and the
issuance of securities out of that trust, will not
adversely affect the U.S. federal income tax status of the
trust, and
o the qualification that the opinion is limited to the
issuance of the certificates of that series by the trust.
If other interests in the trust, excluding the certificates, for
which no opinion will be rendered that those interests would constitute
debt for U.S. federal income tax purposes, are characterized as equity
interests in a partnership, then the trust could be treated as a publicly
traded partnership.
If all or part of the trust were treated as a partnership in which
some or all holders of one or more series were partners, that partnership
could be classified as a publicly traded partnership taxable as a
corporation. Unless specified exceptions apply, a partnership will be
classified as a publicly traded partnership taxable as a corporation if
equity interests in that partnership:
o are traded on an "established securities market", or
o are "readily tradeable" on a "secondary market" or its
"substantial equivalent".
One exception would be if the trust is not engaged in a "financial
business" and 90% or more of its income consists of interest and other
types of passive income. Because Treasury regulations do not clarify the
meaning of "financial business" for this purpose, it is unclear whether
this exception applies. The POOLING AGREEMENT AND EACH Series Supplement
contains provisions designed to reduce the risk that the trust could be
classified as a publicly traded partnership taxable as a corporation due to
trading of interests in the trust other than the certificates, for which an
opinion is furnished that the certificates constitute debt
for U.S. federal income tax purposes. There can be no assurance, however,
that the trust could not become a publicly traded partnership taxable as a
corporation, because some of the actions necessary to comply with the
exception are not fully within the control of the transferor.
If the trust were treated in whole or in part as a publicly traded
partnership taxable as a corporation, the taxable income of the trust would
be subject to U.S. federal income tax at the applicable marginal corporate
income tax rates applicable to that income if all or part of the trust were
treated as a publicly traded partnership taxable as a corporation. This
entity-level tax could result in reduced distributions to
certificateholders. In addition, the distributions from the trust would not
be deductible in computing the taxable income of the deemed corporation,
except to the extent that:
o any certificates were treated as debt of the corporation,
and
o distributions to the related certificateholders were
treated as payments of interest
on the certificates.
Further, distributions to certificateholders not treated as holding debt
would be treated as dividends for U.S. federal income tax purposes to the
extent of the current and accumulated earnings and profits of the deemed
corporation.
TAX CONSIDERATIONS RELATING TO CERTIFICATEHOLDERS
Tax Characterization of the Certificates as Debt
The transferor will express in the POOLING AGREEMENT its intent
that the certificates will be treated as debt for all U.S. tax purposes.
The transferor, by entering into the POOLING AGREEMENT, and each
certificateholder, by the acceptance of a beneficial interest in a
certificate, will agree to treat the certificates as debt for U.S. tax
purposes. However, the POOLING AGREEMENT generally refers to the transfer
of receivables as a "transfer, assignment and conveyance," and the
transferor will treat the POOLING AGREEMENT, for some non-tax accounting
purposes, as causing a transfer of an ownership interest in the receivables
and not as creating a debt obligation.
For U.S. federal income tax purposes, the economic substance of a
transaction often determines its tax consequences. The form of a
transaction, while a relevant factor, is generally not conclusive evidence
of the economic substance of the transaction. In appropriate circumstances,
the courts have allowed the IRS, as well as taxpayers, in more limited
circumstances, to treat a transaction in accordance with its economic
substance, as determined under U.S. federal income tax law, even though the
participants in the transaction have characterized it differently for
non-tax purposes. In a 1967 case, however, the courts substantially limited
the circumstances in which a taxpayer for tax purposes could ignore the
form of a transaction. Nevertheless, Skadden, Arps, Slate, Meagher & Flom
LLP has advised that, in a properly presented case, this would not prevent
a determination of the tax characterization of the certificates based on
the economic substance of the transaction.
President Clinton's Fiscal 2000 Budget Proposal includes a
legislative proposal that would codify the 1967 rule if tax indifferent
parties are involved. The proposal would only apply to transactions entered
into on or after the date of first committee action. It is unclear if the
proposal, as currently drafted, would apply to securities like the
certificates. It is impossible to predict whether the proposed legislation
will be enacted and, if so, in what form. Prospective investors should
consult their own tax advisors regarding the proposed legislation.
The IRS and the courts have determined whether the economic
substance of a purported sale of an interest in property is, instead, a
loan secured by the transferred property based on numerous factors designed
to determine whether the seller has relinquished and the purchaser has
obtained substantial incidents of ownership in the transferred property.
The primary factors examined are whether the purchaser has the opportunity
for gain if the property increases in value and has the risk of loss if the
property decreases in value. Skadden, Arps, Slate, Meagher & Flom LLP is of
the opinion that, although no transaction closely comparable to that
contemplated in this prospectus has been the subject of any Treasury
regulation, revenue ruling or judicial decision, the certificates will be
properly characterized as indebtedness for U.S. federal income tax
purposes. The discussion below assumes that the certificates will be
considered debt for U.S. federal income tax purposes.
Taxation of Interest Income on the Certificates
General. The transferor intends to take the position that a U.S.
CERTIFICATE OWNER generally will include the stated interest on a
certificate in gross income when that interest income is received or
accrued according to that U.S. CERTIFICATE OWNER'S regular method of tax
accounting. This conclusion is based on the transferor's position that the
stated interest on a certificate is unconditionally payable.
Under the applicable Treasury regulations, the stated interest on
the certificates will be considered unconditionally payable only if the
terms and conditions of the certificates make the likelihood of late
payment or non-payment of the stated interest a remote contingency. The
transferor believes that the late payment or non-payment of stated interest
on the certificates is a remote contingency:
o since the trust and the trustee will have no discretion to
withhold, delay or otherwise defer scheduled monthly
payments of stated interest on the certificates, if the
trust has sufficient cash on hand to allow the trustee to
make those interest payments, and
o based on the ratings of the certificates.
If, however, the stated interest on the certificates is not
considered unconditionally payable:
o the stated interest on the certificates will be considered
original issue discount, and
o a U.S. CERTIFICATE OWNER will be required to include that
stated interest in income, as original issue discount, on a
daily economic accrual basis despite that person's regular
method of tax accounting and without regard to whether cash
related to that income is paid at the same time.
In addition, if the stated interest on the certificates is not paid in full
on a DISTRIBUTION DATE, the certificates may at that time, and at all later
times, be considered to be issued with original issue discount and all U.S.
CERTIFICATE OWNERS would be required to include that stated interest in
income as original issue discount on an economic accrual basis.
Original Issue Discount Obligations. Assuming that the stated
interest on the certificates is considered to be "unconditionally payable,"
a series of certificates will not be considered to have been issued with
original issue discount unless:
o a substantial amount of that series of certificates is
sold, under the original issuance of those certificates, to
investors at a price that is less than the stated principal
amount of those certificates, and
o the amount of the discount exceeds a statutory de minimis
amount of original issue discount.
If these bullet points apply, the amount of the discount will be considered
original issue discount. Under applicable regulations, a holder of a
certificate issued with de minimis original issue discount must include the
original issue discount in income proportionately as principal payments are
made on a class of certificates.
A U.S. CERTIFICATE OWNER must include the amount of the original
issue discount in income on a daily economic accrual basis without regard
to that person's method of accounting and without regard to receipt of cash
related to that income. A U.S. CERTIFICATE OWNER will not be required to
include in income separately any payments received on the certificates for
the original issue discount. The relevant prospectus supplement will
disclose if any series of certificates is issued with original issue
discount.
A certificateholder who purchases a certificate at a discount from
its adjusted issue price may be subject to the "market discount" rules of
the tax code. The relevant parts of these rules provide:
o for gain attributable to accrued market discount to be
treated as ordinary income when partial principal payments
are received, or when the certificate is sold or disposed
of, and
o for interest deductions related to debt incurred to acquire
or carry the market discount certificate to be deferred.
A certificateholder that purchases a certificate for an amount
greater than the sum of all amounts payable on that certificate after the
purchase date other than payments of "qualified stated interest", the
"stated redemption amount," will be considered to have purchased the
certificate at a premium. That certificateholder may generally choose to
amortize the premium as an offset to interest income using a constant yield
method over the remaining term of the certificate.
Sale, Exchange or Retirement of Certificates
Upon a sale or other taxable exchange, retirement or disposition
of a certificate, a U.S. CERTIFICATE OWNER will recognize gain or loss
equal to the difference between:
o the amount realized on that sale, exchange, retirement or
other disposition, less an amount equal to any accrued but
unpaid interest that the U.S. CERTIFICATE OWNER has not
included in gross income previously, which will be taxable
as gross income, and
o the U.S. CERTIFICATE OWNER'S adjusted tax basis in that
certificate:
- as increased by any original issue discount or market
discount previously included in income by the holder,
and
- as decreased by any deductions previously allowed for
amortizable bond premium and by any payments
reflecting principal or original issue discount
received for that certificate.
This gain or loss generally will be capital gain or loss and generally will
be considered long-term capital gain or loss if the U.S. CERTIFICATE OWNER
held the certificate for more than one year at the time of the sale,
exchange, retirement or other disposition and subject to the market
discount provisions of the tax code. The long-term capital gains of
individuals, estates, and trusts generally are eligible for reduced rates
of taxation. Capital losses generally may be used only to offset capital
gains.
NON-U.S. CERTIFICATE OWNERS
Assuming that all of the certificates issued to NON-U.S.
CERTIFICATE OWNERS are considered debt of the transferor for U.S. federal
income tax purposes, under present U.S. federal income and estate tax law,
and subject to the discussion on backup withholding below under
"--Information Reporting and Backup Withholding":
o no withholding of U.S. federal income tax will be required
for the payment by the transferor or any withholding agent
of principal or interest on a certificate owned by a
NON-U.S. CERTIFICATE OWNER if:
- the beneficial owner does not actually or
constructively own 10% or more of the total combined
voting power of all classes of stock of the
transferor entitled to vote within the meaning of
section 871(h)(3) of the tax code and the Treasury
regulations under the tax code,
- the beneficial owner is not a controlled foreign
corporation that is related to the transferor through
stock ownership,
- the beneficial owner is not a bank whose receipt of
interest on a certificate is described in section
881(c)(3)(A) of the tax code, and
- the beneficial owner satisfies the statement
requirement provided in section 871(h) and section
881(c) of the tax code and the Treasury regulations
under the tax code, and
o a certificate beneficially owned by an individual who at
the time of his or her death is a NON-U.S. CERTIFICATE
OWNER will not be subject to U.S. federal estate tax as a
result of that individual's death if:
- the individual does not actually or constructively
own 10% or more of the total combined voting power of
all classes of stock of the transferor entitled to
vote within the meaning of section 871(h)(3) of the
tax code, and
- the interest payments relating to the certificate
would not have been, if received at the time of the
individual's death, effectively connected with the
conduct of a U.S. trade or business by the
individual.
To satisfy the statement requirement referred to above, the
certificateholder or a financial institution holding the certificate on
behalf of the owner, must provide, in accordance with specified procedures,
the transferor or any withholding agent with a statement to the effect that
the certificateholder is not a U.S. CERTIFICATE OWNER. Currently, these
requirements will be met if:
o the certificateholder provides its name and address, and
certifies, under penalties of perjury, that it is not a
U.S. CERTIFICATE OWNER, which certification may be made on
an IRS Form W-8 or successor form, or
o a financial institution holding the certificate on behalf
of a certificate owner certifies, under penalties of
perjury, that the statement has been received by it and
furnishes any withholding agent with a copy.
Under recently finalized Treasury regulations, the statement requirement
also may be satisfied with other documentary evidence for interest paid
after December 31, 2000 to an offshore account or through some foreign
intermediaries.
If a NON-U.S. CERTIFICATE OWNER cannot satisfy the requirements
described above, payments of interest made to that beneficial owner will be
subject to a 30% withholding tax unless that beneficial owner provides the
transferor or any withholding agent with a properly executed:
o IRS Form 1001, or successor form, claiming an exemption
from, or a reduction in the rate of, that withholding tax
under the benefit of an applicable U.S. income tax treaty,
or
o IRS Form 4224, or successor form, stating that the interest
paid on the certificate is not subject to that withholding
tax because it is effectively connected with the
certificateholder's conduct of a trade or business in the
United States.
Under recently finalized Treasury regulations, NON-U.S. CERTIFICATE OWNERS
generally will be required to provide an IRS Form W-8 in lieu of an IRS
Form 1001 and IRS Form 4224, although alternative documentation may be
applicable in some situations.
The NON-U.S. CERTIFICATE OWNER, although exempt from the U.S.
withholding tax discussed above, will be subject to U.S. federal income tax
on the interest on a net income basis in the same manner as if it were a
U.S. CERTIFICATE OWNER if:
o it is engaged in a trade or business in the United States,
and
o the interest on its certificates is effectively connected
with the conduct of that trade or business.
In addition, if that NON-U.S. CERTIFICATE OWNER is a foreign corporation,
it may be subject to a U.S. branch profits tax equal to 30%, or lower
applicable treaty rate, of its effectively connected earnings and profits
for the taxable year, subject to adjustments. For this purpose, the
interest income will be included in that foreign corporation's earnings and
profits.
Any gain realized by a NON-U.S. CERTIFICATE OWNER upon the sale,
exchange, retirement or other disposition of a certificate generally will
not be subject to U.S. federal income or withholding tax unless:
o the gain is effectively connected with a U.S. trade or
business of the NON-U.S. CERTIFICATE OWNER in the United
States,
o for a NON-U.S. CERTIFICATE OWNER who is an individual, that
individual is present in the United States for 183 days or
more in the taxable year of the sale, exchange, retirement
or other disposition, and other conditions are met, or
o to the extent the gain is considered accrued but unpaid
interest, the requirements described above are not
satisfied.
If the certificates were treated as an interest in a partnership,
except a publicly traded partnership taxable as a corporation, that
recharacterization could cause a NON-U.S. CERTIFICATE OWNER to be treated
as engaged in a trade or business in the United States, in which case, the
NON-U.S. CERTIFICATE OWNER:
o would be required to file a U.S. federal income tax return,
and
o generally, would be subject to U.S. federal income tax,
including, for a NON-U.S. CERTIFICATE OWNER that is a
corporation, the U.S. branch profits tax, on its allocable
share of the net income from the partnership.
Further, some withholding obligations may apply for partnership income that
is allocable to a NON-U.S. CERTIFICATE OWNER that is considered to be a
partner in the partnership. That withholding would be imposed at a rate
equal to the highest marginal U.S. federal income tax rate applicable to
the NON-U.S. CERTIFICATE OWNER. Alternatively, if some or all of the
certificates were treated as equity interests in a publicly traded
partnership taxable as a corporation, the gross amount of any related
dividend distributions to a NON-U.S. CERTIFICATE OWNER generally would be
subject to U.S. withholding tax at the rate of 30%, unless that rate were
reduced under an applicable U.S. income tax treaty. See the last two
paragraphs of "--Tax Characterization of the Trust" above for discussion of
possible alternative characterizations of the trust.
Special rules may apply for NON-U.S. CERTIFICATE OWNERS who:
o have an office or other fixed place of business in the
U.S.,
o are former U.S. citizens,
o are engaged in a banking, financing, insurance or similar
business in the U.S., or
o are "controlled foreign corporations," "foreign personal
holding companies," "passive foreign investment companies"
or corporations that accumulate earnings in order to avoid
U.S. federal income tax.
These persons should consult their own U.S. tax advisors before investing in
the certificates.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to some
payments of principal and interest paid on certificates and to the proceeds
of the sale of a certificate made by U.S. CERTIFICATE OWNERS except some
exempt recipients, like corporations. A 31% backup withholding tax will
apply to those payments if the U.S. CERTIFICATE OWNER fails to provide a
taxpayer identification number or certification of exempt status or fails
to report in full dividend and interest income.
No information reporting or backup withholding will be required
for payments made by the transferor or any withholding agent to a NON-U.S.
CERTIFICATE OWNER if the statement described above under "--Non-U.S.
Certificate Owners" has been received and the payor does not have knowledge
that the NON-U.S. CERTIFICATE OWNER is actually a U.S. CERTIFICATE OWNER.
In addition, backup withholding and information reporting will not
apply if payments of principal and interest on a certificate are paid or
collected by a foreign office of a custodian, nominee or other foreign
agent on behalf of a certificateholder or if a foreign office of a broker,
as defined in applicable Treasury regulations, pays the proceeds of the
sale of a certificate to the owner of that security. If, however, the
custodian, nominee, agent or broker is, for U.S. federal income tax
purposes:
o a United States person,
o a controlled foreign corporation,
o a foreign person that derives 50% or more of its gross
income for specified periods from the conduct of a trade or
business in the United States, or
o for taxable years beginning after December 31, 2000, a
foreign partnership in which one or more United States
persons, in total, own more than 50% of the income or
capital interests in the partnership or which is engaged in
a trade or business in the United States,
those payments will not be subject to backup withholding but will be
subject to information reporting, unless:
o that custodian, nominee, agent or broker has documentary
evidence in its records that the relevant certificateholder
is not a United States person and other conditions are met,
or
o the certificateholder establishes an exemption.
Payments of principal and interest on a certificate paid to the
certificateholder by a United States office of a custodian, nominee or
agent, or the payment by the United States office of a broker of the
proceeds of the sale of a certificate, will be subject to both backup
withholding and information reporting unless:
o the relevant certificateholder provides the statement
referred to above under "--Non-U.S. Certificate Owners, and
o the payor has no knowledge that the certificateholder is
actually a U.S. CERTIFICATE OWNER or the certificateholder
establishes an exemption.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against a certificateholder's U.S. federal
income tax liability if the required information is furnished to the IRS.
STATE AND LOCAL TAXATION
The discussion above does not address the tax consequences of the
purchase, ownership or disposition of a certificate under any state or
local tax law. Each investor should consult its own tax advisor regarding
state and local tax consequences of purchasing, owning and disposing of a
certificate.
EMPLOYEE BENEFIT PLAN CONSIDERATIONS
A plan fiduciary considering an investment in the offered
certificates should consider that an investment might constitute or give
rise to a prohibited transaction under Employee Retirement Income Security
Act of 1974, as amended, and the tax code or any substantially similar
federal, state or local law. ERISA and the tax code impose restrictions on:
o employee benefit plans as defined in Section 3(3) of ERISA,
o plans described in Section 4975(e)(1) of the tax code,
including retirement accounts and Keogh plans,
o entities whose underlying asset include plan assets by
reason of a plan's investment in these entities, and
o persons who have specified relationships to a plan
described as "parties in interest" under ERISA and
"disqualified persons" under the tax code.
REGULATION UNDER ERISA AND THE TAX CODE
ERISA imposes duties on persons who are fiduciaries of a plan.
Under ERISA, any person who exercises any authority or control over the
management or disposition of a plan's assets is considered to be a
fiduciary of that plan. Both ERISA and the tax code prohibit some
transactions involving "plan assets" between a plan and parties in interest
or disqualified persons. Violations of these rules may result in the
imposition of an excise tax or penalty.
The term "plan assets" is not defined by ERISA or the tax code.
However, a plan's assets may be considered to include an interest in the
underlying assets of the trust if the plan acquires an "equity interest" in
the trust. An equity interest includes the certificates. If so, the
operation of the trust may result in a prohibited transaction under ERISA
and the tax code.
FINAL REGULATION ISSUED BY THE DOL
The U.S. Department of Labor issued a final regulation which
provides exceptions to a plan which acquires an equity interest in the
trust. If a plan acquires a "publicly-offered security," the issuer of the
security is not treated as holding plan assets. A publicly-offered security
is a security that:
o is freely transferable,
o is part of a class of securities that is owned by 100 or
more investors independent of the issuer and of one
another, and
o is either:
- part of a class of securities registered under
Section 12(b) or 12(g) of the Securities Exchange
Act, or
- sold to the plan as part of an offering of securities
to the public under an effective registration
statement under the Securities Act and the class of
securities of which that security is part is
registered under the Securities Exchange Act within
the requisite time.
Although it is anticipated that the conditions of this exception
may be met for some classes of certificates, no assurances can be given and
no monitoring will be done.
In addition, the final regulation provides that if at all times
more than 75% of the value of all classes of equity interests in
certificates of a series are held by investors other than plan investors,
an investing plan's assets will not include any of the underlying assets of
the trust.
If the criteria for publicly-offered securities are not met for
any class of offered certificates, the trust assets may be treated as
including assets of plans that are certificateholders. If so, transactions
involving the trust and parties in interest or disqualified persons
relating to plans that are certificateholders might be prohibited under
ERISA and the tax code. For example, if a participant in any plan is a
cardholder of one of the accounts, under DOL interpretations the holding of
interests in certificates by that plan could constitute a prohibited
transaction. In addition, if DHRC or any underwriter of that series is a
party in interest or a disqualified person for an investing plan, the
purchase of an interest in certificates by that plan could constitute a
prohibited transaction. An investment by a plan in certificates could
result in liability under ERISA and the tax code unless a statutory or
administrative exemption exists and the plan satisfies all conditions for
exemptive relief.
EXEMPTIONS TO PROHIBITED TRANSACTIONS
There are five class exemptions issued by the DOL that could apply
in the event of a prohibited transaction. These DOL Prohibited Transaction
Class Exemptions apply to:
o plan asset transactions determined by independent qualified
professional asset managers (PTE 84-14),
o some transactions involving bank collective investment
funds (PTE 91-38),
o some transactions involving insurance company pooled
separate accounts (PTE 90-1),
o some transactions involving insurance company general
accounts (PTE 95-60), and
o plan asset transactions determined by in-house asset
managers (PTE 96-23).
We can provide no assurance that these exemptions or any other
exemption will apply, even if all of the conditions specified are
satisfied.
SPECIAL CONSIDERATIONS FOR INSURANCE COMPANIES
Based on the reasoning of the United States Supreme Court in John
Hancock Life Ins. Co. v. Harris Trust and Savings Bank, 114 S. Ct. 517
(1993), an insurance company's general account may be deemed to include
assets of the Plans investing in the general account (e.g., through the
purchase of an annuity contract), and the insurance company might be
treated as a Party-in-Interest with respect to a Plan by virtue of such
investment.
Any purchaser that is an insurance company using the assets of an
insurance company general account should note that the Small Business Job
Protection Act of 1996 added new Section 401(c) of ERISA relating to the
status of the assets of insurance company general accounts under ERISA and
Section 4975 of the Code. Pursuant to Section 401(c), the Department of
Labor issued final regulations effective January 5, 2000 with respect to
insurance policies issued on or before December 31, 1998 that are supported
by an insurer's general account. As a result of these regulations, assets
of an insurance company general account will not be treated as "plan
assets" for purposes of the fiduciary responsibility provisions of ERISA
and Section 4975 of the Code to the extent such assets relate to contracts
issued to employee benefit plans on or before December 31, 1998 and the
insurer satisfies various conditions.
Section 401(c) also provides that, except in the case of avoidance
of the final regulations issued by the Department of Labor and actions
brought by the Secretary of Labor relating to certain breaches of fiduciary
duties that also constitute breaches of state or federal criminal law,
until the date that is 18 months after the final regulations issued by the
Department of Labor become final, no liability under the fiduciary
responsibility and prohibited transaction provisions of ERISA and Section
4975 of the Code may result on the basis of a claim that the assets of the
general account of an insurance company constitute the "plan assets" of any
such plan.
The plan asset status of insurance company separate accounts is
unaffected by new Section 401(c) of ERISA, and separate account assets
continue to be treated as the plan assets of any such plan invested in a
separate account. Potential investors considering the purchase of
certificates of any series on behalf of an insurance company general
account should consult their legal advisors regarding the effect of these
regulations on the investment.
GENERAL INVESTMENT CONSIDERATIONS
Prospective fiduciaries of a plan considering the purchase of
interests in certificates of any series should consult with their legal
advisors concerning the impact of ERISA and the tax code and the potential
consequences of making an investment in the certificates based on their
specific circumstances. Each plan fiduciary should take into account, among
other considerations:
o whether the fiduciary has the authority to make the
investment,
o the composition of the plan's portfolio as to
diversification by type of asset,
o the plan's funding objectives,
o the tax effects of the investment,
o whether the assets of the trust which are represented by
these interests would be considered plan assets, and
o whether, under the general fiduciary standards of
investment prudence and diversification an investment in
certificates of any series is appropriate for the plan
taking into account the overall investment policy of the
plan and the composition of the plan's investment
portfolio.
Some employee benefit plans, for example, governmental plans and
some church plans, are not subject to the provisions of Title I of ERISA
and Section 4975 of the tax code. For this reason, assets of these plans
may be invested in the certificates of each series without regard to the
ERISA considerations described here, subject to the provisions of any other
applicable federal and state law. It should be noted that any plan that is
qualified and exempt from taxation under the tax code is subject to the
prohibited transaction rules described in the tax code.
PLAN OF DISTRIBUTION FOR THE OFFERED CERTIFICATES
The place and time of delivery for any series of certificates will
be described in the accompanying prospectus supplement. DHRC may sell
certificates:
o through underwriters or dealers,
o directly to one or more purchasers, or
o through agents.
The prospectus supplement for any offered series will describe the
terms of the offering of the offered certificates, including:
o the name or names of any underwriters for the certificates,
o the purchase price of the certificates,
o the proceeds to DHRC from the sale,
o any underwriting discounts,
o any other compensation of the underwriters,
o the initial offering price, and
o any discounts or concessions allowed or reallowed or paid
to dealers.
Under each underwriting agreement, DHRC will agree to sell to each
of the underwriters in the related prospectus supplement the principal
amount of the offered certificates. In turn, each of those underwriters
will agree to purchase from DHRC the principal amount of certificates
described in the underwriting agreement and in the related prospectus
supplement. The underwriting agreement may allow for a proportional
adjustment in the event of an increase or decrease in the full amount of
the offered certificates. If there is a default by any underwriter, the
underwriting agreement will provide that, in some circumstances, purchase
commitments of the nondefaulting underwriters may be increased or the
underwriting agreement may be ended.
Each underwriting agreement will provide that DHRC will indemnify
the related underwriters against some liabilities, including liabilities
under the federal securities laws.
LEGAL MATTERS
Legal matters relating to the certificates will be passed upon for
RNB, DHCC, DHRC and the trust by James T. Hale, Senior Vice President,
Secretary and General Counsel of Dayton Hudson Corporation. Legal matters
relating to the certificates will be passed upon for the underwriters by
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. Mr. Hale owns
or has the right to acquire a number of shares of common stock of Dayton
Hudson Corporation which total less than 1% of the outstanding common stock
of Dayton Hudson Corporation. Federal income tax matters will be passed
upon for DHRC by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York.
REPORTS TO CERTIFICATEHOLDERS
Unless and until DEFINITIVE CERTIFICATES are issued, monthly and
annual reports, which contain unaudited information concerning the trust
and which are prepared by the servicer, will be sent on behalf of the trust
to Cede & Co., as nominee of DTC and registered holder of the related
certificates. These reports will not constitute financial statements
prepared under generally accepted accounting principles. DHRC does not
intend to send any of its financial reports to registered holders of
certificates or to owners of beneficial interests in the certificates. DHRC
will file with the SEC the periodic reports relating to the trust that are
required under federal securities laws. DHRC may suspend the filing of
periodic reports to the extent the filings are no longer required of DHRC.
See "Description of the Certificates--Book-Entry Registration" and
"--Reports to Certificateholders" and "The Pooling and Servicing
Agreement--Evidence as to Compliance."
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the securities with
the SEC. This prospectus is part of the registration statement, but the
registration statement includes additional information.
The SEC allows us to incorporate information by reference to SEC
filings. This means that we can disclose information to you by referring to
those documents. The information incorporated by reference is considered to
be part of this prospectus. We refer you to the registration statement for
additional information, including any amendments and exhibits. We also
incorporate by reference any future annual, monthly and special SEC reports
and proxy materials filed by or on behalf of the trust until the offering
of the certificates has ended.
Information that we file later with the SEC will automatically
update the information in this prospectus. You should always rely on the
later information over different information included in this prospectus or
the related prospectus supplement. All reports, statements and other
information we file are available for inspection without charge at the
public reference facilities maintained by the SEC at:
o 450 Fifth Street, N.W., Washington, D.C. 20549,
o 7 World Trade Center, New York, New York 10048, and
o Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511.
Copies of the filings may be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Please call the SEC at (800) SEC-0330 for further
information on the operation of the public reference rooms. In addition,
the SEC maintains a Web site at "http://www.sec.gov" that contains filings
and information regarding registrants that file electronically with the SEC.
GLOSSARY OF TERMS FOR PROSPECTUS
"ACCUMULATION PERIOD" means for any series or class, a period:
o beginning on a date determined as described in the related
prospectus supplement, and
o ending on the earliest of:
- the start of the Early Amortization Period or the
Rapid Accumulation Period,
- the date specified in the related prospectus
supplement, and
- the Trust Termination Date; and
during which collections of Principal Receivables up to the amount
specified in the related prospectus supplement are accumulated in a
Principal Funding Account for payment to certificateholders of that series
or class on the Expected Final Payment Date.
"ADDITION CUT-OFF DATE" means any date DHRC designates any
Supplemental Account or Participation Interest for inclusion in the trust.
"ADDITION DATE" means the date DHRC, under the conditions
specified in the Pooling Agreement, adds the following to the trust:
o receivables arising in accounts owned by RNB or another
Credit Card Originator, and
o any Participation Interest.
"ADDITIONAL ACCOUNT" means each Automatic Additional Account and
Supplemental Account.
"ADDITIONAL INTEREST" means interest on overdue Monthly Interest
at the rate specified in the related prospectus supplement.
"ADJUSTMENT PAYMENT" means any payment DHRC must make into the
Special Funding Account equal to the amount by which the servicer adjusts
downward the Principal Receivables:
o for which it received no collections and no charge-off has
occurred, and
o which causes the Required Retained Transferor Amount to
exceed the Transferor Amount, excluding the interest
represented by any Supplemental Certificate.
"AGGREGATE ADDITION LIMIT" means a number of accounts which
either:
o for any of the three consecutive Monthly Periods beginning
in January, April, July and October of each calendar year,
may not exceed 15% of the number of accounts as of the
first day of the calendar year during which those Monthly
Periods begin, or
o for any twelve-month period, equals 20% of the number of
accounts as of the first day of that twelve-month period.
"AMORTIZATION PERIOD" means, for any series or any class within a
series, a period following the Revolving Period, which will be the
Controlled Amortization Period, the Principal Amortization Period, the
Rapid Accumulation Period, the Early Amortization Period, or other
amortization period, in each case as defined for the series in the related
prospectus supplement.
"ASSIGNED ASSETS" means all or a portion of RNB's consumer open
end credit card accounts and the receivables arising under those accounts
that can be transferred to an assuming entity if conditions specified in
the Bank Receivables Purchase Agreement, the Receivables Purchase Agreement
and the Pooling Agreement are satisfied.
"ASSUMED OBLIGATIONS" means all servicing functions and other
obligations under the Bank Receivables Purchase Agreement, the Receivables
Purchase Agreement and the Pooling Agreement or relating to the
transactions contemplated by those agreements.
"AUTOMATIC ADDITION SUSPENSION DATE" means the date DHRC
determines to suspend the inclusion of new open end credit card accounts
owned by the Credit Card Originators in Automatic Additional Accounts.
"AUTOMATIC ADDITION TERMINATION DATE" means the date on which new
open end credit card accounts owned by the Credit Card Originators will
cease to become Automatic Additional Accounts.
"AUTOMATIC ADDITIONAL ACCOUNTS" means each open end credit card
account established under a credit card agreement with a Credit Card
Originator arising:
o after the Cut-Off Date and before the earlier of the
Automatic Addition Suspension Date or Automatic Addition
Termination Date, and
o after a Restart Date and before any subsequent Automatic
Addition Suspension Date or Automatic Addition Termination
Date.
"BASE RATE" means, unless otherwise specified in a Series
Supplement, for any Monthly Period, the annualized percentage equivalent of
the sum of:
o a fraction:
- whose numerator is the sum of the Class A Monthly
Interest, and the Class B Monthly Interest for the
related Interest Period, and
- whose denominator is the Invested Amount on the last
business day of that Monthly Period, and
o a fraction:
- whose numerator is the monthly servicing fee for that
Monthly Period, and
- whose denominator is the Invested Amount on the last
business day of the preceding Monthly Period.
"CASH COLLATERAL ACCOUNT" means an account providing credit
enhancement for a series or class of certificates directly or indirectly as
security for a Cash Collateral Guaranty.
"CASH COLLATERAL GUARANTY" means a guaranty secured by the deposit
of cash or eligible investments in a Cash Collateral Account reserved for
the beneficiaries of that Cash Collateral Guaranty.
"CEDELBANK" means Cedelbank, societe anonyme, an institution
administering a book-entry settlement system for trading of securities in
Europe.
"CEDELBANK CUSTOMERS" means organizations participating in
Cedelbank's book-entry system.
"CERTIFICATE RATE" means the interest rate per annum applicable
for any series or class of certificates.
"CLOSING DATE" means the date of issuance of a series.
"COLLATERAL INVESTED AMOUNT" means a subordinated interest in a
series of certificates in an amount initially equal to the percentage of
the certificates of that series specified in the related prospectus
supplement.
"COLLECTION ACCOUNT" means an Eligible Deposit Account for the
benefit of the certificateholders into which the servicer deposits
collections on the receivables.
"CONTROLLED ACCUMULATION PERIOD" means for any series or class, a
period:
o beginning on a date specified in the related prospectus
supplement after the Revolving Period, and
o ending on the earliest of:
- the start of the Early Amortization Period or the
Rapid Accumulation Period,
- the date specified in the related prospectus
supplement, and
- the Trust Termination Date; and
during which collections of Principal Receivables up to the amount
specified in the related prospectus supplement are deposited monthly into
the Principal Funding Account for payment to certificateholders on the
Expected Final Payment Date.
"CONTROLLED AMORTIZATION PERIOD" means for any series or class, a
period:
o beginning on a date specified in the related prospectus
supplement, and
o ending on the earliest of:
- the start of the Early Amortization Period, and
- the date specified in the related prospectus
supplement; and
during which collections of Principal Receivables allocable to the Invested
Amount and other amounts up to an amount specified in the related
prospectus supplement are paid to certificateholders of that series or
class on each Distribution Date.
"CREDIT CARD GUIDELINES" means the written policies and procedures
of the Credit Card Originator relating to the operation of its consumer
revolving lending business, including:
o determining the creditworthiness of credit card customers,
o the extension of credit to credit card customers, and
o relating to the maintenance of credit card accounts and
collection of receivables,
as these policies and procedures may be modified in accordance with
requirements of law.
"CREDIT CARD ORIGINATOR" means RNB and any transferee, successor
or assign of RNB or any other originator of consumer open end credit card
accounts designated to have their receivables included in the trust.
"CUT-OFF DATE" means June 30, 1995.
"DEFAULT PERCENTAGE" means for any Monthly Period, the average
default rate used to determine if DHRC may continue to designate Automatic
Additional Accounts to the trust during that Monthly Period. This
percentage is equal to the average for the three Monthly Periods preceding
that Monthly Period of the annualized percentage of a fraction:
o whose numerator equals the Defaulted Amount for each
respective Monthly Period, and
o whose denominator equals the total Principal Receivables as
of the first day of the related Monthly Period.
"DEFAULTED AMOUNT" means the amount of receivables described under
"Description of the Certificates--Defaulted Receivables."
"DEFAULTED RECEIVABLES" means for any date of determination,
Principal Receivables that are charged-off as uncollectible on that day.
"DEFINITIVE CERTIFICATES" means certificates in fully registered,
certificated form that are only issued to certificateholders under the
circumstances described under "Description of the Certificates--Definitive
Certificates."
"DISCOUNT OPTION" means DHRC's option to designate a
percentage--the Discount Percentage--of receivables in the trust that would
otherwise be Principal Receivables, to be treated as Finance Charge
Receivables.
"DISCOUNT OPTION RECEIVABLES" means those receivables that
otherwise would have been treated as Principal Receivables that are to be
treated as Finance Charge Receivables at DHRC's option.
"DISCOUNT PERCENTAGE" means a fixed or variable percentage
specified in the related prospectus supplement.
"DISTRIBUTION DATE" means each date specified in the related
prospectus supplement on which distributions of interest or principal are
to be made to certificateholders.
"DTC PARTICIPANTS" means participants of DTC including securities
brokers and dealers, banks, trust companies, clearing corporations, and
certain other organizations.
"EARLY AMORTIZATION EVENT" means for any series of certificates
issued by the trust, any of the events identified in the related prospectus
supplement and any of the events described under "Description of the
Certificates--Early Amortization Events" causing the Rapid Accumulation
Period or the Early Amortization Period to begin.
"EARLY AMORTIZATION PERIOD" means for any series, a period:
o beginning on the day an Early Amortization Event occurs or
any other date specified in the related prospectus
supplement, and
o ending on the earliest of:
- the date the Invested Amount of the certificates of
that series has been paid in full, and,
- the Series Termination Date; and
during which collections of Principal Receivables allocable to that series
will be paid on each Distribution Date to the certificateholders of that
series.
"ELIGIBLE DEPOSIT ACCOUNT" means any bank account satisfying the
requirements listed in "Description of the Certificates--Collection
Account."
"ELIGIBLE INSTITUTION" means those financial institutions
described under "Description of the Certificates--Collection Account."
"ELIGIBLE INVESTMENTS" means those investments described under
"Description of the Certificates--Collection Account."
"ELIGIBLE RECEIVABLE" means each receivable satisfying the
requirements listed in "The Pooling and Servicing
Agreement--Representations and Warranties."
"ENHANCEMENT INVESTED AMOUNT" means a subordinated interest in
cash flows in respect of the receivables to the extent described in the
related prospectus supplement.
"EUROCLEAR" means the system operated by Morgan Guaranty Trust
Company of New York's Brussels, Belgium office under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation.
"EUROCLEAR PARTICIPANTS" means participants of the Euroclear
system.
"EXCESS FINANCE CHARGE COLLECTIONS" means those finance charge
collections described under "Description of the Certificates--Sharing of
Excess Finance Charge Collections and Excess Transferor Finance Charge
Collections."
"EXCESS TRANSFEROR FINANCE CHARGE COLLECTIONS" means those finance
charge collections described under "Description of the
Certificates--Sharing of Excess Finance Charge Collections and Excess
Transferor Finance Charge Collections."
"EXPECTED FINAL PAYMENT DATE" means for a series or class with an
Accumulation Period, the expected date of final payment of principal and
any accrued and unpaid interest for that series or class specified in the
supplement.
"FINANCE CHARGE RECEIVABLES" means:
o periodic finance charges, and
o other charges and fees, including deferred billing fees and
merchant fees,
o other amounts billed for receivables that are not Eligible
Receivables, and
o the amount of any Discount Option Receivables.
"FLOATING ALLOCATION PERCENTAGE" means for each Monthly Period,
the percentage used to allocate to your series Defaulted Amounts and
collections of Finance Charge Receivables as described in the related
prospectus supplement.
"FUNDING PERIOD" means for any pre-funded series, the period:
o beginning on the Closing Date and ending on a date
specified in the related prospectus supplement before an
Amortization Period or an Accumulation Period begins, and
o during which:
- the outstanding principal amount of the pre-funded
series may be greater than the investment of that
series in the receivables in the trust, and
- this difference is held in a Pre-Funding Account for
the benefit of the certificateholders.
"INELIGIBLE RECEIVABLES" means receivables not satisfying the
requirements of Eligible Receivables.
"INTEREST FUNDING ACCOUNT" means an Eligible Deposit Account for
the benefit of the certificateholders of a series in which amounts to be
paid to those certificateholders as interest will be deposited on a monthly
basis, if interest payments are made to certificateholders less frequently
than monthly.
"INVESTED AMOUNT" means for certificateholders in a series, the
total principal amount of their interest in trust assets as specified in
the related prospectus supplement.
"INVESTOR CHARGE-OFF" means for any Monthly Period and for any
series, the amount by which the Invested Amount will be reduced to cover
Defaulted Amounts allocated to the series and other amounts as may be
specified in the prospectus supplement for any series that are not covered
from collections of Finance Charge Receivables or other sources as
specified in the prospectus supplement for any series.
"INVESTOR DEFAULTED AMOUNT" means for any Monthly Period, the
product of:
o the Investor Percentage specified in the related prospectus
supplement for that Monthly Period, and
o the Defaulted Amount for that Monthly Period.
"INVESTOR PERCENTAGE" means the Floating Allocation Percentage
and/or the Principal Allocation Percentage, as applicable.
"MONTHLY INTEREST" means interest accrued for a monthly interest
accrual period as specified in the related prospectus supplement for any
series or class.
"MONTHLY PERIOD" means a fiscal month of DHRC.
"NON-U.S. CERTIFICATE OWNER" means a beneficial owner of a
certificate that is not a U.S. Certificate Owner.
"PARTICIPATION" means an interest in the assets of the trust in
the form of a participation.
"PARTICIPATION INTEREST" means any participation or certificate
representing an undivided interest in a pool of assets primarily consisting
of open end credit card receivables originated by RNB or another Credit
Card Originator and collections on those receivables and other assets.
"PARTICIPATION PERCENTAGE" means the percentage of all collections
of Principal Receivables and Finance Charge Receivables and any other
assets of the trust that the holder of any Participation is entitled to
under a Participation Supplement.
"PARTICIPATION SUPPLEMENT" means a supplement to the Pooling
Agreement under which the trustee issues Participations at DHRC's direction.
"PAYMENT RATE PERCENTAGE" means for any Monthly Period, the
average payment rate used to determine if DHRC may continue to designate
Automatic Additional Accounts to the trust during that Monthly Period. This
percentage is equal to the average for the three Monthly Periods preceding
that Monthly Period of the percentage equivalent of a fraction:
o whose numerator equals the amount of collections received
during that Monthly Period, and
o whose denominator equals the total Principal Receivables as
of the first day of the
related Monthly Period.
"POOLING AGREEMENT" means the Pooling and Servicing Agreement,
dated as of September 13, 1995, among DHRC, as transferor of the
receivables to the trust, RNB, as servicer of the receivables, and Norwest
Bank Minnesota, National Association, as trustee, as amended from time to
time.
"PORTFOLIO REASSIGNMENT PRICE" means the amount DHRC deposits into
the Collection Account to satisfy its reassignment obligations equal to:
o the total Invested Amount for all outstanding series,
o outstanding amounts invested by enhancement providers, if
any, of all series,
o interest payable to certificateholders on that Distribution
Date,
o any interest amounts that were due but not paid on an
earlier Distribution Date, and
o interest on the overdue interest amounts, if the applicable
Series Supplement so provides, at the applicable
Certificate Rates through the day before that Distribution
Date.
"PORTFOLIO YIELD" means with respect to any series for any Monthly
Period, the annualized percentage specified in the related prospectus
supplement.
"PRE-FUNDING ACCOUNT" means a bank account:
o established with the trustee for the benefit of
certificateholders of a pre-funded series, and
o in which is deposited the pre-funded amount.
"PRINCIPAL ALLOCATION PERCENTAGE" means for each Monthly Period,
and for each series, the percentage used to allocate collections of
Principal Receivables to that series as described in the related prospectus
supplement.
"PRINCIPAL AMORTIZATION PERIOD" means for any series or class, a
period:
o beginning on the date specified in the related prospectus
supplement, and
o ending on the earliest of:
- the start of the Early Amortization Period,
- payment in full of the Invested Amount for that
series or class, and
- the Series Termination Date; and
during which collections of Principal Receivables allocable to the Invested
Amount and other amounts specified in the related prospectus supplement
will be used on each Distribution Date to make principal distributions to
the certificateholders of that series or any class then scheduled to
receive principal distributions.
"PRINCIPAL FUNDING ACCOUNT" means an Eligible Deposit Account held
for the benefit of the certificateholders of a series with an Accumulation
Period in which collections of Principal Receivables are accumulated during
the Accumulation Period. At the end of the Accumulation Period, the amount
in this account will be paid to certificateholders of that series or any
class.
"PRINCIPAL RECEIVABLES" means receivables that consist of amounts
charged by cardholders for merchandise and services, less the amount of any
Discount Option Receivables.
"PRINCIPAL SHORTFALLS" means for any series, the deficiency that
occurs when investor principal collections and other amounts are
insufficient to cover required principal payments or deposits.
"RAPID ACCUMULATION PERIOD" means for any series or class, a
period:
o beginning when an Early Amortization Event occurs or at
another time specified in the related prospectus
supplement, and
o ending on the earliest of:
- the start of the Early Amortization Period,
- payment in full of the Invested Amount of the
certificates of that series or class, and
- the Series Termination Date; and
during which collections of Principal Receivables allocable to a series or
class will be deposited on each Transfer Date into the Principal Funding
Account and used to pay principal to the certificateholders of that series
on the Expected Final Payment Date.
"RATINGS EFFECT" means a reduction or withdrawal by any rating
agency of its then-existing rating of the investor certificates of any
outstanding series or class for which it is a rating agency.
"RECORD DATE" means with respect to any payment to
certificateholders, the date specified in the related prospectus supplement
as of which a certificateholder must be the registered holder of a
certificate to receive a payment on the following Distribution Date.
"REMOVED ACCOUNTS" means accounts designated by DHRC to have their
receivables conveyed from the trust to DHRC and which will no longer
constitute trust accounts if DHRC satisfies the conditions specified in the
Pooling Agreement.
"REQUIRED PRINCIPAL BALANCE" means on any date of determination,
an amount equal to:
o the sum of the numerators used to calculate:
- the Investor Percentages with respect to Principal
Receivables for all series then outstanding, and
- the Participation Percentages for all Participations
then outstanding, minus
o the amount on deposit in the Special Funding Account as of
that date.
"REQUIRED RETAINED TRANSFEROR AMOUNT" means the product of:
o the sum of:
- the total amount of Principal Receivables, and
- the amount on deposit in the Special Funding Account
and the amount of other specified trust assets,
including any other accounts specified in the related
prospectus supplement, and
o the highest of the required retained transferor's
percentages specified in the related prospectus supplement
for each series outstanding.
"RESERVE ACCOUNT" means a bank account established to provide
support for a series or one or more classes of certificates. This account
may be funded by an initial cash deposit or any other method specified in
the related prospectus supplement.
"RESTART DATE" means the date DHRC specifies in a written notice
to the trustee that it will start redesignating Automatic Additional
Accounts to the trust only if:
o the conditions described under "The Pooling and Servicing
Agreement--Addition of Trust Assets" are satisfied, and
o all accounts of the Credit Card Originators have been
designated either as Automatic Additional Accounts before
the Automatic Addition Suspension Date or as Supplemental
Accounts.
"REVOLVING PERIOD" means for any series, a period:
o beginning on the Closing Date, and
o ending when an Amortization Period or Accumulation Period
begins; and
during which collections of Principal Receivables allocable to that series
are not paid to certificateholders or accumulated but are paid to the
holder of the Transferor Certificate or distributed in any other manner
described in the related prospectus supplement.
"SERIES ALLOCATION PERCENTAGE" means on any date of determination,
the percentage equivalent of a fraction:
o whose numerator is the Invested Amount of a series, and
o whose denominator is the sum of the Invested Amounts of all
then outstanding series.
"SERIES SUPPLEMENT" means the supplement to the Pooling Agreement
relating to a particular series.
"SERIES TERMINATION DATE" means for any series, the final
Distribution Date on which principal and accrued and unpaid interest is
scheduled to be paid as described in the related prospectus supplement.
"SERVICER DEFAULT" means any failure of the servicer under the
Pooling Agreement and any Series Supplement:
o to perform its duties or fulfill its obligations (each, a
"breach") which has a material adverse impact on
certificateholders, and
o to cure the breach within a specified period of time,
including any grace period, after discovery or notice of
the breach,
and certain events of bankruptcy and insolvency. See "The Pooling and
Servicing Agreement--Servicer Default" for a description of the specific
events that could result in a Servicer Default.
"SHARED PRINCIPAL COLLECTIONS" means those principal collections
described under "Description of the Certificates--Shared Principal
Collections and Transferor Principal Collections."
"SHARED TRANSFEROR PRINCIPAL COLLECTIONS" means those principal
collections described under "Description of the Certificates--Shared
Principal Collections and Transferor Principal Collections."
"SPECIAL FUNDING ACCOUNT" means the Eligible Deposit Account for
the benefit of the certificateholders in which principal collections are
held as collateral if the Transferor Amount, excluding the interest
representing any Supplemental Certificate, is less than the Required
Retained Transferor Amount.
"SUPPLEMENTAL ACCOUNTS" means after the initial Cut-Off Date,
those accounts (other than Automatic Additional Accounts) DHRC designates
to be added to the trust only if they are eligible accounts. However, DHRC
must add Supplemental Accounts to the trust if:
o the Transferor Amount, excluding the interest represented
by any Supplemental Certificate, is less than the Required
Retained Transferor Amount, or
o the total amount of Principal Receivables in the trust is
less than the Required Principal Balance.
"SUPPLEMENTAL CERTIFICATE" means a certificate that represents an
interest in the Transferor's Interest waived or transferred to a person
designated by DHRC only if specified conditions in the Pooling Agreement
are satisfied.
"SUPPLEMENTAL CONVEYANCES" means for Supplemental Accounts, the
supplement to the Bank Receivables Purchase Agreement or the Receivables
Purchase Agreement that RNB or DHCC delivers for those accounts. Each
Supplemental Conveyance constitutes an absolute sale of the receivables in
Supplemental Accounts and all monies due or to become due from those
receivables and any related proceeds.
"TRANSFER DATE" means the business day immediately before a
Distribution Date.
"TRANSFEROR AMOUNT" means the total principal amount of the
Transferor's Interest in the trust based on:
o the total amount of Principal Receivables in the trust, and
o amounts on deposit in the Special Funding Account and other
trust assets, including any other accounts specified in the
related prospectus supplement, and
not allocated to certificateholders, the holders of any Participations or any
enhancement provider.
"TRANSFEROR CERTIFICATE" means collectively the certificate that
represents the Transferor's Interest in the trust and any Supplemental
Certificate.
"TRANSFEROR'S INTEREST" means the total principal amount of the
interest of DHRC, its transferees and any holder of a Supplemental
Certificate in the trust.
"TRUST PORTFOLIO YIELD" means with respect to any series for any
Monthly Period, the annualized percentage equivalent of a fraction:
o whose numerator equals the total collections of Finance
Charge Receivables for that Monthly Period, and
o whose denominator is the total amount of Principal
Receivables in the trust as of the
first day of that Monthly Period.
"TRUST TERMINATION DATE" means the earliest to occur of:
o the day after the day the Invested Amount and the
Enhancement Invested Amount, if any, of each series is
zero, only if the transferor delivers a written notice to
the trustee electing to end the trust,
o September 30, 2095,
o an event relating to the bankruptcy of the transferor, or
o the Transferor Amount being less than the Required Retained
Transferor Amount.
"U.S. CERTIFICATE OWNER" means a beneficial owner of a certificate
that is:
o a citizen or resident of the United States,
o a corporation or partnership created or organized in the
United States or under the laws of the United States or any
political subdivision of the United States,
o an estate whose income is subject to United States federal
income taxation regardless of its source, or
o a trust that is subject to the supervision of a court
within the United States and the control of a United States
person as described in section 7701(a)(30) of the tax code
or that has a valid election in effect under applicable
U.S. Treasury regulations to be treated as a United States
person.
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
Registration Fee................................................ $ 264.00
Printing and Engraving.......................................... *
Trustee's Fees.................................................. *
Legal Fees and Expenses......................................... *
Blue Sky Fees and Expenses...................................... *
Accountants' Fees and Expenses.................................. *
Rating Agency Fees.............................................. *
Miscellaneous Fees.............................................. *
--------
Total....................................................... $
========
- ---------------
* To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VII of the By-laws of Dayton Hudson Receivables
Corporation, a Minnesota corporation, provides for indemnification of all
persons who are serving or have served at the request of Dayton Hudson
Receivables Corporation to the extent permitted under Minnesota law. Such
indemnification is not exclusive of any other right to which those
indemnified may be entitled under any bylaw, agreement, vote of
stockholders or otherwise.
Pursuant to agreements which the Transferor may enter into with
underwriters or agents (forms of which are included as exhibits to this
Registration Statement), officers and directors of the Transferor, and
affiliates thereof, may be entitled to indemnification by such underwriters
or agents against certain liabilities, including liabilities under the
Securities Act of 1933, arising from information which has been furnished
to the Transferor by such underwriters or agents that appears in the
Registration Statement or any Prospectus.
ITEM 16. EXHIBITS
(a) Exhibits
1 Form of Underwriting Agreement*
4(a) Pooling Agreement*
4(b) Form of Series Supplement*
4(c) Bank Receivables Purchase Agreement*
4(d) Receivables Purchase Agreement*
5 Opinion of James T. Hale, with respect to legality*
8 Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to tax
matters*
23(a) Consent of James T. Hale (included in his opinion to be filed as
Exhibit 5)*
23(b) Consent of Skadden, Arps, Slate, Meagher & Flom (included in its
opinion filed as Exhibit 8)*
- ---------------
* To be filed by amendment.
(b) Financial Statements
All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement: (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; provided, however, that (a)(i) and (a)(ii) will not
apply if the information required to be included in a post-effective
amendment by those sub-paragraphs is contained in periodic reports filed by
the registrant pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this registration
statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(d) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(e) To provide to the underwriters at the closing specified in the
underwriting agreements certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to
each purchaser.
(f) That insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of each issue.
(g) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this Registration Statement as of the time it was declared
effective.
(h) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State
of Minnesota, on January 28, 2000.
DAYTON HUDSON CREDIT CARD MASTER TRUST
By: DAYTON HUDSON RECEIVABLES CORPORATION
as originator of the Trust
By /s/ Douglas A. Scovanner
-------------------------
Douglas A. Scovanner, President
DAYTON HUDSON RECEIVABLES CORPORATION
as Co-Registrant
By /s/ Douglas A. Scovanner
-------------------------
Douglas A. Scovanner, President
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned does
hereby constitute and appoint each of Douglas A. Scovanner and Stephen C.
Kowalke, individually, his or her true and lawful attorney-in-fact and
agent, with full power of substitution, for him or her and on his or her
behalf to sign, execute and file this Registration Statement and any or all
amendments (including, without limitation, post-effective amendments and
any amendment or amendments increasing the amount of securities for which
registration is being sought) to this Registration Statement, with all
exhibits and any and all documents required to be filed with respect
thereto, with the Securities and Exchange Commission or any regulatory
authority, granting unto each such attorney-in-fact and agent individually
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he or she might
or could do if personally present hereby ratifying and confirming all that
each such attorney-in-fact and agent may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
DAYTON HUDSON RECEIVABLES CORPORATION
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
Principal Executive Officer:
/s/ Douglas A. Scovanner President January 28, 2000
- ------------------------------ -----------------
Douglas A. Scovanner
Principal Financial Officer:
/s/ Stephen C. Kowalke Vice President and Treasurer January 28, 2000
- ------------------------------ -----------------
Stephen C. Kowalke
Principal Accounting Officer:
/s/ JoAnn Bogdan Vice President and Controller January 28, 2000
- -------------------------------- -----------------
JoAnn Bogdan
Directors:
/s/ Stephen C. Kowalke Director January 28, 2000
- ------------------------------ -----------------
Stephen C. Kowalke
/s/ Martin R. Rosenbaum Director January 28, 2000
- ----------------------------- -----------------
Martin R. Rosenbaum
/s/ Douglas A. Scovanner Director January 28, 2000
- ------------------------------ -----------------
Douglas A. Scovanner
/s/ Sandra Sponem Director January 28, 2000
- -------------------------------- -----------------
Sandra Sponem
/s/ Jerry Storch Director January 28, 2000
- ----------------------------------- -----------------
Jerry Storch
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBITS PAGE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 Form of Underwriting Agreement*...................................................................
4(a) Pooling Agreement*................................................................................
4(b) Form of Series Supplement*........................................................................
4(c) Bank Receivables Purchase Agreement* .............................................................
4(d) Receivables Purchase Agreement*...................................................................
5 Opinion of James T. Hale, with respect to legality.*..............................................
8 Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to tax matters.*.....................
23(a) Consent of James T. Hale (included in his opinion to be filed as Exhibit 5).*.....................
23(b) Consent of Skadden, Arps, Slate, Meagher & Flom (included in its opinion filed as Exhibit 8).*....
- ---------------
* To be filed by amendment.
</TABLE>
