As filed with the Securities and Exchange Commission on June 29, 1999
Registration No. 333-79497
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
<TABLE>
<S> <C> <C>
UNIVERSAL CARD MASTER TRUST New York
(Issuer of Securities)
UNIVERSAL CARD SERVICES CORP. Delaware 22-3013787
(successor by merger to the Originator
of the Trust and the original Transferor)
UNIVERSAL BANK, NATIONAL ASSOCIATION United States of America 58-1885168
(Transferor to the Trust described herein) (State or Other Jurisdiction (I.R.S. Employer
(Exact Name of Registrant as Specified in Its Charter) of Organization) Identification Number)
</TABLE>
200 BROOKSTONE CENTRE, SUITE 110
COLUMBUS, GEORGIA 31904
(706) 257-1700
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
STEPHANIE B. MUDICK, ESQ.
General Counsel - Corporate Law
CITIGROUP INC.
153 East 53rd Street
New York, New York 10043
(212) 559-1000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
COPIES TO:
GREGORY M. SHAW
CRAVATH, SWAINE & MOORE
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
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 being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
Registration Statement number 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>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed Proposed Amount of
Amount to be Maximum aggregate Maximum aggregate registration
Title of securities to be registered registered (1) price per unit (2) offering price (1)(2) fee (3)
- --------------------------------------- ------------------- ---------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Asset Back Certificates............. $2,600,000,000 100% $2,600,000,000 $722,800
- --------------------------------------- ------------------- ---------------------- ---------------------- --------------------
<FN>
(1) Includes an indeterminate amount of Asset Back Certificates that are to
be offered or sold in connection with market-making activities by
affiliates of the Registrants.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended. The
aggregate public offering price of Asset Backed Certificates registered
hereby will not exceed $4,800,000,000.
(3) A filing fee of $531,725 was previously paid in connection with a
registration statement (No. 333-09309) filed on July 31, 1996 relating
to the registration of $1,542,000,000 aggregate principal amount of
securities which are being included in this Registration Statement.
Additionally, a filing fee of $182,924 was previously paid in
connection with the initial filing of this registration statement
relating to the registration of $658,000,000 aggregate principal amount
of securities which are being included in this Registration Statement.
The filing fee of $722,800 relates solely to the registration of
$2,600,000,000 aggregate principal amount of securities not previously
registered.
</FN>
</TABLE>
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
prospectus and prospectus supplement included in this Registration Statement
also relate to $1,542,000,000 of unissued Asset Back Certificates previously
registered under Registration Statement on Form S-3 (No. 333-09309). A filing
fee of $531,725 was previously paid with Registration Statement No. 333-09309 in
connection with such unissued Asset Back Certificates.
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants 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.
<PAGE>
PROSPECTUS
June 29, 1999
UNIVERSAL CARD MASTER TRUST
ASSET BACKED CERTIFICATES SERIES [199_-_]
UNIVERSAL BANK, N.A.
Seller
UNIVERSAL CARD SERVICES CORP.
Servicer
<TABLE>
The trust will issue
<CAPTION>
Class A certificates Class B certificates
<S> <C> <C>
Principal amount $ [...] $[...]
Annual interest rate [...] [...]
Scheduled principal payment date [date] [date]
Price to the public [...]% (or $[...,000,000]) [...]% (or $[...,000,000])
Underwriting discount [...]% (or $[...]) [...]% (or $[...])*
Proceeds to the seller (before [...]% (or $[...]) [...]% (or $[...])*
deducting expenses estimated at $[...])
- ---------------------------------------
<FN>
* The underwriting discount will be [ ]% for class B certificates sold to
noninstitutional investors. To the extent class B certificates are sold to these
investors, the actual class B underwriting discount will be more than, and the
proceeds to the seller will be less than, the amounts shown.
</FN>
</TABLE>
Principal payments on the class B certificates are subordinated to principal
payments on the class A certificates. No principal will be paid on the class B
certificates until all principal has been paid on the class A certificates,
except under limited circumstances.
The trust does not intend to list the certificates on a national securities
exchange or NASDAQ. The trust will apply to have the class A and B certificates
listed on the Luxembourg Stock Exchange.
The certificates are expected to be issued on [date].
- -------------------------------------------------------------------------------
You should read "Series risk factors," beginning on page S-[..] of the
prospectus supplement, and "General risk factors," beginning on page [..] of the
core prospectus, before you purchase any certificates.
Neither the Securities and Exchange Commission nor any state securities
commission has approved the certificates or determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
The certificates represent interests in the trust only and are not obligations
of Universal Bank or any of its affiliates, nor are they insured or guaranteed
by the Federal Deposit Insurance Corporation or any other governmental agency.
- -------------------------------------------------------------------------------
Underwriters of the class A certificates
Underwriters of the class B certificates
The information in this prospectus is not complete and may be changed. We may
not 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 it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
How to read this prospectus S-5
PROSPECTUS SUPPLEMENT S-6
Summary S-6
Addresses S-7
Series risk factors S-7
Limited amounts of credit enhancement S-7
Subordination of class B certificates S-8
Finance charge collections - distributions and subordination S-8
Allocation of finance charge collections S-8
Initial distribution from finance charge collections S-9
Calculation of interest S-9
[Determination of LIBOR] S-10
Second distribution from finance charge collections S-11
Distributions from excess finance charge collection pool S-12
Reallocation of class B and collateral interest principal collections S-12
Reserve account S-13
Principal collections - distributions and subordination S-14
Pooling of principal collections during the revolving period S-14
Required invested amount of collateral interest S-14
Principal collections during the controlled accumulation period S-15
Principal collections during an early amortization period S-15
Subordination as to principal payments S-16
Postponement of controlled accumulation period S-17
Pay out events S-17
Past performance of trust S-18
Loss and delinquency experience S-18
Revenue experience S-20
Principal payment experience for trust S-21
The receivables S-21
Underwriting S-24
United Kingdom S-25
Legal opinions S-26
Appendix 1 - Other series S-27
Appendix 2 - Allocation formulas S-33
First allocation: to series S-33
Second allocation: between investors and Universal Bank S-33
CORE PROSPECTUS 1
Summary 2
The certificates 2
Series and classes 2
Denominations 2
Other series 2
Interest, principal and invested amount 2
Universal Bank's interest in the trust 3
Receivables 3
Revolving, controlled accumulation and controlled amortization periods 4
Series termination 5
Your ownership interest in trust assets 6
Charged-off losses on receivables 6
S-2
<PAGE>
Early accumulation and amortization periods 7
Required amount of principal receivables 8
Universal Bank's residual interest in collections 9
Clean-up call 9
Credit enhancement 9
Ratings of certificates 9
Tax status of certificates 9
The trust and the trustee 10
Servicing 10
Universal Bank and UCS 10
General risk factors 10
More about the certificates 19
Distribution days 19
Allocations 20
Basic allocation structure 20
Reallocation groups 21
Excess allocation series 22
Principal sharing series 23
Subordination 23
New series 23
Pre-funded series 23
Paired series 24
Credit enhancement 25
Interest rate swaps 25
More about the accounts and the receivables 26
The accounts 26
Eligible accounts 27
Eligible receivables 27
Participation interests 28
Charge-off or adjustment of principal receivables 28
Redesignation of receivables 29
Additions of accounts 29
Removal of accounts 30
Liquidation of receivables on Universal Bank's insolvency 30
More about the trust 31
Bank accounts 31
Investment of funds 31
Universal Bank's credit card business 32
Account generation 32
Billing and payments 33
Minimum payments 34
Finance charges 34
Fees and charges 36
Payments 37
Collection of delinquent accounts 37
Interchange 39
More about servicing 39
Servicing fee and payment of expenses 40
Deposits of receivable collections/Citibank guaranty 40
Repurchase of receivables 41
Successors 41
UCS's resignation 41
UCS's default 42
Trustee not liable for servicer's acts 43
Book-entry and paper certificates 43
Book-entry certificates 43
The Depository Trust Company 45
Cedelbank 45
Euroclear 46
Issuance of paper certificates 47
The pooling and servicing agreement 47
Representations and warranties 48
Transfers of Universal Bank's interest 48
Additional transferors of receivables 48
Indemnification 49
Amendments 50
No meetings of investors 51
Tax matters 51
Limits of the discussion 51
S-3
<PAGE>
Tax characterization of the certificates 52
Tax characterization of the trust 53
Tax consequences to US certificate owners 53
Tax consequences to non-US certificate owners 56
Benefit plan investors 58
Prohibited transactions 59
Potential prohibited transactions from investment in certificates 59
Investment by benefit plan investors 60
Tax consequences to benefit plans 61
Plan of distribution 61
Use of proceeds 63
Where you can find more information 63
Reports available from the trustee 63
SEC reports 64
Defined terms 65
S-4
<PAGE>
HOW TO READ THIS PROSPECTUS
This prospectus consists of a prospectus supplement, followed by a core
prospectus. The core prospectus gives general background information that
applies to all series of certificates. The prospectus supplement gives specific
information about your series of certificates. You should carefully read both
the core prospectus and the prospectus supplement before investing.
The prospectus supplement may update or modify information in the core
prospectus. Whenever information in the prospectus supplement differs from
information in the core prospectus, you should rely on the information in the
prospectus supplement.
In deciding whether to purchase certificates, you should rely solely on the
information in this prospectus. We have not authorized anyone to give you
different information about the certificates.
You will find an index of all terms defined in this prospectus at the end of the
prospectus.
S-5
<PAGE>
PROSPECTUS SUPPLEMENT
- ---------------------
SUMMARY
<TABLE>
<CAPTION>
Principal
balance and
invested amount Offered by this
Class at closing date Interest rate Ratings Subordinated to: prospectus?
- ------------------- ------------------ ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
A certificates $[ ,000,000] [rate] Highest rating Not subordinated. Yes
category by at
least one
nationally
recognized
rating agency
B certificates $[ ,000,000] [rate] At least "A" or Class A as to Yes
equivalent by at principal
least one
nationally
recognized
rating agency
Collateral $[ ,000,000] [rate] Not rated Classes A and B No
interest as to principal
and interest
</TABLE>
=================== ==================
Series principal
balance and $[..,000,000]
invested amount
at closing date
Scheduled principal payment date [date]
Interest paid For class A and B certificates, each
[distribution day in [ , ,
and ]] [month], beginning [date].
[Following a pay out event, interest will
be paid on each distribution day.]
Annual servicing fee rate [..]%
Closing date [date]
Revolving period Scheduled [date] through [date].
Controlled accumulation period Scheduled [date] to scheduled principal
payment date. Start of controlled
accumulation period may be postponed.
Controlled accumulation amount $[...], subject to adjustment if start of
controlled accumulation period is
postponed.
Clean-up call Permitted when invested amount of
certificates and collateral interest is
at or below [5]% of initial invested
amount.
S-6
<PAGE>
Series termination date [date]
Margin for series used to [...]% of the series invested amount
determine required amount of
principal receivables
Required amount of collateral [...]% of series invested amount, subject
interest to reduction.
Reallocation group? [Yes - group [ ]. The other series in
group [ ] are [ ], [ ] and [ ].]
Excess allocation series? [Yes].
Principal sharing series? [Yes].
Reinvestment events? None.
Distribution days The 17th day of each month (or the next
business day if the 17th is not a
business day).
Record date Last day of calendar month preceding
distribution day
Book entry? Yes.
Benefit plan investors [May be able to purchase class A
certificates, but will not be able to
purchase class B certificates.] See
"Benefit plan investors" in core
prospectus.
Addresses
- ---------
Universal Bank's main offices are at 200 Brookstone Centre, Suite 110, Columbus,
Georgia 31904, telephone (706) 257-1700.
UCS's main offices are at 8787 Baypine Road, Jacksonville, Florida 32256,
telephone (904) 954-7500.
The trustee's offices are at Bankers Trust Company, Corporate Trust Office, 4
Albany Street, New York, NY 10006, telephone (212) [ ]
SERIES RISK FACTORS
Limited amounts of credit enhancement
- -------------------------------------
The subordination of the class B certificates and the collateral interest
provides credit enhancement for the class A certificates, and the subordination
of the collateral interest provides credit enhancement for the class B
certificates. However, the amount of subordination is limited, may decline
during the controlled accumulation period, and will be reduced by principal
payments. Once the invested amount of the collateral interest is reduced to
zero, class B certificate owners will bear directly the credit and other risks
on their certificates and the class B invested amount may be reduced. If the
S-7
<PAGE>
class B invested amount is reduced to zero, class A certificate owners will bear
directly the credit and other risks on their certificates. Also, if the invested
amount of the class B certificates or the collateral interest is reduced, the
principal and finance charge collections available to make principal and
interest payments on the class A and B certificates may be reduced, which could
delay or reduce such payments.
Subordination of class B certificates
- -------------------------------------
Payments of principal on the class B certificates will not begin until the
invested amount of the class A certificates has been reduced to zero. Moreover,
the class B invested amount may be reduced if
o the collateral interest has been reduced to zero, and
o finance charge collections and excess finance charge collections allocated
to the series are not sufficient to cover interest payments and servicing
fees for the class A and B certificates and to reverse reductions in the
invested amount of the class A certificates due to charge-offs of principal
receivables.
To the extent the class B invested amount is reduced, collections of finance
charge receivables allocable to the class B certificates in future months will
be reduced. Moreover, to the extent the amount of a reduction in the class B
invested amount is not reversed, the amount of principal and interest
distributable to the class B certificate holders will be reduced.
FINANCE CHARGE COLLECTIONS - DISTRIBUTIONS AND SUBORDINATION
Allocation of finance charge collections
- ----------------------------------------
This series is in a reallocation group. Accordingly, all collections of finance
charge receivables for a calendar month initially allocated to this series will
be pooled with collections of finance charge receivables for the month that are
initially allocated to the other series in the reallocation group. The pooled
finance charge collections will then be reallocated to each series in the
reallocation group in proportion to its interest, principal receivable
charge-offs and servicing fees.
Finance charge collections reallocated to this series will then be allocated to
classes A and B and the collateral interest in proportion to their adjusted
invested amounts.
Finance charge collections for the series also include
o net investment income on any funds in the reserve and interest funding
accounts for the series, which is allocated to classes A and B and the
collateral interest in proportion to their adjusted invested amounts, and
S-8
<PAGE>
o net investment income on any funds in the principal funding account and
draws from the reserve account, which are allocated entirely to the class A
certificates.
These investment proceeds and draws from the reserve account do not go through
the reallocation process. Net proceeds of the investment of funds in the
collection account, and any other investment proceeds not described in this
section, are treated as finance charge collections and are allocated to each
series according to its funds on deposit in the collection account. Net proceeds
of the investment of funds in the special funding account are treated like other
collections of finance charge receivables - that is, they go through the
reallocation process.
Initial distribution from finance charge collections
- ----------------------------------------------------
Finance charge collections for a calendar month that are allocated to class A
will be paid or deposited on the next distribution day in the following order of
priority:
(1) To the interest funding account for payment to the class A certificate
holders on that day (or, if the distribution day is not an interest payment
date, for payment on the next interest payment date), interest on the
principal balance of the class A certificates (including past interest and
interest on past interest).
(2) To reverse any reduction in class A's invested amount caused by principal
receivable charge-offs during the month.
(3) To the servicer, class A's portion of the servicing fee for the month.
Finance charge collections for a calendar month that are allocated to class B
will be paid or deposited on the next distribution day in the following order of
priority:
(1) To the interest funding account for payment to the class B certificate
holders on that day (or, if the distribution day is not an interest payment
date, for payment on the next interest payment date), interest on the
invested amount (not the principal balance) of the class B certificates
(including past interest and interest on past interest).
(2) To the servicer, class B's portion of the servicing fee for the month.
Finance charge collections for a calendar month that are allocated to the
collateral interest will be paid on the next distribution day to the servicer up
to the collateral interest's portion of the servicing fee for the month.
Calculation of interest
- -----------------------
Current interest to be paid, or deposited in the interest funding account, for a
certificate on a distribution day is interest
S-9
<PAGE>
o on the principal balance (class A) or the invested amount (class B) of the
certificate on the last day of the preceding month,
o for the actual number of days in the period from the preceding distribution
day to the current distribution day,
o at the annual interest rate for the certificate that was in effect for the
period,
o over a year of 360 days.
For the first distribution day for the series, interest is calculated for the
period from the closing date.
Interest to be paid or deposited for a certificate on a distribution day also
includes
o any interest on the certificate that should have been paid or deposited on
an earlier distribution day but has not yet been paid or deposited, plus
o accrued interest on the unpaid or non-deposited interest at the annual
rate for the certificate plus [...]% for the period from the distribution
day when the payment or deposit should have been made to the current
distribution day,
over a year of 360 days.
[Determination of LIBOR]
- ------------------------
[UCS will first determine LIBOR on the second London business day before the
closing date and then on the second London business day before each interest
payment date. LIBOR as so determined will cover the period from that closing or
interest payment date to the next interest payment date.
Example: Suppose March 17 and June 17 are interest payment dates. UCS will
determine LIBOR on March 15. The LIBOR determined on March 15 will cover the
period from March 17 to June 17. On April 17 (a distribution day), to the extent
funds are available, interest will be deposited in the interest funding account
based on the LIBOR determined March 15 applied to the 31 day period from March
17 to April 17, over a year of 360 days. (This example assumes that all relevant
days are business days or London business days.)
LIBOR determined by UCS will be the LIBOR rate for deposits in US dollars for
the period from the closing date or the interest payment date to the next
interest payment date that appears on the Dow Jones Telerate Service, page 3750
(or a successor page), at 11AM, London time, except that the LIBOR determined by
UCS before the closing date will be determined for a three-month period even if
the period for which the LIBOR will be in effect is not three months.
S-10
<PAGE>
If there is no Telerate quote on that day, LIBOR will be the arithmetic mean of
the rates offered for such deposits at 11AM, London time, on that day by at
least two of three major banks in the London interbank market selected by UCS.
If there are fewer than two such quotes, LIBOR will be the arithmetic mean of
rates quoted by major New York City banks selected by UCS at approximately 11AM,
New York time, for US dollar loans to leading European banks for the same
period. If the banks selected by UCS are not quoting such rates, LIBOR will be
the same LIBOR for the preceding interest payment date.
Second distribution from finance charge collections
- ---------------------------------------------------
After the initial distribution of finance charge collections is made to class A
and B and the collateral interest, all the remaining finance charge collections
allocated to the series will be pooled and paid or deposited in the following
order of priority, to the extent not paid or deposited in the initial
distribution:
(1) To the interest funding account for payment to the class A certificate
holders on that day (or, if the distribution day is not an interest payment
date, for payment on the next interest payment date), interest on the
principal balance of the class A certificates (including past interest and
interest on past interest).
(2) To reverse any reduction in class A's invested amount caused by principal
receivable charge-offs during the month.
(3) To the servicer, class A's portion of the servicing fee for the month.
(4) To reverse any reduction in class A's invested amount caused by principal
receivable charge-offs for previous months that were not previously
reversed.
(5) To the interest funding account for payment to the class B certificate
holders on that day (or, if the distribution day is not an interest payment
date, for payment on the next interest payment date), interest on the
invested amount of the class B certificates (including past interest and
interest on past interest).
(6) To reverse any reduction in class B's invested amount caused by principal
receivable charge-offs during the month.
(7) To the servicer, class B's portion of the servicing fee for the month.
(8) To reverse any reduction in class B's invested amount caused by (a)
principal receivable charge-offs for previous months that were not
previously reversed or (b) a reallocation of principal collections
(described below).
(9) To the collateral interest holders, interest on the invested amount of the
collateral interest (including past interest and interest on past
interest).
S-11
<PAGE>
(10) To the servicer, the servicing fee for the series for the month and any
servicing fee for the series for a prior month that was not paid to the
servicer.
(11) To reverse any reduction in the collateral interest's invested amount
caused by (a) principal receivable charge-offs during the month, (b)
principal receivable charge offs for previous months that were not
previously reversed or (c) a reallocation of principal collections
(described below).
(12) To the reserve account, any required deposit.
(13) To the collateral interest holders, any amounts required to be paid out of
finance charge collections under a separate loan agreement between the
collateral interest holders and Universal Bank.
(14) To the excess finance charge collections pool, all remaining finance charge
collections allocated to the series.
Distributions from excess finance charge collection pool
- --------------------------------------------------------
Your series is an excess allocation series. Consequently, if the amounts
required to be paid out of finance charge collections allocated to class A and B
and the collateral interest, as described above, exceed the finance charge
collections allocated to the series (a finance charge shortfall), the classes of
the series will receive an additional allocation of finance charge collections
to the extent funds are available in the excess finance charge collections pool.
The amount allocated to the series from the excess finance charge collection
pool will be the amount of the pool multiplied by the ratio of
o the finance charge shortfall for the series
to
o the total of the finance charge shortfalls for all excess allocation
series.
Amounts allocated to your series from the excess finance charge collections pool
will be distributed according to the priorities for the second distribution of
finance charge collections described above.
Reallocation of class B and collateral interest principal collections
- ---------------------------------------------------------------------
If on a distribution day the allocations to your series of a month's finance
charge collections and from the excess finance charge collections pool are
insufficient
o to pay full interest on the class A and B certificates,
o to pay class A's and B's portion of the servicing fee, and
o to reverse reductions in the invested amount of the class A certificates
caused by principal receivable charge-offs during the month (but not
reductions of invested amount due to earlier principal receivable
charge-offs),
S-12
<PAGE>
then principal collections for the month initially allocated to class B and the
collateral interest (as described in "More about the certificates" the core
prospectus) will be paid or deposited in the following order of priority, to the
extent not previously received:
(1) To the interest funding account for payment to the class A certificate
holders on that day (or, if the distribution day is not an interest payment
date, for payment on the next interest payment date), interest on the
principal balance of the class A certificates (including past interest and
interest on past interest).
(2) To reverse any reduction in class A's invested amount caused by principal
receivable charge-offs during the month.
(3) To the servicer, class A's portion of the servicing fee for the month.
(4) To the interest funding account for payment to the class B certificate
holders on that day (or, if the distribution day is not an interest payment
date, for payment on the next interest payment date), interest on the
invested amount of the class B certificates (including past interest and
interest on past interest).
(5) To reverse any reduction in class B's invested amount caused by principal
receivable charge-offs during the month.
(6) To the servicer, class B's portion of the servicing fee for the month.
To the extent principal collections are so used, the invested amount of the
collateral interest will be reduced and, if the invested amount of the
collateral interest is reduced to zero, the invested amount of the class B
certificates will then be reduced.
Reserve account
- ---------------
The trustee will establish a reserve account for the benefit of class A and the
collateral interest. The account will be established approximately three months
before the scheduled start of the controlled accumulation period. The reserve
account may receive deposits from finance charge collections and excess finance
charge collections, as described above.
On each distribution day during the controlled accumulation period, the trustee
will transfer from the reserve account to finance charge collections for class A
an amount equal to the difference between
o the amount earned on the principal funding account balance from the
preceding distribution day to the current distribution day, and
o any larger amount that would have been earned if the principal funding
account balance on the preceding distribution day had been invested at the
certificate rate for the class A certificates for the actual number of days
from the preceding distribution day to the current distribution day (over a
year of 360 days).
S-13
<PAGE>
The trustee will also transfer the same amount of funds to finance charge
collections for class A on the first distribution day during an early
amortization period.
After all other withdrawals from and deposits to the reserve account on a
distribution day have been made, the trustee will transfer any balance in the
reserve account that exceeds 0.5% of the invested amount of the class A
certificates on the preceding distribution day
o first, to the collateral interest holders, to the extent required under a
separate loan agreement between the collateral interest holders and
Universal Bank, and
o second, to Universal Bank.
Universal Bank may reduce the amount required to be maintained in the reserve
account, which could increase the transfers to the collateral interest holders,
if each rating agency confirms that it will not reduce its rating for any class
or series.
PRINCIPAL COLLECTIONS - DISTRIBUTIONS AND SUBORDINATION
Pooling of principal collections during the revolving period
- ------------------------------------------------------------
During the revolving period, no principal is required to be paid or deposited
for any class of this series. Accordingly, since the series is a principal
sharing series, principal collections initially allocated to your series will be
pooled with principal collections allocated to other principal sharing series
and used to make required principal payments or deposits to principal funding
accounts for other series. Any pooled principal collections not needed for such
payments or deposits will be reinvested in principal receivables.
There are two exceptions:
o Principal collections initially allocated to class B and the collateral
interest that are reallocated to pay interest and servicing fees and to
reverse any reduction in invested amount caused by principal receivable
charge-offs (see "Reallocation of class B and collateral interest principal
collections" above) will not be pooled.
o To the extent that the invested amount of the collateral interest exceeds
its required amount (see next section), the excess will be paid to the
collateral interest holders.
Required invested amount of collateral interest
- -----------------------------------------------
The invested amount of the collateral interest will generally be required to be
at least [...]% of the total adjusted invested amounts of the class A and class
B certificates and the collateral interest.
However, the required invested amount of the collateral interest
o can not be less than $[...],
S-14
<PAGE>
o will be "frozen" - that is, not subject to further distribution - if there
is a pay out event or if the invested amount of the collateral interest is
reduced during the controlled accumulation period for any reason other than
payment of principal,
o can not be more than the total invested amounts of the class A and class B
certificates, and
o can be reduced if each rating agency confirms that it will not reduce or
withdraw its rating of any class or series.
If one of the first two bulleted conditions conflict with one of the last two
bulleted conditions, the latter will prevail.
Principal collections during the controlled accumulation period
- ---------------------------------------------------------------
On each distribution day during the controlled accumulation period,
o the controlled accumulation amount, and
o any part of a controlled accumulation amount that was required to be, but
was not, deposited in the principal funding account on a previous
distribution day
will be deducted from principal collections allocated to the series (and not
reallocated to pay interest and servicing fees and to reverse reductions in
invested amount caused by principal receivable charge-offs, as described above)
and will be deposited in the principal funding account. No deposit can exceed
the total adjusted invested amount of the class A and B certificates.
Once the deposit to the principal funding account is made, any remaining
principal collections allocated to the series will be treated in the same manner
as during the revolving period, as described above.
If principal collections allocated to your series for a month are less than the
controlled accumulation amount plus any amounts required to have been deposited
in the principal funding account on past distribution days but not yet deposited
(a principal shortfall), a portion of the pooled principal collections from the
other principal sharing series may be allocated to your series. This allocation
will be made to the various principal sharing series in proportion to their
principal shortfalls. Such an allocation to a series can not exceed the series'
principal shortfall. Principal collections so allocated to your series will be
deposited in the principal funding account.
Principal collections during an early amortization period
- ---------------------------------------------------------
If a pay out event triggers an early amortization period for your series, any
balance in the principal funding account and all principal collections allocated
to your series (and
S-15
<PAGE>
not reallocated to finance charge collections as described above) will be paid
on each distribution day
o to the class A certificate holders until the invested amount of the class A
certificates is reduced to zero,
o then to the class B certificate holders until the invested amount of the
class B certificates is reduced to zero,
o and finally to the collateral interest holders until the invested amount
of the collateral interest is reduced to zero.
If the principal collections initially allocated to your series (and not
reallocated as described above) in any month are less than the total invested
amounts of the class A and B certificates and the collateral interest, the
shortfall will be another form of principal shortfall. To the extent available,
a portion of the shared principal collections pool will be allocated to the
series. These allocations will be made to each series in proportion to, but not
in excess of, its principal shortfall. Principal collections allocated to the
series will be distributed as described in the preceding paragraph.
Subordination as to principal payments
- --------------------------------------
The class B certificates are subordinated to the class A certificates, and the
collateral interest is subordinated to the class A certificates and the class B
certificates, as to payments of principal.
Accordingly,
o no principal can be paid on the class B certificates until the invested
amount of the class A certificates is reduced to zero, and
o except as described below, no principal can be paid on the collateral
interest until the invested amount of the class A and the class B
certificates is reduced to zero.
Moreover, if necessary, principal collections allocated to the collateral
interest and the class B certificates will be used to reverse reductions in the
invested amount of the class A certificates caused by principal receivable
charge-offs. Such reallocations of principal will reduce the invested amount of
the collateral interest and, if the invested amount of the collateral interest
is reduced to zero, the class B certificates.
Despite the subordination of the collateral interest, principal may be paid on
the collateral interest as the adjusted invested amount of the class A and B
certificates is reduced, as described in "Required invested amount of collateral
interest" above. However, such principal payments to the collateral interest
will cease if there is a pay out event or a reduction of the invested amount of
the collateral interest during the controlled accumulation period that is not
caused by a principal payment.
S-16
<PAGE>
POSTPONEMENT OF CONTROLLED ACCUMULATION PERIOD
The controlled accumulation period for the series is scheduled to begin [date]
and last [12 months]. However, UCS may reduce the number of months in the
controlled accumulation period by postponing the beginning of the controlled
accumulation period. UCS can postpone the beginning of the controlled
accumulation period only if permitted by a calculation stated in the pooling and
servicing agreement. The calculation is based on the rate at which principal
receivables are being paid and the principal collections of those principal
sharing series that are in their revolving periods.
PAY OUT EVENTS
The following are automatic pay out events:
o The trust fails to pay the full invested amount of the class A and class B
certificates on their scheduled principal payment date.
o Universal Bank fails to maintain the required amount of principal
receivables.
o The trust becomes an investment company within the meaning of the
Investment Company Act of 1940.
o Universal Bank becomes insolvent.
o The average of the interest payment yields (commonly referred to as the
base rate) for three consecutive calendar months is greater than the
average of the net finance charge yields (usually referred to as the series
adjusted portfolio yield) for those months. The base rate for a calendar
month is the ratio of (a) the sum of the interest to be paid to or
deposited in an interest funding account for all classes of the series on
the distribution day in the following month plus the servicing fees for all
the classes of the series for the month to (b) the invested amount of the
series on the last day of the month, stated as an annualized percentage.
Series adjusted portfolio yield for a calendar month is the ratio of (a)
finance charge collections allocated to the series on the distribution day
in the following month to (b) the invested amount of the series on the last
day of the month, stated as an annualized percentage. In calculating net
finance charge yield, finance charge collections include (1) excess finance
charge collections allocated to the series on the following distribution
day if each rating agency approves of their inclusion for this purpose, (2)
draws from a reserve account or investment proceeds on a principal funding
account that are required to be included as finance charge collections on
the following distribution day, but is reduced by (3) principal receivable
charge-offs for the month.
S-17
<PAGE>
The following are pay out events only if declared to be so by either the trustee
or investors holding a majority of the principal balance of the class A and B
certificates and the collateral interest:
o Universal Bank (a) fails for five days to make a required payment or
deposit to the trust, or (b) fails for 60 days to take any other action
required by the pooling and servicing agreement if the failure to act has a
material adverse effect on the series investors.
o (1) A representation or warranty by Universal Bank to the trust, or
information about the cardmember accounts that Universal Bank gives the
trust, is incorrect when made, (2) the incorrectness materially and
adversely affects the interest of the series investors, and (3) Universal
Bank fails to cure the incorrectness for 60 days after the trustee notifies
Universal Bank of the incorrectness. Universal Bank can cure an
incorrectness as to receivables or accounts by repurchasing all the
receivables in the affected accounts.
o A default by UCS of the type described under "UCS default" in the core
prospectus.
PAST PERFORMANCE OF TRUST
The following tables show the loss, delinquency, revenue and payment experience
of the accounts in the trust. Future performance of the accounts in the trust
may differ from past experience.
Loss and delinquency experience
- -------------------------------
The following tables show the recent loss and delinquency experience for the
trust.
<TABLE>
Loss experience for trust (dollars in thousands)
<CAPTION>
Three months Year ended December 31,
ended March 31, 1998 1997 1996
1999
- -------------------------- ----------------- ----------------------------------------------------------
<S> <C> <C> <C> <C>
Average principal
receivables outstanding $[...] $12,201,842 $9,037,357 $6,959,895
Total net charge-offs $[...] $554,597 $470,137 $431,032
Total net charge-offs as
percentage of average
principal receivables [...]%
outstanding (annualized) 4.55% 5.20% 6.19%
Gross charge-offs as
percentage of average
principal receivables [...]%
outstanding (annualized) 5.27% 5.94% 6.88%
</TABLE>
S-18
<PAGE>
In the preceding table:
o Average principal receivables outstanding is the average of the beginning
of month principal receivables outstanding for the indicated period.
However, for months in which new accounts were designated to the trust, the
average principal receivables outstanding amount is the average of (1) the
aggregate amount of principal receivables outstanding on the first day of
the month and (2) the aggregate amount of principal receivables outstanding
on the effective date of the addition, weighted by the number of days in
the month before and after the addition.
o Net charge-offs are gross charge-offs less recoveries. Gross charge-offs
are principal charge-offs before recoveries. Gross charge-offs do not
include reductions in principal receivables outstanding due to fraud,
returned goods, customer disputes or other miscellaneous credit
adjustments.
<TABLE>
Delinquencies for trust (dollars in thousands)
<CAPTION>
At December 31,
At March 31, 1999 1998 1997 1996
$ % $ % $ % $ %
[annualized]
- ------------------ ---------- ---------- ------------ --------- ------------ -------- ------------- --------
<S> <C> <C> <C> <C>
Principal
receivables
outstanding $[...] $14,274,783 $9,577,202 $8,578,283
Delinquent:
31 - 60 days $[...] [...]% $166,192 1.16% $106,718 1.11% $97,263 1.13%
61 - 90 days $[...] [...]% $102,873 0.72% $66,032 0.69% $63,754 0.74%
91 - 120 days $[...] [...]% $78,575 0.55% $50,430 0.53% $48,878 0.57%
over 120 days $[...] [...]% $104,214 0.73% $67,787 0.71% $69,560 0.81%
- ------------------ ---------- ---------- ------------ --------- ------------ -------- ------------- -------
Total $[...] [...]% $451,854 3.17% $290,967 3.04% $279,455 3.26%
========== ========== ============ ========= ============ ======== ============= =======
</TABLE>
In the preceding table, principal receivables outstanding consist of end of day
principal receivables on the date indicated. The delinquent amount includes both
principal and finance charge receivables.
S-19
<PAGE>
Revenue experience
- ------------------
Revenues for the trust from finance charges and fees paid by cardmembers and
from interchange are shown in the following table.
<TABLE>
Revenue for trust (dollars in thousands)
<CAPTION>
At March 31, Year ended December 31,
1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average principal receivables $[...] $12,201,842 $9,037,357 $6,959,895
outstanding
Finance charges and fees paid $[...] $1,741,840 $1,291,112 $1,010,052
Interchange (estimated) $[...] $281,293 $231,118 $184,455
- ------------------------------------------------------------------------------------------------------------------
Total finance charges and fees paid and
interchange $[...] $2,023,133 $1,522,230 $1,194,507
Average revenue yield (total finance
charges and fees paid and interchange
divided by average principal [...]%
receivables outstanding) (annualized) 16.58% 16.84% 17.16%
</TABLE>
In the preceding table:
o Average principal receivables outstanding is calculated in the same way as
in the table of loss experience above.
o Finance charges and fees paid consist of periodic finance charges, late
fees, cash advance fees, annual membership fees and other charges.
The revenues for finance charges shown in the tables above depend in part upon
the degree to which cardmembers use their credit cards as revolving debt
instruments for purchases and cash advances, thus paying off credit card account
balances over several months. This contrasts with convenience use, where
cardmembers pay off their entire balance each month, thereby avoiding finance
charges on purchases.
Finance charges and fee revenues also depend on
o other services cardmembers use and charge on their cards,
o the types of charges and fees assessed by Universal Bank on the accounts,
and
o whether the accounts are nonpremium or premium accounts.
Accordingly, revenues will be affected by future changes in the use of the
cards, the types of charges and fees assessed on the accounts and on the
proportions of the
S-20
<PAGE>
receivable balances of nonpremium and premium accounts. Revenues could also be
adversely affected by future changes in the charges and fees assessed by
Universal Bank.
Neither UCS nor any of its affiliates can predict how future changes in credit
card usage or in the terms of the accounts will affect revenues.
Principal payment experience for trust
- --------------------------------------
The following table shows the highest, lowest and average cardmember monthly
principal payment rates for the periods shown.
The highest and lowest monthly principal payment rates are calculated by
dividing
o principal payments from cardmembers posted to the accounts during the month
by
o the principal receivables outstanding at the beginning of the month, except
that for months in which new accounts were designated to the trust, the
principal receivables outstanding amount is calculated in the same way as
in the table of loss experience above.
The monthly average principal payment rate is calculated by dividing
o the ratio of principal payments from cardmembers posted to the accounts
during the indicated period over the number of months in the period, by
o the average principal receivables outstanding for the period, calculated
in the same way as in the table of loss experience above.
<TABLE>
Monthly principal payment rates
<CAPTION>
Three months Year ended December 31,
ended March 31, 1998 1997 1996
1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lowest month [...]% 14.88% 14.96% 15.57%
Highest month [...]% 18.17% 19.52% 18.84%
Monthly average [...]% 16.14% 17.44% 17.02%
</TABLE>
THE RECEIVABLES
The accounts designated to the trust represent substantially all of the eligible
accounts in Universal Bank's portfolio. Universal Bank believes that the
accounts designated to the trust are representative of the eligible accounts in
Universal Bank's portfolio and do not represent an adverse selection from among
the eligible accounts.
S-21
<PAGE>
Except as otherwise noted,
o the accounts referred to below include accounts whose principal balances
have been charged off. These accounts are retained by the trust since the
trust may eventually recover part or all of the charged-off principal and
finance charge receivables.
o references to "receivables outstanding," "receivables" and "total
receivables" in this section include principal and finance charge
receivables, and also include $[...] in calling card transaction
receivables that do not belong to the trust.
On [date]
o The receivables in the trust included $[...] of principal receivables and
$[...] of finance charge receivables. These figures do not include
receivables from calling card transactions that do not belong to the trust.
o The accounts had an average total receivables balance of $[...] and an
average credit limit of $[...].
o The aggregate total receivables balance as a percentage of the aggregate
total credit limit was [...]%.
o The average age of the accounts was approximately [...] months.
o All of the accounts designated to the trust were MasterCard or VISA credit
card accounts, of which [...]% were non-premium accounts and [...]% were
premium accountS.
o The total receivables balance of non-premium accounts was [...]% of total
receivables, and of premium accounts was [...]% of total receivables.
o The following are the approximate percentages of receivables in accounts
of cardmembers with billing addresses in the listed states:
[state] [...]%
[state] [...]%
[state] [...]%
[state] [...]%
[state] [...]%
o Not more than 5% of the receivables were in accounts of cardmembers with
billing addresses in any other single state.
The following tables describe the accounts designated to the trust by various
criteria on [date]. Because the composition of the trust receivables changes
over time, these tables are not necessarily indicative of the composition of the
trust receivables at any time after [date].
S-22
<PAGE>
<TABLE>
Composition by account balance
<CAPTION>
Number of Percentage of Receivables Percentage of total
Account balance range accounts total number of outstanding receivables
accounts outstanding
- ---------------------------------- ----------------- ------------------- --------------- ---------------------
<S> <C> <C> <C> <C>
Credit balance
No balance
$ 0 -- $ 1,500
$ 1,501 -- $ 5,000
$ 5,001 -- $10,000
Over $10,000
- ---------------------------------- ----------------- ------------------- --------------- ---------------------
Total 100% $ 100%
</TABLE>
<TABLE>
Composition by credit limit
<CAPTION>
Number of Percentage of Receivables Percentage of total
Credit limit range accounts total number of outstanding receivables
accounts outstanding
- ----------------------------------- ----------------- ------------------- --------------- ---------------------
<S> <C> <C> <C> <C>
$ 0 - $ 1,500
$ 1,501 -- $ 5,000
$ 5,001 -- $10,000
Over $10,000
- ----------------------------------- ----------------- ------------------- --------------- ---------------------
Total 100% $ 100%
</TABLE>
The preceding table does not include charged-off accounts, as the balance and
credit limit for such accounts is zero
<TABLE>
Composition by period of delinquency
<CAPTION>
Number of Percentage of Receivables Percentage of
Days contractually delinquent accounts accounts outstanding receivables
outstanding
- ----------------------------------- ----------------- ------------------- --------------- ---------------------
<S> <C> <C> <C> <C>
Not delinquent
Up to 30 days
31 - 60 days
61 - 90 days
91 -120 days
More than 120 days
- ----------------------------------- ----------------- ------------------- --------------- ---------------------
Total 100% $ 100%
</TABLE>
<TABLE>
Composition by account age
<CAPTION>
Number of Percentage of Receivables Percentage of total
Account age accounts total number of outstanding receivables
accounts outstanding
- ----------------------------------- ----------------- ------------------- --------------- ---------------------
<S> <C> <C> <C> <C>
Not more than 6 months
Over 6 months to 12 months
Over 12 months to 24 months
Over 24 months to 36 months
Over 36 months to 48 months
Over 48 months
- ----------------------------------- ----------------- ------------------- --------------- ---------------------
Total 100% $ 100%
</TABLE>
S-23
<PAGE>
UNDERWRITING
The underwriters named below have agreed to purchase the class A and class B
certificates set forth opposite their names:
Initial principal balance of
certificates
Underwriters
Class A Class B
$ $
-----------------------------------------
Totals $ $
=========================================
The underwriters must purchase all of the class A and B certificates. However,
the underwriters' obligation to purchase the certificates is subject to the
approval of legal matters by their counsel and to other conditions.
The underwriters intend to make a market in the class A and B certificates.
However, the underwriters are not obligated to make a market, and they may
discontinue market-making at any time. An active public market for the
certificates may not develop.
The underwriters are permitted to engage in transactions that stabilize,
maintain, or otherwise affect the price of the class A and B certificates. The
underwriters are also permitted to create short positions in the certificates -
that is, to sell more certificates than they purchase from the trust. If the
underwriters engage in such transactions, they may discontinue such transactions
without notice.
Purchase of certificates in the open market for stabilization or to reduce short
positions could cause the price of the certificates to be higher than it might
otherwise be. However, neither Universal Bank, UCS nor the underwriters makes
any representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the prices of the
certificates.
The underwriters intend initially to offer the class A and B certificates to the
public at the prices shown on the cover page of this prospectus. The
underwriters also intend to offer
S-24
<PAGE>
certificates to selected dealers at that price less concessions not in excess of
[...]% of the initial principal balance for class A certificates and [...]% of
the initial principal balance for class B certificates. The underwriters may
allow, and the dealers may reallow, concessions not in excess of [...]% of the
initial principal balance for class A certificates and [...]% of the initial
principal balance for class B certificates to selected brokers and dealers.
After the initial public offering, the underwriters may change the public
offering price and other selling terms of the certificates.
Universal Bank will indemnify the underwriters against specified liabilities,
including liabilities under the Securities Act of 1933, or will contribute to
payments the underwriters may be required to make under the Securities Act of
1933. The underwriters will reimburse Universal Bank for some expenses of the
issuance and distribution of the certificates.
Universal Bank and UCS have a number of broker-dealer affiliates, including
Salomon Smith Barney, that are members of the NASD and that may participate in
the offering of the certificates. Accordingly, the offering of the certificates
will conform with the requirements of rule 2720 of the NASD's conduct rules.
This prospectus may also be used by Universal Bank's and UCS's broker-dealer
affiliates in offers and sales of the certificates in market making transactions
at negotiated prices related to prevailing market prices at the time of sale.
These affiliates may act as principal or agent in such transactions.
United Kingdom
- --------------
Each underwriter will represent and agree that
o it has complied and will comply with the applicable provisions of the
Financial Services Act 1986 for anything it does in relation to the
certificates that involves the United Kingdom,
o it has only issued, distributed or passed on, and will only issue,
distribute or pass on, in the United Kingdom any document received by it in
connection with the issue of the certificates to a person who is of a kind
described in article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued, distributed or passed on,
o if it is an authorized person under chapter III of part I of the Financial
Services Act 1986, it has only promoted and will only promote (as that term
is defined in regulation 1.02(2) of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991) to any person in the United Kingdom
the scheme described in this prospectus if that person is of a kind
described either in section 76(2) of the Financial Services Act 1986 or in
regulation 1.04 of the Financial Services (Promotion of Unregulated
Schemes) Regulations 1991, and
S-25
<PAGE>
o it is a person of a kind described in article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996.
LEGAL OPINIONS
Marla Berman Lewitus, as an Associate General Counsel - Corporate Law of
Citigroup Inc., will deliver a legal opinion to Universal Bank and the trust on
matters, other than tax matters, relating to the certificates. Cravath, Swaine &
Moore, New York, New York will deliver a legal opinion to the Underwriters on
the certificates, and will also deliver a legal opinion to Universal Bank on the
federal tax consequences of the issuance of the certificates and related
matters.
S-26
<PAGE>
APPENDIX 1 - OTHER SERIES
The table below shows the principal characteristics of all other outstanding
series issued by the trust. You can contact UCS at (904) 954-7500 for more
detailed information about any series. UCS will provide you, without charge, a
copy of the prospectus for any publicly issued series. Series 1995-5, series
1998-1, series 1998-2, series 1998-3, series 1998-4, series 1998-5, series
1998-6, series 1998-7, series 1998-8, series 1998-9 and series 1999-1 were not
publicly issued.
The amounts given below for controlled accumulation amounts, and the dates given
for the beginning of controlled accumulation periods, are subject to
modification in a manner similar to that described above for this series. Also,
the revolving period for series that were not publicly issued can be shortened,
and the start of the controlled accumulation or amortization period brought
forward, at Universal Bank's direction. All series listed are excess allocation
and principal sharing series.
(1) Series 1995-2
- -----------------
Initial invested amount $750 million
Class A initial invested amount $675 million
Class A certificate rate 5.95%
Class B initial invested amount $35.625 million
Class B certificate rate 6.1%
Controlled accumulation amount $59,218,750
Controlled accumulation period begins September 30, 1999
Annual servicing fee 2%
Collateral interest initial invested amount $39.375 million
Enhancement for class A and B Collateral interest
Other enhancement for class A Subordination of class B
Scheduled principal payment October 2000
Issuance date November 15, 1995
Reallocation group II
(2) Series 1995-3
- ------------------
Initial invested amount $750 million
Class A initial invested amount $652.5 million
Class A certificate rate Three-month LIBOR plus 0.19%
Class B initial invested amount $45 million
Class B certificate rate Three-month LIBOR plus 0.30%
S-27
<PAGE>
Controlled accumulation amount $58.125 million
Controlled accumulation period begins September 30, 2001
Annual servicing fee 2%
Collateral interest initial invested amount $52.5 million
Enhancement for class A and B Collateral interest
Other enhancement for class A Subordination of class B
Scheduled principal payment October 2002
Issuance date November 15, 1995
Reallocation group I
(3) Series 1995-5 (amended July 17, 1998)
- ------------------------------------------
Initial invested amount $500 million
Class A initial invested amount $455 million
Class A certificate rate Commercial paper index
Annual servicing fee 2%
Collateral interest initial invested amount $45 million
Enhancement for class A certificates Collateral interest
Controlled amortization period begins July 31, 2000
Scheduled final payment August 2001
Issuance date December 21, 1995
Reallocation group IV
(4) Series 1996-1
- ------------------
Initial invested amount $1 billion
Class A initial invested amount $850 million
Class A certificate rate Three-month LIBOR plus 0.125%
Class B initial invested amount $80 million
Class B certificate rate Three-month LIBOR plus 0.26%
Controlled accumulation amount $77.5 million
Controlled accumulation period begins March 31, 2000
Annual servicing fee 2%
Collateral interest initial invested amount $70 million
Enhancement for class A and B Collateral interest
Other enhancement for class A Subordination of class B
Scheduled principal payment April 2001
Series issuance date April 30, 1996
Reallocation group I
(5) Series 1996-3
- ------------------
Initial invested amount $1 billion
Class A initial invested amount $850 million
Class A certificate rate Three-month LIBOR plus 0.10%
Class B initial invested amount $80 million
S-28
<PAGE>
Class B certificate rate Three-month LIBOR plus 0.30%
Controlled accumulation amount $77.5 million
Controlled accumulation period begins August 31, 2000
Annual servicing fee 2%
Collateral interest initial invested amount $70 million
Enhancement for class A and B Collateral interest
Other enhancement for class A Subordination of class B
Scheduled principal payment September 2001
Issuance date September 17, 1996
Reallocation group I
(6) Series 1997-1
- ------------------
Initial invested amount $1 billion
Class A initial invested amount $850 million
Class A certificate rate Three-month LIBOR plus 0.09%
Class B initial invested amount $80 million
Class B certificate rate Three-month LIBOR plus 0.28%
Controlled accumulation amount $77.5 million
Controlled accumulation period begins March 31, 2001
Annual servicing fee 2%
Collateral interest initial invested amount $70 million
Enhancement for class A and B Collateral interest
Other enhancement for class A Subordination of class B
Scheduled principal payment April 2002
Issuance date May 14, 1997
Reallocation group I
(7) Series 1998-1
- ------------------
Initial invested amount $800 million
Class A initial invested amount $744 million
Class A certificate rate Commercial paper index
Annual servicing fee 2%
Collateral interest initial invested amount $56 million
Enhancement for class A Collateral interest
Controlled amortization period begins June 30, 2000
Scheduled final payment July 2001
Issuance date June 4, 1998
Reallocation group III
(8) Series 1998-2
- ------------------
Initial invested amount $800 million
Class A initial invested amount $750 million
Class A certificate rate Commercial paper index
S-29
<PAGE>
Annual servicing fee 2%
Collateral interest initial invested amount $50 million
Enhancement for class A Collateral interest
Controlled amortization period begins June 30, 2000
Scheduled final payment July 2001
Issuance date June 9, 1998
Reallocation group III
(9) Series 1998-3
- -------------------
Initial invested amount $1.1 billion
Class A initial invested amount $1.023 billion
Class A certificate rate Commercial paper index
Annual servicing fee 2%
Collateral interest initial invested amount $77 million
Enhancement for class A Collateral interest
Controlled amortization period begins June 30, 2000
Scheduled final payment July 2001
Issuance date June 16, 1998
Reallocation group III
(10) Series 1998-4
- -------------------
Initial invested amount $800 million
Class A initial invested amount $744 million
Class A certificate rate Commercial paper index
Annual servicing fee 2%
Collateral interest initial invested amount $56 million
Enhancement for class A Collateral interest
Controlled amortization period begins June 30, 2000
Scheduled final payment July 2001
Issuance date June 18, 1998
Reallocation group III
(11) Series 1998-5
- -------------------
Initial invested amount $500 million
Class A initial invested amount $465 million
Class A certificate rate Commercial paper index
Annual servicing fee 2%
Collateral interest initial invested amount $35 million
Enhancement for class A Collateral interest
Controlled amortization period begins September 30, 2000
Scheduled final payment October 2001
Issuance date September 22, 1998
Reallocation group III
S-30
<PAGE>
(12) Series 1998-6
- -------------------
Initial invested amount $600 million
Class A initial invested amount $558 million
Class A certificate rate Commercial paper index
Annual servicing fee 2%
Collateral interest initial invested amount $42 million
Enhancement for class A Collateral interest
Controlled amortization period begins September 30, 2000
Scheduled final payment October 2001
Issuance date September 29, 1998
Reallocation group III
(13) Series 1998-7
- -------------------
Initial invested amount $400 million
Class A initial invested amount $372 million
Class A certificate rate Commercial paper index
Annual servicing fee 2%
Collateral interest initial invested amount $28 million
Enhancement for class A Collateral interest
Controlled amortization period begins September 30, 2000
Scheduled final payment October 2001
Issuance date September 24, 1998
Reallocation group III
(14) Series 1998-8
- -------------------
Initial invested amount $250 million
Class A initial invested amount $232.5 million
Class A certificate rate Commercial paper index
Annual servicing fee 2%
Collateral interest initial invested amount $17.5 million
Enhancement for class A Collateral interest
Controlled amortization period begins November 30, 2000
Scheduled final payment December 2001
Issuance date November 19, 1998
Reallocation group III
(15) Series 1998-9
- -------------------
Initial invested amount $750 million
Class A initial invested amount $697.5 million
Class A certificate rate Commercial paper index
Annual servicing fee 2%
Collateral interest initial invested amount $52.5 million
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<PAGE>
Enhancement for class A Collateral interest
Controlled amortization period begins December 31, 2000
Scheduled final payment January 2002
Issuance date December 10, 1998
Reallocation group III
(16) Series 1999-1
- -------------------
Initial invested amount $750 million
Class A initial invested amount $697.5 million
Class A certificate rate Commercial paper index
Annual servicing fee 1.87%
Collateral interest initial invested amount $52.5 million
Enhancement for class A Collateral interest
Controlled amortization period begins June 30, 2001
Scheduled final payment July 2002
Issuance date June 8, 1999
Reallocation group III
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<PAGE>
APPENDIX 2 - ALLOCATION FORMULAS
First allocation: to series
- ---------------------------
For each calendar month, UCS will allocate to each outstanding series its
portion of finance charge collections ("series allocable finance charge
collections"), principal collections ("series allocable principal collections")
and charge-offs of defaulted principal receivables ("series allocable defaulted
amount").
Series allocable finance charge collections, series allocable principal
collections and series allocable defaulted amount mean, for this series and for
any calendar month, the product of (a) the series allocation percentage for this
series and (b) the amount of collections of finance charge receivables deposited
in the collection account, the amount of collections of principal receivables
deposited in the collection account and the amount of all charge-offs of
defaulted principal receivables for the month, respectively.
Series allocation percentage means, for this series and for any calendar month,
the percentage equivalent of a fraction, the numerator of which is the sum of
the series adjusted invested amount for this series as of the last day of the
immediately preceding calendar month plus the margin for the series used to
determine the required amount of principal receivable for this series as of the
last day of the immediately preceding calendar month and the denominator of
which is the trust adjusted invested amount plus the sum for all series of the
margins for the series used to determine the required amount of principal
receivables.
Series adjusted invested amount means, for this series and for any calendar
month, the invested amount for this series, less the excess, if any, of all
reductions in the invested amount (other than any reductions occasioned by
payments of principal to this series certificate holders or to the holder of the
collateral interest) as of the last day of the preceding calendar month over the
aggregate amount of any reversal of such reductions as of such last day.
Trust adjusted invested amount means, for any calendar month, the sum of the
series adjusted invested amounts for all outstanding series.
Second allocation: between investors and Universal Bank
- -------------------------------------------------------
The series allocable finance charge collections and the series allocable
defaulted amount for this series for any calendar month will be allocated to the
certificates and the collateral interest of this series based on the floating
allocation percentage; the remainder of such series allocable finance charge
collections and series allocable defaulted amount will be allocated to Universal
Bank. The floating allocation percentage means, for any calendar
month, the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the sum of the adjusted invested amounts of
all classes of the series as of the last day of the
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preceding calendar month (or for the first calendar month, the initial invested
amount) and the denominator of which is the product of (a) the sum of the total
amount of the principal receivables in the trust as of such day (subject to
adjustment to give effect to designations of additional accounts and removed
accounts) (or for the first calendar month, the total amount of principal
receivables in the trust on the closing date) and the principal amount on
deposit in the special funding account as of such day and (b) the series
allocation percentage.
The series allocable finance charge collections allocated to the certificates
and the collateral interest will be the investor finance charge collections.
Investor finance charge collections for all series in group [ ] will be
reallocated among all series in group [ ] as set forth in the core prospectus.
Reallocated investor finance charge collections allocated to this series and the
investor default amount will be further allocated between the class A
certificate holders, the class B certificate holders and the holder of the
collateral interest in accordance with the class A floating percentage, the
class B floating percentage and the collateral floating percentage,
respectively. The class A floating percentage means, for any calendar month, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is equal to the class A adjusted invested amount as of
the close of business on the last day of the preceding calendar month (or for
the first calendar month, as of the closing date) and the denominator of which
is equal to the adjusted invested amount for all classes of the series as of the
close of business on such day (or, for the first calendar month, the initial
invested amount). The class B floating percentage means, for any calendar month,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is equal to the class B adjusted invested
amount as of the close of business on the last day of the preceding calendar
month (or for the first calendar month, as of the closing date) and the
denominator of which is equal to the adjusted invested amount for all classes of
the series at the close of business on such day (or for the first calendar
month, the initial invested amount). The collateral floating percentage means,
for any calendar month, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is equal to the collateral
invested amount as of the close of business on the last day of the preceding
calendar month (or for the first calendar month, as of the closing date) and the
denominator of which is equal to the adjusted invested amount for all classes of
the series as of the close of business on such day (or for the first calendar
month, the initial invested amount).
Series allocable principal collections for this series will be allocated to the
certificates and the collateral interest of this series based on the principal
allocation percentage; the remainder of such series allocable principal
collections will be allocated to Universal Bank. The principal allocation
percentage means, for any calendar month, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is (a) during the revolving period, the series adjusted
invested amount for this series as of the last day of the immediately preceding
calendar month (or, in the case of the first calendar month, the closing date)
and (b) during the controlled accumulation period or the early amortization
period, the
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<PAGE>
series adjusted invested amount for this series as of the last day of the
revolving period and the denominator of which is the product of (1) the sum of
the total amount of principal receivables in the trust as of the last day of the
immediately preceding calendar month (subject to adjustment to give effect to
designations of additional accounts and removed accounts) and the principal
amount on deposit in the special funding account as of such last day (or, in the
case of the first calendar month, the closing date) and (2) the series
allocation percentage for this series as of the last day of the immediately
preceding calendar month; provided, however, that because the certificates of
this series are subject to being paired with a future series, if a "pay out
event" or a "reinvestment event" (as those terms are defined in the related
supplement) occurs for a paired series during the controlled accumulation period
for this series, Universal Bank may, by written notice delivered to the trustee
and UCS, designate a different numerator for the foregoing fraction, provided
that such numerator is not less than the adjusted invested amount as of the last
day of the revolving period for such paired series and Universal Bank shall have
received written notice from each rating agency that such designation will
satisfy the rating agency condition and Universal Bank shall have delivered to
the trustee a certificate of an authorized officer to the effect that, based on
the facts known to such officer at the time, in the reasonable belief of
Universal Bank, such designation will not cause a pay out event or an event
that, after the giving of notice or lapse of time, would constitute a pay out
event, to occur for this series.
Such amounts so allocated to the certificates and the collateral interest of
this series will be further allocated to the class A certificate holders, the
class B certificate holders and the holder of the collateral interest based on
the class A principal percentage, the class B principal percentage and the
collateral principal percentage, respectively.
The class A principal percentage means, for any calendar month (a) during the
revolving period, the percentage equivalent (which shall never exceed 100%) of a
fraction, the numerator of which is equal to the class A invested amount as of
the last day of the immediately preceding calendar month (or, in the case of the
first calendar month, the initial class A invested amount), and the denominator
of which is equal to the invested amount as of such day (or, in the case of the
first calendar month, the initial invested amount) and (b) during the controlled
accumulation period or the early amortization period, the percentage equivalent
(which shall never exceed 100%) of a fraction, the numerator of which is the
class A invested amount as of the end of the revolving period, and the
denominator of which is the invested amount as of such day.
The class B principal percentage means, for any calendar month, (1) during the
revolving period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the class B invested amount as of
the last day of the immediately preceding calendar month (or, in
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<PAGE>
the case of the first calendar month, the initial class B invested amount) and
the denominator of which is the invested amount as of such day (or, in the case
of the first calendar month, the initial invested amount) and (2) during the
controlled accumulation period or the early amortization period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is the class B invested amount as of the end of the revolving
period, and the denominator of which is the invested amount as of such day.
The collateral principal percentage means, for any calendar month, (1) during
the revolving period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the collateral invested
amount as of the last day of the immediately preceding calendar month (or, in
the case of the first calendar month, the initial collateral invested amount)
and the denominator of which is the invested amount as of such day (or in the
case of the first calendar month, the initial invested amount) and (2) during
the controlled accumulation period or the early accumulation period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction,
the numerator of which is the collateral invested amount as of the end of the
revolving period, and the denominator of which is the invested amount as of such
day.
As used in this appendix, the following terms have the meanings indicated:
Class A invested amount for any date means an amount equal to (1) the initial
class A invested amount, less (2) the amount of principal payments made to
holders of the class A certificates on or prior to such date, less (3) the
amount of unreversed reductions in the class A invested amount caused by
principal receivable charge-offs.
Class B invested amount for any date means an amount equal to (1) the initial
class B invested amount, less (2) the amount of principal payments made to
holders of the class B certificates on or prior to such date, less (3) the
amount of reductions in the class B invested amount for all prior distribution
days caused by principal receivable charge-offs, less (4) the aggregate amount
of reallocated principal collections for all prior distribution days which have
been used to fund the required amount of principal receivables for such
distribution days (excluding any reallocated principal collections that have
resulted in a reduction of the collateral invested amount), less (5) the amount
by which the class B invested amount has been reduced by principal reallocations
to reverse any reduction in the class A invested amount caused by charge-offs of
principal receivables on all prior distribution days as described in the
prospectus supplement under "Reallocation of class B and collateral interest
principal collections," plus (6) the aggregate amount of excess spread and
excess finance charge collections allocated to this series and applied on all
prior distribution days for the purpose of reimbursing amounts deducted pursuant
to the foregoing clauses (3), (4) and (5); provided, however, that the class B
invested amount may not be reduced below zero.
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<PAGE>
Class A adjusted invested amount for any date means an amount equal to the then
current class A invested amount less the funds on deposit in the principal
funding account (up to the class A invested amount) on such date.
Class B adjusted invested amount for any date means an amount equal to the class
B invested amount less the funds on deposit in the principal funding account in
excess of the class A invested amount on such date.
Collateral invested amount for any date means an amount equal to (1) the initial
collateral invested amount, less (2) the aggregate amount of principal payments
made to the holder of the collateral interest prior to such date, less (3) the
amount of reductions in the collateral interest invested amount for all prior
distribution days caused by principal receivable charge-offs, less (4) the
aggregate amount of reallocated principal collections for all prior distribution
days, less (5) the aggregate amount by which the collateral invested amount has
been reduced by principal reallocations to reverse any reduction in the class A
invested amount caused by charge-offs of principal receivables on all prior
distribution days as described in the prospectus supplement under "Reallocation
of class B and collateral interest principal collections," and plus (6) the
aggregate amount of excess spread and excess finance charge collections
allocated to this series and applied on all prior distribution days for the
purpose of reimbursing amounts deducted pursuant to the foregoing clauses (3),
(4) and (5); provided, however, that the collateral invested amount may not be
reduced below zero.
Invested amount for any date means an amount equal to the sum of the class A
invested amount, the class B invested amount and the collateral invested amount
on such date.
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<PAGE>
CORE PROSPECTUS
June 29, 1999
Universal Bank, N.A.
200 Brookstone Centre, Suite 110
Columbus, Georgia 31904
(706) 257-1700
Universal Card Services Corp.,
servicer
8787 Baypine Road,
Jacksonville, Florida 32256
(904) 954-7500
UNIVERSAL CARD MASTER TRUST
ASSET BACKED CERTIFICATES
You should read "General risk factors," beginning on page [...] of this core
prospectus, and any "Series risk factors" section in the preceding prospectus
supplement, before you purchase any certificates.
1
<PAGE>
SUMMARY
The certificates
- ----------------
Each certificate represents ownership of an interest in the assets of Universal
Card Master Trust (the trust). The trust's assets consist primarily of credit
card receivables transferred to the trust by Universal Bank or a predecessor
transferor.
Series and classes
- ------------------
The certificates offered by this prospectus are part of a single series. A
series may include several classes of certificates, and may include classes of
other interests in the trust. A typical structure for a series involves two
certificate classes, A and B, and a collateral interest class. Some classes may
not be offered to the public, and some classes may be sold to Universal Bank or
its affiliates.
Denominations
- -------------
You can purchase certificates of this series only in multiples of $1,000.
Other series
- ------------
The trust has issued other series in the past and anticipates issuing additional
series in the future. The trust will issue these series without obtaining your
approval. However, a new series can not be issued if its issuance would
o reduce the rating of any class or series, or
o in Universal Bank's reasonable belief, materially and adversely affect the
timing or amount of a payment on a certificate of any series.
Interest, principal and invested amount
- ---------------------------------------
Each certificate will have an interest rate, a principal balance and an invested
amount.
o The interest rate(s) of the certificates of this series are stated in the
prospectus supplement. The interest rate may be a fixed rate or a variable
rate. Interest will be paid on the dates stated in the prospectus
supplement.
o The initial invested amount of a certificate will generally equal the
certificate's initial principal balance. Like the principal balance of a
certificate, the invested amount will be reduced by principal payments.
However, unlike the certificate's principal balance, a certificate's
invested amount could also be reduced as the result of charge-offs of
defaulted receivables (described below) or reallocations of principal
collections to a more senior class (described in the prospectus supplement,
if applicable).
2
<PAGE>
Certificate holders - that is, registered holders of certificates - will
generally be entitled to receive out of the trust's assets
o interest on the principal balance of the certificate at its stated
interest rate (but certificates of some classes may only be entitled to
interest on their invested amount), and
o principal payments up to the certificate's invested amount.
Interest and principal will be paid to persons who were certificate holders on
the record date for the payment. The record date for a payment will generally be
the last day of the calendar month preceding the date that interest or principal
is paid.
Holders of other interests in a series may also be entitled to payments of
interest and principal as described in the prospectus supplement.
Payments of interest and principal to certificate holders can not exceed the
collections on the trust assets that are available for distribution. If the
trust does not have enough collections available to make a full payment of
principal or interest on a certificate, the holder will not have any claim
against Universal Bank or any of its affiliates for the shortfall.
A certificate holder or a holder of another class of interests in the series
(together, the series investors) will not generally have a claim on specific
receivables in the trust. However, an investor may have limited claims against
other specific trust assets, such as bank accounts or credit enhancement
specifically designated for a class of investors.
Universal Bank's interest in the trust
- --------------------------------------
In addition to the investors in the various series, Universal Bank will have an
ownership interest in the trust's assets that will entitle it to receive a
portion of collections on the receivables in the trust. Universal Bank's
ownership interest will fluctuate as the amount of receivables held by the Trust
rises and falls, and may decrease as new series are issued or increase as old
series are paid off. Universal Bank's ownership interest in the trust is not
subordinated to the interests of the investors, or vice-versa, and does not
provide credit enhancement for investors. For purposes of this prospectus,
Universal Bank is not an "investor" and does not have an interest in any class
of any series (except insofar as it might purchase certificates or other
interests in a series).
Receivables
- -----------
Universal Bank maintains MasterCard(R) and VISA(R) revolving credit cardmember
accounts for cardmembers. When a cardmember uses his or her credit card, the
cardmember creates a right to receive payment - a receivable - in favor of
Universal Bank. The receivable may be either
3
<PAGE>
o a principal receivable for goods and services purchased by the cardmember
or a cash advance to the cardmember, or
o a finance charge receivable for interest on unpaid balances in the
cardmember's account, cash advance fees, administrative fees, late charges,
overlimit fees, credit insurance premiums and annual membership fees.
Collections of finance charge receivables also include recoveries on receivables
previously charged off as uncollectible, some returns on investments of cash
held by the trust, and other amounts. Also, between 1% and 2% of collections on
purchases, representing "interchange" fees received from merchants,
will be classified as finance charge collections.
Universal Bank has sold the receivables in designated cardmember accounts, along
with future receivables that cardmembers create in those accounts, to the trust.
The trust's assets will constantly change as the cardmembers pay off old
receivables and create new ones.
Universal Bank may designate new cardmember accounts whose receivables will be
transferred to the trust. In limited circumstances, Universal Bank may remove
the receivables in designated accounts from the trust, and may redesignate some
finance charge receivables as principal receivables, or vice-versa.
Revolving, controlled accumulation and controlled amortization periods
- ----------------------------------------------------------------------
Your series, like other series issued by the trust, has an initial revolving
period that is scheduled to be followed by either a controlled accumulation
period or a controlled amortization period.
During your series' revolving period, no principal will be paid to, or deposited
in a segregated account for, investors. Instead, principal collections allocated
to your series will generally be reinvested in new principal receivables or used
to make principal payments or deposits for other series of certificates. The
revolving period for your series is scheduled to end on the date stated in the
prospectus supplement.
If your series has a controlled accumulation period, during that period the
trust will make monthly deposits of collections on principal receivables to a
segregated principal funding account. Each deposit will be no greater than a
controlled accumulation amount, plus any portion of the controlled accumulation
amount that was not deposited in prior months. Any principal collections that
are not required to be deposited in the principal funding account will be
reinvested in principal receivables or used to make principal payments on other
series of certificates.
The controlled accumulation period will generally be scheduled to last 12
calendar months. A certificate holder is then scheduled to receive from the
principal funding account (and from
4
<PAGE>
other collections of principal receivables) a single principal payment equal to
the invested amount of the holder's certificate on the scheduled principal
payment date. The prospectus supplement states the scheduled first and last day
of any controlled accumulation period, the scheduled amounts and timing of the
deposits to any principal funding account and the scheduled principal payment
date.
If your series has a controlled amortization period, a certificate holder will
be entitled during that period to receive both interest payments and periodic
partial payments of principal on the holder's certificate. The principal
payments are intended to reduce the invested amounts of the certificates to zero
by the scheduled final payment date. The prospectus supplement states the
scheduled amounts and dates of any controlled amortization payments and the
scheduled final payment date.
Within limits described in the prospectus supplement, Universal Card Services
(UCS), as servicer, may postpone the beginning (but not the end) of a controlled
accumulation or controlled amortization period. A postponement will extend the
revolving period.
The various classes of a series could have controlled accumulation or
amortization periods that start or end on different dates, and there could be
separate principal funding accounts for different classes.
As discussed below in "Early accumulation and amortization periods," a
revolving, controlled accumulation or controlled amortization period may end
earlier than scheduled.
Series termination
- ------------------
The series termination date for your series is stated in the prospectus
supplement. The series termination date is generally at least two years after
the scheduled end of the controlled accumulation or controlled amortization
period.
Approximately two months before your series termination date, if the invested
amount of your series has not been reduced to zero, the trustee will solicit
bids for
o principal receivables in an amount equal to the invested amount of all the
classes of your series on the last day of the month preceding the series
termination date, and
o the related finance charge receivables.
These receivables will be sold to the highest bidder on the series termination
date. Universal Bank can submit a bid and see the other bids.
The proceeds of the sale, together with some other collections on receivables,
will be allocated to your series as receivable collections and will be
distributed to the certificate holders on the
5
<PAGE>
series termination date. UCS will determine the proportions of the proceeds that
will be treated as principal and finance charge collections. After the series
termination date, no further principal or interest payments will be made on your
series.
Your ownership interest in trust assets
- ---------------------------------------
For most publicly issued series, the only certificate holder will be a
securities depository, which will hold the certificates for its participants.
You will therefore own your certificates indirectly - that is, through a direct
or indirect participant bank, brokerage house or other institution that
maintains securities accounts for its customers. Some features of this indirect
ownership system are described below in "Book entry and paper certificates."
A certificate holder will have an ownership interest in
o principal receivables in the trust equal to the certificate's adjusted
invested amount - that is, the certificate's invested amount less any funds
in a principal funding account that are allocable to the certificate, and
o related finance charge receivables.
Some classes of investors may also have ownership interests in a portion of
funds in the principal funding and other trust accounts.
Funds in a principal funding account are allocable to classes in order of
seniority - that is, all funds are allocable to the most senior class up to its
invested amount, then to the next most senior class, and so forth. Funds
allocated to a class are allocated to the certificates of the class in
proportion to their invested amounts.
A certificate's interest in the trust will not be an interest in specific
receivables, but rather will be a percentage interest in every receivable in the
trust. As the amount of principal receivables in the trust rises and falls,
Universal Bank's percentage ownership interest in the principal receivables will
rise and fall so as to keep the ownership interest of each certificate in
principal receivables equal to the certificate's adjusted invested amount.
Charged-off losses on receivables
- ---------------------------------
Every month, some principal receivables in the trust are charged off as
uncollectible. When a principal receivable is charged off, the charge-off is
generally allocated among the interests in the trust, including Universal Bank
and the investors in each series. (Charge-offs on receivables that Universal
Bank or UCS is obligated to repurchase from the trust are not allocated to
investors.) Charge-offs allocated to your certificate could reduce the invested
amount of your certificate. However,
o some portion of the finance charge collections allocated to your series and
other series may be available to reverse any reduction in the invested
amount of your certificate. The rever-
6
<PAGE>
sal is accomplished by reinvesting the finance charge collections in
principal receivables to replace the charged-off principal receivables. (To
the extent such finance charge collections are available on the same
distribution day as a charge-off is allocated to your certificates, the
reduction in the invested amount of your certificates and the reversal of
the reduction will be simultaneous. Consequently, the charge-off will not
reduce the invested amont of your certificates.)
o if there are classes of certificates or other interests that are
subordinated to your certificate, any reduction in invested amount will be
borne first by the subordinated classes.
Early accumulation and amortization periods
- -------------------------------------------
The trust's ability to make scheduled payments of principal and interest to all
certificate holders depends on there being no material adverse divergence from
Universal Bank's past experience in the manner in which cardmembers as a group
generate and pay off receivables in the trust. If, for example, there is a
substantial decline in credit card use or in finance charges incurred on the
cards, or a substantial increase in delinquent payments, the trust may sustain a
decline in principal receivables, finance charge receivables or payments on
receivables. If substantial enough, these declines could prevent the trust from
making full payments of interest or principal as scheduled. These or other
events (such as a default by Universal Bank) would cause the revolving period or
a controlled accumulation or amortization period for your series to terminate
early. An early termination of a revolving, controlled amortization or
controlled accumulation period would be followed by an early amortization period
or an early accumulation period.
The prospectus supplement describes the pay out events that will trigger an
early amortization period and any reinvestment events that would trigger an
early accumulation period for your series. While your series provides for pay
out events that will trigger an early amortization period, it need not provide
for reinvestment events that trigger an early accumulation period. A series that
does not provide for a controlled accumulation period can not have an early
accumulation period.
During an early amortization period, all collections on principal receivables
that are allocated to your series and any funds deposited in a principal funding
account will be paid on each monthly distribution day to the holders of the
certificates of the most senior classes in your series until the invested amount
of those certificates is reduced to zero, and then to the investors in any
subordinated classes (beginning with the most senior) until the invested amounts
of those classes are reduced to zero. Thus, principal payments on a certificate
may start earlier than scheduled and may not be limited to a fixed amount.
A series that provides for a controlled accumulation period may or may not
provide for an early accumulation period.
During an early accumulation period, principal collections allocated to a series
are deposited in the principal funding account and used to make payments of
principal to the certificate holders on the scheduled principal payment date.
Deposits to the principal funding account during
7
<PAGE>
an early accumulation period are not limited, however, to the controlled
accumulation amount.
If a pay out event occurs during an early accumulation period, the early
accumulation period will immediately terminate and an early amortization period
will begin.
Required amount of principal receivables
- ----------------------------------------
Universal Bank is required to maintain a required amount of principal
receivables in the trust. The required amount of principal receivables equals
the sum of
o the invested amounts of all the classes of each series, and
o the margin over the invested amount set for each series.
The margin for your series is stated in the prospectus supplement.
If the principal receivables in the trust plus cash in a segregated special
funding account fall short of the required amount of principal receivables,
Universal Bank must designate additional cardmember accounts whose receivables
will be transferred to the trust so that the additional principal receivables
will be at least equal to the shortfall.
If on the last day of a preceding calendar month, the combination of principal
receivables in the trust and cash in the special funding account falls short of
the required amount of principal receivables, then on the next distribution day
the trustee will transfer cash, to the extent available, to the special funding
account to cover the shortfall. The available cash will come solely from
principal collections that would otherwise be distributed to Universal Bank on
that distribution day, which may be less than the amount of the shortfall.
To the date of this core prospectus, there has been no need to deposit cash in
the special funding account. Therefore, for simplicity, we generally assume in
this prospectus that there is no cash in the special funding account. Hence, we
speak of "the receivables in the trust" rather than "the combination of
receivables in the trust and cash in the special funding account."
The amount by which the required amount of principal receivables exceeds the
invested amount of all the series does not provide credit enhancement for your
certificates since, as discussed above, your interest in the trust will consist
of (indirect) ownership of principal receivables equal to the adjusted invested
amount of your certificates. However, maintenance of the margin enables the
trust to absorb fluctuations in principal receivables caused by adjustments for
rebates, refunds, fraudulent charges and other factors.
The principal receivables in the trust change every day, but the required amount
is only measured for these purposes at the end of each calendar month. Universal
Bank has 10 business days to restore any month-end deficiency. As a result, the
principal receivables in the trust could be less than the required amount for
more than a month.
8
<PAGE>
If there were funds in the special funding account, they would be distributed to
Universal Bank on each monthly distribution day to the extent that, after the
payment, the principal receivables in the trust (including the funds remaining
in the special funding account) exceed the required amount of principal
receivables. However, if any series is in a controlled accumulation, controlled
amortization, early accumulation or early amortization period, any funds in the
special funding account would be treated as shared principal collections
(described below).
Universal Bank's residual interest in collections
- -------------------------------------------------
Collections for a calendar month that are allocated to the various classes of
the various series but that are not used for required payments of principal or
interest, deposits to a principal funding or other segregated account, payment
of servicing fees or other required payments will be distributed to Universal
Bank. However, no distribution can be made to Universal Bank out of principal
collections allocated to a class of any series while the principal receivables
in the trust are less than the required amount. Instead, the distributions will
be deposited in the special funding account.
Clean-up call
- -------------
Universal Bank may repurchase all the certificates of your series once the
invested amount of the series has been reduced to a stated amount. This
repurchase option is usually referred to as a clean-up call. On a clean-up call,
a certificate holder will receive the invested amount of the holder's
certificate plus all accrued interest. The invested amount of your series that
will permit a clean-up call is stated in the prospectus supplement.
Credit enhancement
- ------------------
Your certificates may be entitled to credit enhancement. Credit enhancement is
an arrangement with or obligation of a person or entity not to receive a
distribution or payment from the trust, or to make payments to the trust, that
increases the likelihood that the trust will be able to make a full payment of
interest or principal to the certificate holders of the class benefiting from
the credit enhancement. Credit enhancement for a class of certificates is
typically provided by the subordination of another class of certificates. The
prospectus supplement describes any credit enhancement for your certificates.
Ratings of certificates
- -----------------------
The certificates of this series will be rated in one of the four highest rating
categories by at least one nationally recognized rating organization.
Tax status of certificates
- --------------------------
In the opinion of Universal Bank's special tax counsel, the certificates will be
debt for federal income tax purposes. By purchasing a certificate, you will
agree to treat the certificate as debt of Universal Bank for federal, state,
local and franchise tax purposes.
9
<PAGE>
The trust and the trustee
- -------------------------
The trust was organized in 1995 by a UCS subsidiary that has since been merged
into UCS. The trustee is Bankers Trust Company, a New York banking corporation.
The trust's only business activity is acquiring and holding the receivables and
other assets and issuing certificates and other interests.
Servicing
- ---------
The receivables will be serviced by UCS. UCS may delegate some of its duties as
servicer, but will remain ultimately responsible for servicing the receivables.
A servicer sends bills to cardmembers, receives collections on the receivables,
deposits those collections with the trust and keeps track of them as finance
charge receivables or principal receivables. The servicer also calculates
payments of principal and interest required to be made to each class and to
Universal Bank, amounts to be accumulated for classes in a controlled
accumulation period, the portion of finance charge collections, principal
collections and charged-off receivables to be allocated to each series and
class, and whether a revolving period needs to be terminated because of a pay
out event involving a decline in receivables or payments on receivables.
UCS receives a monthly servicing fee from the trust. Each series pays out of
collections on finance charge receivables a portion of the fee that is a
percentage of the adjusted invested amount of the certificates in the series.
The fee percentage for your series is stated in the prospectus supplement.
Universal Bank and UCS
- ----------------------
Universal Bank, N.A. is a national credit card bank that is a wholly owned
subsidiary of UCS. Although Universal Bank is a member of both the MasterCard
and VISA associations, historically it has issued primarily MasterCard credit
cards.
UCS is a wholly owned subsidiary of Citibank, N.A. Citibank acquired UCS from
AT&T Corp. on April 2, 1998. Before that date, UCS was known as AT&T Universal
Card Services Corp.
Citibank is an indirect wholly owned subsidiary of Citigroup Inc., a publicly
traded company.
GENERAL RISK FACTORS
You should consider the following risk factors before you purchase any
certificates:
10
<PAGE>
You may not be able to resell your certificates.
- ------------------------------------------------
There is no established trading market for the certificates. The underwriters
may assist in resales of the certificates, but they are not required to do so. A
secondary market for a series or class of certificates may never develop. If a
secondary market does develop, it may not continue throughout the life of the
series or it may not be sufficiently liquid to allow you to meet your needs.
Credit ratings are limited in nature and could be reduced or withdrawn.
- -----------------------------------------------------------------------
The credit rating of your certificates reflects only the rating agencies'
assessment of the likelihood that interest will be paid on time and that
principal will be paid by the series termination date, which is usually two
years after the scheduled principal payment or scheduled final payment date.
These ratings are primarily based on the rating agencies' determination of the
value of receivables in the trust, the servicer's capabilities and the
availability of credit enhancement.
The ratings do not address:
o the possibility that principal on your certificate will be paid earlier
than anticipated,
o the possible imposition of US withholding tax for non-US certificate
owners,
o the marketability or market price of your certificates, or
o the suitability for you of an investment in a certificate.
A rating of a certificate is not a recommendation to buy, hold or sell the
certificate. Furthermore, a rating agency can reduce or withdraw a rating. If
the rating of your certificates is reduced or withdrawn, the market value of
your certificates could fall. Each rating should be evaluated independently of
any other rating.
Changes in cardmember behavior could result in early or reduced payments on your
- --------------------------------------------------------------------------------
certificates.
- -------------
Cardmembers can
o reduce their use of credit cards whose accounts are designated to the
trust or originated by Universal Bank,
o reduce the degree to which they incur finance charges on receivables in the
trust, or
o default on payments on receivables in the trust.
Changes in credit card use, the financing of credit card balances and the rate
of defaults by cardmembers may result from a variety of social, economic and
competitive factors. Social factors include changes in consumer confidence
levels, the public's perception of the use of credit cards, and changing
attitudes about incurring debt and the stigma of personal bankruptcy. Economic
factors include economic growth and recession, the rate of inflation, the
unem-
11
<PAGE>
ployment rate and the relative interest rates offered for various types of
loans. Changes in these factors may differ from state to state, and may affect
cardmembers differently from the US population as a whole.
Competitive factors include cardmembers' perception of the relative advantages
of using the credit cards of different issuers. Universal Bank must compete with
numerous other credit card providers for new accounts and for use of its credit
cards.
Many cardmembers choose their credit card issuers largely on the basis of fees,
interest rates on unpaid balances, credit limits and other product features.
Customers can and frequently do move accounts from one credit card issuer to
another, or cease or limit use of one credit card in favor of another.
As described below, these changes in cardmember behavior could cause early or
reduced payments on your certificates.
Reduced credit card use. As cardmembers make payments on their receivables, the
level of receivables in the trust declines. When cardmembers charge additional
purchases or cash advances on their cards or when Universal Bank designates new
accounts to the trust, the level of receivables increases.
Receivables in the trust could decline for many reasons, including cardmembers
switching to competing credit cards, increased "convenience" use (where
cardmembers pay their receivables early and thus avoid finance charges) or an
economic downturn.
Universal Bank must transfer additional receivables to the trust if the amount
of principal receivables falls below the required amount of principal
receivables. However, the same factors that can lead to a fall in the
receivables in the trust, as well as an increase in the number of accounts or
account balances lost to competing card issuers, might also reduce Universal
Bank's ability to transfer additional receivables. Universal Bank's failure to
make an addition could trigger an early amortization or accumulation period for
your series.
If there is an early amortization period for a series, holders of certificate of
that series may receive principal payments on their certificates earlier than
scheduled, and they may not be able to reinvest the principal at an equivalent
rate of return.
Lower yield on receivables. The effective yield on the trust's receivables could
be reduced by
o an increase in convenience use, or
o a change in the annual percentage rates for the accounts.
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<PAGE>
A rise in interest rates for the accounts designated to the trust could increase
yield by increasing interest charges, but might also reduce yield by causing
cardmembers to increase convenience use or the use of competing credit cards.
A decline in yield could trigger an early amortization or accumulation period.
Decreased finance charge collections could also decrease the protection of a
certificate holder against a reduction in the invested amount of the holder's
certificate caused by principal receivable charge-offs, which could result in
the holder's not recovering the full principal balance of the certificate.
Cardmember payment defaults. Increased payment defaults by cardmembers could
result in increased charge-offs of principal receivables. If substantial enough,
this could cause an early amortization or accumulation period and could also
result in a certificate holder's not recovering the full principal balance of
the holder's certificate.
Universal Bank's ability to change terms of the cardmember accounts could alter
- -------------------------------------------------------------------------------
payment patterns.
- -----------------
Universal Bank transfers receivables to the trust but will continue to own the
accounts. As owner of the accounts, Universal Bank can change account terms
(including the periodic interest rate, fees and the required monthly minimum
payment). If Universal Bank changes the periodic interest rate or any fees,
there could be a change in the finance charge receivables and collections. In
addition, changes in account terms may alter payment patterns. If payment rates
decrease significantly when a certificate holder is scheduled to receive
principal payments, the holder might receive principal more slowly than
expected.
Universal Bank ordinarily will not change the interest rate or fees it charges
on the accounts if that action would cause an early amortization or accumulation
period for any series, unless Universal Bank is required by law to do so or it
determines that the change is necessary to maintain its credit card business on
a competitive basis.
Universal Bank has no other restrictions on its ability to change the terms of
the accounts. Changes in relevant law, changes in the marketplace, including
recent announcements by other credit card issuers lowering interest rates, or
prudent business practices could impel Universal Bank to change account terms.
Changes in interest rates could cause early or reduced payments on your
- -----------------------------------------------------------------------
certificates.
- -------------
The accounts generally have finance charges set at a variable rate above the
prime rate or another specified index. Your certificates may bear interest at a
fixed rate or at a floating rate based on a different index. If the prime rate
or other specified index declines, finance charge collections may be reduced
while interest on your certificates and other amounts required to
13
<PAGE>
be funded out of finance charge collections may not be similarly reduced.
Reduced finance charge collections could trigger an early amortization or
accumulation period and could also decrease the protection of certificate
holders against reductions in the invested amount of their certificates caused
by charge-offs of principal receivables
The trust may enter into interest rate swaps and related caps, floors and
collars to minimize the risk to certificate holders from adverse changes in
interest rates. However,
o the trust's ability to hedge against fluctuations in interest rates
through swaps will depend on the degree of correlation between interest
rate movements in the market generally and interest rate movements in the
receivables,
o the trust may not be able to find acceptable counterparties for a specific
swap, and
o the trust's ability to engage in hedging transactions may be
limited by tax considerations.
The costs of hedging transactions vary among the various hedging techniques and
also depend on market conditions and the length of the contract.
Swaps are not traded on regulated markets but are arranged through financial
institutions acting as principals or agents. In an over-the-counter environment,
many protections afforded to exchange participants are not available.
In particular,
o there are no daily fluctuation limits, and adverse market movements could
therefore continue to an unlimited extent over a period of time, and
o because the performance of swaps is not guaranteed by a settlement agency,
there is a risk of counterparty default.
The trust may take advantage of swap opportunities that are not presently
contemplated for use by the trust or that are not currently available but that
may be developed. Such opportunities would have to be consistent with the
trust's objectives and be legally permissible investments for the trust.
Issuance of additional series by the trust could adversely affect your payments
- -------------------------------------------------------------------------------
or rights.
- ----------
The trust has issued other series of certificates and is expected to issue
additional series in the future. Future issuances will not require your consent.
A new series can only be issued if (1) each rating agency confirms that it will
not lower the rating of any series or class of certificates and (2) Universal
Bank confirms that it reasonably believes that the issuance will not result in a
pay out or reinvestment event or materially and adversely affect the amount or
timing of payments on the certificates of any series. There can be no assurance,
however, that the terms of a new series would not adversely affect the timing
and amounts of payments on your certificates.
14
<PAGE>
Example: If your series pools finance charge collections with a new series that
has a higher interest rate on its certificates, the amount of finance charge
collections allocated to your series would be reduced.
Also, if the trust issues a new series as a paired series with your certificates
and there is an early amortization event for the paired series, the final
payment of principal on your certificates could be delayed.
The investors in each new series will have voting rights that will reduce the
percentage interest represented by your series. Voting rights may relate to
approving waivers and giving consents, directing the appointment of a successor
servicer following a servicer default, amending the pooling and servicing
agreement , which governs the terms of the certificates and the servicing of the
trust's receivables, and directing a repurchase of the receivables.
Redesignation of receivables could affect payments.
- ---------------------------------------------------
Universal Bank can, without your consent, redesignate finance charge receivables
as principal receivables, or vice-versa. Such redesignations could decrease
amounts available for interest payments while increasing amounts available for
principal payments, or vice versa. Universal Bank can not effect such a
redesignation, however, unless
o each rating agency confirms that it will not reduce or withdraw its rating
of any class or series, and
o Universal Bank certifies that in its reasonable belief, the
redesignation will not cause a pay out or reinvestment event.
Addition of new assets may erode the credit quality of the trust's assets.
- --------------------------------------------------------------------------
The trust's assets are constantly changing. Receivables are collected and new
receivables are added to the trust daily as cardmembers pay their credit card
bills and charge new purchases to their accounts. In addition, Universal Bank
may voluntarily designate additional accounts whose receivables will be added to
the trust, or it may, at times, be obligated to make such additions to maintain
the required amount of principal receivables in the trust. Universal Bank may
also add participation interests to the trust instead of receivables.
Additional designated accounts may have been originated using different criteria
from those used for the accounts currently designated to the trust. These
differences may occur because the additional accounts were originated at a
different date or were acquired from an institution that used different
underwriting standards or procedures. Consequently, future additional accounts,
or the receivables in those accounts that are transferred to the trust, may not
have the same credit quality as the accounts currently designated to the trust
or the receivables currently in the trust.
15
<PAGE>
Additional accounts may also have different terms from accounts currently
designated. These differences might have adverse consequences for current
certificate holders. For example, the additional accounts may have lower finance
charge rates than current accounts. This could reduce the finance charge
collections allocated to your certificates.
Universal Bank can only designate additional accounts (other than newly
originated accounts) to the trust if
o for additional designations required to maintain the required amount of
principal receivables, Standard & Poor's Corporation confirms that the
addition will not cause it to reduce its rating of any class or series, and
o for voluntary designations, each rating agency confirms that the addition
will not cause it to reduce its rating of any class or series.
Universal Bank can only designate newly originated accounts to the trust if each
rating agency approves the number and balance of the new accounts for any period
selected by the rating agency.
Other claimants may have superior claims to the receivables.
- ------------------------------------------------------------
Universal Bank has represented to the trust that the transfer of the receivables
to the trust is either a sale or the grant of a security interest in the
receivables. To protect investors, Universal Bank or UCS will take steps to
ensure that if the transfer is determined to be a grant of a security interest
and not a sale, the trust will have a "first priority perfected security
interest" in the receivables. The holder of such a security interest will
generally have a superior claim to the receivables over other persons who might
claim an interest in the receivables. However, some creditors may have priority
over a first priority perfected security interest:
(1) A tax, government or other nonconsensual lien on Universal Bank's property
that arises before a receivable comes into existence may have priority over the
trust's interest in the receivable.
(2) UCS (or a subservicer UCS designates) receives cardmember payments on the
receivables and may hold them until the trust is to distribute the payments. If
UCS or the subservicer becomes insolvent, the trust may not have a first
priority perfected security interest in the cardmember payments held by UCS or
the subservicer. In addition, if a conservator or receiver is appointed for UCS
or the subservicer, the conservator or receiver may be able to prevent either
the trust or the investors from appointing a new servicer or subservicer.
(3) If the Federal Deposit Insurance Corporation (the FDIC, the United States
agency that insures Universal Bank's deposits) is appointed conservator or
receiver of Universal Bank, the FDIC's administrative expenses may be paid
before the certificate holders are paid.
16
<PAGE>
Governing law, as well as policy statements issued by the FDIC, provide that the
FDIC, as conservator or receiver, should respect a security interest granted by
Universal Bank to the trust if the security interest
o was perfected before Universal Bank's insolvency, and
o was not taken in contemplation of Universal Bank's insolvency or with the
intent to hinder, delay or defraud Universal Bank or its creditors.
FDIC staff positions do not suggest that the FDIC would interrupt the timely
transfer to the trust of collections on the receivables. However, if the FDIC
takes a different position, payments of principal and interest to certificate
holders could be delayed and possibly reduced. For example, under governing law,
the FDIC could
o require the trust to go through an administrative claims procedure to
establish its right to collections on the receivables,
o request a stay of proceedings on Universal Bank, or
o reject Universal Bank's agreement to sell receivables to the trust and
limit the trust's resulting claim to "actual direct compensatory damages."
If a conservator or receiver is appointed for Universal Bank,
o new principal receivables would not be transferred to the trust, and
o the trust would sell the receivables and distribute the proceeds to the
investors unless a sufficient amount of investors and others authorized to
vote on the matter gave the trust other instructions.
You could have a loss if the net proceeds of the receivables sale proved
insufficient to make a full payment of principal and interest to certificate
holders. However, the conservator or receiver may have the power
o to prevent the early sale of the receivables or to require new principal
receivables to continue being transferred to the trust, or
o regardless of the instructions of those authorized to vote, to require the
early sale of the receivables and distribution of the proceeds or to
prohibit the continued transfer of principal receivables to the trust.
Consumer protection laws may restrict UCS's ability to collect receivables and
- ------------------------------------------------------------------------------
Universal Bank's ability to maintain yield on the receivables.
- --------------------------------------------------------------
Current and future federal and state laws regulating the credit card and
consumer revolving loan industry may adversely affect UCS's ability to collect
the receivables or Universal Bank's ability to maintain levels of finance
charges or fees.
17
<PAGE>
Universal Bank makes representations and warranties to the trust about Universal
Bank's compliance with legal requirements and the enforceability of the
receivables. However, the trust will not examine the receivables to establish
their conformity with Universal Bank's representations and warranties, or for
any other purpose. If a representation or warranty is breached, the trust's only
remedy is that Universal Bank must accept the reassignment of the affected
receivables.
Receivables may also be charged off as uncollectible if a cardmember seeks
relief under federal or state bankruptcy laws. This could reduce the funds
available to distribute to certificate holders.
Current litigation could change the credit card industry.
- ---------------------------------------------------------
In October 1998, the US Justice Department sued MasterCard and VISA, asserting
that control of both associations by the same group of banks violates the
antitrust laws by lessening competition between MasterCard and VISA. The
government seeks to require banks to participate in the governance of only one
of the associations. The suit also challenges MasterCard and VISA rules that
restrict member banks from issuing American Express or Discover cards.
MasterCard and VISA have both stated that they believe the suit to be without
merit and have denied the allegations. However, we cannot predict the outcome of
the litigation or its effect on the competitive environment in the credit card
industry.
Investors in other series or classes may take actions that are opposed to your
- ------------------------------------------------------------------------------
interests.
- ----------
In some circumstances, the consent or approval of a specified percentage of the
investors in all outstanding series or by each class of a series is required.
Providers of credit enhancement may also have voting rights. As a result, the
investors in any one series or class or other persons with voting rights could
block actions desired by other series or classes. Such circumstances include
o requiring the appointment of a successor servicer following UCS's default,
o amending the pooling and servicing agreement,
o directing a reassignment of the entire portfolio of receivables, and
o directing the trust not to sell or liquidate the receivables following
Universal Bank's insolvency.
Year 2000
- ---------
Many computer applications have been written using two digits rather than four
to define the applicable year, and therefore may not recognize a date using "00"
as the year 2000. This could result in the inability of the application to
properly process transactions with dates in the year 2000 or later.
18
<PAGE>
UCS, Universal Bank and their affiliates have assessed and, where necessary, are
updating their computer applications and business processes related to the
certificates offered by this prospectus to provide for their continued
functionality and expect to complete implementation of the necessary changes in
a timely manner. Neither UCS nor Universal Bank anticipates that the costs
related to such implementation will be material to any single year or quarter.
In addition, an assessment of the readiness of third parties, including Total
System Services, Inc., with whom UCS and Universal Bank interface in achieving
year 2000 compliance, is ongoing. Lack of readiness by these third parties could
expose UCS or Universal Bank to impairment of business processes and activities.
The Depository Trust Company has informed its participants that it is
implementing a program so that its systems for timely payments, book-entry
deliveries and settlement of trades will continue to function appropriately
after January 1, 2000.
UCS and Universal Bank are assessing these risks and are creating contingency
plans intended to address perceived risks. Neither UCS nor Universal Bank can
predict what effect the failure of such a third party to address, in a timely
manner, the year 2000 problem would have on UCS or Universal Bank.
MORE ABOUT THE CERTIFICATES
Distribution days
- -----------------
The distribution day for each month will generally be the 17th day of the month.
If the 17th day of the month is not a business day, the distribution day will be
the first business day following the 17th day of the month. Payments of interest
and principal to certificate holders and deposits to any principal funding or
interest funding account (described below) that are required to be made in a
month will be made on the distribution day for that month.
Payments and deposits on the distribution day will be made from finance charge
and principal collections received during the preceding calendar month. During
the first week in each month, UCS will calculate the amounts to be allocated to
each class of each series out of the preceding calendar month's receivables
collections. The allocations are described below. Where a calculation relies on
the amounts of outstanding principal or finance charge receivables or on the
balance in any principal funding or other account, the amounts are generally
determined as of the end of the preceding calendar month.
If interest payments for your certificates are less frequent than monthly,
interest not paid in a month will be deposited with the trustee in a segregated
interest funding account for the certifi-
19
<PAGE>
cate holders of your series. The trustee will withdraw funds from the interest
funding account to make interest payments to certificate holders of your series.
Allocations
- -----------
Principal and finance charge collections received by the trust, and charge-offs
of defaulted receivables, must be allocated between Universal Bank and the
various series and among the various classes of a series. With modifications
discussed below, interest payments on your certificates can only be made from
finance charge collections allocated to your series, and principal payments can
only be made from principal collections allocated to your series.
UCS calculates allocations in three steps:
(1) UCS allocates all principal collections, finance charge collections and
charge-offs of defaulted receivables for a period among the various series.
(2) UCS then allocates those collections and charge-offs allocated to a
particular series between Universal Bank, on the one hand, and the series
investors on the other.
(3) Finally, UCS allocates those collections and charge-offs allocated to the
investors of a series among the different classes of the series.
At each step, separate allocations are made for principal collections, finance
charge collections, and charge-offs of defaulted receivables.
The allocations actually performed by UCS are complex. In this prospectus,
however, we describe the allocations to investors in a simplified manner. For
investors, the simplified allocation description below gives the same results as
the more elaborate allocations that UCS actually performs. (A description of the
actual allocation procedure is attached as appendix II to the prospectus
supplement.)
Basic allocation structure
- --------------------------
Principal collections received in a calendar month will be allocated to your
class of certificates in proportion to the ratio of the invested amount of your
class of certificates to the amount of principal receivables in the trust on the
last day of the preceding month, except that the invested amount is "frozen" on
the last day of the revolving period - that is, during a controlled accumulation
or amortization period or an early accumulation or amortization period for your
series, principal collections will be allocated based on the invested amount of
your class of certificates on the last day of the revolving period.
Allocation of finance charge collections works in much the same way as
allocations of principal collections, except that
20
<PAGE>
o the allocation to your class is in proportion to the class's adjusted
invested amount - that is, the allocation is based on the invested amount
of the class less any amounts in a principal funding account that are
allocated to the class, and
o the invested amount is not frozen on the last day of the revolving period.
While deposits made to a principal funding account may reduce the finance charge
collections allocated to the class, interest payment to the class will generally
continue to be based on the principal balance or invested amount of the class,
not the adjusted invested amount. However, funds to pay interest on a class may
still be available under these circumstances because:
o funds in the principal funding account will be invested in short term
investments, and the proceeds of these investments will be considered
finance charge collections, and thus available to make interest payments,
and
o a portion of finance charge collections that are not required for payments
of interest, servicing fees or reversal of reductions in invested amount
caused by principal receivable charge-offs may have been deposited in a
segregated reserve account. During a controlled accumulation period, any
funds in the reserve account will be used to make up the difference between
the investment return on the principal funding account and what the
principal funding account would have earned if invested at the interest
rate on the most senior class of certificates. Funds in the reserve account
may, however, only be available for interest payments to a senior class.
Finally, charge-offs of principal receivables will be allocated to your class in
the same way that finance charge collections are allocated.
Reallocation groups
- -------------------
Interest rates will generally be different for different series. As a result,
some series may need a higher proportion of their allocated finance charge
collections to fund interest payments.
If a series is in a reallocation group with other series, finance charge
collections allocated to the various series in that group will be pooled and
reallocated to each series in proportion to its interest, servicing fee and
amounts needed to reverse reductions in invested amount caused by principal
receivable charge-offs. As a result of this reallocation, each series will be
allocated a percentage of the finance charge collections allocated to all the
series in the reallocation group, expressed as a fraction whose numerator is the
sum of the payments and deposits to be made from finance charge collections on
the certificates of that series and whose denominator is the sum of the payments
and deposits to be made from finance charge collections on the certificates of
all series in the reallocation group.
21
<PAGE>
The prospectus supplement states whether your series is in a reallocation group
and, if so, which other series are in the group.
Excess allocation series
- ------------------------
If a series is an excess allocation series, finance charge collections allocated
to a series that remain after required payments are made will be pooled with
similar excess finance charge collections from other excess allocation series.
The pooled excess finance charge collections will then be allocated to those
excess allocation series that did not make all required payments out of finance
charge collections, in proportion to the amounts of the shortfalls.
Excess allocation series need not be in the same reallocation group. The
prospectus supplement will state whether your series is an excess allocation
series and, if so, will identify the other excess allocation series. To the date
of this core prospectus, all series have been excess allocation series.
Excess finance charge collections will cease being shared among excess
allocation series if Universal Bank certifies to the trustee that Universal Bank
reasonably believes that the continued sharing of excess finance charge
collections among excess allocation series would have adverse regulatory
implications for Universal Bank or UCS. Universal Bank believes that, under
current regulations, the sharing of excess finance charge collections among
excess allocation series will not have adverse regulatory implications for it or
UCS.
Principal sharing series
- ------------------------
Your series may be a principal sharing series. If any principal collections
allocated to a series remain after all required principal payments or deposits
to a principal funding account have been made, the remainder will be pooled with
similar remainders from other principal sharing series. This pool will then be
allocated to those principal sharing series where required principal payments
and deposits exceeded the principal collections originally allocated to that
series. The percentage of the pool allocated to your series will be the
percentage equivalent of a fraction, the numerator of which is the amount of
such shortfalls in principal collections allocated to your series and the
denominator of which is the amount of such shortfalls for all principal sharing
series.
Principal sharing series need not be in the same reallocation group. The
prospectus supplement will state whether your series is a principal sharing
series. To the date of this core prospectus, all series have been principal
sharing series.
The trust has issued some series, and may issue additional series, where the
revolving period can be shortened, and the start of the controlled accumulation
or amortization period brought forward, at Universal Bank's direction. None of
these series issued to date (a) has been publicly
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offered or (b) is in the same reallocation group as your series, nor has
Universal Bank cut short the revolving period for any of these series. If
Universal Bank were to cut short the revolving period of such a series, there
would be less shared principal collections for your series and therefore
principal payments on your series could be reduced.
Subordination
- -------------
A class of certificates may be subordinated to a more senior class of
certificates, and a class may be subordinated for one purpose but not others. A
typical structure might involve three classes of certificates, A, B and a
collateral interest class, where class B is subordinated to class A for
principal payments but not for interest payments, and the collateral interest
class is subordinated to classes A and B for both principal and interest
payments.
New series
- ----------
Universal Bank intends to have the trust issue additional series. Universal Bank
will decide on the terms of each new series. The terms of any new series could
have an adverse impact on the timing and amount of payments received on your
certificates.
A new series can only be issued if
o each rating agency confirms that it will not reduce or withdraw its rating
of any class or series,
o Universal Bank reasonably believes that the issuance will not result in a
pay out or reinvestment event or materially and adversely affect the amount
or timing of payments on the certificates of any series, and
o Universal Bank delivers to the trustee and to each rating agency and
provider of credit enhancement a tax opinion - that is, a legal opinion
that following the issuance of the new series, for federal income tax
purposes (1) the trust will not be taxable as a corporation, (2)
certificates that were characterized as debt on their issuance will
continue to be characterized as debt, (3) the issuance will not cause an
investor to recognize gain or loss on his interest, and (4) to the extent
provided in the prospectus for the new series, the certificates and other
interests in the new series will be characterized as debt.
Universal Bank is not required and does not intend to obtain the consent of any
investor in your series to issue an additional series. However, in some
circumstances the issuance of a new series could require the consent of some
investors in some previously issued series.
Pre-funded series
- -----------------
For some series, the trust may use the proceeds of the sale of the certificates
and other interests of the series to purchase receivables after the closing date
for the series. Until the receivables
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are purchased, the invested amount of the certificates will be less than their
initial principal balance.
For such a series, from the closing date until a specified date before the
beginning of the controlled amortization period or controlled accumulation
period, the invested amounts of the certificates of the series will be expected
to increase until they equal the certificates' principal balances. The invested
amounts of the certificates will increase as receivables are delivered to the
trust or as the invested amounts of other series of the trust are reduced.
To the extent that the amount of principal receivables allocated to a series is
less than the principal balances of the certificates, cash will be held by the
trust in a pre-funding account for the benefit of certificate holders. Funds in
the pre-funding account will be paid to Universal Bank as the invested amounts
of the certificates increase. Funds in the pre-funding account may be invested
by the trustee in eligible investments. Investment earnings on funds in the
pre-funding account will be treated as collections of finance charge
receivables.
The prospectus supplement will state the initial invested amount for the
certificates of each class of a pre-funded series and the date by which the
invested amount is expected to equal the principal balance. If for any reason
the invested amounts of the certificates do not equal their principal balances
by the expected date, any amount remaining in the pre-funding account and any
additional amounts specified in the prospectus supplement for the prefunded
series will be paid to the certificate holders of the series.
To the date of this core prospectus, no series has been pre-funded.
Paired series
- -------------
A series may be paired with an earlier series. The paired series will be issued
near the beginning of the controlled accumulation or controlled amortization
period for the earlier series. When two series are paired, the total invested
amount for the two series will be the same as the invested amount of the earlier
series at the time the later series is issued. This means that the invested
amount of the later series
o will initially be zero,
o will increase by the amount of each decrease in the invested amount of the
earlier series, and
o will equal the invested amount of the earlier series at the time of
issuance of the later series when the invested amount of the earlier series
is reduced to zero - that is, when the earlier series is fully paid or
funded.
Until the invested amount of the earlier series is reduced to zero, all
principal collections allocated to the later series will be reallocated to the
earlier series. If, however, there is a pay out
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or reinvestment event for the later series, principal collections allocated to
the earlier series could be reduced below the level of collections that would
have obtained if the later paired series had not been issued.
To the date of this core prospectus, no series has been paired with an earlier
series.
Credit enhancement
- ------------------
Credit enhancement may be provided for the benefit of one or more classes of
your series. Credit enhancement may take the form of a collateral interest
class, a letter of credit, a cash collateral account, a spread account, a surety
bond, an insurance policy or any other form described in the prospectus
supplement.
Credit enhancement may also be provided for a class or series by subordination
provisions that require payments of principal or interest to be made to the
certificates of one or more classes before payments are made to one or more
other classes. Alternatively, a series may be subordinated to another series.
Any form of credit enhancement may be available to more than one class or
series.
Credit enhancement for a class is intended to enhance the likelihood of timely
receipt by certificate holders of that class of the full amount of their
principal and interest and to decrease the likelihood that the certificate
holders will experience reductions in the invested amount of their certificates
due to charge-offs of principal receivables. However, credit enhancement might
not provide protection against all risks of loss of interest or principal and
might not guarantee repayment of the entire principal balance of the
certificates and interest. If losses of interest and principal exceed the amount
of the credit enhancement or are not covered by the credit enhancement,
certificate holders will bear their allocable share of the losses. In addition,
if credit enhancement is provided for the benefit of more than one class or
series, certificate holders of a particular class or series will be subject to
the risk that the credit enhancement will be exhausted by the claims of
certificate holders of the other classes or series.
Credit enhancement may pay principal of certificates following the occurrence of
some pay out or reinvestment events. If so, the credit enhancement provider will
acquire an interest in cash flows on the receivables and may be entitled to the
benefit of an interest in the receivables, in each case subordinated to the
interest of the certificate holders.
Interest rate swaps
- -------------------
The trust may enter into interest rate swaps (including related caps, floors and
collars) to reduce the risk to investors of adverse changes in interest rates.
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An interest rate swap is an agreement between two parties to exchange a stream
of interest payments on an agreed hypothetical, or "notional," principal amount;
no principal amount is exchanged between the parties. In a typical interest rate
swap, one party agrees to pay a fixed rate on a notional principal amount, while
the other party pays a floating rate on the same notional principal amount.
Interest rate swaps also permit parties to exchange floating rate payments based
upon one reference interest rate (such as LIBOR) for floating rate payments
based upon another reference interest rate (such as US treasury bill rates).
The trust may not be able to enter into swaps at advantageous times, prices or
other terms. Also, even though the trust may have the right to terminate a swap
in certain circumstances, the trust may not be able to terminate the swap on
favorable financial terms.
MORE ABOUT THE ACCOUNTS AND THE RECEIVABLES
The accounts
- ------------
The accounts designated to the trust consist solely of MasterCard(R) or VISA(R)*
consumer revolving credit card accounts originated under the AT&T Universal Card
program. The AT&T Universal Card combines a credit card and a separate AT&T
calling card. The calling card feature of the card allows cardmembers to charge
local and AT&T long distance (domestic and international) calls and other
telecommunications services to their accounts.
Calling card receivables in the designated accounts will not initially be
included in the trust's receivables. However, to the extent the cardmember
finances the calling card transaction - that is, does not pay it in full when
billed - the receivable and its related finance charge receivables will become
assets of the trust. As described in "Universal Bank's credit card business -
Billing and payments" below, minimum monthly payments required from cardmembers
will cover all calling card transactions, and payments received from cardmembers
will be credited against calling card transactions first.
While the receivables in the designated cardmember accounts will be transferred
to the trust, Universal Bank will remain the owner of the accounts. As owner,
Universal Bank can change the terms of the accounts.
All of the cardmember accounts were originated by Universal Bank or by Columbus
Bank & Trust Company, of Columbus, Georgia, under a 1994 agreement between UCS,
Universal Bank and Columbus Bank & Trust. In April 1998, the agreement was
terminated and Columbus Bank & Trust sold all the cardmember accounts that it
originated under the agreement to
- --------
* MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and VISA USA, Inc., respectively.
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Universal Bank. Since that date, all new accounts in the trust have been
originated by Universal Bank.
Eligible accounts
- -----------------
Universal Bank may only designate a cardmember account whose receivables are to
be included in the trust if the account is an eligible account - that is, a
revolving credit card account that
o is maintained by Universal Bank,
o is payable in US dollars,
o has a cardmember whose address is in the United States or its territories
or possessions or is a military address,
o except as described below, has a cardmember who is not involved in a
voluntary or involuntary bankruptcy proceeding,
o is not an account where a credit card has been lost or stolen,
o has not been sold or pledged to any other person except, in limited
circumstances, to a Universal Bank affiliate that is designating credit
card accounts to the trust (see "Additional transferors of receivables"
below).
o does not have receivables that have been sold or pledged to a person other
than Universal Bank,
o except as described below, does not have charged-off receivables, and
o does not have receivables that have been identified by UCS or the
cardmember as resulting from fraudulent use of a credit card.
An account of a bankrupt cardmember or that contains charged-off receivables may
be designated to the trust as long as the cardmember's charging privileges on
the account have been cancelled. However, the amount of principal receivables in
these accounts will be deemed to be zero for allocation and other purposes.
Eligible receivables
- --------------------
Universal Bank will warrant to the trust that each receivable in the trust is an
eligible receivable - that is, a receivable
o that arises in an eligible account,
o that materially complies with all legal requirements,
o for which the trust has, with limited exceptions, either (a) on its
transfer to the trust, good title, free of all liens, charges and security
interests, or (b) a valid first priority perfected security interest,
o that is the cardmember's legally binding payment obligation,
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o that, on its transfer to the trust, has not been waived or modified except
as permitted under the pooling and servicing agreement, and
o as to which, on its transfer to the trust, neither UCS nor Universal Bank
has taken or failed to take an action that would impair the rights of the
trust or the certificate holders in the receivable.
The preceding warranties will generally be made as of the last day of the month
preceding the designation to the trust of the account containing the receivable.
If any of these warranties is breached, and the breach has a material adverse
effect on the investors' interest in the receivable, Universal Bank will have 60
days to cure the defect. UCS and the trustee can extend this cure period. If
Universal Bank does not cure the defect, all receivables of the affected account
will be transferred back to Universal Bank and future receivables created in the
account will no longer be included in the trust's assets. Transfer of the
receivables in the affected account to Universal Bank is the sole remedy
available to the investors or the trustee.
The trustee is not required or expected to examine any receivables or any
records relating to receivables to determine whether the receivables are
eligible receivables or for any other purpose. However, UCS will deliver to the
trustee by March 31 of each year a legal opinion as to the validity of the
trust's interest in the receivables.
Participation interests
- -----------------------
The trust assets may also include participation interests. A participation
interest is an undivided percentage interest in a pool of assets primarily
consisting of revolving credit card receivables, consumer loan receivables,
charge card receivables and other self-liquidating financial assets, or a
security backed by such assets. In this prospectus, "account" generally also
refers to participation interests.
Charge-off or adjustment of principal receivables
- ------------------------------------------------
UCS may charge off receivables as uncollectible. UCS's current policy is to
charge off all the receivables in a cardmember account when the account is 181
days delinquent (sooner if UCS learns that the cardmember has died and it
appears that the estate will not pay the debt; immediately if UCS learns that
the cardmember is bankrupt).
A principal receivable may also be reduced, without payment or charge-off. The
most common reasons for such adjustments are that the receivable
o is subject to a rebate, refund, counterclaim, defense or error or involved
a fraudulent or counterfeit charge to a cardmember, or
o was created in the purchase of merchandise that was refused or returned by
a cardmember.
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Adjustments will not reduce the invested amount of any class or series, but will
reduce Universal Bank's interest in the trust.
Redesignation of receivables
- ----------------------------
Universal Bank can redesignate a fixed or variable percentage of new principal
receivables in all or some cardmember accounts as finance charge receivables, or
vice-versa.
A redesignation of principal receivables as finance charge receivables might
occur if Universal Bank determined that additional finance charge collections
were needed to cover interest and other amounts payable from finance charge
collections or to avoid a pay out or reinvestment event. A designation of
finance charge receivables as principal receivables might occur if Universal
Bank determined that additional principal collections were needed to cover
principal payments or deposits to principal funding accounts or to avoid a pay
out or reinvestment event. Universal Bank can make multiple redesignations, and
can reduce or withdraw a redesignation.
A redesignation, or its reduction or withdrawal, will only become effective if
o Universal Bank reasonably believes that the redesignation, reduction or
withdrawal will not cause a pay out or reinvestment event, and
o each rating agency confirms that it will not reduce or withdraw its rating
of any class or series.
To the date of this core prospectus, Universal Bank has not redesignated any
receivables in the trust.
Additions of accounts
- ---------------------
Universal Bank may be required to designate additional cardmember accounts to
the trust if the principal receivables in the trust fall below the required
amount of principal receivables. Universal Bank may also designate additional
accounts without being required to do so.
If Universal Bank designates additional eligible accounts for the trust that are
not new - that is, newly originated - accounts,
o the designation of the accounts must be done in a manner that Universal
Bank believes will not result in a pay out or reinvestment event or
materially and adversely affect the amount or timing of payments on the
certificates of any series,
o for additional designations required to maintain the required amount of
principal receivables, Standard & Poor's must confirm that the addition
will not cause it to reduce or withdraw its rating of any class or series,
and
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o for voluntary designations, each rating agency must confirm that the
addition will not cause it to reduce or withdraw its rating of any class or
series.
After obtaining the consent of each rating agency as to the number and balance
of the new accounts for any period selected by the rating agency, Universal Bank
may designate newly originated cardmember accounts to the trust. These new
accounts must be eligible accounts that are the same types of revolving credit
card accounts that were either originally designated to the trust or newly
originated accounts previously designated to the trust. To the extent new
accounts are designated to the trust, Universal Bank will deliver to the
trustee, at least quarterly, a legal opinion confirming the validity and
perfection of each transfer of the new accounts. If the opinion is not
delivered, all receivables arising in the new accounts to which the failure
relates will be removed from the trust.
Removal of accounts
- -------------------
Universal Bank may remove receivables and proceeds of receivables of some
designated cardmember accounts if
o Universal Bank reasonably believes that (1) the selection procedure
utilized in removing the accounts is not materially adverse to the
interests of any investors and (2) the removal will not result in a pay out
or reinvestment event or materially and adversely affect the amount or
timing of payments to any investors, and
o each rating agency confirms that it will not reduce or withdraw its rating
of any class or series.
Liquidation of receivables on Universal Bank's insolvency
- ---------------------------------------------------------
The pooling and servicing agreement requires that if Universal Bank becomes
insolvent, Universal Bank will immediately cease to transfer principal
receivables to the trust. Within 15 days of Universal Bank's insolvency, the
trustee is to publish a notice that it intends to liquidate the receivables
unless investors holding a majority of the principal balance of each class of
certificates and other interests of each series instruct the trustee that they
want to continue having principal receivables transferred to the trust.
Unless such instruction is received, the trustee is to liquidate the receivables
in a commercially reasonable manner and on commercially reasonable terms. The
proceeds from the disposition of the receivables are then to be treated as
collections on the receivables and applied as described in the prospectus
supplement.
Despite the pooling and servicing agreement, if Universal Bank became insolvent,
the FDIC, as receiver, may have the power to prevent the trustee from suspending
transfers of receivables to the trust and selling the receivables.
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MORE ABOUT THE TRUST
Universal Card Master Trust operates under a pooling and servicing agreement
between Universal Bank, UCS, as servicer, and Bankers Trust Company, as trustee.
The trust is administered in accordance with the laws of New York State.
Universal Bank, UCS and their affiliates may enter into normal banking and
trustee relationships with the trustee and its affiliates. The trustee and
Universal Bank may hold certificates in their own names, but Universal Bank's
holdings are disregarded in actions taken by investors.
To meet legal requirements in some states, the trustee may appoint a co-trustee
or separate trustees of all or part of the trust. Bankers Trust and the
co-trustee or separate trustee will jointly hold all rights, powers, duties and
obligations. If Bankers Trust is not qualified to perform some act in a state,
the co-trustee or separate trustee will perform the act at Bankers Trust's
direction.
Bank accounts
- -------------
The trust has established a collection account for the benefit of the investors
to hold receivable collections deposited by UCS. The collection and special
funding accounts, and any principal funding, reserve or interest funding
accounts, must be maintained with a depository institution (which may be the
trustee)
o (a) that is a member of the FDIC, is nationally or state chartered or is a
domestic branch of a foreign bank, and has a certificate of deposit rating
or a long-term unsecured debt rating acceptable to each rating agency, or
(b) as to which each rating agency confirms that maintaining the account
with the institution will not cause the rating agency to reduce or withdraw
its rating of any class or series, or
o in a segregated trust account with the institution's corporate trust
department, and each rating agency rates the institution's unsecured and
unguaranteed senior debt securities as investment grade.
Unless the trustee revokes UCS's power, UCS can withdraw funds from the
collection account, and can instruct the trustee to make withdrawals and
payments from the collection account, to carry out the trustee's or UCS's
obligations.
Investment of funds
- -------------------
Funds in the collection and special funding accounts, and in any principal
funding, reserve or interest funding accounts, will generally be invested, at
UCS's direction, in any of the following eligible investments:
o obligations issued or fully guaranteed by the United States of America,
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o demand deposits, time deposits, certificates of deposit or bankers'
acceptances of US financial institutions whose short-term debt is rated in
the highest rating category of the applicable rating agency,
o commercial paper in the highest rating category,
o demand deposits, time deposits or certificates of deposit that are fully
insured by the FDIC and are rated in the highest rating category,
o money market funds in the highest rating category,
o other time deposits that mature by the next distribution day and are
issued by an entity whose commercial paper credit rating is acceptable to
the rating agencies, and
o any other investment if each rating agency confirms that the investment
will not cause the rating agency to reduce or withdraw its rating of any
class or series.
Rating requirements for eligible investments will only apply at the time of the
trust's investment.
Net earnings on investments of funds in the collection and special funding
accounts will be treated as finance charge collections of the trust and will be
allocated as described in the prospectus supplement; net earnings on investments
of funds in any principal funding, reserve or interest funding accounts for your
series will be treated as finance charge collections allocable to some or all of
the classes of your series.
UNIVERSAL BANK'S CREDIT CARD BUSINESS
Account generation
- ------------------
Universal Bank uses UCS and third party vendors to originate cardmember
accounts. Substantially all new accounts are generated through nationwide direct
mail and telephone solicitations of potential cardmembers. UCS obtains from
independent national credit bureaus lists of individuals who have been
prescreened and whose credit bureau scores satisfy Universal Bank's established
credit quality standards. Credit bureau scoring is intended to provide a general
indication of the likelihood of an individual's repaying his or her obligations.
The credit scoring uses internal servicer credit scoring models and an
industry-accepted credit scoring model - the FICO model developed by Fair,
Isaacs Companies - to statistically evaluate the correlation of certain common
characteristics with credit risk. Internal servicer scoring models predict the
likelihood of bankruptcy. The FICO model predicts the degree of credit risk of
prospective cardmembers.
Based on credit bureau scores and other credit characteristics and information,
individuals are selected to receive a prescreened solicitation. Universal Bank
offers credit card accounts with
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<PAGE>
different annual percentage rates and may offer accounts with annual fees and,
depending on the type of account, enhanced special features. It also offers
cardmembers optional enhancements for a fee.
Individuals qualifying for pre-screened direct mail solicitation are offered a
credit card account through the use of an acceptance certificate. The
prospective cardmember must provide information to the servicer, who then
requests an updated credit report. Prospective customers receive offers of
credit lines up to a pre-specified amount, but the initial credit line is not
assigned until after updated information is obtained. In some cases credit may
not be granted.
UCS may send direct mail solicitations to potential cardmembers who have not
been pre-screened. When UCS receives an application for a credit card account
for an individual who has not been pre-screened, it reviews the application for
completeness and obtains a credit report and credit bureau score on the
applicant from an independent national credit bureau. It may verify some
information about the applicant and request additional information to make a
decision on the applicant's creditworthiness.
Credit limits are established for each cardmember based on credit bureau score,
income and other credit characteristics. The accounts generally have credit
limits ranging from $2,000 to $15,000. Some accounts may have a separate credit
limit for cash advances as a portion of the overall credit limit. Non-premium
accounts generally have initial credit limits in the $2,000 to $5,000 range,
with the average limit being between $2,500 and $3,000. Premium accounts are
generally assigned credit limits of $5,000 to $15,000 or more, with the average
limit being between $6,000 and $6,500. Universal Bank uses the TRIAD behavioral
scoring system to review the accounts periodically for automatic credit line
adjustment. The accounts are scored based upon time since the last credit line
adjustment, account age, current limit, credit line utilization, payment history
and other relevant credit criteria. In addition, line increases may be granted
by credit analysts who manually review accounts upon request by the cardmember.
The amount by which an authorization in excess of available credit may be
granted is determined based on a behavioral score assigned to the account. Also,
further extensions of credit may be suspended if the balance on an account
exceeds the assigned credit limit.
Billing and payments
- --------------------
A monthly billing statement is sent to the cardmember if the amount due on the
account totals at least one dollar or if there are new calling card transactions
during the billing cycle. Otherwise, the charges are included on a statement in
a subsequent billing cycle.
The accounts, which generally have variable annual percentage rates, are
governed by various cardmember agreements and disclosure statements and have
different billing and payment structures, including varying fees, depending on
the type of account. Each cardmember
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agreement permits Universal Bank to change the terms and conditions of that
agreement at any time, subject to applicable law. For example, Universal Bank
may change the required minimum payment, the rate or amount of finance charges,
fees or other charges and the method of computing the balance upon which finance
charges are assessed. If legally required, Universal Bank will give cardmembers
prior written notice before implementing any such change.
Monthly billing statements are sent to the cardmember at the end of each billing
cycle, generally within two business days after the cycle date assigned to the
account by the servicer. Currently, UCS has 28 different billing cycles within
each calendar month. The monthly billing statement reflects all purchases, cash
advances, administrative charges (such as overlimit charges, late charges and
returned payment charges), any annual fees, credit insurance charges and finance
charges incurred during the billing cycle or a prior billing cycle and reported
to the servicer, all payments or credits applicable to the account, and the
outstanding balance of the account as of the cycle date, including available
credit.
Minimum payments
- ----------------
A cardmember must usually make at least the minimum payment shown on the monthly
statement by the due date to avoid delinquency. The minimum monthly payment in a
billing cycle is the greater of
o the sum of (a) 2.1% of the new balance (or 2.5% for some accounts
generated in the college market) on the monthly statement (excluding
calling card transactions), rounded to the nearest whole dollar, plus (b)
calling card transactions posted to the account in the billing cycle, plus
(c) any unpaid minimum payment from prior statements and any amounts that
exceed the credit line, or
o $10 (or the new balance if less than $10), plus any calling card
transactions.
Universal Bank may offer some credit-qualified cardmembers the option to enjoy a
payment holiday for a particular billing cycle. A payment holiday means that no
minimum payment is required on the account. Daily periodic finance charges
continue to accrue. The effect of a payment holiday would be to increase the
yield on the receivables on a billed basis and to decrease the rate of payments
of principal and finance charge receivables during the billing cycles to which
the offer applies. Universal Bank may make similar offers or increase the
frequency of this program in the future.
Finance charges
- ---------------
Finance charges on accounts are calculated separately for purchases and cash
advances. Finance charges for purchases are determined by applying a daily
periodic rate (the annual percentage rate divided by 365 days) to the daily
balance of purchases, and adding together the finance charges
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<PAGE>
for each day in the billing cycle. Finance charges for cash advances are
determined by applying the daily periodic rate to the daily balance of cash
advances, and adding together the finance charges for each day in the billing
cycle, plus any applicable cash advance fee(s).
The daily balance for purchases is determined by adding each day
o the beginning balance of purchases on the account,
o any new purchases,
o any unpaid finance charges on purchases,
o any charges for credit insurance,
o any other charges posted to the account, and
o any unpaid calling card transactions from prior billing cycles,
and subtracting from that sum payments and credits applied to purchases that
day.
The daily balance for cash advances is determined by adding each day
o the beginning balance of cash advances on the account,
o any new cash advances, and
o any unpaid finance charges on cash advances,
and then subtracting from that sum any payments and credits applied to cash
advances that day.
Finance charges are imposed on purchases and cash advances from the date the
transaction is included in the daily balance until full payment is received. If
there was no new balance, or if the entire new balance on the account was paid
by the payment due date indicated on the monthly statement, then no finance
charge is imposed on new purchases in that billing cycle. However, finance
charges do accrue from the date of posting on balance transfers generated by
certain promotional offers. The payment due date is at least 25 days after the
end of the prior billing cycle.
No finance charge is imposed on calling card transactions in the billing cycle
in which the transactions are posted to the account. The receivables represented
by these charges are not part of the trust's assets. However, any charge for
calling card transactions that is not paid by the payment due date on the
monthly statement in which it is billed is added to the daily balance of
purchases on the first day of the next billing cycle. These unpaid calling card
transactions, and finance charges on these unpaid transactions, become part of
the trust's receivables.
For most accounts, the periodic rate is a variable rate that changes quarterly
and is calculated by taking the highest rate among the prime rates published in
The Wall Street Journal (rounded
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to the nearest 0.1%) on specified days during each calendar quarter and adding a
specified margin to that rate. For some accounts, the periodic rate is adjusted
monthly. For other accounts, the periodic rate is a variable rate that changes
quarterly and is calculated by taking the three-month London interbank offered
rate (LIBOR) on specified days during each calendar quarter and adding a
specified margin to that rate. Finance charges on the accounts are compounded
daily.
Universal Bank has offered special fixed and variable promotional rates that
revert in time to a different variable rate, and it may offer such rates again
from time to time. It also may offer accounts with variable rates tied to other
financial indices.
If an account becomes delinquent or overlimit or a payment is returned unpaid,
the rate payable on the account (including any promotional rate payable on the
entire balance) may be increased to a fixed rate of 23.9%. The rate payable on
an account may also be increased to 23.9% if the cardmember becomes delinquent
with any other creditor. A cardmember may again qualify for the lower variable
annual percentage rate on new purchases and cash advances, as well as existing
balances, after the account has been in good standing for at least 12 months.
Any change in the periodic rate will go into effect on the first day of the
billing cycle starting after the first day of the next calendar month or
quarter, as the case may be, and may result in an increase or decrease in the
finance charge imposed on the account. There will be a minimum finance charge of
50 cents in any billing cycle in which a finance charge at a periodic rate is
charged.
Accounts are typically charged a fee for each cash advance, including
withdrawals of cash from ATMs, cash advances provided by banks or other
institutions, and convenience checks. The cash advance fee is 3% of each cash
advance, but never less than $5. Accounts are also assessed a fee for quasi-cash
advances, such as wire transfers, foreign currency, travelers checks or money
orders. The cash advance fee for quasi-cash transactions is 3% of each
quasi-cash transaction but never less than $10. The cash advance fee is part of
the finance charge. Currently, cash and quasi-cash advances are not entitled to
any grace period and are assessed finance charges from the date of the
transaction (for convenience checks, from the date of posting).
Fees and charges
- ----------------
Universal Bank began issuing the AT&T Universal Card in March 1990. Cardmembers
who joined during the first year of the program were considered charter members,
and their cards carry no annual fee for life. Universal Bank issues cards with
non-refundable membership fees ranging from $20 to $60 on some accounts.
However, most of the accounts currently do not carry an annual fee.
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Accounts may be assessed administrative charges, including
o late charges of $29 if the required minimum payment on the account is not
received on a timely basis,
o returned payment charges of $29 the first time a payment is returned
unsatisfied,
o overlimit charges of $29 if the new balance on the account exceeds the
credit line, and
o a $29 fee for returned convenience checks.
No late fee is assessed if the balance is less than $50.
Payments
- --------
Cardmember payments are processed by UCS through affiliates or third parties,
and generally are allocated to the outstanding balance in the following order:
(1) to calling card transactions on the most recent billing statement,
(2) to finance charges at promotional rates,
(3) to finance charges on purchases,
(4) to miscellaneous fees, such as late fees or overlimit fees,
(5) to finance charges on cash advances and convenience checks,
(6) to balances at promotional rates one or more cycles old,
(7) to purchase balances one or more cycles old,
(8) to miscellaneous fees one or more cycles old,
(9) to cash advance and convenience check balances one or more cycles old,
(10) to calling card transactions since the last billing statement,
(11) to balances at promotional rates since the last billing statement,
(12) to purchases since the last billing statement,
(13) to miscellaneous fees since the last billing statement, and
(14) to cash advances and convenience checks since the last billing statement.
Collection of delinquent accounts
- ---------------------------------
Minimum scheduled payments on the accounts are due no less than 25 days after
the end of the prior billing cycle. An account is considered delinquent (or one
payment past due) for collection purposes if the minimum payment indicated on
the billing statement is not received by the servicer by the next statement
cycle date, which is generally five days after the payment due date. Interest
generally is not assessed on purchases unless payment in full has not been
received before the next statement cycle date.
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UCS uses the TRIAD behavioral scoring system along with custom developed models
to create behavioral risk scores for all accounts. The scoring models use
payment behavior, the age of the account, credit bureau scores, credit balance,
credit line utilization and other factors to predict the probability of an
account becoming 90 days past due in the next six months. The timing of the
collection activity to be implemented for an account is based on the
cardmember's behavioral score and the account balance. The servicer believes
that the use of behavioral scoring helps reduce exposure to loss by enabling it
to manage at an early stage accounts that have a greater probability of
experiencing a loss.
Efforts to collect delinquent credit card receivables are made principally by
UCS's personnel, supplemented by collection agencies and attorneys retained by
UCS when deemed necessary. Collection activities include statement messages,
formal collection letters and telephone calls. The intensity with which
collection activity is pursued depends on the risk profile of the account. The
risk profile is determined based on a combination of factors, including the
dollar amount deemed to be at risk, the degree of account delinquency and the
age of the account. Currently, collection activity may begin with a telephone
call to the cardmember as early as one day after the date the account becomes
delinquent. Follow-up telephone calls continue until the cardmember is
contacted. If the collector is unable to establish telephone contact with the
cardmember, the collector sends a series of collection letters to the cardmember
until the matter is resolved. Universal Bank's current charge-off policy for
accounts is:
general delinquency 181 days
fraud 91 days
bankruptcy Immediately upon receipt of notice
If the cardmember dies, in most cases receivables in the account will not be
charged off until collection activities indicate the estate will not pay the
debt. In certain other cases, the account's receivables will be charged off
immediately upon receipt of a death notification.
Depending on the behavioral score established by the servicer, extension of
credit to an account that is delinquent may be restricted as early as one day
after the date the account becomes delinquent. Typically, Universal Bank will
not extend credit to any account with a history of delinquency. Although such
arrangements are made infrequently, the servicer, on behalf of Universal Bank,
may in its sole discretion enter into arrangements with delinquent cardmembers
to extend or otherwise modify payment schedules. No such extension or
modification will result in negative amortization to the account.
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The risk evaluation, servicing, charge-off policies and collection practices
described above are constantly reviewed and may change over time in accordance
with the business judgment of Universal Bank and UCS and its affiliates and with
legal requirements.
Information about the delinquency and loss experience on the accounts designated
to the trust is contained in the prospectus supplement.
Interchange
- -----------
When a cardmember purchases goods or services from a merchant, the merchant
typically receives less than 100% of the purchase price to be paid by the
cardmember. Portions of this difference between the transaction amount and the
amount the merchant receives are retained by MasterCard and VISA and by banks
participating in the MasterCard and VISA associations as partial compensation
for taking credit risk, absorbing fraud losses and funding receivables for a
limited period prior to initial billing. The remainder, representing
approximately 1% to 2% of the transaction amount, is retained by Universal Bank
as interchange. The amount of interchange retained by Universal Bank may be
changed by MasterCard and VISA.
The portion of the transaction amount representing interchange is treated as
finance charge collections.
MORE ABOUT SERVICING
UCS and its affiliates perform servicing functions at credit card operations
centers in Jacksonville, Florida and other sites.
UCS, as servicer, must service, collect and administer the receivables in
accordance with its usual servicing procedures for credit card receivables
comparable to the receivables in the trust.
UCS's servicing activities include
o collecting and recording payments, communicating with cardmembers,
investigating payment delinquencies, evaluating increases in credit limits
and the issuance of credit cards, providing billing and tax records to
cardmembers and maintaining internal records for each cardmember account,
o maintaining the agreements, documents and files relating to the accounts
and receivables as custodian for the trust, and
o providing related data processing and reporting services for the investors
and the trustee.
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UCS may delegate its servicing duties to any entity that agrees to perform those
duties in accordance with the pooling and servicing agreement and UCS's
servicing procedures. However, UCS will remain liable for all delegated duties.
Total System Services, Inc. performs data processing on behalf of UCS. Total
System Services, which is not affiliated with UCS, processes transactions and
cash advances and authorizes accountholder purchases for merchants. It also
calculates billing statements, creates statement files and handles the daily
posting of transactions to the accounts.
Servicing fee and payment of expenses
- -------------------------------------
UCS will receive a monthly fee for its servicing activities. Each class of
certificates will generally be responsible for payment on each distribution day
of a portion of the servicing fee equal to
o 1/12 of the annual servicing fee percentage for the series, multiplied by
o the aggregate adjusted invested amount of the class on the last day of the
preceding month.
UCS may deduct its monthly servicing fee from any receivable collections without
first depositing the collections with the trust if
o the required amount of principal receivables is in the trust, and
o collections for a month have been deposited in the trust that are adequate
to fund all required payments and deposits to principal funding and other
accounts on the next distribution day.
UCS will pay most expenses incurred in servicing the receivables, including the
fees and disbursements of the trustee, the paying agent, the transfer agent, the
registrar and the independent accountants.
Deposits of receivable collections/Citibank guaranty
- ----------------------------------------------------
Citibank has guaranteed to the trust UCS's obligations as servicer. Citibank's
guaranty expires September 1, 2016, unless sooner released by the trust. Because
of Citibank's guaranty, and as long as Citibank maintains a certificate of
deposit rating of A-1 by Standard & Poor's and P-1 by Moody's, UCS can hold
collections received during a calendar month until the business day before the
distribution day in the following calendar month.
UCS can also deposit each month's collections on the business day before the
distribution day in the following month if each rating agency confirms that it
will not reduce or withdraw its rating of any class or series.
If UCS were not permitted to make monthly deposits of collections, it would have
to deposit each collection within two business days after it first records the
transaction.
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Repurchase of receivables
- -------------------------
UCS may not
o cancel a receivable except in accordance with its servicing procedures,
unless ordered by a court or other governmental authority,
o reschedule, revise or defer a payment due on a receivable except in
accordance with its servicing procedures, or
o impair any investor's rights in a receivable.
UCS must also comply with all material legal requirements and maintain all
material required qualifications to service the receivables and accounts.
If UCS's failure to comply with any of these requirements
o is not cured within 60 days, and
o would have a material adverse effect on the investors' interest in the
receivable,
then UCS will purchase all the receivables in the affected account. The purchase
will be made on the distribution day in the month following the month in which
UCS becomes obligated to purchase the receivables. The purchase price will be
the amount of the receivables, which will be paid in immediately available funds
deposited in the collection account. On UCS's purchase of the receivables, the
account will no longer be designated to the trust.
UCS's repurchase of receivables is the investors' only remedy for UCS's failure
to comply with the requirements described in this section.
Successors
- ----------
A successor by merger to UCS, or a corporation that acquires substantially all
of UCS's assets, can become the servicer only if it
o is organized under US law,
o is legally qualified to act as servicer,
o assumes UCS's servicing obligations, and
o has a net worth of at least $50 million.
UCS's resignation
- -----------------
UCS may not resign as servicer unless either
o it determines that the performance of its duties is no longer legally
permissible and there is no reasonable action that UCS can take to make its
performance permissible, or
o its servicing duties are assumed by an eligible servicer (a) that is a
wholly owned subsidiary of Citicorp or (b) for which each rating agency
confirms that it will not reduce or withdraw its rating of any class or
series.
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An eligible servicer is an entity that, when it becomes a servicer for th
trust,
o is servicing a portfolio of revolving credit card accounts,
o satisfies the trustee that it can professionally and competently service a
portfolio of accounts similar to those designated to the trust in
accordance with high standards of skill and care,
o has the right to use software adequate for servicing the accounts
designated to the trust, and
o had a net worth of at least $50 million at the end of its most recent
fiscal quarter.
A resignation can not become effective until the trustee or a successor to UCS
has assumed UCS's duties. However, UCS may assign part or all of its duties as
servicer to an affiliate as long as UCS fully guarantees the affiliate's
performance or each rating agency confirms that it will not reduce or withdraw
its rating of any class or series.
UCS's default
- -------------
Either the trustee or investors holding a majority of the aggregate principal
balance of all certificates and other interests of all series may terminate UCS
as servicer if UCS
o fails to make a payment, transfer or deposit, or fails to give instructions
to the trustee to make a payment, transfer or deposit, when required, and
the failure is not cured for five business days (plus an additional 10
business days if the delay is caused by act of God or similar event that
UCS could not reasonably prevent),
o otherwise fails to perform any of its other obligations under the pooling
and servicing agreement, and the failure results in a pay out or
reinvestment event or materially and adversely affects the amount or timing
of payments on the certificates of any series, and the failure is not cured
for 60 days (plus an additional 60 business days if the delay is caused by
act of God or similar event that UCS could not reasonably prevent),
o attempts to assign any of its servicing obligations in ways not permitted
by the pooling and servicing agreement,
o makes a representation, warranty or certification in the pooling and
servicing agreement or any certificate delivered under the pooling and
servicing agreement that (1) was incorrect when made, (2) results in a pay
out or reinvestment event or materially and adversely affects the amount or
timing of payments on the certificates of any series, and (3) is not cured
for 60 days (60 business days if the delay is caused by act of God or
similar event that UCS could not reasonably prevent), or
o becomes bankrupt or insolvent or goes into receivership.
If UCS is terminated as servicer, the trustee will promptly appoint a successor
servicer. The trustee will seek to obtain bids from potential servicers meeting
the eligibility requirements in
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the pooling and servicing agreement to serve as a successor servicer for
servicing compensation not in excess of (1) UCS's servicing fee plus (2) that
portion of finance charge collections allocated to the various series that are
ultimately distributed to Universal Bank. If no successor servicer is appointed
by the time UCS ceases to act as servicer, the trustee will act as servicer.
If the trustee does not receive any bids from eligible servicers to act as
successor servicer within 60 days after UCS is notified that it is being
terminated as servicer, and an officer of Universal Bank certifies to the
trustee that UCS cannot in good faith cure its default, Universal Bank can
purchase all the certificates on the distribution day in the next calendar
month. The purchase price for the certificates will equal the greater of
o the aggregate adjusted invested amount of the certificates plus interest
due on the distribution day, or
o the aggregate bid prices for similar certificates, as determined by a
procedure described in the pooling and servicing agreement.
Trustee not liable for servicer's acts
- --------------------------------------
The trustee is not liable for the acts or omissions of a servicer, or any person
to whom servicing obligations are delegated, including acts or omissions in
connection with servicing the receivables, calculations made by such persons, or
deposits to or withdrawals from the collection or other trust accounts.
BOOK-ENTRY AND PAPER CERTIFICATES
Book-entry certificates
- -----------------------
Most classes of certificates offered to the public will be book-entry
certificates. That is, a single "global" certificate for each of these classes
will be registered in the name of The Depository Trust Company, a securities
depository, or its nominee (together, DTC). DTC will thus be the only registered
holder of these certificates. If you purchase a book-entry certificate, you will
be a beneficial owner of the certificate, and as such will not be able to obtain
paper certificates evidencing your ownership of your certificates.
In this prospectus,
o certificate holder refers to the registered holder of a certificate
(usually DTC),
o investor refers to the registered holder of a certificate or the holder of
another interest in the trust (other than Universal Bank's interest in the
trust), and includes a certificate holder, and
o certificate owner refers to the beneficial owner of a certificate.
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Purchasers of book-entry certificates will hold their certificates indirectly
through securities intermediaries - banks, brokerage houses and other
institutions that maintain securities accounts for their customers. DTC will
maintain accounts showing the certificate holdings of its participants (all of
whom will be securities intermediaries, and may include the underwriters), and
these securities intermediaries will in turn maintain accounts showing the
certificate holdings of their customers (some of whom may themselves be
securities intermediaries holding certificates for their customers). Thus, each
purchaser of a book-entry certificate will hold that certificate through a
hierarchy of intermediaries, with DTC at the "top" and the purchaser's own
securities intermediary at the "bottom." The book-entry system for holding
certificates through accounts with a hierarchy of securities intermediaries with
a securities depository at the top is the system through which most publicly
traded securities are held in the United States.
Purchasers of book-entry certificates should realize that, unless otherwise
stated in this prospectus, the trust
o will make all payments on their certificates to DTC,
o will send all reports and notices required to be sent to book-entry
certificate holders solely to DTC, and
o will accept notices and directions solely from the investors, which for
book-entry certificates will mean DTC.
However, DTC and other securities intermediaries are generally required by law
and their own internal procedures to
o pass through to their customers the economic benefit of ownership of the
certificates, such as payments from the trust, and
o exercise the rights that come from holding certificates as a representative
of their customers.
Owners of book-entry certificates may find it somewhat more difficult to pledge
their certificates because of the lack of a physical certificate, and may
experience delays in receiving payments on their certificates, since payments
will be initially made to DTC and must then travel down the hierarchy of
intermediaries to the certificate owner's own account with its securities
intermediary.
European purchasers of certificates can hold interests in the certificates only
through Cedelbank, societe anonyme (Cedelbank), or through Morgan Guaranty Trust
Company of New York, Brussels Office, as operator of the Euroclear System
(Euroclear), if they are participants in such systems or indirectly through
organizations that are participants in such systems.
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Because Cedelbank and Euroclear are not DTC participants, Cedelbank and
Euroclear will hold positions through US securities intermediaries that will in
turn hold positions on DTC's books. Citibank will act as securities intermediary
for Cedelbank, and The Chase Manhattan Bank will act as securities intermediary
for Euroclear.
Neither the trustee, Universal Bank nor UCS will be responsible, or liable to
certificate owners, for any action or failure to act of a securities depository
or securities intermediary, including any action or inaction involving a
securities depository's or securities intermediary's
o payments to its participants or customers,
o transmission of notices, directions (including directions as to voting
certificates) and other communications to or from certificate owners, or
o record keeping.
Nor will the trustee, Universal Bank or UCS have any obligation to certificate
owners to monitor, supervise or review any actions or procedures of a securities
depository or securities intermediary.
The Depository Trust Company
- ----------------------------
DTC is a limited purpose trust company organized under the laws of New York
State, a member of the Federal Reserve System, a "clearing corporation" under
the New York Uniform Commercial Code and a "clearing agency" registered under
the Securities Exchange Act of 1934.
DTC holds securities deposited by its participants and facilitates the
settlement of securities transactions among its participants through electronic
book-entry changes in accounts of the participants, thus eliminating the need
for physical movement of securities certificates. DTC is owned by a number of
its participants and by the New York Stock Exchange, the American Stock Exchange
and the National Association of Securities Dealers (the NASD). The rules
applicable to DTC and its participants are on file with the Securities and
Exchange Commission.
Cedelbank
- ---------
Cedelbank is registered as a bank in Luxembourg and is regulated by Luxembourg's
central bank, the Banque Centrale du Luxembourg. Cedelbank holds securities for
its customers and facilitates the clearance and settlement of securities
transactions by electronic book-entry transfers between their accounts.
Cedelbank provides various services, including safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedelbank also deals with domestic securities markets in
over 30 countries through established depository and custodial relationships.
Cedelbank has established an electronic bridge with Euroclear in Brussels to
facilitate settlement of trades between Cedelbank and Euroclear.
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<PAGE>
Cedelbank's customers are worldwide financial institutions, including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Cedelbank's US customers are limited to securities
brokers and dealers and banks, and may include the underwriters. Indirect access
to Cedelbank is available to other institutions that clear through or maintain a
custodial relationship with a Cedelbank account holder.
Euroclear
- ---------
Euroclear was created in 1968 to hold securities for participants of Euroclear
and to clear and settle transactions between Euroclear participants through
simultaneous electronic book-entry delivery against payment. This system
eliminates the need for physical movement of certificates and any risk from lack
of simultaneous transfers of securities and cash. Euroclear includes various
other services, including securities lending and borrowing, and interfaces with
domestic markets in several countries. Euroclear is operated by the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York, under contract with
Euro-clear Clearance Systems S.C., a Belgian cooperative corporation. Morgan
Guaranty - Brussels conducts all operations. All Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with Morgan Guaranty -
Brussels. Euro-clear Clearance Systems establishes policy for Euroclear on
behalf of Euroclear participants. Euroclear participants include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries, and may include the underwriters. Indirect access to
Euroclear is also available to other firms that clear through or maintain a
custodial relationship with a Euroclear participant, either directly or
indirectly.
Morgan Guaranty - Brussels is the Belgian branch of a New York banking
corporation that is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Federal Reserve Board and the New York State
Banking Department, as well as the Belgian Banking Commission.
Securities clearance accounts and cash accounts with Morgan Guaranty - Brussels
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law. Euroclear's rules govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments with
respect to securities in Euroclear. All securities in Euroclear are held on a
fungible basis without attribution of specific certificates to specific
securities clearance accounts. Morgan Guaranty - Brussels acts under Euroclear's
rules only on behalf of Euroclear participants, and has no record of or
relationship with persons holding through Euroclear participants.
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The preceding information about DTC, Cedelbank and Euroclear has been provided
by each of them for informational purposes only and is not intended to serve as
a representation, warranty or contract modification of any kind.
Issuance of paper certificates
- ------------------------------
Owners of book-entry certificates may obtain paper certificates registered in
their name only if
o DTC is unwilling or unable to continue as depositary for the global
certificates and Universal Bank is unable to find a qualified replacement,
o Universal Bank decides to terminate the book-entry system for a specific
series or class, or
o UCS defaults and beneficial owners of least 50% of the
principal balance of a series or class determine that the continuation of
the book-entry system for the series or class is no longer in their best
interest.
If any of these events occurs, the trustee will notify the owners of the
affected certificates through the chain of intermediaries that paper
certificates are available, and the trustee will then issue paper certificates
in registered form to the certificate owners. Once a paper certificate is issued
to a certificate owner, the owner will have all the rights of a certificate
holder, including the right to receive payments of interest and principal
directly from the trust or its paying agent.
THE POOLING AND SERVICING AGREEMENT
Your certificates are governed by the pooling and servicing agreement and a
series supplement to the pooling and servicing agreement for your series,
substantially in the forms filed or to be filed as exhibits to registration
statements under the Securities Act of 1933 or the Securities Exchange Act of
1934. References in this prospectus to the "pooling and servicing agreement"
will generally refer to the pooling and servicing agreement and the relevant
series supplement.
Many of the matters dealt with in the pooling and servicing agreement are
discussed elsewhere in this prospectus. The following discussion summarizes some
of the remaining terms of the pooling and servicing agreement.
The certificates are complex instruments, and the pooling and servicing
agreement is a lengthy and complex document. This prospectus only discusses
those aspects of the certificates and the pooling and servicing agreement that
Universal Bank and UCS believe are likely to be material to certificate
purchasers. You should read the pooling and servicing agreement for provisions
that may be important to you. The trustee will provide you with a copy of the
pooling and servicing agreement (without exhibits or schedules) on your written
request.
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<PAGE>
Representations and warranties
- ------------------------------
Universal Bank will represent and warrant to the trust that on the series
closing date,
o Universal Bank is a national bank validly existing under US law,
o it has the authority to consummate the transactions contemplated by the
pooling and servicing agreement,
o Universal Bank is legally bound by the pooling and servicing agreement, and
o the transfer of the receivables to the trust is either (a) a valid sale to
the trust of Universal Bank's entire interest in the receivables, including
receivables created after that date and the proceeds of those receivables,
and in recoveries and interchange allocable to the trust, or (b) the grant
of a first priority perfected security interest under the Uniform
Commercial Code in those receivables, proceeds, recoveries and interchange.
If Universal Bank's breach of any of these representations or warranties has a
material adverse effect on the investors' interest in the receivables
(determined without regard to any funds available from credit enhancement) or
the availability of the proceeds of the receivables to the trust, either the
trustee or investors holding a majority of the principal balance of the
certificates and other interests of all series can direct Universal Bank to
repurchase all of the receivables in the trust. Universal Bank will not have to
repurchase the receivables, however, if it cures the breach within 60 days (or a
longer grace period up to 120 days permitted by the trustee or the investors).
Any repurchase will occur on the distribution day following the calendar month
in which the repurchase obligation arises. The purchase price for the
certificates and other interests will be the aggregate invested amount of all
the certificates and other interests of all series, together with all interest
due on the distribution day. Universal Bank's repurchase of the receivables will
be the sole remedy available to the investors or the trustee for Universal
Bank's breach of these representations and warranties.
The trustee is not required or expected to examine Universal Bank to establish
its compliance with its representations or warranties or the performance of its
obligations under the pooling and servicing agreement or for any other purpose.
Transfers of Universal Bank's interest
- --------------------------------------
Universal Bank may transfer part, but not all, of its interest in the trust.
However, Universal Bank can only do this if
o each rating agency confirms that it will not reduce or withdraw its rating
of any class or series,
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o the transfer will not result in a pay out or reinvestment event or
materially and adversely affect the amount or timing of payments on the
certificates of any series,
o Universal Bank reasonably believes that the transfer will not result in a
pay out or reinvestment event or materially and adversely affect the amount
or timing of payments on the certificates of any series,
o Universal Bank delivers a tax opinion on the transfer to the trustee, and
o the required amount of principal receivables are in the trust on the date
of the transfer.
A transferee of Universal Bank's interest will have, to the extent of the
interest transferred, all the rights and obligations of Universal Bank with
respect to the trust and the certificates as described in this prospectus.
Additional transferors of receivables
- -------------------------------------
Universal Bank may designate any of its affiliates (an additional transferor) to
designate the affiliate's credit card accounts to the trust. In connection with
the designation of an additional transferor, Universal Bank will transfer part
of its interest in the trust to the affiliate. The transfer of a portion of
Universal Bank's interest in the trust will be effective only if
o the pooling and servicing agreement is amended to include the additional
transferor, and the amendment satisfies all the requirements for an
amendment that does not require the consent of any investor (see below),
and
o Universal Bank delivers a tax opinion on the transfer to the trustee.
An additional transferor will be treated in the same manner as Universal Bank
and will generally have the same obligations and rights as to the receivables it
transfers to the trust as Universal Bank has as to the receivables Universal
Bank transfers to the trust.
Indemnification
- ---------------
UCS must indemnify the trust and the trustee against any loss, liability,
expense, damage or injury arising out of UCS's actions or omissions in the
performance of its servicing obligations or the trustee's administration of the
trust, other than loss, liability, expense, damage or injury arising from the
trustee's negligence or willful misconduct.
Universal Bank has agreed to be liable directly to an injured party for the
entire amount of any liabilities of the trust (other than those incurred by an
investor) arising out of the arrangement created by the pooling and servicing
agreement or of UCS's actions as servicer as though the pooling and servicing
agreement created a partnership in which Universal Bank was a general partner.
UCS has in turn agreed to indemnify Universal Bank against any such liabilities
that arise from UCS's actions or omissions.
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<PAGE>
Except as described in the preceding two paragraphs, neither Universal Bank, UCS
nor any of their directors, officers, employees or agents will have any other
liability to the trust, the trustee, the investors, any person providing credit
enhancement or any other person for actions taken or omitted in good faith under
the pooling and servicing agreement. However, these persons will be liable for
their willful misfeasance, bad faith or gross negligence in the performance of
their duties or for their reckless disregard of their obligations and duties
under the pooling and servicing agreement.
UCS is not obligated to appear in, prosecute or defend any legal action that is
not incidental to its servicing duties under the pooling and servicing
agreement. UCS may undertake for the benefit of the investors any legal action
it deems desirable related to the pooling and servicing agreement and the
interests of the investors.
Amendments
- ----------
UCS, Universal Bank and the trustee may amend the pooling and servicing
agreement without the consent of the investors of any series, provided that
o Universal Bank delivers a legal opinion to the trustee that all conditions
to the amendment have been satisfied,
o Universal Bank reasonably believes that the amendment will not result in a
pay out or reinvestment event or materially and adversely affect the amount
or timing of payments on the certificates of any series, and
o each rating agency confirms that it will not reduce or withdraw its rating
of any class or series.
For example, the pooling and servicing agreement can be amended without consent
of any investor to add an additional transferor or to allow Universal Bank or an
additional transferor to transfer participation interests to the trust.
The pooling and servicing agreement may also be amended with the consent of the
investors holding not less than 2/3 of the aggregate principal balance of the
certificates and other interests of all the affected series. However, the
amendment may not
o reduce the amount of, or delay the timing of, deposits or payments on a
certificate or other interest, or
o change the definition of or the manner of calculating the interest of any
investor without the consent of each affected investor.
Nor may any amendment
o reduce the interest of the certificates and other interests required to
consent to an amendment without the consent of all investors, or
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o adversely affect the rating of a class without the consent of the
investors holding at least 2/3 of the aggregate principal balance of the
class.
A series supplement for a new series of certificates is not considered an
amendment to the pooling and servicing agreement.
No meetings of investors
- ------------------------
There will not be any annual or other meetings of investors.
TAX MATTERS
Limits of the discussion
- ------------------------
This section summarizes the material US federal income tax consequences to
certificate owners. However, the discussion is limited in the following ways:
o The discussion only covers you if you buy your certificates in the initial
offering.
o The discussion only covers you if you hold your certificates as a capital
asset (that is, for investment purposes), and if you do not have a special
tax status.
o The discussion does not apply to you if you are a non-US certificate owner
and if you (a) own 10% or more of the voting stock of Citigroup, (b) are a
"controlled foreign corporation" with respect to Citigroup, or (c) are
related to transferees of Universal Bank's interest in the trust.
o The discussion does not cover tax consequences that depend upon your
particular tax circumstances. You should consult your tax advisors about
the tax consequences of holding the certificates in your particular
situation.
o The discussion does not cover state, local or foreign law.
o The discussion is based on current law. Changes in the law may change the
tax treatment of your certificates.
o There is no authority on many of the tax issues concerning the trust and
the certificates. We have not requested a ruling from the Internal Revenue
Service (IRS) on the tax consequences of owning the certificates. As a
result, the IRS could disagree with portions of this discussion.
o The discussion does not cover every type of certificate that we might
issue. For example, it does not cover certificates that are scheduled to be
outstanding for one year or less, certificates denominated in foreign
currency, or certificates whose tax characterization is different than that
described below. If your certificates are of a type not described in this
summary, additional tax information will be provided in the prospectus
supplement.
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o The discussion does not apply to certificates issued at more than a small
discount from their principal amount. More precisely, the discussion
applies only if any such discount is less than 1/4% times the number of
full years from the issue date to the scheduled principal payment date of
the certificates. This discount is referred to as de minimis OID. If the
discount on your certificates exceeds this de minimis amount, the original
issue discount (OID) rules of the Internal Revenue Code will apply and
additional information will be provided in the prospectus supplement.
Because of these limitations, and because of the uncertainties described below,
we strongly encourage you to consult your tax advisor before purchasing
certificates.
Tax characterization of the certificates
- ----------------------------------------
Cravath, Swaine & Moore, special federal tax counsel to Universal Bank and the
trust, will provide an opinion to the trustee that the certificates are properly
characterized as indebtedness for federal income tax purposes. In addition,
certificate owners will agree, by acquiring certificates, to treat the
certificates as debt of Universal Bank for federal, state and local income and
franchise tax purposes. Universal Bank will treat the certificates in the same
manner for these purposes, although it will treat the certificates as equity for
certain nontax purposes.
Tax counsel's opinion is based on a balancing of factors. The most important
factor is the economic substance of the certificates. The certificates have
economic substance as indebtedness principally because:
o The certificates have many characteristics typical of debt, including a
fixed principal amount, a predetermined interest rate, one or more
specified dates on which principal payments are expected to be made and a
series termination date. These characteristics are generally independent
of, and different from, the cash flows on the underlying assets of the
trust.
o The economic position of a certificate owner with respect to the trust's
assets is different from the economic position of an owner of an equity
interest in those assets, but is similar to the economic position of a
lender making a nonrecourse loan. The principal economic characteristics of
a typical owner of an equity interest are the opportunity to gain if the
assets increase in value and the risk of loss if the assets decrease in
value. On the other hand, a lender making a nonrecourse loan is generally
unaffected by changes in the value of the underlying assets unless they
become insufficient to pay the full principal and interest on the loan. (A
nonrecourse loan is a loan where only specified assets, rather than all
assets of the borrower, are available to repay the loan.)
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Tax characterization of the trust
- ---------------------------------
Tax counsel will provide an opinion to the trustee that the trust will not be an
association or publicly traded partnership taxable as a corporation for federal
income tax purposes. As a result, the trust will not be subject to federal
income tax.
The precise tax characterization of the trust for federal income tax purposes is
not certain. It might be viewed as merely holding assets on behalf of Universal
Bank as collateral for debt issued by Universal Bank. On the other hand, the
trust could be viewed as a separate entity for tax purposes, probably a
partnership, issuing its own debt. This distinction, however, should not have a
significant tax effect on certificate owners except as stated below.
The trust is permitted to elect to be a financial asset securitization
investment trust, or FASIT, for tax purposes. A FASIT is also not subject to
federal income tax. To make the election, the trust would have to deliver a
legal opinion to the trustee that (1) the trust will not be taxable as a
corporation, and (2) the election will not have a significant adverse effect on
the federal income tax treatment of owners of then-outstanding certificates. The
trust has not elected to be a FASIT.
Tax consequences to US certificate owners
- -----------------------------------------
Many of the tax consequences of your owning certificates depend upon whether you
are a US certificate owner - that is, whether you are either
o an individual US citizen or resident alien,
o a corporation, or entity taxable as a corporation, that was created under
US law (federal or state), or
o an estate or trust whose worldwide income is subject to US federal income
tax.
If a partnership holds certificates, the tax treatment of a partner will
generally depend upon the status of the partner and upon the activities of the
partnership. Partners of partnerships holding certificates should consult their
tax advisors.
Interest
Unless the OID rules apply as described below:
o If you are a cash method taxpayer (including most individual certificate
owners), you must report interest on the certificates in your income when
you receive it.
o If you are an accrual method taxpayer, you must report that interest in
your income as it accrues.
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Possible OID on the certificates
Your certificates might be treated as having OID, even though they satisfy the
requirement for de minimis OID described above. This result could arise in two
ways:
(1) Interest on your certificates is not paid in full on a scheduled payment
date. Your certificates will then have OID from that date until their principal
is fully paid.
(2) When your certificates are issued, there is more than a "remote"
risk of a late payment or nonpayment of interest. Your certificates would then
have OID from their date of issuance. However, Universal Bank intends to take
the position that OID does not arise under this rule because the risks in
question are "remote."
If your certificate has OID, all interest on the certificate would be subject to
the tax rules for accruing OID. In general, there would not be a significant
adverse effect on you. However,
o you would have to report interest income on your certificate as it accrues
rather than when it is paid, even if you are on the cash method of
accounting, and
o if your certificate was issued at a small discount from its face amount -
that is, with de minimis OID - you would have to accrue that discount into
income over the life of the certificate.
Premium and discount
Additional special rules apply in the following situations:
o If you buy your certificate in the initial offering for more than its
initial principal balance, the excess amount you pay will be "bond
premium." You can use bond premium to reduce your taxable interest income
over the life of your certificate.
o If you buy a certificate in the initial offering for less than its initial
offering price to the public, special rules concerning "market discount"
may apply.
Appropriate adjustments to tax basis are made in these situations. Certificate
owners in these situations should consult their tax advisors.
Sale or retirement of certificates
On your sale or retirement of your certificate:
o You will have taxable gain or loss equal to the difference between the
amount you receive on the sale and your tax basis in the certificate. Your
tax basis in your certificate will generally be its cost, with adjustments
for any OID, premium or discount.
o Your gain or loss will generally be capital gain or loss, and will be long
term capital gain or loss if you held your certificate for more than one
year.
o If your certificate is issued with de minimis OID, you must report that
discount in income as taxable gain on a proportionate basis as you receive
principal on the certificate.
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o If you sell the certificate between interest payment dates, a portion
of the amount you receive reflects interest that has accrued on the
certificate but has not yet been paid by the sale date. That amount is
treated as ordinary interest income and not as sale proceeds.
Information reporting and backup withholding
Assuming you hold your certificates through a broker or other securities
intermediary, the intermediary must provide information to the IRS concerning
interest, OID and retirement proceeds it pays to you on certificates you own,
unless an exemption applies.
Similarly, unless an exemption applies, you must provide the intermediary with
your taxpayer identification number for its use in reporting information to the
IRS. If you are an individual, this is your social security number. You must
also comply with other IRS requirements concerning information reporting.
If you are subject to these requirements but do not comply, the intermediary
must withhold 31% of all amounts payable to you on your certificates (including
principal payments). This is called backup withholding. If the intermediary
withholds payments, you may use the withheld amount as a credit against your
federal income tax liability.
Individual US certificate owners are subject to these requirements. Some US
certificate owners, including all corporations, tax-exempt organizations and
individual retirement accounts, are exempt from these requirements.
Other possible tax characterizations
Since we are not obtaining a ruling from the IRS on the tax consequences of the
certificates, the IRS could disagree with the intended tax consequences or with
the opinions of tax counsel described above. As a result:
o The certificates might be treated as equity interests in a partnership
rather than debt for tax purposes. Certificate owners would then be treated
as partners in a partnership, with possible adverse tax results. In
particular, individual certificate owners would be required to include
trust income in their own income as it accrues rather than when it is paid,
and might not be allowed a deduction for certain trust expenses (resulting
in a greater amount of taxable income than cash received).
o The trust might initially or in the future be treated as a taxable
corporation, with the certificates treated as debt or equity in the
corporation. Tax imposed on the trust could significantly reduce the amount
of cash otherwise available for payment to certificate owners.
In particular, under a special tax rule, a noncorporate entity such as the trust
is taxable as a corporation if (1) it is considered to be engaged in the
financial business, (2) it issues a class of interests treated as equity for tax
purposes, and (3) any such class of equity interests is "pub-
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licly traded," as broadly defined. Because the trust might be considered to
satisfy condition (1), the trust might be a taxable corporation if it issues
certificates or other interests that are equity for tax purposes and that meet
the broad test for being "publicly traded."
The trust has issued, and may continue to issue, certificates for which tax
counsel does not provide an opinion that the certificates are debt for tax
purposes. None of those certificates have been or will be publicly offered
within the meaning of the securities laws. Nevertheless, if any of these
certificates are treated as equity for tax purposes and also considered
"publicly traded," under the rule in the preceding paragraph the trust might
become a taxable corporation. Universal Bank will take measures to minimize this
risk and expects to be successful in doing so. However, no assurance can be
provided in this regard.
Tax consequences to non-US certificate owners
- ---------------------------------------------
This section applies to you only if you are a non-US certificate owner - that
is, if you are
o a nonresident alien individual
o a corporation created under non-US law, or
o an estate or trust that is not taxable in the US on its worldwide income.
Withholding taxes
Generally, assuming the certificates are debt for federal income tax purposes
(as provided in the opinion of tax counsel), payments of principal and interest
on the certificates will not be subject to US withholding taxes.
However, for the exemption from withholding taxes to apply to you, you must meet
one of the following requirements:
o You provide your name, address and a signed statement that you are the
beneficial owner of the certificates and that you are not a US certificate
owner. This statement is generally made on IRS Form W-8 or Form W-8BEN.
o You or your agent claim an exemption from withholding tax under an
applicable tax treaty. This claim is generally made on Form 1001 or Form
W-8BEN.
o You or your agent claim an exemption from withholding tax on the ground
that the income is effectively connected with the conduct of a trade or
business in the US. This claim is generally made on Form 4224 or Form
W-8ECI.
You should consult your tax advisors about the procedures for satisfying these
requirements. These procedures will change on January 1, 2001. In addition, a
claim for exemption will not be valid if the person receiving the applicable
form has actual knowledge that the statements on the form are false.
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Sale or retirement of certificates
If you sell a certificate or it is redeemed, you will not be subject to federal
income tax on any gain unless one of the following applies:
o The gain is connected with a trade or business that you conduct in the US.
o You are an individual, you are present in the US for at least 183 days
during the year in which you dispose of the certificate, and certain other
conditions are satisfied.
o The gain represents accrued interest or OID, in which case the rules for
interest would apply.
US trade or business
If you hold your certificate in connection with a trade or business that you are
conducting in the US:
o Any interest on the certificate, and any gain from disposing of the
certificate, generally will be subject to income tax as if you were a
US-certificate owner.
o If you are a corporation, you may be subject to the "branch profits tax"
on your earnings that are connected with your US trade or business,
including earnings from the certificate. This tax is 30%, but may be
reduced or eliminated by an applicable income tax treaty.
Estate taxes
If you are an individual, your certificate will not be subject to US estate tax
when you die. However, this rule only applies if, at your death, payments on the
certificate were not connected to a trade or business that you were conducting
in the US
Information reporting and backup withholding
US rules concerning information reporting and backup withholding are described
above. Under these rules:
o Principal and interest payments received by you will be automatically
exempt from the usual rules if you provide the tax certifications needed to
avoid withholding tax on interest, as described above (unless the recipient
of the applicable form knows that the certification is false). However,
interest paid to you will be reported to the IRS on Form 1042-S.
o Sale proceeds you receive on a sale of your certificates through a broker
may be subject to these rules if you are not eligible for an exemption. In
particular, information reporting and backup withholding may apply if you
use the US office of a broker, and information reporting (but not backup
withholding) may apply if you use the foreign office of a broker that has
certain connections to the US. You should consult your tax advisor
concerning information reporting and backup withholding on a sale.
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Other possible tax characterizations
If the trust is treated as a taxable corporation, as discussed above, the tax
liability of the trust could reduce the amount of cash available to certificate
owners. In addition, if your certificates are characterized as equity rather
than debt for federal income tax purposes, there could be material adverse tax
consequences to you. For example:
o If your certificates were equity interests in a partnership, (a) 30% US
withholding tax might apply to the gross amount of trust income allocable
to you, or (b) you might have to file a tax return in the US and pay tax on
your share of net income of the trust as if such income were your US
business income. A corporate certificate owner might also be subject to the
"branch profits tax."
o If your certificates are equity interests in a corporation, all interest
payable to you might be treated as a dividend subject to 30% withholding
tax (or a lower rate for dividends provided by a tax treaty).
Non-US certificate owners should consult their tax advisors concerning these
risks.
BENEFIT PLAN INVESTORS
Benefit plans are subject to restrictions under the Internal Revenue Code and
the Employee Retirement Income Security Act of 1974 (ERISA). These restrictions
include rules concerning prudence and diversification of the investment of
assets of a benefit plan (plan assets). A benefit plan fiduciary should consider
whether an investment by the benefit plan in certificates complies with these
requirements.
In general, a benefit plan for these purposes includes:
o an employee benefit plan that is tax-qualified under the Internal Revenue
Code and provides deferred compensation to employees (such as a pension,
profit-sharing, section 401(k) or Keogh plan);
o an individual retirement account; and
o a collective investment fund or other entity, if (1) the fund or entity
has one or more benefit plan investors and (2) certain "look-through" rules
apply to treat the assets of the fund or entity as constituting plan assets
of the benefit plan investors.
However, a plan maintained by a government is not a benefit plan unless it is
tax-qualified under the Internal Revenue Code. A fund or other entity (including
an insurance company general account) considering an investment in certificates
should consult its tax advisors concerning whether its assets might be
considered plan assets under these rules.
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Prohibited transactions
- -----------------------
ERISA and the Internal Revenue Code also prohibit transactions of a specified
type between a benefit plan and a party in interest who is related in a
specified manner to the benefit plan. Violation of these prohibited transaction
rules may result in significant penalties. There are statutory exemptions from
the prohibited transaction rules, and the US Department of Labor has granted
administrative exemptions of specified transactions.
Potential prohibited transactions from investment in certificates
- -----------------------------------------------------------------
There are two categories of prohibited transactions that might arise from a
benefit plan's investment in certificates. Fiduciaries of benefit plans
contemplating an investment in certificates should carefully consider whether
the investment would violate these rules.
1: Prohibited transactions between the benefit plan and a party in interest
The first category of prohibited transaction could arise on the grounds that the
benefit plan, by purchasing certificates, was engaged in a prohibited
transaction with a party in interest. A prohibited transaction could arise, for
example, if the certificates were viewed as debt of Universal Bank and Universal
Bank is a party in interest as to the benefit plan. A prohibited transaction
could also arise if Universal Bank, the trustee, UCS or another party with an
economic relationship to the trust either
o is involved in the investment decision as to the benefit plan to purchase
certificates, or
o is otherwise a party in interest for the benefit plan.
If a prohibited transaction might result from the benefit plan's purchase of
certificates, an administrative exemption from the prohibited transaction rules
might be available to permit an investment in certificates. The exemptions that
are potentially available include the following Prohibited Transaction Class
Exemptions (PTCE):
o PTCE 96-23 (available to "in-house asset managers"),
o PTCE 95-60 (available to insurance company general accounts),
o PTCE 91-38 (available to bank collective investment funds),
o PTCE 90-1 (available to insurance company pooled separate accounts), and
o PTCE 84-14 (available to "qualified professional asset managers").
However, even if the benefit plan is eligible for one of these exemptions, the
exemption may not cover every aspect of the investment by the benefit plan that
might be a prohibited transaction.
2: Prohibited transactions between the trust and a party in interest
The second category of prohibited transactions could arise if
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o a benefit plan acquires certificates, and
o under a Department of Labor plan asset regulation, assets of the trust are
treated as if they were plan assets of the benefit plan.
In this case, every transaction by the trust would be treated as a transaction
by the benefit plan using plan assets.
If trust assets are treated as plan assets, a prohibited transaction could
result if the trust itself engages in a transaction with a party in interest for
the benefit plan. For example, if the trust holds a receivable that is an
obligation of a benefit plan participant, there would be a prohibited extension
of credit between the benefit plan and a party in interest (the participant).
As a result, if trust assets are treated as plan assets, there would be a
significant risk of a prohibited transaction. Moreover, the PTCEs referred to
above could not be relied on to exempt all the trust's transactions from the
prohibited transaction rules. In addition, because all the assets of the trust
would be treated as plan assets, managers of those assets might become subject
to the fiduciary responsibility rules of ERISA.
Under an exemption in the plan asset regulations, trust assets would not be
considered plan assets, and so this risk of prohibited transactions would not
arise, if a benefit plan purchased a certificate that was a "publicly offered
security." To qualify for the exemption, a certificate must be
o freely transferable,
o registered under the Securities Exchange Act of 1934, and
o owned by at least 100 investors independent of the issuer and of one
another at the conclusion of the initial offering.
This test is applied separately to each series or class of certificates.
We expect that all the certificates will be freely transferable and will satisfy
this registration requirement. However, it is possible that certificates of some
classes will not satisfy the 100-investor requirement of the exemption. A
significant risk of prohibited transactions could arise if a benefit plan
acquired those certificates.
Investment by benefit plan investors
- ------------------------------------
For the reasons described in the preceding sections, benefit plans can purchase
certificates of a particular class if Universal Bank notifies the trustee that
Universal Bank expects the certificates of that class to be held by at least 100
separately named persons at the conclusion of the offering. A copy of this
notice will be available from the trustee at its Corporate Trust Department. If
your series is not divided into classes, the notice will be based on your series
as a whole.
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However, even if this notice is provided and benefit plans are permitted to
purchase certificates, benefit plan fiduciaries should note that:
o This notice will be based on information provided to Universal Bank by an
underwriter or other selling agent. Universal Bank will not independently
make this determination.
o Neither Universal Bank nor any underwriter or selling agent will determine
whether the named persons are independent of the issuer or of one another.
This is a requirement of the exemption under the plan asset regulation.
o The fiduciary of the benefit plan must ultimately determine whether the
requirements of the plan asset regulation are satisfied. More generally,
the fiduciary must determine whether the benefit plan's investment in
certificates will result in one or more nonexempt prohibited transactions
or otherwise violate the provisions of ERISA or the Internal Revenue Code.
Because of the risk of prohibited transactions if trust assets are considered to
be plan assets, unless the notice described above is provided:
o the trust will not permit benefit plans to purchase certificates, and
o each certificate owner will be deemed to represent and warrant to the
trust that it is not a benefit plan and has not purchased the certificates
on behalf of a benefit plan or with assets of a benefit plan.
Tax consequences to benefit plans
- ---------------------------------
In general, assuming the certificates are debt for federal income tax purposes,
interest income on certificates would not be taxable to benefit plans that are
tax-exempt under the Internal Revenue Code, unless the certificates are "debt
financed property" under the Internal Revenue Code. However, if (contrary to the
opinion of tax counsel) the certificates are equity interests in a partnership
for federal income tax purposes, and other certificates issued by the trust are
debt for federal income tax purposes, then all or part of the interest income on
the certificates would be taxable to the benefit plan as debt financed income.
Benefit plans should consult their tax advisors concerning the tax consequences
of purchasing certificates.
PLAN OF DISTRIBUTION
Universal Bank may sell certificates
o through underwriters or dealers,
o directly to one or more purchasers, or
o through agents.
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The prospectus supplement describes the terms of the offering, including the
names of any underwriters or agents, the purchase price of the offered
certificates and the proceeds to Universal Bank from the sale of the
certificates, the underwriting discounts and other components of the
underwriters' compensation, the initial public offering price and the discounts
or concessions allowed or reallowed or paid to dealers.
If Universal Bank uses underwriters in a sale of the certificates, the
underwriters will acquire the certificates for their own account and may resell
the certificates in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of
sale or at the time of commitment for sale. The certificates may be offered to
the public either through underwriting syndicates represented by managing
underwriters or by underwriters without a syndicate. Unless otherwise stated in
the prospectus supplement, the obligations of the underwriters to purchase the
certificates will be subject to customary closing conditions, and the
underwriters will be obligated to purchase all of the certificates if they
purchase any certificates. Any initial public offering price and discounts or
concessions allowed or reallowed or paid to dealers may be changed.
Universal Bank may sell certificates directly or through agents it designates.
Each agent involved in the offer or sale of certificates will be named, and any
commissions payable by Universal Bank to the agent will be set forth, in the
prospectus supplement. Unless otherwise stated in the prospectus supplement,
each agent will act on a best efforts basis for the period of its appointment.
Each underwriter, agent or dealer participating in the distribution of
certificates may be deemed to be an "underwriter," and any discounts or
commissions received by an agent on the sale or resale of certificates may be
deemed to be underwriting discounts and commissions, under the Securities Act of
1933. Agents and underwriters may be entitled under agreements entered into with
Universal Bank to indemnification by Universal Bank against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribution with respect to payments that the agents or underwriters may be
required to make in respect of those liabilities.
Underwriters and agents may engage in transactions with, or perform services
for, Universal Bank and UCS or their affiliates in the ordinary course of
business.
Affiliates of Universal Bank may act as underwriters or agents in the sale of
the certificates. These affiliates may also act as principal or agent in
market-making transactions in the certificates. The prospectus supplement will
name any affiliate acting as an underwriter or agent in the sale of the
certificates and describe that affiliate's relationship to Universal Bank. This
prospectus may be used by affiliates of Universal Bank in connection with offers
and sales related
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to market-making transactions in the certificates. These sales will be made at
prices related to prevailing market prices at the time of sale.
USE OF PROCEEDS
The net proceeds from the sale of the certificates of this series will be paid
to Universal Bank. Universal Bank will use the proceeds primarily for general
corporate purposes.
WHERE YOU CAN FIND MORE INFORMATION
Reports available from the trustee
- ----------------------------------
By March 31 in each year, UCS will have a nationally recognized accounting firm
report to the trustee, with copies to the rating agencies, that
o the firm has applied procedures agreed upon with UCS and has examined
documents and records relating to the servicing of the accounts,
o on the basis of those procedures, nothing has come to the firm's attention
that caused it to believe that the servicing was not conducted in
compliance with the pooling and servicing agreement, except for exceptions
that the firm believes to be immaterial and any other exceptions set forth
in the report, and
o the firm has applied procedures agreed upon with UCS to compare the
mathematical calculation of amounts in the UCS report of distributions
referred to in the preceding section with UCS' computer records, and that
the firm is of the opinion that the amounts are in agreement, except for
exceptions that the firm believes to be immaterial and any other exceptions
set forth in the report.
These reports, which need not be prepared by the same accounting firm, will
describe the agreed-upon procedures performed. The accounting firms may also
render other services to UCS or Universal Bank and any of their affiliates.
By March 31 of each year, UCS will deliver to the trustee a statement signed by
an officer of UCS that UCS has, or has caused to be, performed all its material
obligations under the pooling and servicing agreement throughout the preceding
year or, if there has been a default in the performance of an obligation,
specifying the nature and status of the default.
You may obtain copies of any of these reports and statements by written request
to the trustee's Corporate Trust Office, Four Albany Steet, New York, NY 10006.
Early in each month, UCS will prepare
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o a statement of payments to be made on the following distribution day to
the investors of your series, and
o an officer's certificate as to UCS's compliance with the pooling and
servicing agreement.
UCS will send the statement and the certificate to the trustee, the trustee's
paying agent, each rating agency and the holders of interests other than the
certificates. You can obtain a copy of any of these monthly reports or
certificates by written request to the trustee's Corporate Trust Office.
SEC reports
- -----------
A registration statement relating to the certificates was filed with the
Securities and Exchange Commission (the SEC). This prospectus is part of the
registration statement, but the registration statement includes additional
information.
The servicer will file with the SEC all required annual, monthly and special SEC
reports and other information about the trust.
You may read and copy any reports, statements or other information filed at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
You can request copies of these documents, upon payment of a duplicating fee, by
writing to the SEC. Please call the SEC at (800) SEC-0330 for further
information on the operation of the public reference rooms. SEC filings are also
available to the public on the SEC internet site (http://www.sec.gov).
The SEC permits the "incorporation by reference" of information filed with it,
which means that important information can be disclosed to you by referring you
to those documents. The information incorporated by reference is considered to
be part of this prospectus. Information that is filed later with the SEC will
automatically update the information in this prospectus. In all cases, you
should rely on the later information over different information included in this
prospectus or the accompanying prospectus supplement. Any future annual, monthly
and special reports for the SEC and proxy materials filed by or on behalf of the
trust are incorporated by reference until the offering of the certificates is
terminated and no broker-dealer affiliate of Universal Bank or UCS is making a
market in the certificates.
You may request a copy of any document incorporated by reference, except
exhibits to the documents (unless the exhibits are specifically incorporated by
reference), at no cost, by writing to: Universal Card Services Corp., 8787
Baypine Road, Jacksonville, Florida 32256, Attention: Thomas Donahue. Telephone
requests for such copies should be directed to Mr. Donahue at (904) 954-7500.
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DEFINED TERMS
additional transferor, 49
adjusted invested amount, 6
adjustments, 28
AT&T Universal Card, 26
backup withholding, 55
base rate, S-17
beneficial owner, 43
benefit plan, 58
book-entry certificates, 43
cardmember accounts, 3
Cedelbank, 44
certificate holder, 3
certificate owner, 43
classes, 2
clean-up call, 9
collateral interest, 2
collection account, 31
controlled accumulation amount, 4
controlled accumulation period, 4
controlled amortization period, 5
core prospectus, S-5
credit enhancement, 9
de minimis OID, 52
distribution day, 19
DTC, 43
early accumulation period, 7
early amortization period, 7
eligible account, 27
eligible investments, 31
eligible receivable, 27
eligible servicer, 42
ERISA, 58
Euroclear, 44
excess allocation series, 22
excess finance charge collections, 22
FDIC, 16
finance charge receivable, 4
finance charge shortfall, S-12
interchange, 39
interest funding account, 19
invested amount, 2
investors, 3
IRS, 51
LIBOR, 36
NASD, 45
non-US certificate owner, 56
OID, 52
participation interests, 28
party in interest, 59
pay out events, 7
plan asset regulation, 60
plan assets, 58
pooling and servicing agreement, 15
principal funding account, 4
principal receivable, 4
principal sharing series, 22
principal shortfall, S-15
prohibited transactions, 59
prospectus supplement, S-5
PTCE, 59
reallocation group, 21
receivable, 3
record date, 3
registered holder, 43
reinvestment events, 7
required amount of principal receivables, 8
reserve account, 21
revolving period, 4
scheduled final payment date, 5
scheduled principal payment date, 5
65
<PAGE>
SEC, 64
securities intermediaries, 44
series, 2
series adjusted portfolio yield S-17
series supplement, 47
series termination date, 5
servicer, 5
special funding account, 8
tax counsel, 52
tax opinion, 23
trust, 2
UCS, 5
US certificate owner, 53
66
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses to be incurred by
the Registrants in connection with the offering of the securities being offered
hereunder, other than underwriting discounts and commissions.
Registration Fee.................................. $ 905,724 **
Printing and Engraving Fees....................... 480,000 *
Trustee's Fees and Expenses....................... 10,000 *
Legal Fees and Expenses........................... 450,000 *
Accountants' Fees and Expenses.................... 120,000 *
Blue Sky Fees and Expenses........................ 120,000 *
Stock Exchange Listing Fees....................... 60,000 *
Rating Agency Fees................................ 1,650,000 *
Miscellaneous..................................... 100,000 *
Total.......................................... $ 3,895,724
===========
------------------------
* Estimated
** Actual
ITEM 15. Indemnification of Directors and Officers.
Article TENTH of the Articles of Association of Universal Bank provides
for the indemnification of Universal Bank's directors and officers to the
fullest extent permitted by the Georgia Business Corporation Code ("GBCC").
Article TENTH, however, also provides that Universal Bank will not indemnify any
director or officer for any expenses, penalties or other payments incurred in an
administrative proceeding or action instituted by an appropriate bank regulatory
agency which results in a final order assessing civil money penalties or
requiring affirmative action by an individual or individuals in the form of
payments to Universal Bank.
Section 851(a) of the GBCC empowers a corporation to an indemnify any
person who is or was a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative or
investigative by reason of the fact that he or she is or was a director, against
all obligations to pay a judgment, settlement, penalty, fine (including an
excise tax assessed with respect to an employee benefit plan), or reasonable
expenses (including counsel fees) incurred in such proceedings if:
(1) Such individual conducted himself or herself in good faith; and
(2) Such individual reasonably believed:
(A) In the case of conduct in his or her official capacity, that
such conduct was in the best interests of the corporation;
(B) In all other cases, that such conduct was at least not opposed
to the best interests of the corporation; and
(C) In the case of any criminal proceeding, that the individual
had no reasonable cause to believe such conduct was unlawful.
Section 852 of the GBCC further provides that a corporation is obligated to
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding referred to in subsection (a) of Section 851 to
which he or she was a party because he or she was a director of the corporation,
against reasonable expenses (including attorneys' fees) incurred by the director
in connection with the proceeding.
II-1
<PAGE>
Section 851(d) of the GBCC prohibits a corporation from indemnifying a
director in connection with a proceeding by or in the right of the corporation
(except for reasonable expenses incurred in connection with the proceeding if it
is determined that the director has met the relevant standard of conduct under
subsection (a)), or in connection with any proceeding with respect to conduct
for which he or she was adjudged liable on the basis that personal benefit was
improperly received by him or her, whether or not involving action in his or her
official capacity.
The GBCC also empowers a corporation to an indemnify and advance
expenses to an officer who is or was a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative or investigative by reason of the fact that he or she is or was an
officer of the corporation, to the same extent as a director, except for
liability arising out of conduct that constitutes:
(1) appropriation, in violation of his or her duties, of any business
opportunity of the corporation;
(2) acts or omissions which involve intentional misconduct or a knowing
violation of law;
(3) liability for unlawful distributions as set forth in Section 832 of
the GBCC; or
(4) receipt of an improper personal benefit.
An officer of a corporation who is not a director is also entitled to mandatory
indemnification under Section 852 of the GBCC, and may apply to a court for
indemnification or advances for expenses, in each case to the same extent to
which a director may be entitled to indemnification or advances for expenses
under those provisions.
Article IX of the By-Laws of Universal Card Services Corp. ("UCS")
provides for the indemnification of UCS's directors and officers to the fullest
extent permitted by the Delaware General Corporation Law ("DGCL").
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in
right of the corporation to procure a judgment in its favor by reason of the
fact that such person acted in any of the capacities set forth above, against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper. Section 145 of the DGCL further provides that to
the extent a director or officer of a corporation has been successful on the
merits or otherwise in the defense of any action, suit or proceeding referred to
in subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; that
indemnification provided for by Section 145 shall, unless otherwise provided
when authorized and ratified, continue as to such person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of such
person's heirs, executors and administrators; and empowers the corporation to
purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him and incurred by him in
any such capacity, or arising out
II-2
<PAGE>
of his status as such, whether or not the corporation would have the power to
indemnify him against such liabilities under Section 145.
The directors and officers of Universal Bank and UCS are covered by
insurance policies indemnifying them against certain liabilities, including
certain liabilities arising under the Securities Act, which might be incurred by
them in such capacities and against which they cannot be indemnified by
Universal Bank or UCS. Any agents, dealers or underwriters who execute any
underwriting or distribution agreement relating to securities offered pursuant
to this Registration Statement will agree to indemnify Universal Bank's and
UCS's directors and their officers who signed the Registration Statement against
certain liabilities that may arise under the Securities Act with respect to
information furnished to Universal Bank, UCS or the Trust by or on behalf of
such indemnifying party.
For the undertaking with respect to indemnification, see Item 17
herein.
ITEM 16. Exhibits.
(a) Exhibits.
* 1.1 Form of Class A Underwriting Agreement.
* 1.2 Form of Class B Underwriting Agreement.
* 4.1 Amended and Restated Pooling and Servicing Agreement dated as
of April 24, 1998, including certain other related agreements
as exhibits thereto (incorporated by reference to Exhibit 4 of
Form 8-K dated April 2, 1998 filed by Universal Bank, N.A., on
behalf of Universal Card Master Trust (formerly AT&T Universal
Card Master Trust) on April 6, 1998.
* 4.2 Form of Series Supplement, including form of Certificates.
* 4.3 Citibank Servicing Guarantee dated April 24, 1998, issued to
Trustee.
* 5.1 Opinion of Marla Berman Lewitus, Esq., Assistant General
Counsel of Citigroup Inc. with respect to legality.
* 8.1 Opinion of Cravath, Swaine & Moore with respect to tax
matters.
* 23.1 Consent of Marla Berman Lewitus, Esq. (included in Exhibit
5.1).
* 23.2 Consent of Cravath, Swaine & Moore (included in Exhibit 8.1).
** 24.1 Powers of Attorney of Universal Bank, N.A.
* 24.2 Powers of Attorney of Universal Card Services Corp. (included
on page II-8)
* Filed herewith.
** Previously filed.
(b) Financial Statements
All financial statements, schedules and historical information have
been omitted as they are not applicable.
ITEM 17. Undertakings.
The undersigned Registrants on behalf of the Universal Card Master
Trust (the "Trust") hereby undertake as follows:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
II-3
<PAGE>
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this 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 this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that (a(1)(i) and (a)(1)(ii) will not apply if the
information required to be included in a post-effective amendment
thereby is contained in periodic reports filed pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering hereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Trust's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15
above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the 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.
(d)(1) 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.
II-4
<PAGE>
(2) 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.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3, reasonably believes that the
security rating requirement contained in Transaction Requirement B.5 of Form S-3
will be met by the time of sale of the securities registered hereunder, and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbus, State of Georgia, on
June 29, 1999.
UNIVERSAL BANK, N.A.
As transferor of the Trust and Registrant
By: /s/ Meridith A. Jarrell
-------------------------------
Name: Meridith A. Jarrell
Title: President and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on June 29, 1999 by the following
persons in the capacities indicated.
Signature Title
--------- -----
/s/ Meridith A. Jarrell
-------------------------------- President and Chief Operating
Name: Meridith A. Jarrell Officer and Director
(Principal Executive Officer)
* Chief Financial Officer,
-------------------------------- Treasurer and Controller
Name: Kim M. Rogers (Principal Financial Officer and
Principal Accounting Officer)
* Director
--------------------------------
Name: Frederick A. Caldwell
* Director
--------------------------------
Name: Thomas A. Cochran, Jr.
* Director
--------------------------------
Name: Rebecca K. Yarbrough
* By: /s/ Meridith A. Jarrell
--------------------------------
Name: Meridith A. Jarrell
Title: Attorney-in-Fact
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3, reasonably believes that the
security rating requirement contained in Transaction Requirement B.5 of Form S-3
will be met by the time of sale of the securities registered hereunder, and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Jacksonville, State of Florida, on
June 29, 1999.
UNIVERSAL CARD MASTER TRUST
As issuer of the securities and Registrant
By: UNIVERSAL CARD SERVICES CORP.
As servicer of Universal Card Master
Trust
By: /s/ Thomas F. Donahue
-------------------------------
Name: Thomas F. Donahue
Title: Treasurer
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3, reasonably believes that the
security rating requirement contained in Transaction Requirement B.5 of Form S-3
will be met by the time of sale of the securities registered hereunder, and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Jacksonville, State of Florida, on
June 29, 1999.
UNIVERSAL CARD SERVICES CORP.
As transferor of the Trust and Registrant
By: /s/ Richard J. Garside
-------------------------------
Name: Richard J. Garside
Title: President and Chief Executive Officer
POWERS OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard J. Garside, Michael Gehlen,
Thomas F. Donahue and Charles E. Wainhouse, and each of them, his or her true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for and in his or her own name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this Registration Statement and any or all other documents in connection
therewith, and to file the same, with all exhibits thereto, with the Securities
and Exchange Commission, granting unto said persons authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as might or could be done in
person, hereby ratifying and confirming all said attorneys-in-fact and agents or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on June 29, 1999 by the following
persons in the capacities indicated.
Signature Title
--------- -----
/s/ Richard J. Garside President and Chief Executive
-------------------------------- Officer
Name: Richard J. Garside (Principal Executive Officer)
/s/ Terence S. Finkelstein Vice President
-------------------------------- (Principal Accounting Officer)
Name: Terence S. Finkelstein
/s/ Michael Gehlen Vice President and
-------------------------------- Chief Financial Officer
Name: Michael Gehlen (Principal Financial Officer)
/s/ Richard J. Garside Director
--------------------------------
Name: Richard J. Garside
/s/ Micahel Gehlen Director
--------------------------------
Name: Michael Gehlen
II-8
<PAGE>
EXHIBIT INDEX
* 1.1 Form of Class A Underwriting Agreement.
* 1.2 Form of Class B Underwriting Agreement.
* 4.1 Amended and Restated Pooling and Servicing Agreement dated as
of April 24, 1998, including certain other related agreements
as exhibits thereto (incorporated by reference to Exhibit 4 of
Form 8-K dated April 2, 1998 filed by Universal Bank, N.A., on
behalf of Universal Card Master Trust (formerly AT&T Universal
Card Master Trust) on April 6, 1998.
* 4.2 Form of Series Supplement, including form of Certificates.
* 4.3 Citibank Servicing Guarantee dated April 24, 1998, issued to
Trustee.
* 5.1 Opinion of Marla Berman Lewitus, Esq., Assistant General
Counsel of Citigroup Inc. with respect to legality.
* 8.1 Opinion of Cravath, Swaine & Moore with respect to tax
matters.
* 23.1 Consent of Marla Berman Lewitus, Esq. (included in Exhibit
5.1).
* 23.2 Consent of Cravath, Swaine & Moore (included in Exhibit 8.1).
** 24.1 Powers of Attorney of Universal Bank, N.A.
* 24.2 Powers of Attorney of Universal Card Services Corp. (included
on page II-8)
* Filed herewith.
** Previously filed.
UNIVERSAL BANK, N.A.
Class A Credit Card Participation Certificates, Series 1999-[ ]
Universal Bank Card Master Trust
[ ]% Certificate Rate
CLASS A UNDERWRITING AGREEMENT
[ ], 1999
[ ]
as Representative of the Several Underwriters,
[ ]
[ ]
Ladies and Gentlemen:
Universal Bank, N.A. (the "Bank"), has conveyed and proposes
to continue to convey the Receivables arising from certain consumer revolving
credit card accounts and other rights to the Universal Card Master Trust (the
"Trust"), and proposes to cause the Trust to sell to the underwriters named in
Schedule I hereto (the "Underwriters"), for whom you are acting as
representative (the "Representative"), $[ ] aggregate principal amount of [ ]%
Class A Asset Backed Certificates, Series 1999-[ ] (the "Class A Certificates")
in the Trust. It is understood that the Bank is concurrently entering into a
Class B Underwriting Agreement dated the date hereof (the "Class B Underwriting
Agreement") among the Bank and the underwriters named in Schedule I thereto (the
"Class B Underwriters"), providing for the sale of $[ ] aggregate principal
amount of [ ]% Class B Asset Backed Certificates, Series 1999-[ ] (the "Class B
Certificates"). The Class A Certificates and the Class B Certificates are
referred to herein collectively as the "Certificates".
The Receivables have been and will be conveyed by the Bank to
the Trust and the Certificates will be issued pursuant to the Amended and
Restated Pooling and Servicing Agreement, dated as of April 24, 1998 (the
"P&S"), among the Bank, as Seller, Universal Card Services Corp. ("UCS"), as
Servicer, and Bankers Trust Company, as trustee (the "Trustee"), and the Series
1999-[ ] Supplement to the Pooling and Servicing Agreement, to be dated as of
the Closing Date (as defined in Section 3 below) (the "Supplement"), among the
Bank, as Seller, UCS, as Servicer, and
1
<PAGE>
the Trustee. The P&S and the Supplement are referred to herein collectively as
the "Pooling and Servicing Agreement". The Class A Certificates will represent
undivided interests in certain assets of the Trust and will be sold pursuant to
this Agreement. The Trust will also issue $[ ] aggregate principal amount of
Class B Certificates which will be sold pursuant to the Class B Underwriting
Agreement. This Agreement and the Class B Underwriting Agreement are referred to
herein collectively as the "Underwriting Agreements". In addition, the Bank, as
Seller, UCS, as Servicer, the Trustee and [ ], as agent for the Collateral
Interest Holder (the "Agent"), acting by and through its New York branch (the
"Branch"), will enter into a Loan Agreement to be dated as of the Closing Date
(the "Loan Agreement") pursuant to which the purchaser of the Collateral
Interest (the "Collateral Interest Holder") will purchase $[ ] aggregate initial
principal amount of Collateral Interest (the "Collateral Interest").
Capitalized terms used herein without definition shall have
the meanings set forth in the Supplement.
Section 1. Representations and Warranties of the Bank. The
Bank represents and warrants to, and agrees with, each Underwriter as set forth
in this Section 1. Certain terms used in this Section 1 are defined in paragraph
(a) below.
(a) The Bank meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
(Registration No. 333-9309) on such Form, including a related preliminary
prospectus, for registration under the Act of the offering and sale of the Class
A Certificates. The Bank may have filed one or more amendments thereto,
including the related preliminary prospectus, each of which amendments has
previously been furnished to the Underwriters. The Bank will next file with the
Commission a final basic prospectus and final prospectus supplement relating to
the Class A Certificates in accordance with Rules 415 and 424(b)(2) or (5) under
the Act. The Bank has included in such registration statement, as amended at the
Effective Date, all information required by the Act and the rules thereunder to
be included in such registration statement. As filed, such amendment and form of
final prospectus supplement, or such final basic prospectus or final prospectus
supplement, shall include all such required information, with respect to the
Class A Certificates and the offering thereof and, except to the extent the
Underwriters shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to the Underwriters prior to the
Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest preliminary prospectus that has previously been
furnished to the Underwriters) as the Bank has advised the
2
<PAGE>
Underwriters, prior to the Execution Time, will be included or made therein. If
the Registration Statement contains the undertakings specified by item 512(a) of
Regulation S-K, the Registration Statement, at the Execution Time, meets the
requirements set forth in Rule 415(a)(1)(x).
The terms that follow, when used in this Agreement, shall
have the meanings indicated. The term "Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "Execution Time" shall mean the date and
time that this Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
the preceding paragraph. "Basic Prospectus" shall mean the prospectus referred
to above contained in the Registration Statement at the Effective Date.
"Prospectus" shall mean the prospectus supplement relating to the Class A
Certificates that is first filed pursuant to Rule 424(b) after the Execution
Time, together with the Basic Prospectus (as such Basic Prospectus may have been
amended and together with any supplements thereto) or, if no filing pursuant to
Rule 424(b) is required, shall mean the prospectus supplement relating to the
Class A Certificates, including the Basic Prospectus, included in the
Registration Statement at the Effective Date. "Registration Statement" shall
mean the registration statement referred to in the preceding paragraph and any
registration statement required to be filed under the Act or rules thereunder,
including incorporated documents, exhibits and financial statements, in the form
in which it has or shall become effective and, in the event any post-effective
amendment thereto becomes effective prior to the Closing Date, shall also mean
such registration statement as so amended. "Rule 424","Rule 415" and "Regulation
S-K" refer to such rules or regulations under the Act. Any reference herein to
the Registration Statement, the Basic Prospectus or Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 which were filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus or Prospectus,
as the case may be; and any reference herein to the terms "amend", "amendment"
or "supplement" with respect to the Registration Statement, the Basic Prospectus
or Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act after the Effective Date of the Registration Statement,
or the issue date of the Basic Prospectus or Prospectus, as the case may be,
deemed to be incorporated therein by reference.
(b) On the Effective Date, the Registration Statement did or
will comply in all material respects with the applicable requirements of the Act
and the rules thereunder; on the Effective Date and when the Prospectus is first
filed (if required) in accordance with Rule 424(b) and on the Closing Date,
3
<PAGE>
the Prospectus (as amended and together with any supplements thereto) will
comply in all material respects with the applicable requirements of the Act and
the rules thereunder; on the Effective Date, the Registration Statement did not
or will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date, the Prospectus,
if not filed pursuant to Rule 424(b), did not or will not, and on the date of
any filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus (as
amended and together with any supplements thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Bank makes no
representations or warranties as to the information contained in or omitted from
the Registration Statement or the Prospectus (or any supplements thereto) in
reliance upon and in conformity with information furnished in writing to the
Bank by or on behalf of any Underwriter specifically for use in connection with
the preparation of the Registration Statement or the Prospectus (or any
supplements thereto).
(c) The Bank is an association duly organized, validly
existing and in good standing as a licensed national banking association under
the laws of the United States, and has all requisite power and authority to own
its properties and conduct its business as presently conducted and to execute,
deliver and perform this Agreement, to authorize the issuance of the
Certificates and to consummate the transactions contemplated hereby.
(d) The execution, delivery and performance by the Bank of the
Underwriting Agreements, the Pooling and Servicing Agreement, the Loan
Agreement, the Depository Agreement, and the issuance of the Certificates and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary action or proceedings.
(e) This Agreement has been duly executed and delivered by the
Bank.
(f) The Bank has authorized the conveyance of the Receivables
to the Trust, and the Bank has authorized the Trust to issue and sell the
Certificates.
(g) The Bank has delivered to the Underwriters complete and
correct copies of (i) publicly available portions of the Consolidated Reports of
Condition and Income of the Bank for the years ended December 31, 1997 and 1998,
as submitted to the Comptroller of the Currency; and (ii) the December 31, 1996,
1997 and 1998, audited consolidated balance sheets of Citicorp (parent of the
Bank) which are included in Citicorp's 1998 Annual Report
4
<PAGE>
on Form 10-K. Except as set forth in or contemplated in the Registration
Statement and the Prospectus, there has been no material adverse change in the
condition (financial or otherwise) of the Bank since December 31, 1998.
(h) Any taxes, fees and other governmental charges in
connection with the execution, delivery and performance of this Agreement, the
Pooling and Servicing Agreement, the Loan Agreement and the Certificates, shall
have been paid or will be paid by the Bank at or prior to the Closing Date to
the extent
then due.
(i) The Certificates have been duly and validly authorized.
The Certificates, when validly authenticated, issued and delivered in accordance
with the Pooling and Servicing Agreement and sold to the Underwriters as
provided herein and to the Class B Underwriters pursuant to the Class B
Underwriting Agreement, will conform in all material respects to the
descriptions thereof contained in the Prospectus and will be validly issued and
outstanding and entitled to the benefits of the Pooling and Servicing Agreement.
Section 2. Purchase and Sale. Subject to the terms and
conditions and in reliance upon the covenants, representations and warranties
herein set forth, the Bank agrees to cause the Trust to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase, the respective initial principal amount of Class A Certificates set
forth opposite such Underwriter's name in Schedule I hereto. The purchase price
for the Class A Certificates shall be equal to [ ]% of the aggregate initial
principal amount of the Class A Certificates.
Section 3. Delivery and Payment. Delivery of and payment for
the Class A Certificates shall be made at the offices of [ ], 1999, at 10:00
a.m., New York City time, on [ ], 1999, or at such later date (not later than [
], 1999) as the Underwriters shall designate, which date and time may be
postponed by agreement between the Underwriters and the Bank (such date and time
of delivery and payment for the Class A Certificates being referred to herein as
the "Closing Date"). Delivery of one or more global certificates representing
the Class A Certificates shall be made to the accounts of the several
Underwriters against payment by the several Underwriters of the purchase price
therefor to or upon the order of the Bank by one or more wire transfers or
checks in Federal (same day) Funds. The global certificates to be so delivered
shall be registered in the name of Cede & Co., as nominee for The Depository
Trust Company ("DTC"). The interests of beneficial owners of the Class A
Certificates will be represented by book entries on the records of DTC and
participating members thereof. Definitive Class A Certificates
5
<PAGE>
representing the Class A Certificates will be available only
under limited circumstances.
The Bank agrees to have the global certificates or the
Definitive Class A Certificates available for inspection, checking and packaging
by the Underwriters in New York, New York, not later than 1:00 p.m., New York
City time, on the business day prior to the Closing Date.
Section 4. Offering by Underwriters. (a) It is
understood that the Underwriters propose to offer the Class A
Certificates for sale to the public as set forth in the
Prospectus.
(b) Each Underwriter agrees that if it is a foreign broker or
dealer not eligible for membership in the National Association of Securities
Dealers, Inc. (the "NASD"), it will not effect any transaction in the Class A
Certificates within the United States or induce or attempt to induce the
purchase of or sale of the Class A Certificates within the United States, except
that it shall be permitted to make sales to the other Underwriters or to its
United States affiliates; provided that such sales are made in compliance with
an exemption of certain foreign brokers or dealers under Rule 15a-6 under the
Exchange Act, and in conformity with the Rules of Fair Practice of the NASD as
such Rules apply to non-NASD brokers or dealers.
(c) Each Underwriter represents and agrees that (i) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Class A
Certificates in, from or otherwise involving the United Kingdom; (ii) it has
only issued, distributed or passed on and will only issue, distribute 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 or persons to whom such document may otherwise lawfully
be issued, distributed or passed on; (iii) if it is an authorized person under
Chapter III of Part I of the Financial Services Act 1986, it has only promoted
and will only promote (as that term is defined in Regulation 1.02(2) of the
Financial Services (Promotion of Unregulated Schemes) Regulations 1991) to any
person in the United Kingdom the scheme described in the Prospectus if that
person is of a kind described either in section 76(2) of the Financial Services
Act 1986 or in Regulation 1.04 of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991; and (iv) it is a person of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996.
6
<PAGE>
Section 5. Agreements. The Bank covenants and agree
with the Underwriters that:
(a) The Bank will use its best efforts to cause the
Registration Statement, and any amendment thereto, if not effective at the
Execution Time, to become effective. If filing of the Prospectus is required
under Rule 424(b), the Bank will file the Prospectus, properly completed, and
any supplement thereto, pursuant to Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Underwriters of such
timely filing. The Bank will promptly advise the Underwriters (i) when the
Registration Statement, and any amendment thereto, if not yet effective at the
Execution Time, shall have become effective, (ii) when the Prospectus, and any
supplement thereto, shall have been filed with the Commission pursuant to Rule
424(b), (iii) of any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or threat of
any proceeding for that purpose and (v) of the receipt by the Bank of any
notification with respect to the suspension of the qualification of the Class A
Certificates for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Bank will not file any amendment of the
Registration Statement or supplement to the Prospectus unless a copy has been
furnished to the Underwriters, for review by the Underwriters prior to such
filing if the Underwriters shall have not yet completed their distribution of
the Certificates, and after such filing if the Underwriters shall have completed
their distribution of the Certificates. The Bank will use its reasonable efforts
to prevent the issuance of any such stop order and, if issued, to obtain as soon
as possible the withdrawal thereof.
(b) If, at any time when a Prospectus relating to the
Certificates is required to be delivered under the Act, any event occurs as a
result of which such Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in light of the circumstances under which they were
made not misleading, or if it shall be necessary to supplement such Prospectus
to comply with the Act or the Exchange Act or the respective rules thereunder,
the Bank promptly will prepare and file with the Commission, subject to
paragraph (a) of this Section 5, a supplement that will correct such statement
or omission or an amendment that will effect such compliance.
(c) As soon as practicable, and in no case later than 16
months after the Closing Date, the Bank will make generally available to
Certificateholders and to the Underwriters an earnings statement or statements
of the Trust that will satisfy
7
<PAGE>
the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(d) The Bank will furnish to the Underwriters and counsel to
the Underwriters, without charge, conformed copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of each
Preliminary Prospectus and the Prospectus and any supplement thereto as the
Underwriters may reasonably request.
(e) The Bank will pay all expenses incidental to the
performance of its obligations under this Agreement, including, without
limitation, (i) expenses of preparing, printing and reproducing the Registration
Statement, the Prospectus, this Agreement, the Pooling and Servicing Agreement,
the Loan Agreement, the Depository Agreement and the Class A Certificates, (ii)
any fees charged by any rating agency for the rating of the Class A
Certificates, (iii) any expenses (including reasonable fees and disbursements of
counsel) incurred by the Underwriters in connection with qualification of the
Class A Certificates for sale under the laws of such jurisdictions as the
Underwriters designate, (iv) reasonable fees and expenses of Cravath, Swaine &
Moore in its role as special Federal tax and ERISA counsel for the Bank and the
Trust, (v) any expenses incurred by the Underwriters in connection with listing
the Class A Certificates on the Luxembourg Stock Exchange, (vi) the cost of
delivering the Class A Certificates to the offices of the Underwriters, insured
to the satisfaction of the Underwriters, (vii) the fees and expenses of the
Trustee and its counsel and (viii) the fees and expenses of the Bank's
accountants (it being understood that, except as provided in paragraph (d) and
this paragraph (e) and in Sections 7 and 8 hereof, the Underwriters will pay
their own expenses, including the expense of preparing, printing and reproducing
any agreement among underwriters, the fees and expenses of Cravath, Swaine &
Moore in its role as counsel to the Underwriters, any transfer taxes on resale
of any of the Class A Certificates by them and advertising expenses connected
with any offers that the Underwriters may make).
(f) The Bank will arrange for the qualification of the Class A
Certificates for sale under the laws of such jurisdictions as the Underwriters
may designate, will maintain such qualifications in effect so long as required
for the distribution of the Class A Certificates and will arrange for the
determination of the legality of the Class A Certificates for purchase by
institutional investors.
(g) For so long as the Class A Certificates are outstanding,
the Bank shall deliver to the Underwriters by first-class mail and as soon as
practicable a copy of all reports and notices delivered to the Trustee or the
Certificateholders under the Pooling and Servicing Agreement or to the Agent
under the
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<PAGE>
Loan Agreement, and any other material relating to the Bank or the Trust that is
reasonably available to the Bank and necessary for any Underwriter to deliver a
prospectus in connection with market-making activities as required by the rules
and regulations of the Commission.
(h) For so long as the Class A Certificates are outstanding,
the Bank will furnish to the Underwriters (i) as soon as practicable after the
end of each fiscal year, all documents required to be distributed to Class A
Certificateholders or filed with the Commission and (ii) as soon as practicable
after filing, any other information concerning the Bank filed with any
government or regulatory authority which is otherwise publicly available, as the
Underwriters may reasonably request. The Bank will register the Certificates
under the Exchange Act within 120 days after the end of the fiscal year of the
Trust during which the offering of the Certificates to the public occurred.
(i) To the extent, if any, that any rating provided with
respect to the Class A Certificates set forth in Section 6(m) hereof is
conditional upon the furnishing of documents reasonably available to the Bank,
the Bank shall furnish such documents.
Section 6. Conditions of Underwriters' Obligation. The
obligation of the Underwriters to purchase and pay for the Class A Certificates
on the Closing Date shall be subject to the accuracy of the representations and
warranties of the Bank contained herein as of the Execution Time and the Closing
Date, to the accuracy of the statements of the Bank made in any certificates
delivered pursuant to the provisions hereof, to the performance by the Bank of
its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Underwriters shall agree in writing to a
later time, the Registration Statement shall have become effective not later
than (i) 6:00 p.m. New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 p.m. New York
City time on such date or (ii) 12:00 noon on the business day following the day
on which the public offering price was determined, if such determination
occurred after 3:00 p.m. New York City time on such date; if filing of the
Prospectus, or any supplements thereto, is required pursuant to Rule 424(b), the
Prospectus, and any supplements thereto, shall have been filed in the manner and
within the time period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
9
<PAGE>
(b) The Bank shall have delivered to the Underwriters a
certificate, dated the Closing Date, signed by its Chairman of the Board,
President, Vice Chairman of the Board, Executive Vice President, Senior Vice
President, Vice President, principal financial officer, principal accounting
officer, treasurer or cashier to the effect that the signer of such certificate
has carefully examined the Underwriting Agreements, the Pooling and Servicing
Agreement, the Loan Agreement, the Prospectus (and any supplements thereto) and
the Registration Statement and that:
(i) the representations and warranties of the Bank in this
Agreement are true and correct at and as of the Closing Date as if made
on and as of the Closing Date (except to the extent they expressly
relate to an earlier date, in which case the representations and
warranties of the Bank are true and correct as of such earlier date);
(ii) the Bank has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
under this Agreement at or prior to the Closing Date;
(iii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the knowledge of the signer,
threatened; and
(iv) since the date of the most recent financial statements of
the Bank delivered to the Underwriters pursuant to Section 1(g) hereof,
there has been no material adverse change in the condition (financial
or otherwise) of the Bank whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated
in the Registration Statement and the Prospectus.
(c) The Underwriters shall have received from Walter M.
Korchun, Senior Vice President and General Counsel of UCS, a favorable opinion
dated the Closing Date and satisfactory in form and substance to the
Underwriters and counsel to the Underwriters, to the effect that:
(i) UCS has been duly organized as a corporation and is
validly existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing
under the laws of each jurisdiction which requires such qualification
wherein it owns or leases material properties or conducts material
business, and has full corporate power and authority to own its
properties, to conduct its business as described in the Registration
Statement and the Prospectus, to enter into and perform its obligations
under the Underwriting Agreements, the Loan Agreement, the Depository
Agreement and the Pooling and
10
<PAGE>
Servicing Agreement and to perform its obligations and
transactions contemplated hereby and thereby;
(ii) the Pooling and Servicing Agreement, the Loan Agreement,
the Depository Agreement, the Underwriting Agreements and the
Certificates have each been duly authorized, executed and delivered by
the Bank;
(iii) neither the execution nor the delivery of the
Underwriting Agreements, the Pooling and Servicing Agreement, the Loan
Agreement or the Depository Agreement nor the issuance or delivery of
the Certificates, nor the consummation of any of the transactions
contemplated herein or therein, nor the fulfillment of the terms of the
Certificates, the Underwriting Agreements, the Pooling and Servicing
Agreement, the Loan Agreement or the Depository Agreement will conflict
with or violate, result in a material breach of or constitute a default
under (A) any term or provision of the charter or by-laws of UCS or the
Bank or any statute or regulation currently applicable to UCS or the
Bank, (B) any term or provision of any order known to such counsel to
be currently applicable to UCS or the Bank of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over UCS or the Bank, or (C) any term or provision of any indenture or
other agreement or instrument known to such counsel to which UCS or the
Bank is a party or by which UCS or any of their properties are bound;
(iv) except as otherwise disclosed in the Prospectus (and any
supplements thereto) or the Registration Statement, there is no pending
or, to the best knowledge of such counsel, threatened action, suit or
proceeding before any court or governmental agency, authority or body
or any arbitrator with respect to the Trust, the Certificates, the
Pooling and Servicing Agreement, the Underwriting Agreements, the Loan
Agreement or the Depository Agreement or any of the transactions
contemplated herein or therein or with respect to UCS or the Bank
which, in the case of any such action, suit or proceeding with respect
to UCS or the Bank if adversely determined, would have a material
adverse effect on the Certificateholders or the Trust or upon the
ability of UCS or the Bank to perform its obligations under the Pooling
and Servicing Agreement.
(v) no approval, authorization, consent, order, registration,
filing, qualification, license or permit of or with any court or
governmental agency or body is required for the execution and delivery
by UCS or the Bank of the Certificates or any of the transactions
contemplated in the Underwriting Agreements, the Pooling and Servicing
Agreement, the Loan Agreement or the Depository Agreement, except such
as have been obtained under the Act and such as
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<PAGE>
may be required under the blue sky laws of any jurisdiction inside the
United States in connection with the purchase and distribution of the
Certificates by the Underwriters and the Class B Underwriters and such
filings or other approvals (specified in such opinion) as have been
made or obtained;
(d) The Underwriters shall have received from counsel to the
Bank, a favorable opinion dated the Closing Date and satisfactory in form and
substance to the Underwriters and counsel to the Underwriters, to the effect
that:
(i) the Pooling and Servicing Agreement and the Loan Agreement
have each been duly authorized, executed and delivered by the Bank and
each constitutes the legal, valid and binding agreement of the Bank
enforceable in accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally from
time to time in effect and to the application of general principles of
equity);
(ii) the Underwriting Agreements have been duly authorized,
executed and delivered by the Bank;
(iii) the Certificates have been duly authorized and, when
executed and authenticated in accordance with the terms of the Pooling
and Servicing Agreement and in the case of the Class A Certificates
delivered to and paid for by the Underwriters pursuant to this
Agreement, and, in the case of the Class B Certificates, delivered to
and paid for by the Class B Underwriters pursuant to the Class B
Underwriting Agreement, will be validly issued and outstanding,
enforceable in accordance with their terms (subject, as to enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally from
time to time in effect and to the application of general principles of
equity) and will be entitled to the benefits of the Pooling and
Servicing Agreement;
(iv) neither the execution nor the delivery of the
Underwriting Agreements, the Pooling and Servicing Agreement, the Loan
Agreement or the Depository Agreement nor the issuance or delivery of
the Certificates, nor the consummation of any of the transactions
contemplated herein or therein, nor the fulfillment of the terms of the
Certificates, the Underwriting Agreements, the Pooling and Servicing
Agreement, the Loan Agreement or the Depository Agreement will conflict
with or violate, result in a material breach of or constitute a default
under any Federal or New York statute or regulation currently
applicable to the Trust;
12
<PAGE>
(v) no approval, authorization, consent, order, registration,
filing, qualification, license or permit of or with any Federal or New
York court or governmental body or agency is required for the
consummation by the Trust of the transactions contemplated in the
Underwriting Agreements, the Pooling and Servicing Agreement, the
Depository Agreement or the Loan Agreement or in connection with the
issuance of the Certificates, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction inside the United States in connection with the purchase
and distribution of the Class A Certificates by the Underwriters and
the Class B Underwriters and such filings or approvals as have been
made and obtained;
(vi) the Registration Statement has become effective under the
Act; any required filing of the Prospectus or any supplements thereto
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the best knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that purpose have
been instituted or threatened; the Registration Statement and the
Prospectus (and any supplements thereto) (other than financial and
statistical information contained therein as to which such counsel need
express no opinion) comply as to form in all material respects with the
applicable requirements of the Act and the rules thereunder;
(vii) the Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended. The
Trust is not now, and following the sale of the Certificates to the
Underwriters and the Class B Underwriters will not be, required to be
registered under the Investment Company Act of 1940, as amended;
(viii) such counsel has no reason to believe that at the
Effective Date the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus (and any supplements
thereto) includes any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
(other than financial and statistical information contained therein as
to which such counsel need express no opinion);
(ix) the Certificates, the Underwriting Agreements, the Loan
Agreement and the Pooling and Servicing Agreement conform in all
material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus (and any supplements
thereto); and
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<PAGE>
(x) the statements in the Registration Statement under the
heading "Certain Legal Aspects of the Receivables" (other than
"Consumer Protection Laws") to the extent that they constitute
statements of matters of law or legal conclusions with respect thereto,
are correct in all material respects.
In rendering such opinion counsel may rely (A) as to clauses
(i), (ii) and (xi) of this paragraph (d), insofar as they relate to the Bank, on
the opinion of Walter M. Korchun, General Counsel of UCS, (B) as to matters
involving the application of laws other than the General Corporation Law of the
State of Delaware or laws of any jurisdiction other than the State of New York
and the United States, to the extent deemed proper and stated in such opinion,
upon the opinion of other counsel of good standing believed by such counsel to
be reliable and acceptable to the Underwriters and counsel to the Underwriters,
and (C) as to matters of fact, to the extent deemed proper and as stated
therein, on certificates of responsible officers of the Trust, the Bank and
public officials.
(e) The Underwriters shall have received from Cravath, Swaine
& Moore, (i) in its capacity as counsel to the Underwriters, a favorable opinion
dated the Closing Date, with respect to the issuance and sale of the
Certificates, the Pooling and Servicing Agreement, the Registration Statement,
the Prospectus and such other related matters as the Underwriters may reasonably
require; and (ii) in its capacity as special Federal tax and ERISA counsel for
the Bank and the Trust, a favorable opinion dated the Closing Date, to the
effect that the statements in the Registration Statement and the Basic
Prospectus under the heading "Tax Matters" (other than "Limits of the
Discussion") accurately describe the material Federal income tax consequences to
holders of the Certificates, and the statements in the Registration Statement
and the Basic Prospectus under the heading "Benefit plan investors", to the
extent that they constitute statements of matters of law or legal conclusions
with respect thereto, have been prepared or reviewed by such counsel and
accurately describe the material consequences to holders of the Certificates
under ERISA; and the Bank shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass on all such
matters.
In giving their opinion, Cravath, Swaine & Moore may rely (A)
upon the opinions of counsel delivered pursuant to subsection (c) above, (B) as
to matters involving the application of laws of any jurisdiction other than the
State of New York, the United States or the General Corporation Law of the State
of Delaware, to the extent deemed proper and specified in such opinion, upon the
opinion of other counsel of good standing believed to be reliable, and (C) as to
matters of fact, to the extent deemed proper and as stated therein on
certificates of responsible officers of the Trust, the Bank, and public
14
<PAGE>
officials. References to the Prospectus in this paragraph (e)
include any supplements thereto.
(f) At the Execution Time and at the Closing Date, KPMG LLP
shall have furnished to the Underwriters a letter or letters, dated respectively
as of the date of this Agreement and as of the Closing Date, in form and
substance satisfactory to the Underwriters and counsel to the Underwriters,
confirming that they are certified independent public accountants and stating in
effect that (i) they have performed certain specified procedures as a result of
which they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the Trust and the
Bank) set forth in the Registration Statement and the Prospectus (and any
supplements thereto), agrees with the accounting records of the Trust and the
Bank, excluding any questions of legal interpretation, and (ii) they have
performed certain specified procedures with respect to the computer programs
used to select the initial Eligible Accounts and to generate information with
respect to the Accounts set forth in the Registration Statement and the
Prospectus (and any supplements thereto).
(g) The Underwriters shall have received evidence satisfactory
to them that, on or before the Closing Date, UCC-1 financing statements have
been filed in the offices of the Secretaries of State of Florida and Georgia and
such other jurisdictions as counsel to the Bank deems appropriate to reflect the
interest of the Trust in the Receivables and the proceeds thereof.
(h) The Loan Agreement shall have been duly authorized,
executed and delivered by each party thereto on or prior to the Closing Date.
(i) The Underwriters and the Bank shall have received from
counsel to the Agent admitted in [ ] (with respect to the Agent, the "Home
Country"), reasonably acceptable to the Underwriters and the Bank, favorable
opinions, dated the Closing Date and satisfactory in form and substance to the
Underwriters, counsel to the Underwriters, the Bank and their counsel, to the
effect that:(1)
(i) the Agent is a corporation duly organized and validly
existing under the laws of the Home Country and has the corporate power
and authority under the laws of the Home Country to execute, deliver
and perform its obligations under the Loan Agreement through the
Branch;
- --------
1 Adapt to each specific Home Country.
15
<PAGE>
(ii) the Loan Agreement has been duly authorized and, when
executed and delivered by the Agent through the Branch, will constitute
the valid and legally binding obligation of the Agent enforceable
against the Branch in accordance with its terms, subject, as to
enforcement, to (A) bankruptcy, insolvency, reorganization,
liquidation, readjustment of debt and other laws and equitable
principles relating to or affecting the enforcement of creditors'
rights generally as they may be applied in the event of the bankruptcy,
insolvency, reorganization, liquidation or readjustment of debt of, or
the appointment of a receiver with respect to the property of, or a
similar event applicable to, the Branch, and (B) the effect of any
moratorium or similar occurrence affecting the Branch;
(iii) the Loan Agreement is enforceable in accordance with its
terms against the Agent's head office in the Home Country if the Branch
defaults in its obligations thereunder, subject, as to enforcement, to
(A) bankruptcy, insolvency, reorganization, liquidation, readjustment
of debt and other laws and equitable principles relating to or
affecting the enforcement of creditors' rights generally as they may be
applied in the event of the bankruptcy, insolvency, reorganization,
liquidation or readjustment of debt of, or the appointment of a
receiver with respect to the property of, or a similar event applicable
to, the Agent, and (B) the effect of any moratorium or similar
occurrence affecting the Agent;
(iv) no consent or approval of any governmental authority in
the Home Country is required as a condition to the validity of the Loan
Agreement;
(v) the choice of the law of the State of New York to govern
the Loan Agreement is valid under the laws of the Home Country, and a
court in the Home Country would uphold such choice of law in a suit,
action or other proceeding on the Loan Agreement brought in a court of
the Home Country; and
(vi) any judgment for a fixed and definite sum of money
rendered by the courts of the State of New York or the United States of
America located in the State of New York, in respect of any suit,
action or other proceeding against the Branch for the enforcement of
the Loan Agreement will, upon request, be declared valid and
enforceable against the Agent by the competent courts of the Home
Country, without reexamination of the matters adjudicated upon, if such
judgment is not subject to appeal and is enforceable according to the
laws of the State of New York or United States Federal law. However,
such judgment will not be enforced if its contents are in violation of
fundamental principles of the Home Country legal system or if it has
16
<PAGE>
been rendered in violation of such principles. As a general rule it can
be stated that judgments of United States Federal courts and of courts
of the State of New York are enforceable in the Home Country, and such
counsel knows of no reason why such judgments would be a violation of
the fundamental principles of the Home Country legal system.
(j) The Underwriters and the Bank shall have received from
United States counsel for the Agent reasonably acceptable to the Underwriters
and the Bank, a favorable opinion, dated the Closing Date and satisfactory in
form and substance to the Underwriters, counsel to the Underwriters, the Bank
and their counsel to the effect that:
(i) the Agent is licensed by the Superintendent of Bank of the
State of New York to maintain a branch for the conduct of a banking
business at the Branch's address in New York City;
(ii) no authorization, consent or approval of or by any
governmental authority of the United States or the State of New York is
necessary for the execution, delivery and performance by the Agent or
the Branch of the Loan Agreement, except such authorizations, consents
and approvals as are in full force and effect;
(iii) the Loan Agreement has been duly authorized, executed
and delivered by the Branch; and
(iv) the Loan Agreement constitutes the legal, valid and
binding obligation of the Agent and the Branch, enforceable against the
Agent and the Branch in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, liquidation, moratorium, readjustment of debt or other
similar laws affecting the enforcement of creditors' rights generally,
as such laws may be applied in the event of a bankruptcy, insolvency,
reorganization, liquidation, moratorium, readjustment of debt or other
similar proceedings of or affecting the Agent or the Branch, and
subject to the application of general principles of equity regardless
of whether such enforceability is considered in a proceeding at law or
in equity.
(k) The Underwriters and the Bank shall have received from
Orrick, Herrington & Sutcliffe LLP, counsel for the Trustee, a favorable
opinion, dated the Closing Date and satisfactory in form and substance to the
Underwriters and counsel to the Underwriters, the Bank and its counsel, to the
effect that:
(i) the Trustee has been duly incorporated and is validly
existing as a banking corporation under the laws of the State of New
York, and has the power and authority
17
<PAGE>
(corporate and other) to enter into, and to take all action
required of it under the Pooling and Servicing Agreement and
the Loan Agreement;
(ii) the Pooling and Servicing Agreement and the Loan
Agreement have each been duly authorized, executed and delivered by the
Trustee and each constitutes a legal, valid and binding agreement of
the Trustee, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, liquidation,
reorganization, moratorium or other similar laws affecting the
enforcement of rights of creditors against the Trustee generally, as
such laws would apply in the event of bankruptcy, insolvency,
liquidation or reorganization or any moratorium or similar occurrence
affecting the Trustee, and the application of general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(iii) the Certificates have been duly authenticated and
delivered by the Trustee;
(iv) the execution and delivery of the Pooling and Servicing
Agreement and the Loan Agreement by the Trustee and the performance by
the Trustee of the terms of each do not conflict with or result in a
violation of (A) any law of the United States of America or the State
of New York or any regulation governing the banking or trust powers of
the Trustee, or (B) the articles of incorporation or by-laws of the
Trustee; and
(v) no approval, authorization or other action by, or filing
with, any governmental authority of the United States of America or the
State of New York having jurisdiction over the banking or trust powers
of the Trustee is required in connection with its execution and
delivery of the Pooling and Servicing Agreement and the Loan Agreement
or the performance by the Trustee of the terms of the Pooling and
Servicing Agreement and the Loan Agreement.
(l) The Underwriters and the Bank shall have received from
Williams, Parker, Harrison, Dietz & Getzen a favorable opinion, dated the
Closing Date and satisfactory in form and substance to the Underwriters, the
Bank and its counsel to the
effect that:
(i) insofar as the Georgia UCC is applicable (without regard
to principles of conflicts of laws), except for any Receivable that is
evidenced by an instrument or chattel paper, the Receivables will
constitute either "general intangibles" or "accounts," in each case as
defined under the Georgia UCC Section 9-106.
18
<PAGE>
(ii) if the transfer of the Receivables to the Trustee
pursuant to the Pooling and Servicing Agreement constituted a true sale
of the Receivables to Trustee, then, to the extent that Georgia law
governs the perfection and the effect of perfection or nonperfection of
such sale:
(a) with respect to Receivables in existence on the
date hereof, such sale transferred all of the right, title,
and interest of the Bank in and to such Receivables, free and
clear of any Liens now existing or hereafter created, but
subject to the rights of the Transferor or any Additional
Transferor as the holder of the Transferor's Certificate;
(b) with respect to Receivables which come into
existence after the date hereof, upon creation of such
Receivables and the subsequent transfer of such Receivables to
Trustee in accordance with the Pooling and Servicing Agreement
and receipt by the Bank of the consideration therefor required
pursuant to the Pooling and Servicing Agreement, such sale
will transfer all of the right, title, and interest of the
Bank in and to such Receivables to Trustee, free and clear of
any Liens, but subject to the rights of the Transferor or any
Additional Transferor as the holder of the Transferor's
Certificates;
and, in either case, no further action will thereafter be required
under the Georgia UCC to protect Trustee's ownership interest in such
Receivables against creditors of, or subsequent purchasers from, the
Bank. However, if the Receivables constitute "general intangibles"
rather than "accounts," in each case as defined in the Georgia UCC
Section 9-106, it is arguable that Trustee's ownership interest with
respect to Receivables which come into existence after the date hereof
will be subject to Liens which are in existence on the day such
Receivables come into existence. Nonetheless, a Georgia court,
following proper consideration of prevailing commercial practices and
other relevant factors, should hold that Trustee's ownership is not
subject to such Liens. Unless the Obligor in respect of a Receivable
has received notice of the assignment thereof (such notice not being
contemplated by the Pooling and Servicing Agreement): (i) in the event
a Georgia court deems that the State of Georgia-Financing
Statement-UCC-1 and Schedule I thereto do not constitute notice of
Trustee's ownership interest therein to either the Obligor or second
assignees of such Receivable, bona fide second assignees of such
Receivable may be deemed in certain instances to have a superior
interest in such Receivable; and (ii) bona fide payments made by such
Obligor to the Bank, or a second assignee of such Receivable (as to
which such Obligor has received notice of such assignment) will
discharge such
19
<PAGE>
Obligor's obligations to the extent of such payment, and such payment
will be recoverable only from the Bank, or, in certain cases, such
second assignee, as the case may be.
(iii) if the transfer of the Receivables to Trustee pursuant
to the Pooling and Servicing Agreement does not constitute a true sale
of such Receivables to Trustee, assuming that the Bank has rights in
the Receivables and the proceeds thereof, and that the Trustee gives
value to the Bank under the Pooling and Servicing Agreement, then,
insofar as the Georgia UCC is applicable (without regard to principles
of conflicts of laws), the Pooling and Servicing Agreement creates a
valid security interest in favor of Trustee in, the Bank's right,
title, and interest in and to such Receivables and the proceeds thereof
securing the obligations of the Bank thereunder. Such security interest
constitutes a perfected security interest in such Receivables and the
proceeds thereof subject to no prior or equal Liens, enforceable as
such against creditors of, and subsequent purchasers from the Bank.
(m) The Class A Certificates shall be given the highest
investment grade rating by Moody's Investors Service, Inc. ("Moody's"), and
Standard & Poor's Ratings Services ("S&P"), and neither S&P nor Moody's shall
have placed the Class A Certificates under review with possible negative
implications.
(n) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, there shall not have
been any change, or any development involving a prospective change, in or
affecting the business or properties of the Trust, the Bank or Citicorp the
effect of which, in any case referred to above, is, in the judgment of the
Underwriters (after consultation with the Bank), so material and adverse as to
make it impractical or inadvisable to proceed with the offering or the delivery
of the Certificates as contemplated by the Registration Statement and the
Prospectus (and any supplements thereto).
(o) The Bank shall have used its best efforts to cause the
Class A Certificates to be approved for listing on the Luxembourg Stock Exchange
on or before the Closing Date.
(p) Simultaneously with or prior to the Closing, $[ ]
aggregate principal amount of the Class B Certificates shall have been sold to
the Class B Underwriters.
(q) Simultaneously with or prior to the Closing $[ ] aggregate
principal amount of Collateral Interest shall have been sold to the Collateral
Interest Holder.
(r) The Underwriters and counsel to the Underwriters
shall have received such information, certificates and documents
20
<PAGE>
as the Underwriters or counsel to the Underwriters may reasonably
request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions or certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Underwriters and counsel to the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Underwriters. Notice of such cancelation shall be given to the Trust and the
Bank in writing or by telephone or telegraph confirmed in writing.
Section 7. Reimbursement of Expenses. If the sale of the Class
A Certificates provided for herein is not consummated because any condition to
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 9 hereof or because of any
refusal, inability or failure on the part of the Bank to perform any agreement
herein or to comply with any provision hereof other than by reason of a default
by the Underwriters, the Bank will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by the Underwriters in
connection with the proposed purchase and sale of the Class A Certificates.
Section 8. Indemnification and Contribution. (a) The Bank
agrees to indemnify and hold harmless each Underwriter and each person who
controls any Underwriter within the meaning of the Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Certificates as originally filed or in any amendment thereof, or in any
Preliminary Prospectus, the Basic Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agree to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) the Bank will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission
21
<PAGE>
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Bank by or on behalf of any Underwriter
specifically for use in connection with the preparation thereof, and (ii) such
indemnity with respect to the Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Class A
Certificates which are the subject thereof if such person did not receive a copy
of the Prospectus (or the Prospectus as supplemented) excluding documents
incorporated therein by reference at or prior to the confirmation of the sale of
such Class A Certificates to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a material fact
contained in any Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as supplemented). This indemnity agreement will be in addition to any
liability which the Bank may otherwise have.
(b) Each Underwriter, severally, agrees to indemnify and hold
harmless the Bank, each of its directors, each of the officers who signs the
Registration Statement, and each person who controls the Bank within the meaning
of the Act, to the same extent as the foregoing indemnities from the Bank to
each Underwriter, but only with reference to written information relating to
such Underwriter furnished to the Bank by or on behalf of such Underwriter
specifically for use in the preparation of the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Bank acknowledge that
the statements relating to the Underwriters and this Agreement set forth in the
second sentence under the heading "General risk factors"--"You may not be able
to resell your certificates" and the statements under the heading "Underwriting"
in any Preliminary Prospectus, the Basic Prospectus and the Prospectus
constitute the only information furnished in writing by or on behalf of any
Underwriter for inclusion in any Preliminary Prospectus, the Basic Prospectus or
the Prospectus, and each Underwriter confirms that such statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled, jointly with any
other indemnifying party similarly notified, to appoint counsel satisfactory to
such indemnified party to represent the
22
<PAGE>
indemnified party in such action; provided, however, that if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
appoint counsel to defend such action and approval by the indemnified party of
such counsel, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by the
Underwriters in the case of paragraph (a) of this Section 8, representing the
indemnified parties under such paragraph (a) who are parties to such action),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall be only in respect of the counsel referred to in such
clause (i) or (iii).
(d) To provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable on grounds of policy or otherwise, the Bank, on the one
hand, and the Underwriters, on the other, shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) to which
the Bank and the Underwriters may be subject in such proportion so that the
Underwriters shall be responsible for that portion represented by the percentage
that the underwriting discount appearing on the cover page of the Prospectus
bears to the public offering price appearing thereon and the Bank shall be
responsible for the balance; provided, however, that (i) in no case shall any
Underwriter (except as may be provided in the agreement among underwriters
relating to the offering of the Class A Certificates) be responsible for any
amount in excess of the underwriting discount applicable to the Class A
Certificates purchased by such Underwriter hereunder and (ii) no person guilty
of fraudulent misrepresentation (within the
23
<PAGE>
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls any Underwriter within the meaning of
the Act shall have the same rights to contribution as such Underwriter, and each
person who controls the Bank within the meaning of the Act, each officer of the
Bank who shall have signed the Registration Statement and each director of the
Bank shall have the same rights to contribution as the Bank, as the case may be,
subject in each case to clauses (i) and (ii) of this paragraph (d). Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against any other party or parties under this
paragraph (d), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this paragraph
(d).
Section 9. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Underwriters, by notice given to
the Bank prior to delivery of and payment for the Class A Certificates, if prior
to such time (i) trading in securities generally on the New York or Luxembourg
Stock Exchange shall have been suspended or limited or minimum prices shall have
been established on such other Exchange, (ii) a banking moratorium shall have
been declared by Federal, New York state authorities or (iii) there shall have
occurred any outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United States of
America, Japan or Europe is such as to make it, in the judgment of the
Underwriters, impractical or inadvisable to market the Class A Certificates.
Section 10. Representations and Indemnities To Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Trust, the Bank or its officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the Underwriters
or the Trust, the Bank or any of the officers, directors or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Class A Certificates. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancelation of this Agreement.
Section 11. Notices. All communications hereunder
shall be in writing and effective only on receipt, and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to them c/o [ ], [ADDRESS],
Attention of [ ] and, if sent to the Bank, will be
24
<PAGE>
mailed, delivered or telegraphed and confirmed to it at
[ADDRESS], attention of General Counsel.
Section 12. Applicable Law. This Agreement will be
governed by and construed in accordance with the laws of the
State of New York. This Agreement supersedes all prior
agreements and understandings relating to the subject matter
hereof.
Section 13. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers, directors and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
Section 14. Miscellaneous. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
Section 15. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the Class A Certificates
agreed to be purchased by such Underwriter or Underwriters hereunder and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions which
the amount of Class A Certificates set forth opposite their names in Schedule I
hereto bears to the aggregate amount of Class A Certificates set forth opposite
the names of all the remaining Underwriters) the Class A Certificates which the
defaulting Underwriter or Underwriters agreed but failed to purchase; provided,
however, that in the event that the aggregate amount of Class A Certificates
which the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate principal amount of Class A Certificates set
forth in Schedule I hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Class A Certificates, and if such nondefaulting Underwriters do not purchase all
the Class A Certificates, this Agreement will terminate without liability to any
nondefaulting Underwriter, the Trust or the Bank. In the event of a default by
any Underwriter as set forth in this Section 15, the Closing Date shall be
postponed for such period, not exceeding seven days, as the Underwriters shall
determine in order that the required changes in the Registration Statement and
the Prospectus (and any supplements thereto) or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to
25
<PAGE>
the Bank and any nondefaulting Underwriter for damages occasioned
by its default hereunder.
Section 16. Representation of Underwriters. The Representative
will act for the several Underwriters in connection with this financing, and any
action under this Agreement taken by the Representative will be binding upon all
the Underwriters.
If you are in agreement with the foregoing, please sign two
counterparts hereof and return one to the Bank, whereupon this letter and your
acceptance shall become a binding agreement
26
<PAGE>
among the Bank and the several Underwriters.
Very truly yours,
UNIVERSAL BANK, N.A.,
by___________________________
Name:
Title:
ACCEPTED AND AGREED:
[ ]
by___________________________
Name:
Title:
For itself and the other
several Underwriters named in
Schedule I to the foregoing
27
<PAGE>
SCHEDULE I
- ------------------------------------------------- ------------------------
Underwriter Principal Amount
[ ]............................. $[ ]
[ ]............................. [ ]
[ ]............................. [ ]
Total ........................................... [ ]
============
28
UNIVERSAL BANK, N.A.
Class B Credit Card Participation Certificates, Series 1999-[ ]
Universal Bank Card Master Trust
[ ]% Certificate Rate
Class B UNDERWRITING AGREEMENT
[ ], 1999
[ ]
as Representative of the Several Underwriters,
[ ]
[ ]
Ladies and Gentlemen:
Universal Bank, N.A. (the "Bank"), has conveyed and proposes
to continue to convey the Receivables arising from certain consumer revolving
credit card accounts and other rights to the Universal Card Master Trust (the
"Trust"), and proposes to cause the Trust to sell to the underwriters named in
Schedule I hereto (the "Underwriters"), for whom you are acting as
representative (the "Representative"), $[ ] aggregate principal amount of [ ]%
Class B Asset Backed Certificates, Series 1999-[ ] (the "Class B Certificates")
in the Trust. It is understood that the Bank is concurrently entering into a
Class A Underwriting Agreement dated the date hereof (the "Class A Underwriting
Agreement") among the Bank and the underwriters named in Schedule I thereto (the
"Class A Underwriters"), providing for the sale of $[ ] aggregate principal
amount of [ ]% Class A Asset Backed Certificates, Series 1999-[ ] (the "Class A
Certificates"). The Class A Certificates and the Class B Certificates are
referred to herein collectively as the "Certificates".
The Receivables have been and will be conveyed by the Bank to
the Trust and the Certificates will be issued pursuant to the Amended and
Restated Pooling and Servicing Agreement, dated as of April 24, 1998 (the
"P&S"), among the Bank, as Seller, Universal Card Services Corp. ("UCS"), as
Servicer, and Bankers Trust Company, as trustee (the "Trustee"), and the Series
1999-[ ] Supplement to the Pooling and Servicing Agreement, to be dated as of
the Closing Date (as defined in Section 3 below) (the "Supplement"), among the
Bank, as Seller, UCS, as Servicer, and
1
<PAGE>
the Trustee. The P&S and the Supplement are referred to herein collectively as
the "Pooling and Servicing Agreement". The Class B Certificates will represent
undivided interests in certain assets of the Trust and will be sold pursuant to
this Agreement. The Trust will also issue $[ ] aggregate principal amount of
Class A Certificates which will be sold pursuant to the Class A Underwriting
Agreement. This Agreement and the Class A Underwriting Agreement are referred to
herein collectively as the "Underwriting Agreements". In addition, the Bank, as
Seller, UCS, as Servicer, the Trustee and [ ], as agent for the Collateral
Interest Holder (the "Agent"), acting by and through its New York branch (the
"Branch"), will enter into a Loan Agreement to be dated as of the Closing Date
(the "Loan Agreement") pursuant to which the purchaser of the Collateral
Interest (the "Collateral Interest Holder") will purchase $[ ] aggregate initial
principal amount of Collateral Interest (the "Collateral Interest").
Capitalized terms used herein without definition shall have
the meanings set forth in the Supplement.
Section 1. Representations and Warranties of the Bank. The
Bank represents and warrants to, and agrees with, each Underwriter as set forth
in this Section 1. Certain terms used in this Section 1 are defined in paragraph
(a) below.
(a) The Bank meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
(Registration No. 333-9309) on such Form, including a related preliminary
prospectus, for registration under the Act of the offering and sale of the Class
A Certificates. The Bank may have filed one or more amendments thereto,
including the related preliminary prospectus, each of which amendments has
previously been furnished to the Underwriters. The Bank will next file with the
Commission a final basic prospectus and final prospectus supplement relating to
the Class B Certificates in accordance with Rules 415 and 424(b)(2) or (5) under
the Act. The Bank has included in such registration statement, as amended at the
Effective Date, all information required by the Act and the rules thereunder to
be included in such registration statement. As filed, such amendment and form of
final prospectus supplement, or such final basic prospectus or final prospectus
supplement, shall include all such required information, with respect to the
Class B Certificates and the offering thereof and, except to the extent the
Underwriters shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to the Underwriters prior to the
Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest preliminary prospectus that has previously been
furnished to the Underwriters) as the Bank has advised the
2
<PAGE>
Underwriters, prior to the Execution Time, will be included or made therein. If
the Registration Statement contains the undertakings specified by item 512(a) of
Regulation S-K, the Registration Statement, at the Execution Time, meets the
requirements set forth in Rule 415(a)(1)(x).
The terms that follow, when used in this Agreement, shall
have the meanings indicated. The term "Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "Execution Time" shall mean the date and
time that this Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
the preceding paragraph. "Basic Prospectus" shall mean the prospectus referred
to above contained in the Registration Statement at the Effective Date.
"Prospectus" shall mean the prospectus supplement relating to the Class B
Certificates that is first filed pursuant to Rule 424(b) after the Execution
Time, together with the Basic Prospectus (as such Basic Prospectus may have been
amended and together with any supplements thereto) or, if no filing pursuant to
Rule 424(b) is required, shall mean the prospectus supplement relating to the
Class B Certificates, including the Basic Prospectus, included in the
Registration Statement at the Effective Date. "Registration Statement" shall
mean the registration statement referred to in the preceding paragraph and any
registration statement required to be filed under the Act or rules thereunder,
including incorporated documents, exhibits and financial statements, in the form
in which it has or shall become effective and, in the event any post-effective
amendment thereto becomes effective prior to the Closing Date, shall also mean
such registration statement as so amended. "Rule 424","Rule 415" and "Regulation
S-K" refer to such rules or regulations under the Act. Any reference herein to
the Registration Statement, the Basic Prospectus or Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 which were filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus or Prospectus,
as the case may be; and any reference herein to the terms "amend", "amendment"
or "supplement" with respect to the Registration Statement, the Basic Prospectus
or Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act after the Effective Date of the Registration Statement,
or the issue date of the Basic Prospectus or Prospectus, as the case may be,
deemed to be incorporated therein by reference.
(b) On the Effective Date, the Registration Statement did or
will comply in all material respects with the applicable requirements of the Act
and the rules thereunder; on the Effective Date and when the Prospectus is first
filed (if required) in accordance with Rule 424(b) and on the Closing Date,
3
<PAGE>
the Prospectus (as amended and together with any supplements thereto) will
comply in all material respects with the applicable requirements of the Act and
the rules thereunder; on the Effective Date, the Registration Statement did not
or will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date, the Prospectus,
if not filed pursuant to Rule 424(b), did not or will not, and on the date of
any filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus (as
amended and together with any supplements thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Bank makes no
representations or warranties as to the information contained in or omitted from
the Registration Statement or the Prospectus (or any supplements thereto) in
reliance upon and in conformity with information furnished in writing to the
Bank by or on behalf of any Underwriter specifically for use in connection with
the preparation of the Registration Statement or the Prospectus (or any
supplements thereto).
(c) The Bank is an association duly organized, validly
existing and in good standing as a licensed national banking association under
the laws of the United States, and has all requisite power and authority to own
its properties and conduct its business as presently conducted and to execute,
deliver and perform this Agreement, to authorize the issuance of the
Certificates and to consummate the transactions contemplated hereby.
(d) The execution, delivery and performance by the Bank of the
Underwriting Agreements, the Pooling and Servicing Agreement, the Loan
Agreement, the Depository Agreement, and the issuance of the Certificates and
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary action or proceedings.
(e) This Agreement has been duly executed and delivered by the
Bank.
(f) The Bank has authorized the conveyance of the Receivables
to the Trust, and the Bank has authorized the Trust to issue and sell the
Certificates.
(g) The Bank has delivered to the Underwriters complete and
correct copies of (i) publicly available portions of the Consolidated Reports of
Condition and Income of the Bank for the years ended December 31, 1997 and 1998,
as submitted to the Comptroller of the Currency; and (ii) the December 31, 1996,
1997 and 1998, audited consolidated balance sheets of Citicorp (parent of the
Bank) which are included in Citicorp's 1998 Annual Report
4
<PAGE>
on Form 10-K. Except as set forth in or contemplated in the Registration
Statement and the Prospectus, there has been no material adverse change in the
condition (financial or otherwise) of the Bank since December 31, 1998.
(h) Any taxes, fees and other governmental charges in
connection with the execution, delivery and performance of this Agreement, the
Pooling and Servicing Agreement, the Loan Agreement and the Certificates, shall
have been paid or will be paid by the Bank at or prior to the Closing Date to
the extent
then due.
(i) The Certificates have been duly and validly authorized.
The Certificates, when validly authenticated, issued and delivered in accordance
with the Pooling and Servicing Agreement and sold to the Underwriters as
provided herein and to the Class A Underwriters pursuant to the Class A
Underwriting Agreement, will conform in all material respects to the
descriptions thereof contained in the Prospectus and will be validly issued and
outstanding and entitled to the benefits of the Pooling and Servicing Agreement.
Section 2. Purchase and Sale. Subject to the terms and
conditions and in reliance upon the covenants, representations and warranties
herein set forth, the Bank agrees to cause the Trust to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase, the respective initial principal amount of Class B Certificates set
forth opposite such Underwriter's name in Schedule I hereto. The purchase price
for the Class B Certificates shall be equal to [ ]% of the aggregate initial
principal amount of the Class B Certificates.
Section 3. Delivery and Payment. Delivery of and payment for
the Class B Certificates shall be made at the offices of [ ], 1999, at 10:00
a.m., New York City time, on [ ], 1999, or at such later date (not later than [
], 1999) as the Underwriters shall designate, which date and time may be
postponed by agreement between the Underwriters and the Bank (such date and time
of delivery and payment for the Class B Certificates being referred to herein as
the "Closing Date"). Delivery of one or more global certificates representing
the Class B Certificates shall be made to the accounts of the several
Underwriters against payment by the several Underwriters of the purchase price
therefor to or upon the order of the Bank by one or more wire transfers or
checks in Federal (same day) Funds. The global certificates to be so delivered
shall be registered in the name of Cede & Co., as nominee for The Depository
Trust Company ("DTC"). The interests of beneficial owners of the Class B
Certificates will be represented by book entries on the records of DTC and
participating members thereof. Definitive Class B Certificates
5
<PAGE>
representing the Class B Certificates will be available only
under limited circumstances.
The Bank agrees to have the global certificates or the
Definitive Class B Certificates available for inspection, checking and packaging
by the Underwriters in New York, New York, not later than 1:00 p.m., New York
City time, on the business day prior to the Closing Date.
Section 4. Offering by Underwriters. (a) It is
understood that the Underwriters propose to offer the Class B
Certificates for sale to the public as set forth in the
Prospectus.
(b) Each Underwriter agrees that if it is a foreign broker or
dealer not eligible for membership in the National Association of Securities
Dealers, Inc. (the "NASD"), it will not effect any transaction in the Class B
Certificates within the United States or induce or attempt to induce the
purchase of or sale of the Class B Certificates within the United States, except
that it shall be permitted to make sales to the other Underwriters or to its
United States affiliates; provided that such sales are made in compliance with
an exemption of certain foreign brokers or dealers under Rule 15a-6 under the
Exchange Act, and in conformity with the Rules of Fair Practice of the NASD as
such Rules apply to non-NASD brokers or dealers.
(c) Each Underwriter represents and agrees that (i) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Class B
Certificates in, from or otherwise involving the United Kingdom; (ii) it has
only issued, distributed or passed on and will only issue, distribute or pass on
in the United Kingdom any document received by it in connection with the issue
of the Class B Certificates to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or persons to whom such document may otherwise lawfully
be issued, distributed or passed on; (iii) if it is an authorized person under
Chapter III of Part I of the Financial Services Act 1986, it has only promoted
and will only promote (as that term is defined in Regulation 1.02(2) of the
Financial Services (Promotion of Unregulated Schemes) Regulations 1991) to any
person in the United Kingdom the scheme described in the Prospectus if that
person is of a kind described either in section 76(2) of the Financial Services
Act 1986 or in Regulation 1.04 of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991; and (iv) it is a person of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996.
6
<PAGE>
Section 5. Agreements. The Bank covenants and agree
with the Underwriters that:
(a) The Bank will use its best efforts to cause the
Registration Statement, and any amendment thereto, if not effective at the
Execution Time, to become effective. If filing of the Prospectus is required
under Rule 424(b), the Bank will file the Prospectus, properly completed, and
any supplement thereto, pursuant to Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Underwriters of such
timely filing. The Bank will promptly advise the Underwriters (i) when the
Registration Statement, and any amendment thereto, if not yet effective at the
Execution Time, shall have become effective, (ii) when the Prospectus, and any
supplement thereto, shall have been filed with the Commission pursuant to Rule
424(b), (iii) of any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or threat of
any proceeding for that purpose and (v) of the receipt by the Bank of any
notification with respect to the suspension of the qualification of the Class B
Certificates for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Bank will not file any amendment of the
Registration Statement or supplement to the Prospectus unless a copy has been
furnished to the Underwriters, for review by the Underwriters prior to such
filing if the Underwriters shall have not yet completed their distribution of
the Certificates, and after such filing if the Underwriters shall have completed
their distribution of the Certificates. The Bank will use its reasonable efforts
to prevent the issuance of any such stop order and, if issued, to obtain as soon
as possible the withdrawal thereof.
(b) If, at any time when a Prospectus relating to the
Certificates is required to be delivered under the Act, any event occurs as a
result of which such Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in light of the circumstances under which they were
made not misleading, or if it shall be necessary to supplement such Prospectus
to comply with the Act or the Exchange Act or the respective rules thereunder,
the Bank promptly will prepare and file with the Commission, subject to
paragraph (a) of this Section 5, a supplement that will correct such statement
or omission or an amendment that will effect such compliance.
(c) As soon as practicable, and in no case later than 16
months after the Closing Date, the Bank will make generally available to
Certificateholders and to the Underwriters an earnings statement or statements
of the Trust that will satisfy
7
<PAGE>
the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(d) The Bank will furnish to the Underwriters and counsel to
the Underwriters, without charge, conformed copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of each
Preliminary Prospectus and the Prospectus and any supplement thereto as the
Underwriters may reasonably request.
(e) The Bank will pay all expenses incidental to the
performance of its obligations under this Agreement, including, without
limitation, (i) expenses of preparing, printing and reproducing the Registration
Statement, the Prospectus, this Agreement, the Pooling and Servicing Agreement,
the Loan Agreement, the Depository Agreement and the Class B Certificates, (ii)
any fees charged by any rating agency for the rating of the Class B
Certificates, (iii) any expenses (including reasonable fees and disbursements of
counsel) incurred by the Underwriters in connection with qualification of the
Class B Certificates for sale under the laws of such jurisdictions as the
Underwriters designate, (iv) reasonable fees and expenses of Cravath, Swaine &
Moore in its role as special Federal tax and ERISA counsel for the Bank and the
Trust, (v) any expenses incurred by the Underwriters in connection with listing
the Class B Certificates on the Luxembourg Stock Exchange, (vi) the cost of
delivering the Class B Certificates to the offices of the Underwriters, insured
to the satisfaction of the Underwriters, (vii) the fees and expenses of the
Trustee and its counsel and (viii) the fees and expenses of the Bank's
accountants (it being understood that, except as provided in paragraph (d) and
this paragraph (e) and in Sections 7 and 8 hereof, the Underwriters will pay
their own expenses, including the expense of preparing, printing and reproducing
any agreement among underwriters, the fees and expenses of Cravath, Swaine &
Moore in its role as counsel to the Underwriters, any transfer taxes on resale
of any of the Class B Certificates by them and advertising expenses connected
with any offers that the Underwriters may make).
(f) The Bank will arrange for the qualification of the Class B
Certificates for sale under the laws of such jurisdictions as the Underwriters
may designate, will maintain such qualifications in effect so long as required
for the distribution of the Class B Certificates and will arrange for the
determination of the legality of the Class B Certificates for purchase by
institutional investors.
(g) For so long as the Class B Certificates are outstanding,
the Bank shall deliver to the Underwriters by first-class mail and as soon as
practicable a copy of all reports and notices delivered to the Trustee or the
Certificateholders under the Pooling and Servicing Agreement or to the Agent
under the
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<PAGE>
Loan Agreement, and any other material relating to the Bank or the Trust that is
reasonably available to the Bank and necessary for any Underwriter to deliver a
prospectus in connection with market-making activities as required by the rules
and regulations of the Commission.
(h) For so long as the Class B Certificates are outstanding,
the Bank will furnish to the Underwriters (i) as soon as practicable after the
end of each fiscal year, all documents required to be distributed to Class B
Certificateholders or filed with the Commission and (ii) as soon as practicable
after filing, any other information concerning the Bank filed with any
government or regulatory authority which is otherwise publicly available, as the
Underwriters may reasonably request. The Bank will register the Certificates
under the Exchange Act within 120 days after the end of the fiscal year of the
Trust during which the offering of the Certificates to the public occurred.
(i) To the extent, if any, that any rating provided with
respect to the Class B Certificates set forth in Section 6(m) hereof is
conditional upon the furnishing of documents reasonably available to the Bank,
the Bank shall furnish such documents.
Section 6. Conditions of Underwriters' Obligation. The
obligation of the Underwriters to purchase and pay for the Class B Certificates
on the Closing Date shall be subject to the accuracy of the representations and
warranties of the Bank contained herein as of the Execution Time and the Closing
Date, to the accuracy of the statements of the Bank made in any certificates
delivered pursuant to the provisions hereof, to the performance by the Bank of
its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Underwriters shall agree in writing to a
later time, the Registration Statement shall have become effective not later
than (i) 6:00 p.m. New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 3:00 p.m. New York
City time on such date or (ii) 12:00 noon on the business day following the day
on which the public offering price was determined, if such determination
occurred after 3:00 p.m. New York City time on such date; if filing of the
Prospectus, or any supplements thereto, is required pursuant to Rule 424(b), the
Prospectus, and any supplements thereto, shall have been filed in the manner and
within the time period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
9
<PAGE>
(b) The Bank shall have delivered to the Underwriters a
certificate, dated the Closing Date, signed by its Chairman of the Board,
President, Vice Chairman of the Board, Executive Vice President, Senior Vice
President, Vice President, principal financial officer, principal accounting
officer, treasurer or cashier to the effect that the signer of such certificate
has carefully examined the Underwriting Agreements, the Pooling and Servicing
Agreement, the Loan Agreement, the Prospectus (and any supplements thereto) and
the Registration Statement and that:
(i) the representations and warranties of the Bank in this
Agreement are true and correct at and as of the Closing Date as if made
on and as of the Closing Date (except to the extent they expressly
relate to an earlier date, in which case the representations and
warranties of the Bank are true and correct as of such earlier date);
(ii) the Bank has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
under this Agreement at or prior to the Closing Date;
(iii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the knowledge of the signer,
threatened; and
(iv) since the date of the most recent financial statements of
the Bank delivered to the Underwriters pursuant to Section 1(g) hereof,
there has been no material adverse change in the condition (financial
or otherwise) of the Bank whether or not arising from transactions in
the ordinary course of business, except as set forth in or contemplated
in the Registration Statement and the Prospectus.
(c) The Underwriters shall have received from Walter M.
Korchun, Senior Vice President and General Counsel of UCS, a favorable opinion
dated the Closing Date and satisfactory in form and substance to the
Underwriters and counsel to the Underwriters, to the effect that:
(i) UCS has been duly organized as a corporation and is
validly existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing
under the laws of each jurisdiction which requires such qualification
wherein it owns or leases material properties or conducts material
business, and has full corporate power and authority to own its
properties, to conduct its business as described in the Registration
Statement and the Prospectus, to enter into and perform its obligations
under the Underwriting Agreements, the Loan Agreement, the Depository
Agreement and the Pooling and
10
<PAGE>
Servicing Agreement and to perform its obligations and
transactions contemplated hereby and thereby;
(ii) the Pooling and Servicing Agreement, the Loan Agreement,
the Depository Agreement, the Underwriting Agreements and the
Certificates have each been duly authorized, executed and delivered by
the Bank;
(iii) neither the execution nor the delivery of the
Underwriting Agreements, the Pooling and Servicing Agreement, the Loan
Agreement or the Depository Agreement nor the issuance or delivery of
the Certificates, nor the consummation of any of the transactions
contemplated herein or therein, nor the fulfillment of the terms of the
Certificates, the Underwriting Agreements, the Pooling and Servicing
Agreement, the Loan Agreement or the Depository Agreement will conflict
with or violate, result in a material breach of or constitute a default
under (A) any term or provision of the charter or by-laws of UCS or the
Bank or any statute or regulation currently applicable to UCS or the
Bank, (B) any term or provision of any order known to such counsel to
be currently applicable to UCS or the Bank of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over UCS or the Bank, or (C) any term or provision of any indenture or
other agreement or instrument known to such counsel to which UCS or the
Bank is a party or by which UCS or any of their properties are bound;
(iv) except as otherwise disclosed in the Prospectus (and any
supplements thereto) or the Registration Statement, there is no pending
or, to the best knowledge of such counsel, threatened action, suit or
proceeding before any court or governmental agency, authority or body
or any arbitrator with respect to the Trust, the Certificates, the
Pooling and Servicing Agreement, the Underwriting Agreements, the Loan
Agreement or the Depository Agreement or any of the transactions
contemplated herein or therein or with respect to UCS or the Bank
which, in the case of any such action, suit or proceeding with respect
to UCS or the Bank if adversely determined, would have a material
adverse effect on the Certificateholders or the Trust or upon the
ability of UCS or the Bank to perform its obligations under the Pooling
and Servicing Agreement.
(v) no approval, authorization, consent, order, registration,
filing, qualification, license or permit of or with any court or
governmental agency or body is required for the execution and delivery
by UCS or the Bank of the Certificates or any of the transactions
contemplated in the Underwriting Agreements, the Pooling and Servicing
Agreement, the Loan Agreement or the Depository Agreement, except such
as have been obtained under the Act and such as
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<PAGE>
may be required under the blue sky laws of any jurisdiction inside the
United States in connection with the purchase and distribution of the
Certificates by the Underwriters and the Class A Underwriters and such
filings or other approvals (specified in such opinion) as have been
made or obtained;
(d) The Underwriters shall have received from counsel to the
Bank, a favorable opinion dated the Closing Date and satisfactory in form and
substance to the Underwriters and counsel to the Underwriters, to the effect
that:
(i) the Pooling and Servicing Agreement and the Loan Agreement
have each been duly authorized, executed and delivered by the Bank and
each constitutes the legal, valid and binding agreement of the Bank
enforceable in accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally from
time to time in effect and to the application of general principles of
equity);
(ii) the Underwriting Agreements have been duly authorized,
executed and delivered by the Bank;
(iii) the Certificates have been duly authorized and, when
executed and authenticated in accordance with the terms of the Pooling
and Servicing Agreement and in the case of the Class B Certificates
delivered to and paid for by the Underwriters pursuant to this
Agreement, and, in the case of the Class A Certificates, delivered to
and paid for by the Class A Underwriters pursuant to the Class A
Underwriting Agreement, will be validly issued and outstanding,
enforceable in accordance with their terms (subject, as to enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally from
time to time in effect and to the application of general principles of
equity) and will be entitled to the benefits of the Pooling and
Servicing Agreement;
(iv) neither the execution nor the delivery of the
Underwriting Agreements, the Pooling and Servicing Agreement, the Loan
Agreement or the Depository Agreement nor the issuance or delivery of
the Certificates, nor the consummation of any of the transactions
contemplated herein or therein, nor the fulfillment of the terms of the
Certificates, the Underwriting Agreements, the Pooling and Servicing
Agreement, the Loan Agreement or the Depository Agreement will conflict
with or violate, result in a material breach of or constitute a default
under any Federal or New York statute or regulation currently
applicable to the Trust;
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<PAGE>
(v) no approval, authorization, consent, order, registration,
filing, qualification, license or permit of or with any Federal or New
York court or governmental body or agency is required for the
consummation by the Trust of the transactions contemplated in the
Underwriting Agreements, the Pooling and Servicing Agreement, the
Depository Agreement or the Loan Agreement or in connection with the
issuance of the Certificates, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction inside the United States in connection with the purchase
and distribution of the Class B Certificates by the Underwriters and
the Class A Underwriters and such filings or approvals as have been
made and obtained;
(vi) the Registration Statement has become effective under the
Act; any required filing of the Prospectus or any supplements thereto
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the best knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that purpose have
been instituted or threatened; the Registration Statement and the
Prospectus (and any supplements thereto) (other than financial and
statistical information contained therein as to which such counsel need
express no opinion) comply as to form in all material respects with the
applicable requirements of the Act and the rules thereunder;
(vii) the Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended. The
Trust is not now, and following the sale of the Certificates to the
Underwriters and the Class A Underwriters will not be, required to be
registered under the Investment Company Act of 1940, as amended;
(viii) such counsel has no reason to believe that at the
Effective Date the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus (and any supplements
thereto) includes any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
(other than financial and statistical information contained therein as
to which such counsel need express no opinion);
(ix) the Certificates, the Underwriting Agreements, the Loan
Agreement and the Pooling and Servicing Agreement conform in all
material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus (and any supplements
thereto); and
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<PAGE>
(x) the statements in the Registration Statement under the
heading "Certain Legal Aspects of the Receivables" (other than
"Consumer Protection Laws") to the extent that they constitute
statements of matters of law or legal conclusions with respect thereto,
are correct in all material respects.
In rendering such opinion counsel may rely (A) as to clauses
(i), (ii) and (xi) of this paragraph (d), insofar as they relate to the Bank, on
the opinion of Walter M. Korchun, General Counsel of UCS, (B) as to matters
involving the application of laws other than the General Corporation Law of the
State of Delaware or laws of any jurisdiction other than the State of New York
and the United States, to the extent deemed proper and stated in such opinion,
upon the opinion of other counsel of good standing believed by such counsel to
be reliable and acceptable to the Underwriters and counsel to the Underwriters,
and (C) as to matters of fact, to the extent deemed proper and as stated
therein, on certificates of responsible officers of the Trust, the Bank and
public officials.
(e) The Underwriters shall have received from Cravath, Swaine
& Moore, (i) in its capacity as counsel to the Underwriters, a favorable opinion
dated the Closing Date, with respect to the issuance and sale of the
Certificates, the Pooling and Servicing Agreement, the Registration Statement,
the Prospectus and such other related matters as the Underwriters may reasonably
require; and (ii) in its capacity as special Federal tax and ERISA counsel for
the Bank and the Trust, a favorable opinion dated the Closing Date, to the
effect that the statements in the Registration Statement and the Basic
Prospectus under the heading "Tax Matters" (other than "Limits of the
Discussion") accurately describe the material Federal income tax consequences to
holders of the Certificates, and the statements in the Registration Statement
and the Basic Prospectus under the heading "Benefit plan investors", to the
extent that they constitute statements of matters of law or legal conclusions
with respect thereto, have been prepared or reviewed by such counsel and
accurately describe the material consequences to holders of the Certificates
under ERISA; and the Bank shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass on all such
matters.
In giving their opinion, Cravath, Swaine & Moore may rely (A)
upon the opinions of counsel delivered pursuant to subsection (c) above, (B) as
to matters involving the application of laws of any jurisdiction other than the
State of New York, the United States or the General Corporation Law of the State
of Delaware, to the extent deemed proper and specified in such opinion, upon the
opinion of other counsel of good standing believed to be reliable, and (C) as to
matters of fact, to the extent deemed proper and as stated therein on
certificates of responsible officers of the Trust, the Bank, and public
14
<PAGE>
officials. References to the Prospectus in this paragraph (e)
include any supplements thereto.
(f) At the Execution Time and at the Closing Date, KPMG LLP
shall have furnished to the Underwriters a letter or letters, dated respectively
as of the date of this Agreement and as of the Closing Date, in form and
substance satisfactory to the Underwriters and counsel to the Underwriters,
confirming that they are certified independent public accountants and stating in
effect that (i) they have performed certain specified procedures as a result of
which they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the Trust and the
Bank) set forth in the Registration Statement and the Prospectus (and any
supplements thereto), agrees with the accounting records of the Trust and the
Bank, excluding any questions of legal interpretation, and (ii) they have
performed certain specified procedures with respect to the computer programs
used to select the initial Eligible Accounts and to generate information with
respect to the Accounts set forth in the Registration Statement and the
Prospectus (and any supplements thereto).
(g) The Underwriters shall have received evidence satisfactory
to them that, on or before the Closing Date, UCC-1 financing statements have
been filed in the offices of the Secretaries of State of Florida and Georgia and
such other jurisdictions as counsel to the Bank deems appropriate to reflect the
interest of the Trust in the Receivables and the proceeds thereof.
(h) The Loan Agreement shall have been duly authorized,
executed and delivered by each party thereto on or prior to the Closing Date.
(i) The Underwriters and the Bank shall have received from
counsel to the Agent admitted in [ ] (with respect to the Agent, the "Home
Country"), reasonably acceptable to the Underwriters and the Bank, favorable
opinions, dated the Closing Date and satisfactory in form and substance to the
Underwriters, counsel to the Underwriters, the Bank and their counsel, to the
effect that:(1)
(i) the Agent is a corporation duly organized and validly
existing under the laws of the Home Country and has the corporate power
and authority under the laws of the Home Country to execute, deliver
and perform its obligations under the Loan Agreement through the
Branch;
- --------
1 Adapt to each specific Home Country.
15
<PAGE>
(ii) the Loan Agreement has been duly authorized and, when
executed and delivered by the Agent through the Branch, will constitute
the valid and legally binding obligation of the Agent enforceable
against the Branch in accordance with its terms, subject, as to
enforcement, to (A) bankruptcy, insolvency, reorganization,
liquidation, readjustment of debt and other laws and equitable
principles relating to or affecting the enforcement of creditors'
rights generally as they may be applied in the event of the bankruptcy,
insolvency, reorganization, liquidation or readjustment of debt of, or
the appointment of a receiver with respect to the property of, or a
similar event applicable to, the Branch, and (B) the effect of any
moratorium or similar occurrence affecting the Branch;
(iii) the Loan Agreement is enforceable in accordance with its
terms against the Agent's head office in the Home Country if the Branch
defaults in its obligations thereunder, subject, as to enforcement, to
(A) bankruptcy, insolvency, reorganization, liquidation, readjustment
of debt and other laws and equitable principles relating to or
affecting the enforcement of creditors' rights generally as they may be
applied in the event of the bankruptcy, insolvency, reorganization,
liquidation or readjustment of debt of, or the appointment of a
receiver with respect to the property of, or a similar event applicable
to, the Agent, and (B) the effect of any moratorium or similar
occurrence affecting the Agent;
(iv) no consent or approval of any governmental authority in
the Home Country is required as a condition to the validity of the Loan
Agreement;
(v) the choice of the law of the State of New York to govern
the Loan Agreement is valid under the laws of the Home Country, and a
court in the Home Country would uphold such choice of law in a suit,
action or other proceeding on the Loan Agreement brought in a court of
the Home Country; and
(vi) any judgment for a fixed and definite sum of money
rendered by the courts of the State of New York or the United States of
America located in the State of New York, in respect of any suit,
action or other proceeding against the Branch for the enforcement of
the Loan Agreement will, upon request, be declared valid and
enforceable against the Agent by the competent courts of the Home
Country, without reexamination of the matters adjudicated upon, if such
judgment is not subject to appeal and is enforceable according to the
laws of the State of New York or United States Federal law. However,
such judgment will not be enforced if its contents are in violation of
fundamental principles of the Home Country legal system or if it has
16
<PAGE>
been rendered in violation of such principles. As a general rule it can
be stated that judgments of United States Federal courts and of courts
of the State of New York are enforceable in the Home Country, and such
counsel knows of no reason why such judgments would be a violation of
the fundamental principles of the Home Country legal system.
(j) The Underwriters and the Bank shall have received from
United States counsel for the Agent reasonably acceptable to the Underwriters
and the Bank, a favorable opinion, dated the Closing Date and satisfactory in
form and substance to the Underwriters, counsel to the Underwriters, the Bank
and their counsel to the effect that:
(i) the Agent is licensed by the Superintendent of Bank of the
State of New York to maintain a branch for the conduct of a banking
business at the Branch's address in New York City;
(ii) no authorization, consent or approval of or by any
governmental authority of the United States or the State of New York is
necessary for the execution, delivery and performance by the Agent or
the Branch of the Loan Agreement, except such authorizations, consents
and approvals as are in full force and effect;
(iii) the Loan Agreement has been duly authorized, executed
and delivered by the Branch; and
(iv) the Loan Agreement constitutes the legal, valid and
binding obligation of the Agent and the Branch, enforceable against the
Agent and the Branch in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, liquidation, moratorium, readjustment of debt or other
similar laws affecting the enforcement of creditors' rights generally,
as such laws may be applied in the event of a bankruptcy, insolvency,
reorganization, liquidation, moratorium, readjustment of debt or other
similar proceedings of or affecting the Agent or the Branch, and
subject to the application of general principles of equity regardless
of whether such enforceability is considered in a proceeding at law or
in equity.
(k) The Underwriters and the Bank shall have received from
Orrick, Herrington & Sutcliffe LLP, counsel for the Trustee, a favorable
opinion, dated the Closing Date and satisfactory in form and substance to the
Underwriters and counsel to the Underwriters, the Bank and its counsel, to the
effect that:
(i) the Trustee has been duly incorporated and is validly
existing as a banking corporation under the laws of the State of New
York, and has the power and authority
17
<PAGE>
(corporate and other) to enter into, and to take all action
required of it under the Pooling and Servicing Agreement and
the Loan Agreement;
(ii) the Pooling and Servicing Agreement and the Loan
Agreement have each been duly authorized, executed and delivered by the
Trustee and each constitutes a legal, valid and binding agreement of
the Trustee, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, liquidation,
reorganization, moratorium or other similar laws affecting the
enforcement of rights of creditors against the Trustee generally, as
such laws would apply in the event of bankruptcy, insolvency,
liquidation or reorganization or any moratorium or similar occurrence
affecting the Trustee, and the application of general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(iii) the Certificates have been duly authenticated and
delivered by the Trustee;
(iv) the execution and delivery of the Pooling and Servicing
Agreement and the Loan Agreement by the Trustee and the performance by
the Trustee of the terms of each do not conflict with or result in a
violation of (A) any law of the United States of America or the State
of New York or any regulation governing the banking or trust powers of
the Trustee, or (B) the articles of incorporation or by-laws of the
Trustee; and
(v) no approval, authorization or other action by, or filing
with, any governmental authority of the United States of America or the
State of New York having jurisdiction over the banking or trust powers
of the Trustee is required in connection with its execution and
delivery of the Pooling and Servicing Agreement and the Loan Agreement
or the performance by the Trustee of the terms of the Pooling and
Servicing Agreement and the Loan Agreement.
(l) The Underwriters and the Bank shall have received from
Williams, Parker, Harrison, Dietz & Getzen a favorable opinion, dated the
Closing Date and satisfactory in form and substance to the Underwriters, the
Bank and its counsel to the
effect that:
(i) insofar as the Georgia UCC is applicable (without regard
to principles of conflicts of laws), except for any Receivable that is
evidenced by an instrument or chattel paper, the Receivables will
constitute either "general intangibles" or "accounts," in each case as
defined under the Georgia UCC Section 9-106.
18
<PAGE>
(ii) if the transfer of the Receivables to the Trustee
pursuant to the Pooling and Servicing Agreement constituted a true sale
of the Receivables to Trustee, then, to the extent that Georgia law
governs the perfection and the effect of perfection or nonperfection of
such sale:
(a) with respect to Receivables in existence on the
date hereof, such sale transferred all of the right, title,
and interest of the Bank in and to such Receivables, free and
clear of any Liens now existing or hereafter created, but
subject to the rights of the Transferor or any Additional
Transferor as the holder of the Transferor's Certificate;
(b) with respect to Receivables which come into
existence after the date hereof, upon creation of such
Receivables and the subsequent transfer of such Receivables to
Trustee in accordance with the Pooling and Servicing Agreement
and receipt by the Bank of the consideration therefor required
pursuant to the Pooling and Servicing Agreement, such sale
will transfer all of the right, title, and interest of the
Bank in and to such Receivables to Trustee, free and clear of
any Liens, but subject to the rights of the Transferor or any
Additional Transferor as the holder of the Transferor's
Certificates;
and, in either case, no further action will thereafter be required
under the Georgia UCC to protect Trustee's ownership interest in such
Receivables against creditors of, or subsequent purchasers from, the
Bank. However, if the Receivables constitute "general intangibles"
rather than "accounts," in each case as defined in the Georgia UCC
Section 9-106, it is arguable that Trustee's ownership interest with
respect to Receivables which come into existence after the date hereof
will be subject to Liens which are in existence on the day such
Receivables come into existence. Nonetheless, a Georgia court,
following proper consideration of prevailing commercial practices and
other relevant factors, should hold that Trustee's ownership is not
subject to such Liens. Unless the Obligor in respect of a Receivable
has received notice of the assignment thereof (such notice not being
contemplated by the Pooling and Servicing Agreement): (i) in the event
a Georgia court deems that the State of Georgia-Financing
Statement-UCC-1 and Schedule I thereto do not constitute notice of
Trustee's ownership interest therein to either the Obligor or second
assignees of such Receivable, bona fide second assignees of such
Receivable may be deemed in certain instances to have a superior
interest in such Receivable; and (ii) bona fide payments made by such
Obligor to the Bank, or a second assignee of such Receivable (as to
which such Obligor has received notice of such assignment) will
discharge such
19
<PAGE>
Obligor's obligations to the extent of such payment, and such payment
will be recoverable only from the Bank, or, in certain cases, such
second assignee, as the case may be.
(iii) if the transfer of the Receivables to Trustee pursuant
to the Pooling and Servicing Agreement does not constitute a true sale
of such Receivables to Trustee, assuming that the Bank has rights in
the Receivables and the proceeds thereof, and that the Trustee gives
value to the Bank under the Pooling and Servicing Agreement, then,
insofar as the Georgia UCC is applicable (without regard to principles
of conflicts of laws), the Pooling and Servicing Agreement creates a
valid security interest in favor of Trustee in, the Bank's right,
title, and interest in and to such Receivables and the proceeds thereof
securing the obligations of the Bank thereunder. Such security interest
constitutes a perfected security interest in such Receivables and the
proceeds thereof subject to no prior or equal Liens, enforceable as
such against creditors of, and subsequent purchasers from the Bank.
(m) The Class B Certificates shall be given the highest
investment grade rating by Moody's Investors Service, Inc. ("Moody's"), and
Standard & Poor's Ratings Services ("S&P"), and neither S&P nor Moody's shall
have placed the Class B Certificates under review with possible negative
implications.
(n) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, there shall not have
been any change, or any development involving a prospective change, in or
affecting the business or properties of the Trust, the Bank or Citicorp the
effect of which, in any case referred to above, is, in the judgment of the
Underwriters (after consultation with the Bank), so material and adverse as to
make it impractical or inadvisable to proceed with the offering or the delivery
of the Certificates as contemplated by the Registration Statement and the
Prospectus (and any supplements thereto).
(o) The Bank shall have used its best efforts to cause the
Class B Certificates to be approved for listing on the Luxembourg Stock Exchange
on or before the Closing Date.
(p) Simultaneously with or prior to the Closing, $[ ]
aggregate principal amount of the Class A Certificates shall have been sold to
the Class A Underwriters.
(q) Simultaneously with or prior to the Closing $[ ] aggregate
principal amount of Collateral Interest shall have been sold to the Collateral
Interest Holder.
(r) The Underwriters and counsel to the Underwriters
shall have received such information, certificates and documents
20
<PAGE>
as the Underwriters or counsel to the Underwriters may reasonably
request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions or certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Underwriters and counsel to the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Underwriters. Notice of such cancelation shall be given to the Trust and the
Bank in writing or by telephone or telegraph confirmed in writing.
Section 7. Reimbursement of Expenses. If the sale of the Class
A Certificates provided for herein is not consummated because any condition to
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 9 hereof or because of any
refusal, inability or failure on the part of the Bank to perform any agreement
herein or to comply with any provision hereof other than by reason of a default
by the Underwriters, the Bank will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by the Underwriters in
connection with the proposed purchase and sale of the Class B Certificates.
Section 8. Indemnification and Contribution. (a) The Bank
agrees to indemnify and hold harmless each Underwriter and each person who
controls any Underwriter within the meaning of the Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Certificates as originally filed or in any amendment thereof, or in any
Preliminary Prospectus, the Basic Prospectus or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agree to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) the Bank will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission
21
<PAGE>
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Bank by or on behalf of any Underwriter
specifically for use in connection with the preparation thereof, and (ii) such
indemnity with respect to the Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Class B
Certificates which are the subject thereof if such person did not receive a copy
of the Prospectus (or the Prospectus as supplemented) excluding documents
incorporated therein by reference at or prior to the confirmation of the sale of
such Class B Certificates to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a material fact
contained in any Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as supplemented). This indemnity agreement will be in addition to any
liability which the Bank may otherwise have.
(b) Each Underwriter, severally, agrees to indemnify and hold
harmless the Bank, each of its directors, each of the officers who signs the
Registration Statement, and each person who controls the Bank within the meaning
of the Act, to the same extent as the foregoing indemnities from the Bank to
each Underwriter, but only with reference to written information relating to
such Underwriter furnished to the Bank by or on behalf of such Underwriter
specifically for use in the preparation of the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Bank acknowledge that
the statements relating to the Underwriters and this Agreement set forth in the
second sentence under the heading "General risk factors"--"You may not be able
to resell your certificates" and the statements under the heading "Underwriting"
in any Preliminary Prospectus, the Basic Prospectus and the Prospectus
constitute the only information furnished in writing by or on behalf of any
Underwriter for inclusion in any Preliminary Prospectus, the Basic Prospectus or
the Prospectus, and each Underwriter confirms that such statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled, jointly with any
other indemnifying party similarly notified, to appoint counsel satisfactory to
such indemnified party to represent the
22
<PAGE>
indemnified party in such action; provided, however, that if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
appoint counsel to defend such action and approval by the indemnified party of
such counsel, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by the
Underwriters in the case of paragraph (a) of this Section 8, representing the
indemnified parties under such paragraph (a) who are parties to such action),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall be only in respect of the counsel referred to in such
clause (i) or (iii).
(d) To provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable on grounds of policy or otherwise, the Bank, on the one
hand, and the Underwriters, on the other, shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same) to which
the Bank and the Underwriters may be subject in such proportion so that the
Underwriters shall be responsible for that portion represented by the percentage
that the underwriting discount appearing on the cover page of the Prospectus
bears to the public offering price appearing thereon and the Bank shall be
responsible for the balance; provided, however, that (i) in no case shall any
Underwriter (except as may be provided in the agreement among underwriters
relating to the offering of the Class B Certificates) be responsible for any
amount in excess of the underwriting discount applicable to the Class B
Certificates purchased by such Underwriter hereunder and (ii) no person guilty
of fraudulent misrepresentation (within the
23
<PAGE>
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls any Underwriter within the meaning of
the Act shall have the same rights to contribution as such Underwriter, and each
person who controls the Bank within the meaning of the Act, each officer of the
Bank who shall have signed the Registration Statement and each director of the
Bank shall have the same rights to contribution as the Bank, as the case may be,
subject in each case to clauses (i) and (ii) of this paragraph (d). Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made against any other party or parties under this
paragraph (d), notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this paragraph
(d).
Section 9. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Underwriters, by notice given to
the Bank prior to delivery of and payment for the Class B Certificates, if prior
to such time (i) trading in securities generally on the New York or Luxembourg
Stock Exchange shall have been suspended or limited or minimum prices shall have
been established on such other Exchange, (ii) a banking moratorium shall have
been declared by Federal, New York state authorities or (iii) there shall have
occurred any outbreak or material escalation of hostilities or other calamity or
crisis the effect of which on the financial markets of the United States of
America, Japan or Europe is such as to make it, in the judgment of the
Underwriters, impractical or inadvisable to market the Class B Certificates.
Section 10. Representations and Indemnities To Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Trust, the Bank or its officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the Underwriters
or the Trust, the Bank or any of the officers, directors or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Class B Certificates. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancelation of this Agreement.
Section 11. Notices. All communications hereunder
shall be in writing and effective only on receipt, and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to them c/o [ ], [ADDRESS],
Attention of [ ] and, if sent to the Bank, will be
24
<PAGE>
mailed, delivered or telegraphed and confirmed to it at
[ADDRESS], attention of General Counsel.
Section 12. Applicable Law. This Agreement will be
governed by and construed in accordance with the laws of the
State of New York. This Agreement supersedes all prior
agreements and understandings relating to the subject matter
hereof.
Section 13. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers, directors and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
Section 14. Miscellaneous. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
Section 15. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the Class B Certificates
agreed to be purchased by such Underwriter or Underwriters hereunder and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions which
the amount of Class B Certificates set forth opposite their names in Schedule I
hereto bears to the aggregate amount of Class B Certificates set forth opposite
the names of all the remaining Underwriters) the Class B Certificates which the
defaulting Underwriter or Underwriters agreed but failed to purchase; provided,
however, that in the event that the aggregate amount of Class B Certificates
which the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate principal amount of Class B Certificates set
forth in Schedule I hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Class B Certificates, and if such nondefaulting Underwriters do not purchase all
the Class B Certificates, this Agreement will terminate without liability to any
nondefaulting Underwriter, the Trust or the Bank. In the event of a default by
any Underwriter as set forth in this Section 15, the Closing Date shall be
postponed for such period, not exceeding seven days, as the Underwriters shall
determine in order that the required changes in the Registration Statement and
the Prospectus (and any supplements thereto) or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to
25
<PAGE>
the Bank and any nondefaulting Underwriter for damages occasioned
by its default hereunder.
Section 16. Representation of Underwriters. The Representative
will act for the several Underwriters in connection with this financing, and any
action under this Agreement taken by the Representative will be binding upon all
the Underwriters.
If you are in agreement with the foregoing, please sign two
counterparts hereof and return one to the Bank, whereupon this letter and your
acceptance shall become a binding agreement
26
<PAGE>
among the Bank and the several Underwriters.
Very truly yours,
UNIVERSAL BANK, N.A.,
by___________________________
Name:
Title:
ACCEPTED AND AGREED:
[ ]
by___________________________
Name:
Title:
For itself and the other
several Underwriters named in
Schedule I to the foregoing
27
<PAGE>
SCHEDULE I
- ------------------------------------------------- ------------------------
Underwriter Principal Amount
[ ]............................. $[ ]
[ ]............................. [ ]
[ ]............................. [ ]
Total ........................................... [ ]
============
28
SERIES [199_-_] SUPPLEMENT
Dated as of [ ], [199_]
to
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
Dated as of April 24, 1998
$[ ]
------------------------------
UNIVERSAL CARD MASTER TRUST
Series [199_-_]
------------------------------
among
UNIVERSAL BANK
Transferor
UNIVERSAL CARD SERVICES CORP.
Servicer
and
BANKERS TRUST COMPANY
Trustee
on behalf of the Series [199_-_] Certificateholders
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Creation of the Series [199_-_] Certificates
Section 1.01. Designation....................................................1
ARTICLE II
Definitions
Section 2.01. Definitions....................................................2
ARTICLE III
Servicing Fee and Interchange
Section 3.01. Servicing Compensation; Interchange...........................18
ARTICLE IV
Rights of Series [199_-_] Certificateholders and
Allocation and Application of Collections
Section 4.01. Collections and Allocations...................................20
Section 4.02. Determination of Monthly Interest; Interest Funding Account...22
Section 4.03. Principal Funding Account; Controlled Accumulation Period ....26
Section 4.04. Required Amount...............................................28
Section 4.05. Application of Class A Available Funds, Class B Available
Funds, Collateral Available Funds and Available Principal
Collections..............................................28
Section 4.06. Defaulted Amounts; Investor Charge-Offs.......................31
Section 4.07. Excess Spread; Excess Finance Charge Collections..............33
Section 4.08. Reallocated Principal Collections.............................34
Section 4.09. Excess Finance Charge Collections.............................35
Section 4.10. Reallocated Investor Finance Charge Collections...............36
Section 4.11. Shared Principal Collections..................................37
Section 4.12. Reserve Account...............................................38
Section 4.13. Determination of LIBOR........................................39
Section 4.14. Investment Instructions.......................................40
i
<PAGE>
ARTICLE V
Distributions and Reports to
Series [199_-_] Certificateholders
Section 5.01. Distributions.................................................40
Section 5.02. Reports and Statements to Series [199_-_] Certificateholders..42
ARTICLE VI
Pay Out Events
Section 6.01. Pay Out Events................................................42
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.01. Optional Repurchase...........................................44
Section 7.02. Series Termination............................................44
ARTICLE VIII
Final Distributions
Section 8.01. Sale of Receivables or Certificateholders' Interest pursuant to
Section 2.06 or 10.01 of the Agreement and Section 7.01
or 7.02 of this Supplement..............................45
Section 8.02. Distribution of Proceeds of Sale, Disposition or Liquidation of
the Receivables pursuant to Section 9.01 of the
Agreement...............................................46
ARTICLE IX
Miscellaneous Provisions
Section 9.01. Ratification of Agreement.....................................48
Section 9.02. Counterparts..................................................48
Section 9.03. Governing Law.................................................48
EXHIBITS
EXHIBIT A-1 - Form of Class A Certificate
EXHIBIT A-2 - Form of Class B Certificate
EXHIBIT B - Form of Monthly Payment Instructions and Notification
to the Trustee
EXHIBIT C - Form of Monthly Series [199_-_] Certificateholders'
Statement
EXHIBIT D - Form of Servicer's Certificate
ii
<PAGE>
SERIES [199_-_] SUPPLEMENT, dated as of [ ], [199_] (the
"Supplement"), between UNIVERSAL BANK, a national banking association, as
Transferor, UNIVERSAL CARD SERVICES CORP., as Servicer, and BANKERS TRUST
COMPANY, a banking corporation organized and existing under the laws of the
State of New York, not in its individual capacity, but solely as Trustee.
Pursuant to the Amended and Restated Pooling and Servicing
Agreement dated as of April 24, 1998 (as amended and supplemented, the
"Agreement"), among the Transferor, the Servicer and the Trustee, the Transferor
has continued the Universal Card Master Trust (the "Trust"). Section 6.03 of the
Agreement provides that the Transferor may from time to time direct the Trustee
to authenticate one or more new Series of Investor Certificates representing
fractional undivided interests in the Trust. The Principal Terms of any new
Series are to be set forth in a Supplement to the Agreement.
Pursuant to this Supplement, the Transferor and the Trustee
shall create a new Series of Investor Certificates and specify the Principal
Terms thereof.
ARTICLE I
Creation of the Series [199_-_] Certificates
Section 1.01. Designation. (a) There is hereby created a Series
of Investor Certificates to be issued pursuant to the Agreement and this
Supplement to be known as "Universal Card Master Trust, Series [199_-_]." The
Series [199_-_] Certificates shall be issued in two Classes, the first of which
shall be known as the "Class A Series [199_-_] [Floating Rate] Asset Backed
Certificates" and the second of which shall be known as the "Class B Series
[199_-_] [Floating Rate] Asset Backed Certificates." In addition, there is
hereby created a third Class of uncertificated interests in the Trust which,
except as expressly provided herein, shall be deemed to be "Investor
Certificates" for all purposes under the Agreement and this Supplement (other
than for purposes of the definition of the term "Tax Opinion" in Section 1.01 of
the Agreement) and which shall be known as the "Collateral Interest, Series
[199_-_]." The Collateral Interest shall be considered a Class of Series
[199_-_] for all purposes of the Agreement and this Supplement, including for
purposes of voting concerning the liquidation of the Trust pursuant to Section
9.01 of the Agreement. The Collateral Interest Holder shall be deemed to be the
Series Enhancer for all purposes under the Agreement and this Supplement.
(b) Series [199_-_] shall be included in Group [I] [and shall be
a Principal Sharing Series]. [Series [199_-_] shall be an Excess Allocation
Series.] [Series [199_-_] shall not be subordinated to any other Series.]
Notwithstanding any provision in the Agreement or in this Supplement to the
contrary, the first Distribution Date with respect to Series [199_-_] shall be
the [ ], [199_] Distribution Date and the first Monthly Period shall begin on
and include [ ], [199_] and end on and include [ ], [199_].
(c) Except as expressly provided herein, the provisions of
Article VI and Article XII of the Agreement relating to the registration,
authentication, delivery, presentation, cancellation and surrender of Registered
Certificates shall not be applicable to the Collateral Interest.
1
<PAGE>
ARTICLE II
Definitions
Section 2.01. Definitions. (a) Whenever used in this Supplement,
the following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and the masculine as well as the feminine and neuter genders
of such terms.
"Additional Interest" means, with respect to any Distribution
Date, the Class A Additional Interest, the Class B Additional Interest and the
Collateral Additional Interest for such Distribution Date.
"Adjusted Invested Amount" shall mean, with respect to any date
of determination, an amount equal to the Invested Amount, less the Principal
Funding Account Balance on such date of determination.
"Available Principal Collections" shall mean, with respect to any
Monthly Period, an amount equal to the sum of (a) (i) an amount equal to the
Principal Allocation Percentage of Series [199_-_] Allocable Principal
Collections received during such Monthly Period minus (ii) the amount of
Reallocated Principal Collections with respect to such Monthly Period which
pursuant to subsection 4.08(a) or (b) are required to fund the Required Amount
for the related Distribution Date, (b) [any Shared Principal Collections with
respect to other Series that are allocated to Series [199_-_] in accordance with
Section 4.04 of the Agreement and Section 4.11 hereof, and (c)] any other
amounts which pursuant to Section 4.05 or 4.07 hereof are to be treated as
Available Principal Collections with respect to the related Distribution Date.
"Available Reserve Account Amount" shall mean, with respect to
any Distribution Date, the lesser of (a) the amount on deposit in the Reserve
Account on such date (before giving effect to any deposit to be made to the
Reserve Account on such date) and (b) the Required Reserve Account Amount.
"Base Rate" shall mean, with respect to any Monthly Period,
the annualized percentage equivalent of a fraction, the numerator of which is
equal to the sum of the Class A Monthly Interest, the Class B Monthly Interest,
Collateral Monthly Interest and the Monthly Servicing Fee with respect to the
related Distribution Date and the denominator of which is the Invested Amount as
of the last day of the preceding Monthly Period.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.02(a).
"Class A Adjusted Invested Amount" shall mean, with respect to
any date of determination, an amount equal to the Class A Invested Amount less
the Principal Funding Account Balance (but not in excess of the Class A Invested
Amount) on such date.
"Class A Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the sum of (a) if such Monthly Period relates to a
Distribution Date with respect to the Controlled Accumulation Period, the amount
of Principal Funding Investment Proceeds, if any, with respect to such
Distribution Date, (b) the Class A Floating Percentage of the Reallocated
Investor Finance Charge Collections and (c) the amount of funds, if any, to be
withdrawn from the Reserve Account which, pursuant to subsection 4.12(d), are
required to be included in Class A Available Funds with respect to such
Distribution Date.
["Class A Certificate Rate" shall mean, for any Interest Period
with respect to the Class A Certificates, a per annum rate of [ ]% above LIBOR
determined on the related LIBOR Determination Date, calculated on the basis of
actual days elapsed and a 360-day year.]
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"Class A Certificateholder" shall mean the Person in whose name a
Class A Certificate is registered in the Certificate Register.
"Class A Certificates" shall mean any one of the Certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-l.
"Class A Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class A Adjusted
Invested Amount as of the close of business on the last day of the preceding
Monthly Period and the denominator of which is equal to the Adjusted Invested
Amount as of such day; provided, however, that with respect to the first Monthly
Period, the Class A Floating Percentage shall mean the percentage equivalent of
a fraction, the numerator of which is the Class A Initial Invested Amount and
the denominator of which is the Initial Invested Amount.
"Class A Initial Invested Amount" shall mean $[ ].
"Class A Interest Shortfall" shall have the meaning specified in
subsection 4.02(a).
"Class A Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class A Initial Invested Amount, minus
(b) the aggregate amount of principal payments made to the Class A
Certificateholders on or prior to such date, minus (c) the excess, if any, of
the aggregate amount of Class A Investor Charge-Offs for all prior Distribution
Dates over Class A Investor Charge-Offs reimbursed pursuant to subsection
4.07(b) prior to such date.
"Class A Investor Charge-Offs" shall have the meaning specified
in subsection 4.06(a).
"Class A Investor Default Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (i) the Investor
Default Amount for the related Monthly Period and (ii) the Class A Floating
Percentage for such Monthly Period.
"Class A Monthly Interest" shall have the meaning specified in
subsection 4.02(a).
"Class A Principal Percentage" shall mean, with respect to any
Monthly Period (i) during the Revolving Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which is the
Class A Invested Amount as of the last day of the immediately preceding Monthly
Period and the denominator of which is the Invested Amount as of such day and
(ii) during the Controlled Accumulation Period or the Early Amortization Period,
the percentage equivalent (which percentage shall never exceed 100%) of a
fraction, the numerator of which is the Class A Invested Amount as of the end of
the Revolving Period, and the denominator of which is the Invested Amount as of
the end of the Revolving Period; provided, however, that with respect to the
first Monthly Period, the Class A Principal Percentage shall mean the percentage
equivalent of a fraction, the numerator of which is the Class A Initial Invested
Amount and denominator of which is the Initial Invested Amount.
"Class A Required Amount" shall have the meaning specified in
subsection 4.04(a).
"Class A Servicing Fee" shall have the meaning specified in
Section 3.01.
"Class B Additional Interest" shall have the meaning specified in
subsection 4.02(b).
"Class B Adjusted Invested Amount" shall mean an amount equal to
the Class B Invested Amount less the positive difference, if any, between the
Principal Funding Account Balance and the Class A Invested Amount on such date.
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"Class B Available Funds" shall mean, with respect to any Monthly
Period, an amount equal to the Class B Floating Percentage of the Reallocated
Investor Finance Charge Collections.
["Class B Certificate Rate" shall mean, for any Interest Period
with respect to the Class B Certificates, a per annum rate of [ ]% above LIBOR
determined on the related LIBOR Determination Date, calculated on the basis of
actual days elapsed and a 360-day year.]
"Class B Certificateholder" shall mean the Person in whose name a
Class B Certificate is registered in the Certificate Register.
"Class B Certificates" shall mean any one of the Certificates
executed by the Transferor and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2.
"Class B Floating Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is equal to the Class B Adjusted
Invested Amount as of the close of business on the last day of the preceding
Monthly Period and the denominator of which is equal to the Adjusted Invested
Amount as of the close of business on such day; provided, however, that with
respect to the first Monthly Period, the Class B Floating Percentage shall mean
the percentage equivalent of a fraction, the numerator of which is the Class B
Initial Invested Amount and the denominator of which is the Initial Invested
Amount.
"Class B Initial Invested Amount" shall mean $[ ].
"Class B Interest Shortfall" shall have the meaning specified in
subsection 4.02(b).
"Class B Invested Amount" shall mean, on any date of
determination, an amount equal to (a) the Class B Initial Invested Amount, minus
(b) the aggregate amount of principal payments made to the Class B
Certificateholders prior to such date, minus (c) the aggregate amount of Class B
Investor Charge-Offs for all prior Distribution Dates, minus (d) the amount of
Reallocated Principal Collections allocated on all prior Distribution Dates
pursuant to subsection 4.08(a) (excluding any Reallocated Principal Collections
that have resulted in a reduction in the Collateral Invested Amount pursuant to
Section 4.08), minus (e) an amount equal to the amount by which the Class B
Invested Amount has been reduced on all prior Distribution Dates pursuant to
subsection 4.06(a) and plus (f) the amount of Excess Spread and Excess Finance
Charge Collections allocated and available on all prior Distribution Dates
pursuant to subsection 4.07(d) for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c), (d) and (e); provided, however, that the
Class B Invested Amount may not be reduced below zero.
"Class B Investor Charge-Offs" shall have the meaning specified
in subsection 4.06(b).
"Class B Investor Default Amount" shall mean, with respect to
each Distribution Date, an amount equal to the product of (i) the Investor
Default Amount for the related Monthly Period and (ii) the Class B Floating
Percentage for such Monthly Period.
"Class B Monthly Interest" shall have the meaning specified in
subsection 4.02(b).
"Class B Principal Percentage" shall mean, with respect to any
Monthly Period, (i) during the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Class B Invested Amount as of the last day of the immediately preceding
Monthly Period and the denominator of which is the Invested Amount as of such
day and (ii) during the Controlled Accumulation Period or the Early Amortization
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class B Invested Amount as of the end
of the Revolving Period, and the denominator of which is the Invested Amount as
of the end of the Revolving Period; provided, however, that with respect to the
first Monthly Period, the Class B
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Principal Percentage shall mean the percentage equivalent of a fraction, the
numerator of which is the Class B Initial Invested Amount and the denominator of
which is the Initial Invested Amount.
"Class B Required Amount" shall have the meaning set forth in
subsection 4.04(b).
"Class B Servicing Fee" shall have the meaning specified in
Section 3.01.
"Closing Date" shall mean [ ], [199_].
"Collateral Additional Interest" shall have the meaning specified
in subsection 4.02(e).
"Collateral Available Funds" shall mean with respect to any
Distribution Date, the Collateral Floating Percentage of Reallocated Investor
Finance Charge Collections with respect to the preceding Monthly Period.
"Collateral Charge-Offs" shall have the meaning specified in
subsection 4.06(c).
"Collateral Default Amount" shall mean, with respect to any
Distribution Date, the product of the Investor Default Amount for the related
Monthly Period and the Collateral Floating Percentage.
"Collateral Floating Percentage" shall mean, with respect to any
Distribution Date, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is equal to the Collateral
Invested Amount as of the close of business on the last day of the preceding
Monthly Period and the denominator of which is the Adjusted Invested Amount as
of the close of business on such last day; provided, however, that with respect
to the first Monthly Period, the Collateral Floating Percentage shall mean the
percentage equivalent of a fraction, the numerator of which is the Collateral
Initial Invested Amount and the denominator of which is the Initial Invested
Amount.
"Collateral Initial Invested Amount" shall mean $[ ].
"Collateral Interest" shall mean a fractional undivided interest
in the Trust which shall consist of the right to receive, to the extent
necessary to make the required payments to the Collateral Interest Holder under
this Supplement, the portion of Collections allocable thereto under the
Agreement and this Supplement and funds on deposit in the Collection Account
allocable thereto pursuant to the Agreement and this Supplement.
"Collateral Interest Holder" shall mean the entity so designated
in the Loan Agreement.
"Collateral Interest Shortfall" shall have the meaning specified
in subsection 4.02(e).
"Collateral Invested Amount" shall mean, when used with respect
to any date, an amount equal to (a) the Collateral Initial Invested Amount,
minus (b) the aggregate amount of principal payments made to the Collateral
Interest Holder prior to such date, minus (c) the aggregate amount of Collateral
Charge-Offs for all prior Distribution Dates pursuant to subsection 4.06(c),
minus (d) the aggregate amount of Reallocated Principal Collections allocated on
all prior Distribution Dates pursuant to Section 4.08 allocable to the
Collateral Invested Amount, minus (e) an amount equal to the amount by which the
Collateral Invested Amount has been reduced on all prior Distribution Dates
pursuant to subsections 4.06(a) and (b), and plus (f) the amount allocated and
available on all prior Distribution Dates pursuant to subsection 4.07(h), for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e); provided, however, that the Collateral Invested Amount may not
be reduced below zero.
"Collateral Monthly Interest" shall have the meaning specified in
subsection 4.02(e).
"Collateral Principal Percentage" shall mean, with respect to any
Monthly Period, (i) during the Revolving Period, the percentage equivalent
(which percentage shall never exceed 100%) of a fraction, the numerator of which
is the Collateral Invested Amount as of the last day of the immediately
preceding Monthly Period and the denominator of which is the Invested Amount as
of such day and (ii) during the Controlled Accumulation Period or the Early
Amortization Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Collateral Invested
Amount as of the end of the Revolving Period, and the denominator of which is
the Invested Amount as of the end of the Revolving Period; provided, however,
that with respect to the first Monthly Period, the Collateral Principal
Percentage shall mean the percentage equivalent of a fraction, the numerator of
which is the Collateral Initial Invested Amount and the denominator of which is
the Initial Invested Amount.
"Collateral Rate" shall mean the rate specified in the Loan
Agreement.
"Collateral Servicing Fee" shall have the meaning set forth in
Section 3.01.
"Controlled Accumulation Amount" shall mean, for any Distribution
Date with respect to the Controlled Accumulation Period, $[ ]; provided,
however, that, if the Controlled Accumulation Period Length is determined to be
less than 12 months, the Controlled Accumulation Amount for each Distribution
Date with respect to the Controlled Accumulation Period will be equal to (i) the
product of (x) the sum of the Class A Initial Invested Amount and the Class B
Initial Invested Amount and (y) the Controlled Accumulation Period Factor for
the related Monthly Period divided by (ii) the Required Accumulation Factor
Number and provided, further, that after the Class A Invested Amount and the
Class B Invested Amount are paid in full, the Controlled Accumulation Amount
shall mean the Collateral Invested Amount.
"Controlled Accumulation Period" shall mean, unless a Pay Out
Event shall have occurred prior thereto, the period commencing at the close of
business on [ ], [ ], or such later date as is determined in accordance with
subsection 4.03(c) and ending on the first to occur of (a) the commencement of
the Early Amortization Period, (b) the payment in full of the Invested Amount
and (c) the Series [199_-_] Termination Date.
"Controlled Accumulation Period Factor" shall mean, for each
Monthly Period, a fraction, the numerator of which is equal to the sum of the
series invested amounts as of the last day of the prior Monthly Period of all
outstanding Series, and the denominator of which is equal to the sum (without
duplication) of (a) the Series Invested Amount as of the last day of the prior
Monthly Period, (b) the series invested amounts as of the last day of the prior
Monthly Period of all outstanding Series (other than Series [199_-_]) that are
not expected to be in their revolving periods, and (c) the series invested
amounts as of the last day of the prior Monthly Period of all other outstanding
Series that are not Principal Sharing Series and are in their revolving periods.
"Controlled Accumulation Period Length" has the meaning specified
in subsection 4.03(c).
"Controlled Deposit Amount" shall mean, for any Distribution Date
with respect to the Controlled Accumulation Period, an amount equal to the sum
of the Controlled Accumulation Amount for such Distribution Date and any Deficit
Controlled Accumulation Amount for the immediately preceding Distribution Date.
"Covered Amount" shall mean, for any Distribution Date with
respect to the Controlled Accumulation Period or the first Special Payment Date,
if such Special Payment Date occurs prior to the date the Class A Invested
Amount is paid in full, an amount equal to the product of (i) a fraction, the
numerator of which is the actual number of days in the period from and including
the immediately preceding Distribution Date to but excluding such Distribution
Date and the denominator of which is 360,
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times (ii) the Class A Certificate Rate in effect during such period, and (iii)
the Principal Funding Account Balance, if any, as of the preceding Distribution
Date.
"Deficit Controlled Accumulation Amount" shall mean (a) on the
first Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount for such Distribution Date
over the amount deposited in the Principal Funding Account on such Distribution
Date and (b) on each subsequent Distribution Date with respect to the Controlled
Accumulation Period, the excess, if any, of the Controlled Deposit Amount for
such subsequent Distribution Date over the amount deposited in the Principal
Funding Account on such subsequent Distribution Date.
"Distribution Date" shall mean [ ], [199_] and the seventeenth
day of each calendar month thereafter, or if such seventeenth day is not a
Business Day, the next succeeding Business Day.
"Early Amortization Period" shall mean the period commencing at
the close of business on the Business Day immediately preceding the day on which
a Pay Out Event with respect to Series [199_-_] is deemed to have occurred, and
ending on the first to occur of (i) the payment in full of the Invested Amount
or (ii) the Series [199_-_] Termination Date.
"Excess Finance Charge Collections" shall have the meaning
specified in Section 4.09.
"Excess Spread" shall mean, with respect to any Distribution
Date, the sum of the amounts, if any, specified pursuant to subsections
4.05(a)(iv), 4.05(b)(iii) and 4.05(c)(ii) with respect to such Distribution
Date.
"Expected Final Payment Date" shall mean the [ ] Distribution
Date.
"Finance Charge Shortfall" shall have the meaning specified in
Section 4.09.
"Floating Allocation Percentage" shall mean, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Adjusted Invested Amount as
of the last day of the preceding Monthly Period (or with respect to the first
Monthly Period, the Initial Invested Amount) and the denominator of which is the
product of (x) the Series [199_-_] Allocation Percentage with respect to such
Monthly Period and (y) the sum of (i) the total amount of Principal Receivables
in the Trust as of such day (or with respect to the first Monthly Period, the
total amount of Principal Receivables in the Trust on the Closing Date) and (ii)
the principal amount on deposit in the Special Funding Account as of such last
day (or with respect to the first Monthly Period, as of the Closing Date);
provided, however, that with respect to any Monthly Period in which an Addition
Date for an Aggregate Addition or a Removal Date occurs the amount in (y)(i)
above shall be (1) the aggregate amount of Principal Receivables in the Trust at
the end of the day on the last day of the prior Monthly Period for the period
from and including the first day of such Monthly Period to but excluding the
related Addition Date or Removal Date and (2) the aggregate amount of Principal
Receivables in the Trust at the end of the day on the related Addition Date or
Removal Date for the period from and including the related Addition Date or
Removal Date to and including the last day of such Monthly Period.
["Group I" shall mean [Series [199-_],] Series 1997-1, Series
1995-3, Series 1996-1, Series 1996-2 and Series 1996-3 and each other Series
specified in the related Supplement to be included in Group I.]
"Group [I] Investor Additional Amounts" shall mean, with respect
to any Distribution Date, the sum of (a) Series [199_-_] Additional Amounts for
such Distribution Date and (b) for all other Series included in Group [I], the
sum of (i) the aggregate net amount by which the Invested Amounts of such Series
have been reduced as a result of investor charge-offs, subordination of
principal collections and funding the investor default amounts in respect of any
Class or Series Enhancement interests of such Series
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as of such Distribution Date and (ii) if the applicable Supplements so provide,
the aggregate unpaid amount of interest at the applicable certificate rates that
has accrued on the amounts described in the preceding clause (i) for such
Distribution Date.
"Group [I] Investor Default Amount" shall mean, with respect to
any Distribution Date, the sum of (a) the Investor Default Amount for such
Distribution Date and (b) the aggregate amount of the investor default amounts
for all other Series included in Group [I] for such Distribution Date.
"Group [I] Investor Finance Charge Collections" shall mean, with
respect to any Distribution Date, the sum of (a) Investor Finance Charge
Collections for such Distribution Date and (b) the aggregate amount of the
investor finance charge collections for all other Series included in Group [I]
for such Distribution Date.
"Group [I] Investor Monthly Fees" shall mean with respect to any
Distribution Date, the sum of (a) Series [199_-_] Monthly Fees for such
Distribution Date and (b) the aggregate amount of the servicing fees, investor
fees, fees payable to any Series Enhancer and any other similar fees, which are
payable out of reallocated investor finance charge collections pursuant to the
related Supplements, for all other Series included in Group [I] for such
Distribution Date.
"Group [I] Investor Monthly Interest" shall mean, with respect to
any Distribution Date, the sum of (a) Series [199_-_] Monthly Interest for such
Distribution Date and (b) the aggregate amount of monthly interest, including
overdue monthly interest and interest on such overdue monthly interest, if such
amounts are payable out of reallocated investor finance charge collections
pursuant to the related Supplements, for all other Series included in Group [I]
for such Distribution Date.
"Initial Invested Amount" shall mean $[ ].
"Interest Funding Account" shall have the meaning set forth in
subsection 4.02(c)(i).
"Interest Funding Investment Proceeds" shall have the meaning
specified in subsection 4.02(c)(ii).
"Interest Payment Date" shall mean the 17th day of [ ], [ ], [ ]
and [ ] (or, if any such day is not a Business Day, the next succeeding Business
Day), and the Expected Final Payment Date, commencing on the [ ] [199_]
Distribution Date.
"Interest Period" shall mean, with respect to any Payment Date,
the period from and including the Payment Date immediately preceding such
Payment Date (or, in the case of the first Payment Date, from and including the
Closing Date) to but excluding such Payment Date.
"Invested Amount" shall mean, as of any date of determination, an
amount equal to the sum of (a) the Class A Invested Amount as of such date, (b)
the Class B Invested Amount as of such date and (c) the Collateral Invested
Amount as of such date.
"Investor Charge-Offs" shall mean Class A Investor Charge-Offs,
Class B Investor Charge-Offs and Collateral Charge-Offs.
"Investor Default Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Series [199_-_]
Allocable Defaulted Amount for the related Monthly Period and (b) the Floating
Allocation Percentage for such Monthly Period.
"Investor Finance Charge Collections" shall mean with respect to
any Distribution Date, an amount equal to the product of (a) the Floating
Allocation Percentage for the related Monthly Period and
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(b) Series [199_-_] Allocable Finance Charge Collections deposited in the
Collection Account for the related Monthly Period.
["LIBOR" shall mean, for any Interest Period, an interest rate
per annum determined by the Trustee for such Interest Period in accordance with
the provisions of Section 4.13.]
["LIBOR Determination Date" shall mean [ ], [199_] for the
initial Interest Period, and the second London Business Day prior to the
commencement of the second and each subsequent Interest Period.]
"Loan Agreement" shall mean the agreement among the Transferor,
the Trustee and the Collateral Interest Holder, dated [ ], [199_].
"London Business Day" shall mean any day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"Monthly Interest" means, with respect to any Distribution Date,
the Class A Monthly Interest, the Class B Monthly Interest and the Collateral
Monthly Interest for such Distribution Date.
"Monthly Servicing Fee" shall have the meaning specified in
Section 3.01.
"Payment Date" shall mean any Interest Payment Date and any
Special Payment Date.
"Pay Out Event" shall mean any Pay Out Event specified in Section
6.01.
"Principal Allocation Percentage" shall mean, with respect to any
day during a Monthly Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is (a) during the
Revolving Period, the Series Adjusted Invested Amount for Series [199_-_] as of
the last day of the immediately preceding Monthly Period (or, in the case of the
first Monthly Period, the Initial Invested Amount) and (b) during the Controlled
Accumulation Period or the Early Amortization Period, the Series Adjusted
Invested Amount for Series [199_-_] as of the last day of the Revolving Period
and the denominator of which is the product of (x) the sum of (i) the total
amount of Principal Receivables in the Trust as of the last day of the
immediately preceding Monthly Period (or with respect to the first Monthly
Period, the total amount of Principal Receivables in the Trust as of the Closing
Date) and (ii) the principal amount on deposit in the Special Funding Account as
of such last day (or with respect to the first Monthly Period, the Closing Date)
and (y) the Series [199_-_] Allocation Percentage as of the last day of the
immediately preceding Monthly Period; provided, however, that with respect to
any Monthly Period in which an Addition Date for an Aggregate Addition or a
Removal Date occurs the amount in (x)(i) above shall be (1) the aggregate amount
of Principal Receivables in the Trust at the end of the day on the last day of
the prior Monthly Period for the period from and including the first day of such
Monthly Period to but excluding the related Addition Date or Removal Date and
(2) the aggregate amount of Principal Receivables in the Trust at the end of the
day on the related Addition Date or Removal Date for the period from and
including the related Addition Date or Removal Date to and including the last
day of such Monthly Period; and provided further, that if after the commencement
of the Controlled Accumulation Period a Pay Out Event occurs with respect to
another Series that was designated in the Supplement therefor as a Series that
is a "Paired Series" with respect to Series [199_-_], the Transferor may, by
written notice delivered to the Trustee and the Servicer, designate a different
numerator for the foregoing fraction, provided that (x) such numerator is not
less than the Adjusted Invested Amount as of the last day of the revolving
period for such Paired Series, (y) the Transferor shall have received written
notice from each Rating Agency that the Rating Agency Condition has been
satisfied with respect to such designation and shall have delivered copies of
each such written notice to the Servicer and the Trustee and (z) the Transferor
shall have delivered to the Trustee an Officer's Certificate to the effect that,
based on the facts known to such officer at such time, in the reasonable belief
of the Transferor, such designation will not
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cause a Pay Out Event or an event that, after the giving of notice or the lapse
of time, would constitute a Pay Out Event, to occur with respect to Series
[199_-_].
"Principal Funding Account" shall have the meaning specified in
subsection 4.03(a)(i).
"Principal Funding Account Balance" shall mean, with respect to
any date of determination during the Controlled Accumulation Period, the
principal amount, if any, on deposit in the Principal Funding Account on such
date of determination.
"Principal Funding Investment Proceeds" shall have the meaning
specified in subsection 4.03(a)(ii).
"Principal Funding Investment Shortfall" shall mean, with respect
to each Distribution Date during the Controlled Accumulation Period, the amount,
if any, by which the Principal Funding Investment Proceeds are less than the
Covered Amount.
"Reallocated Investor Finance Charge Collections" shall mean that
portion of Group [I] Investor Finance Charge Collections allocated to Series
[199_-_] pursuant to Section 4.10.
"Reallocated Principal Collections" shall mean, with respect to
any Monthly Period, the product of (a) the Series [199_-_] Allocable Principal
Collections deposited in the Collection Account for such Monthly Period and (b)
the sum of the Class B Principal Percentage and the Collateral Principal
Percentage.
"Reassignment Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (i) the Adjusted
Invested Amount on such Distribution Date, plus (ii) Monthly Interest for such
Distribution Date and any Monthly Interest previously due but not distributed to
the Series [199_-_] Certificateholders or deposited to the Interest Funding
Account on a prior Distribution Date, plus (iii) the amount of Additional
Interest, if any, for such Distribution Date and any Additional Interest
previously due but not distributed to the Series [199_-_] Certificateholders or
deposited to the Interest Funding Account on a prior Distribution Date.
"Reference Banks" shall mean three major banks in the London
interbank market selected by the Servicer.
"Required Accumulation Factor Number" shall be equal to a
fraction, rounded upwards to the nearest whole number, the numerator of which is
one and the denominator of which is equal to the lowest monthly principal
payment rate on the Accounts, expressed as a decimal, for the three months
preceding the date of such calculation.
"Required Amount" shall mean, with respect to any Monthly Period,
the sum of the Class A Required Amount and the Class B Required Amount.
"Required Collateral Invested Amount" shall mean (i) initially $[
] and (ii) on any Distribution Date thereafter, [ ]% of the sum of the Class A
Adjusted Invested Amount on such Distribution Date, the Class B Adjusted
Invested Amount on such Distribution Date (in each case after taking into
account payments to be made on such Distribution Date) and the Collateral
Invested Amount on the prior Distribution Date after any adjustments made on
such Distribution Date, but not less than $[ ]; provided, however, that (1) if
either (a) there is a reduction in the Collateral Invested Amount pursuant to
clauses (c), (d) or (e) of the definition thereof during the Controlled
Accumulation Period or (b) a Pay Out Event with respect to the Series [199_-_]
Certificates has occurred, the Required Collateral Invested Amount for any
Distribution Date thereafter shall equal the Required Collateral Invested Amount
for the Distribution Date immediately preceding such reduction or Pay Out Event,
(2) in no event shall the
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Required Collateral Invested Amount exceed the unpaid principal amount of the
Series [199_-_] Certificates as of the last day of the Monthly Period preceding
such Distribution Date after taking into account payments to be made on the
related Distribution Date and (3) the Required Collateral Invested Amount may be
reduced to a lesser amount at any time if the Rating Agency Condition is
satisfied.
"Required Reserve Account Amount" shall mean, with respect to any
Distribution Date on or after the Reserve Account Funding Date, an amount equal
to (1) [ ]% of the Class A Invested Amount as of the preceding Distribution Date
(after giving effect to all changes therein on such date) or (2) any other
amount designated by the Transferor, provided that if such amount is less than
the amount specified in clause (1) above, the Transferor shall have received
written notice from each Rating Agency that the Rating Agency Condition shall
have been satisfied with respect to such designation and shall have delivered
copies of each such written notice to the Servicer and the Trustee.
"Reserve Account" shall have the meaning specified in subsection
4.12(a).
"Reserve Account Funding Date" shall mean the Distribution Date
with respect to the Monthly Period which commences three months prior to the
Distribution Date with respect to the first Monthly Period in the Controlled
Accumulation Period or such earlier date as the Transferor may determine by
written notice to the Trustee and the Servicer.
"Reserve Account Surplus" shall mean, as of any date of
determination, the amount, if any, by which the amount on deposit in the Reserve
Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" shall have the meaning specified in
subsection 4.12(c).
"Revolving Period" shall mean the period beginning at the close
of business on the Series Cut-Off Date and ending on the earlier of (a) the
close of business on the day immediately preceding the day the Controlled
Accumulation Period commences and (b) the close of business on the day
immediately preceding the day the Early Amortization Period commences.
"Series Adjusted Portfolio Yield" shall mean, with respect to any
Monthly Period, the annualized percentage equivalent of a fraction, (A) the
numerator of which is equal to (a) Reallocated Investor Finance Charge
Collections with respect to such Monthly Period, plus (b) the amount of any
Principal Funding Investment Proceeds for the related Distribution Date, plus
(c) provided that each Rating Agency has consented in writing to the inclusion
thereof in calculating the Series Adjusted Portfolio Yield, any Excess Finance
Charge Collections that are allocated to Series [199_-_] with respect to such
Monthly Period plus (d) the amount of funds, if any, withdrawn from the Reserve
Account which pursuant to subsection 4.12(d) are required to be included as
Class A Available Funds for the Distribution Date with respect to such Monthly
Period minus (e) the Investor Default Amount for the Distribution Date with
respect to such Monthly Period, and (B) the denominator of which is the Invested
Amount as of the last day of the preceding Monthly Period.
"Series Cut-Off Date" shall mean the close of business on [ ],
[199_].
"Series [199_-_]" shall mean the Series of Certificates the terms
of which are specified in this Supplement.
"Series [199_-_] Additional Amounts" shall mean, with respect to
any Distribution Date, the sum of the amounts determined pursuant to subsections
4.07(b), (d) and (h) for such Distribution Date.
"Series [199_-_] Allocable Defaulted Amount" shall mean the
Series Allocable Defaulted Amount with respect to Series [199_-_].
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"Series [199_-_] Allocable Finance Charge Collections" shall mean
the Series Allocable Finance Charge Collections with respect to Series [199_-_].
"Series [199_-_] Allocable Principal Collections" shall mean the
Series Allocable Principal Collections with respect to Series [199_-_].
"Series [199_-_] Allocation Percentage" shall mean the Series
Allocation Percentage with respect to Series [199_-_].
"Series [199_-_] Certificate" shall mean a Class A Certificate or
a Class B Certificate or the Collateral Interest.
"Series [199_-_] Certificateholder" shall mean a Class A
Certificateholder or a Class B Certificateholder or the Collateral Interest
Holder.
"Series [199_-_] Certificateholders' Interest" shall mean the
Certificateholders' Interest for Series [199_-_], including the Collateral
Interest.
"Series [199_-_] Monthly Fees" shall mean, with respect to any
Distribution Date, the amount determined pursuant to subsections 4.05(a)(iii),
(b)(ii) and (c)(i) and subsection 4.07(f).
"Series [199_-_] Monthly Interest" shall mean the amounts
determined pursuant to subsections 4.02(a), (b) and (e).
"Series [199_-_] Principal Shortfall" shall have the meaning
specified in Section 4.11.
"Series [199_-_] Termination Date" shall mean the [ ]
Distribution Date.
"Series Invested Amount" shall mean the Initial Invested Amount.
"Series Required Transferor Amount" shall mean an amount equal to
[ ]% of the Invested Amount.
"Servicing Base Amount" shall have the meaning specified in
Section 3.01.
"Servicing Fee Rate" shall mean 2.0% per annum.
"Special Payment Date" shall mean each Distribution Date with
respect to the Early Amortization Period.
["Telerate Page 3750" shall mean the display page currently so
designated on the Dow Jones Telerate Service (or such other page as may replace
that page on that service for the purpose of displaying comparable rates or
prices).]
"Transferor Percentage" shall mean 100% minus (a) the Floating
Allocation Percentage, when used at any time with respect to Finance Charge
Receivables and Defaulted Receivables, or (b) the Principal Allocation
Percentage, when used at any time with respect to Principal Receivables.
(b) Notwithstanding anything to the contrary in this Supplement
or the Agreement, the term "Rating Agency" shall mean, whenever used in this
Supplement or the Agreement with respect to Series [199_-_], Moody's, Standard &
Poor's and Fitch; provided, however, that references to "Rating Agency" in the
definition of "Eligible Investments" shall be deemed to not include Fitch to the
extent that an investment is rated by Moody's and Standard & Poor's, but not by
Fitch. As used in this Supplement and in the Agreement with respect to Series
[199_-_], "highest investment category" shall mean (i) in the case of Standard &
Poor's, AAA or A-1+, as applicable, (ii) in the case of Moody's, Aaa or P-1, as
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applicable, and (iii) in the case of Fitch, F-1+ or AAA, as applicable;
provided, however, that notwithstanding any other provision of the Agreement or
this Supplement to the contrary, for the purpose of investing funds on deposit
in the Interest Funding Account allocable to (i) Class B Monthly Interest, (ii)
the amount of any Class B Monthly Interest previously due but not distributed to
Class B Certificateholders or deposited in the Interest Funding Account and
(iii) Class B Additional Interest, "highest investment category" as used in the
definition of "Eligible Investments" shall mean, in the case of Standard &
Poor's, A-1 as well as A-1+ and, in the case of Fitch, F-1 as well as F-1+.
(c) Each capitalized term defined herein shall relate to the
Series [199_-_] Certificates and no other Series of Certificates issued by the
Trust, unless the context otherwise requires. All capitalized terms used herein
and not otherwise defined herein have the meanings ascribed to them in the
Agreement. In the event that any term or provision contained herein shall
conflict with or be inconsistent with any term or provision contained in the
Agreement, the terms and provisions of this Supplement shall govern.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Supplement shall refer to this Supplement as a
whole and not to any particular provision of this Supplement; references to any
Article, subsection, Section or Exhibit are references to Articles, subsections,
Sections and Exhibits in or to this Supplement unless otherwise specified; and
the term "including" means "including without limitation."
ARTICLE III
Servicing Fee and Interchange
Section 3.01. Servicing Compensation; Interchange. (a) Servicing
Fee. The share of the Servicing Fee allocable to the Series [199_-_]
Certificateholders with respect to any Distribution Date (the "Monthly Servicing
Fee") shall be equal to one-twelfth of the product of (a) the Servicing Fee Rate
and (b) (i) the Adjusted Invested Amount as of the last day of the Monthly
Period preceding such Distribution Date, minus (ii) the product of the amount,
if any, on deposit in the Special Funding Account as of the last day of the
Monthly Period preceding such Distribution Date and the Series [199_-_]
Allocation Percentage with respect to such Monthly Period (the amount calculated
pursuant to this clause (b) Amount"); provided, however, that with respect to
the first Distribution Date, the Monthly Servicing Fee shall be equal to $[ ].
The share of the Monthly Servicing Fee allocable to the Class A
Certificateholders with respect to any Distribution Date (the "Class A Servicing
Fee") shall be equal to one-twelfth of the product of (a) the Class A Floating
Percentage, (b) the Servicing Fee Rate and (c) the Servicing Base Amount;
provided, however, that with respect to the first Distribution Date, the Class A
Servicing Fee shall be equal to $[ ]. The share of the Monthly Servicing Fee
allocable to the Class B Certificateholders with respect to any Distribution
Date (the "Class B Servicing Fee") shall be equal to one-twelfth of the product
of (a) the Class B Floating Percentage, (b) Servicing Fee Rate and (c) the
Servicing Base Amount; provided, however, that with respect to the first
Distribution Date, the Class B Servicing Fee shall be equal to $[ ]. The share
of the Monthly Servicing Fee allocable to the Collateral Interest with respect
to any Distribution Date (the "Collateral Servicing Fee") shall be equal to
one-twelfth of the product of the (a) Collateral Floating Percentage, (b) the
Servicing Fee Rate and (c) the Servicing Base Amount; provided, however, that
with respect to the first Distribution Date, the Collateral Servicing Fee shall
be equal to $[ ]. The remainder of the Servicing Fee shall be paid by the
Holders of the Transferor Certificates or the investor certificateholders of
other Series (as provided in the related Supplements) and in no event shall the
Trust, the Trustee or the Series [199_-_] Certificateholders be liable for the
share of the Servicing Fee to be paid by the Holders of the Transferor
Certificates or the investor certificateholders of any other Series. To the
extent that the Class A Servicing Fee, the Class B Servicing Fee and the
Collateral Servicing Fee are not paid in full pursuant to the preceding
provisions of this Section 3.01, and Sections 4.05 and 4.07, they shall be paid
by the Holders of the Transferor Certificates.
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(b) Interchange. On or before each Determination Date, the
Transferor shall notify the Servicer of the amount of Interchange to be included
as Series [199_-_] Allocable Finance Charge Collections with respect to the
preceding Monthly Period as determined pursuant to this subsection 3.01(b). Such
amount of Interchange shall be equal to the product of (i) the amount of
Interchange attributable to the Accounts, as reasonably estimated by the
Transferor, and (ii) the Series [199_-_] Allocation Percentage. On each Transfer
Date, the Transferor shall pay to the Servicer, and the Servicer shall deposit
into the Collection Account, in immediately available funds, the amount of
Interchange to be so included as Series [199_-_] Allocable Finance Charge
Collections with respect to the preceding Monthly Period and such Interchange
shall be treated as a portion of Series [199_-_] Allocable Finance Charge
Collections for all purposes of this Supplement and the Agreement.
Notwithstanding the above, if the Rating Agency Condition is satisfied with
respect thereto, the Transferor may, in lieu of transferring Interchange as set
forth above, designate Discount Option Receivables pursuant to Section 2.12 of
the Agreement in an amount approximately equal to the then current Interchange
with respect to the Accounts.
ARTICLE IV
Rights of Series [199_-_] Certificateholders and
Allocation and Application of Collections
Section 4.01. Collections and Allocations. (a) Allocations.
Collections of Finance Charge Receivables and Principal Receivables and
Defaulted Receivables allocated to Series [199_-_] pursuant to Article IV of the
Agreement (and, as described herein, Collections of Finance Charge Receivables
reallocated from other Series in Group [I]) shall be allocated and distributed
or reallocated as set forth in this Article.
(b) Payments to the Transferor. The Servicer shall on Deposit
Dates withdraw from the Collection Account and pay to the Holders of the
Transferor Certificates the following amounts:
(i) an amount equal to the Transferor Percentage for the
related Monthly Period of Series [199_-_] Allocable Finance Charge
Collections to the extent such amount is deposited in the Collection
Account; and
(ii) an amount equal to the Transferor Percentage for the
related Monthly Period of Series [199_-_] Allocable Principal
Collections deposited in the Collection Account, if the Transferor
Amount (determined after giving effect to any Principal Receivables
transferred to the Trust on such Deposit Date) exceeds zero.
The withdrawals to be made from the Collection Account pursuant
to this subsection 4.01(b) do not apply to deposits into the Collection Account
that do not represent Collections, including payment of the purchase price for
the Certificateholders' Interest pursuant to Section 2.06 or 10.01 of the
Agreement, payment of the purchase price for the Series [199_-_]
Certificateholders' Interest pursuant to Section 7.01 of this Supplement and
proceeds from the sale, disposition or liquidation of Receivables pursuant to
Section 9.01 or 12.02 of the Agreement.
(c) Allocations to the Series [199_-_] Certificateholders. The
Servicer shall, prior to the close of business on any Deposit Date, allocate to
the Series 1997-1 Certificateholders the following amounts as set forth below:
(i) Allocations of Finance Charge Collections. The Servicer
shall allocate to the Series [199_-_] Certificateholders and retain in
the Collection Account for application as provided herein an amount
equal to the product of (A) the Floating Allocation Percentage and (B)
the Series [199_-_] Allocation Percentage and (C) the aggregate amount
of Collections of Finance Charge Receivables deposited in the
Collection Account on such Deposit Date.
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(ii) Allocations of Principal Collections. The Servicer shall
allocate to the Series [199_-_] Certificateholders the following
amounts as set forth below:
(x) Allocations During the Revolving Period. During
the Revolving Period (A) an amount equal to the product of (I)
the sum of the Class B Principal Percentage and the Collateral
Principal Percentage and (II) the Principal Allocation
Percentage and (III) the Series [199_-_] Allocation Percentage
and (IV) the aggregate amount of Collections of Principal
Receivables deposited in the Collection Account on such
Deposit Date, shall be allocated to the Series [199_-_]
Certificateholders and retained in the Collection Account
until applied as provided herein and (B) an amount equal to
the product of (I) the Class A Principal Percentage and (II)
the Principal Allocation Percentage and (III) the Series
[199_-_] Allocation Percentage and (IV) the aggregate amount
of Collections of Principal Receivables deposited in the
Collection Account on such Deposit Date shall be allocated to
the Series [199_-_] Certificateholders and, to the extent
needed to make any distribution pursuant to subsection
4.05(d)(i), deposited in the Collection Account, and otherwise
first, if any other Principal Sharing Series is outstanding
and in its amortization period or accumulation period,
retained in the Collection Account for application, to the
extent necessary, as Shared Principal Collections on the
related Distribution Date, and second paid to the Holders of
the Transferor Certificates; provided, however, that such
amount to be paid to the Holders of the Transferor
Certificates on any Deposit Date shall be paid to such Holders
only if the Transferor Amount on such Deposit Date is greater
than the Required Transferor Amount (after giving effect to
all Principal Receivables transferred to the Trust on such
day) and otherwise shall be deposited in the Special Funding
Account.
(y) Allocations During the Controlled Accumulation
Period. During the Controlled Accumulation Period (A) an
amount equal to the product of (I) the sum of the Class B
Principal Percentage and the Collateral Principal Percentage
and (II) the Principal Allocation Percentage and (III) the
Series [199_-_] Allocation Percentage and (IV) the aggregate
amount of Collections of Principal Receivables deposited in
the Collection Account on such Deposit Date, shall be
allocated to the Series [199_-_] Certificateholders and
retained in the Collection Account until applied as provided
herein and (B) an amount equal to the product of (I) the Class
A Principal Percentage and (II) (III) the Series [199_-_]
Allocation Percentage and (IV) the aggregate amount of
Collections of Principal Receivables deposited in the
Collection Account on such Deposit Date (such product for any
such date, a "Percentage Allocation") shall be allocated to
the Series [199_-_] Certificateholders and retained in the
Collection Account until applied as provided herein; provided,
however, that if the sum of such Percentage Allocation and all
preceding Percentage Allocations with respect to the same
Monthly Period exceeds the Controlled Deposit Amount for the
related Distribution Date, then such excess shall not be
treated as a Percentage Allocation and shall be first, if any
other Principal Sharing Series is outstanding and in its
amortization period or accumulation period, retained in the
Collection Account for application, to the extent necessary,
as Shared Principal Collections on the related Distribution
Date, and second paid to the Holders of the Transferor
Certificates only if the Transferor Amount on such Deposit
Date is greater than the Required Transferor Amount (after
giving effect to all Principal Receivables transferred to the
Trust on such day) and otherwise shall be deposited in the
Special Funding Account.
(z) Allocations During the Early Amortization Period.
During the Early Amortization Period, an amount equal to the
product of (A) the Principal Allocation Percentage and (B) the
Series [199_-_] Allocation Percentage and (C) the aggregate
amount of Collections of Principal Receivables deposited in
the Collection Account on
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such Deposit Date, shall be allocated to the Series [199_-_]
Certificateholders and retained in the Collection Account
until applied as provided herein; provided, however, that
after the date on which an amount of such Collections equal to
the Adjusted Invested Amount has been deposited into the
Collection Account and allocated to the Series [199_-_]
Certificateholders, such amount shall be first, if any other
Principal Sharing Series is outstanding and in its
amortization period or accumulation period, retained in the
Collection Account for application, to the extent necessary,
as Shared Principal Collections on the related Distribution
Date, and second paid to the Holders of the Transferor
Certificates only if the Transferor Amount on such date is
greater than the Required Transferor Amount (after giving
effect to all Principal Receivables transferred to the Trust
on such day) and otherwise shall be deposited in the Special
Funding Account.
Section 4.02. Determination of Monthly Interest; Interest Funding
Account. (a) The amount of monthly interest ("Class A Monthly Interest")
distributable from the Collection Account with respect to the Class A
Certificates on any Distribution Date shall be an amount equal to the product of
(i) (A) a fraction, the numerator of which is the actual number of days in the
period from (and including) the immediately preceding Distribution Date (or in
the case of the first Distribution Date, the Closing Date) to (but excluding)
such Distribution Date and the denominator of which is 360, times (B) the Class
A Certificate Rate and (ii) the outstanding principal balance of the Class A
Certificates as of close of business on the last day of the preceding Monthly
Period (or, in the case of the first Distribution Date, the Closing Date).
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class A Interest Shortfall"),
of (x) the Class A Monthly Interest for such Distribution Date over (y) the
aggregate amount of funds allocated and available to pay such Class A Monthly
Interest on such Distribution Date. If the Class A Interest Shortfall with
respect to any Distribution Date is greater than zero, on each subsequent
Distribution Date until such Class A Interest Shortfall is fully paid, an
additional amount ("Class A Additional Interest") equal to the product of (i)
(A) a fraction, the numerator of which is the actual number of days in the
period from (and including) the immediately preceding Distribution Date to (but
excluding) such Distribution Date and the denominator of which is 360, times (B)
the sum of (x) the Class A Certificate Rate and (y) 2.0% per annum and (ii) such
Class A Interest Shortfall (or the portion thereof which has not been paid to
the Class A Certificateholders or deposited in the Interest Funding Account with
respect to the Class A Certificates) shall be payable as provided herein with
respect to the Class A Certificates. Notwithstanding anything to the contrary
herein, Class A Additional Interest shall be payable or distributed to the Class
A Certificateholders only to the extent permitted by applicable law.
(b) The amount of monthly interest ("Class B Monthly Interest")
distributable from the Collection Account with respect to the Class B
Certificates on any Distribution Date shall be an amount equal to the product of
(i) (A) a fraction, the numerator of which is the actual number of days in the
period from (and including) the immediately preceding Distribution Date (or, in
the case of the first Distribution Date, the Closing Date) to (but excluding)
such Distribution Date and the denominator of which is 360, times (B) the Class
B Certificate Rate and (ii) the Class B Invested Amount as of the close of
business on the last day of the preceding Monthly Period (or, in the case of the
first Distribution Date, the Closing Date).
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class B Interest Shortfall"),
of (x) the Class B Monthly Interest for such Distribution Date over (y) the
aggregate amount of funds allocated and available to pay such Class B Monthly
Interest on such Distribution Date. If the Class B Interest Shortfall with
respect to any Distribution Date is greater than zero, on each subsequent
Distribution Date until such Class B Interest Shortfall is fully paid, an
additional amount ("Class B Additional Interest") equal to the product of (i)
(A) a fraction, the numerator of which is the actual number of days in the
period from (and including) the
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immediately preceding Distribution Date to (but excluding) such Distribution
Date and the denominator of which is 360, times (B) the sum of (x) the Class B
Certificate Rate and (y) 2.0% per annum and (ii) such Class B Interest Shortfall
(or the portion thereof which has not been paid to the Class B
Certificateholders or deposited in the Interest Funding Account with respect to
the Class B Certificates) shall be payable as provided herein with respect to
the Class B Certificates. Notwithstanding anything to the contrary herein, Class
B Additional Interest shall be payable or distributed to the Class B
Certificateholders only to the extent permitted by applicable law.
(c)(i) The Servicer, for the benefit of the Series
[199_-_] Certificateholders, shall establish and maintain in the name
of the Trustee, on behalf of the Trust, an Eligible Deposit Account
(the "Interest Funding Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Series [199_-_] Certificateholders. The Interest Funding Account
shall initially be established with the Trustee.
(ii) At the written direction of the Servicer, funds
on deposit in the Interest Funding Account shall be invested by the
Trustee in Eligible Investments selected by the Servicer. All such
Eligible Investments shall be held by the Trustee for the benefit of
the Series [199_-_] Certificateholders; provided, that on each
Distribution Date all interest and other investment income (net of
losses and investment expenses) ("Interest Funding Investment
Proceeds") on funds on deposit therein shall be applied as set forth in
paragraph (iii) below. Funds on deposit in the Interest Funding Account
shall be invested in Eligible Investments that will mature so that such
funds will be available at the close of business on the Transfer Date
preceding the following Distribution Date. Unless the Servicer directs
otherwise, funds deposited in the Interest Funding Account on a
Transfer Date (which immediately precedes a Payment Date) upon the
maturity of any Eligible Investments are not required to be invested
overnight. No such Eligible Investment shall be disposed of prior to
its maturity; provided, however, that the Trustee may sell, liquidate
or dispose of any such Eligible Investment before its maturity, at the
written direction of the Servicer, if such sale, liquidation or
disposal would not result in a loss of all or part of the principal
portion of such Eligible Investment or if, prior to the maturity of
such Eligible Investment, a default occurs in the payment of principal,
interest or any other amount with respect to such Eligible Investment.
(iii) On each Distribution Date, the Trustee shall,
in accordance with the applicable Monthly Servicer's Certificate,
withdraw from the Interest Funding Account all Interest Funding
Investment Proceeds then on deposit in the Interest Funding Account and
such Interest Funding Investment Proceeds shall be treated as
collections of Finance Charge Receivables allocable to Series [199_-_].
(iv) Reinvested interest and other investment income
on funds deposited in the Interest Funding Account shall not be
considered to be principal amounts on deposit therein for purposes of
this Supplement.
(d)(i) The Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Interest
Funding Account and in all proceeds thereof. The Interest Funding
Account shall be under the sole dominion and control of the Trustee for
the benefit of the Series [199_-_] Certificateholders. If, at any time,
the Interest Funding Account ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) shall within 10 Business
Days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) establish a new Interest Funding
Account meeting the conditions specified in paragraph (c)(i) above as
an Eligible Deposit Account and shall transfer any cash or any
investments to such new Interest Funding Account.
(ii) Pursuant to the authority granted to the Servicer
in subsection 3.01(b) of the Agreement, the Servicer shall have the
power, revocable by the Trustee, to make withdrawals and
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payments or to instruct the Trustee to make withdrawals and payments
from the Interest Funding Account for the purposes of carrying out the
Servicer's or Trustee's duties hereunder. Pursuant to the authority
granted to the Paying Agent in Section 5.01 of this Supplement and
Section 6.07 of the Agreement, the Paying Agent shall have the power,
revocable by the Trustee, to withdraw funds from the Interest Funding
Account for the purpose of making distributions to the Series [199_-_]
Certificateholders.
(e) The amount of monthly interest ("Collateral Monthly
Interest") distributable from the Collection Account with respect to the
Collateral Invested Amount on any Distribution Date shall be an amount equal to
the product of (i) (A) a fraction, the numerator of which is the actual number
of days in the period from (and including) the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date) to (but excluding) such Distribution Date and the denominator of which is
360, times (B) the Collateral Rate in effect with respect to the period from
(and including) the immediately preceding Distribution Date (or in the case of
the first Distribution Date, the Closing Date) to (but excluding) such
Distribution Date, and (ii) the Collateral Invested Amount as of the close of
business on the last day of the preceding Monthly Period (or, in the case of the
first Distribution Date, the Closing Date).
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Collateral Interest Shortfall") equal
to (x) the aggregate Collateral Monthly Interest for such Distribution Date
minus (y) the aggregate amount of funds allocated and available to pay such
Collateral Monthly Interest on such Distribution Date. If the Collateral
Interest Shortfall with respect to any Distribution Date is greater than zero,
on each subsequent Distribution Date until such Collateral Interest Shortfall is
fully paid, an additional amount ("Collateral Additional Interest") shall be
payable as provided herein with respect to the Collateral Invested Amount equal
to the product of (i) (A) a fraction, the numerator of which is the actual
number of days in the period from (and including) the immediately preceding
Distribution Date to (but excluding) such Distribution Date and the denominator
of which is 360, times (B) the Collateral Rate in effect with respect to the
period from (and including) the immediately preceding Distribution Date to (but
excluding) such Distribution Date, and (ii) such Collateral Interest Shortfall
(or the portion thereof which has not been paid to the Collateral Interest
Holder). Notwithstanding anything to the contrary herein, Collateral Additional
Interest shall be payable or distributed to the Collateral Interest Holder only
to the extent permitted by applicable law.
Section 4.03. Principal Funding Account; Controlled Accumulation
Period. (a)(i) The Servicer, for the benefit of the Series [199_-_]
Certificateholders, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account (the "Principal Funding
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Series [199_-_] Certificateholders. The
Principal Funding Account shall initially be established with the Trustee.
(ii) At the written direction of the Servicer, funds on
deposit in the Principal Funding Account shall be invested by the
Trustee in Eligible Investments selected by the Servicer. All such
Eligible Investments shall be held by the Trustee for the benefit of
the Series [199_-_] Certificateholders; provided, that on each
Distribution Date all interest and other investment income (net of
losses and investment expenses) ("Principal Funding Investment
Proceeds") on funds on deposit therein shall be applied as set forth in
paragraph (iii) below. Funds on deposit in the Principal Funding
Account shall be invested in Eligible Investments that will mature so
that such funds will be available at the close of business on the
Transfer Date immediately preceding the following Distribution Date.
Unless the Servicer directs otherwise, funds deposited in the Principal
Funding Account on a Transfer Date (which immediately precedes a
Payment Date) upon the maturity of any Eligible Investments are not
required to be invested overnight. No such Eligible Investment shall be
disposed of prior to its maturity; provided, however, that the Trustee
may sell, liquidate or dispose of any such Eligible Investment before
its maturity, at the written direction of the Servicer, if such sale,
liquidation or disposal would not result in a loss of all or
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part of the principal portion of such Eligible Investment or if, prior
to the maturity of such Eligible Investment, a default occurs in the
payment of principal, interest or any other amount with respect to such
Eligible Investment.
(iii) On each Distribution Date with respect to the Controlled
Accumulation Period, the Trustee shall, in accordance with the
applicable Monthly Servicer's Certificate, withdraw from the Principal
Funding Account all Principal Funding Investment Proceeds then on
deposit in the Principal Funding Account and such Principal Funding
Investment Proceeds shall be treated as a portion of Class A Available
Funds.
(iv) Reinvested interest and other investment income on funds
deposited in the Principal Funding Account shall not be considered to
be principal amounts on deposit therein for purposes of this
Supplement.
(b)(i) The Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Principal Funding
Account and in all proceeds thereof. The Principal Funding Account
shall be under the sole dominion and control of the Trustee for the
benefit of the Series [199_-_] Certificateholders. If, at any time, the
Principal Funding Account ceases to be an Eligible Deposit Account, the
Trustee (or the Servicer on its behalf) shall within 10 Business Days
(or such longer period, not to exceed 30 calendar days, as to which
each Rating Agency may consent) establish a new Principal Funding
Account meeting the conditions specified in paragraph (a)(i) above as
an Eligible Deposit Account and shall transfer any cash or any
investments to such new Principal Funding Account.
(ii) Pursuant to the authority granted to the Servicer in
subsection 3.01(b) of the Agreement, the Servicer shall have the power,
revocable by the Trustee, to make withdrawals and payments or to
instruct the Trustee to make withdrawals and payments from the
Principal Funding Account for the purposes of carrying out the
Servicer's or Trustee's duties hereunder. Pursuant to the authority
granted to the Paying Agent in Section 5.01 of this Supplement and
Section 6.07 of the Agreement, the Paying Agent shall have the power,
revocable by the Trustee, to withdraw funds from the Principal Funding
Account for the purpose of making distributions to the Series [199_-_]
Certificateholders.
(c) The Controlled Accumulation Period is scheduled to commence
at the close of business on [ ], [ ]; provided, however, that if the Controlled
Accumulation Period Length (determined as described below) is less than twelve
(12) months, the date on which the Controlled Accumulation Period actually
commences will be delayed to the close of business on the last day of the month
preceding the month that is the number of months prior to the Expected Final
Payment Date at least equal to the Controlled Accumulation Period Length and, as
a result, the number of Monthly Periods in the Controlled Accumulation Period
will at least equal the Controlled Accumulation Period Length. On the
Determination Date immediately preceding the [ ] Distribution Date, and on each
Determination Date thereafter that occurs prior to the Determination Date
occurring in the Monthly Period in which the Controlled Accumulation Period
commences, the Servicer will determine the "Controlled Accumulation Period
Length" which will equal the number of months such that the sum of the
Controlled Accumulation Period Factors for each month during such period will be
equal to or greater than the Required Accumulation Factor Number; provided,
however, that the Controlled Accumulation Period Length shall not be less than
one month. Notwithstanding the foregoing, if the Controlled Accumulation Period
Length shall have been determined to be less than twelve (12) months and, after
the date on which such determination is made, a Pay Out Event or Reinvestment
Event (as those terms are defined in the Supplement for such Series) shall occur
with respect to any outstanding Principal Sharing Series other than Series
[199_-_], the Controlled Accumulation Period will commence on the earlier of (i)
the first day of the Monthly Period immediately succeeding the date that such
Pay Out Event or Reinvestment Event shall have occurred with respect to such
Series and (ii) the date on which the Controlled Accumulation Period is then
scheduled to commence.
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Section 4.04. Required Amount. (a) With respect to each
Distribution Date, on the related Determination Date, the Servicer shall
determine the amount (the "Class A Required Amount"), if any, by which (x) the
sum of (i) Class A Monthly Interest for such Distribution Date, (ii) any Class A
Monthly Interest previously due but not paid to the Class A Certificateholders
or deposited to the Interest Funding Account on a prior Distribution Date, (iii)
any Class A Additional Interest for such Distribution Date and (iv) any Class A
Additional Interest previously due but not paid to the Class A
Certificateholders or deposited to the Interest Funding Account on a prior
Distribution Date, (v) the Class A Investor Default Amount, if any, for such
Distribution Date, (vi) the Class A Servicing Fee for such Distribution Date,
and (vii) any Class A Servicing Fee previously due but not paid to the Servicer
exceeds (y) the Class A Available Funds. In the event that the difference
between (x) the Class A Required Amount for such Distribution Date and (y) the
amount of Excess Spread and Excess Finance Charge Collections applied with
respect thereto pursuant to subsection 4.07(a) on such Distribution Date is
greater than zero, the Servicer shall give written notice to the Trustee of such
excess Class A Required Amount on the date of computation.
(b) With respect to each Distribution Date, on the related
Determination Date, the Servicer shall determine the amount (the "Class B
Required Amount"), if any, equal to the sum of (x) the amount, if any, by which
(A) the sum of (i) Class B Monthly Interest for such Distribution Date, (ii) any
Class B Monthly Interest previously due but not paid to the Class B
Certificateholders or deposited to the Interest Funding Account on a prior
Distribution Date, (iii) Class B Additional Interest, if any, for such
Distribution Date, (iv) any Class B Additional Interest previously due but not
paid to the Class B Certificateholders or deposited to the Interest Funding
Account on a prior Distribution Date, (v) the Class B Servicing Fee for such
Distribution Date and (vi) any Class B Servicing Fee previously due but not paid
to the Servicer exceeds (B) the Class B Available Funds and (y) the Class B
Investor Default Amount for such Distribution Date. In the event that the
difference between (x) the Class B Required Amount for such Distribution Date
and (y) the amount of Excess Spread and Excess Finance Charge Collections
applied with respect thereto pursuant to subsection 4.07(c) on such Distribution
Date is greater than zero, the Servicer shall give written notice to the Trustee
of such excess Class B Required Amount on the date of computation.
Section 4.05. Application of Class A Available Funds, Class B
Available Funds, Collateral Available Funds and Available Principal Collections.
The Servicer shall apply, or shall cause the Trustee to apply by written
instruction to the Trustee, on each Distribution Date, Class A Available Funds,
Class B Available Funds, Collateral Available Funds and Available Principal
Collections on deposit in the Collection Account with respect to such
Distribution Date to make the following distributions:
(a) On each Distribution Date, an amount equal to the Class A
Available Funds with respect to such Distribution Date will be distributed or
deposited in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not distributed to Class A Certificateholders or
deposited to the Interest Funding Account on a prior Distribution Date,
plus the amount of any Class A Additional Interest for such
Distribution Date and any Class A Additional Interest previously due
but not distributed to Class A Certificateholders or deposited to the
Interest Funding Account on a prior Distribution Date, shall be
deposited in the Interest Funding Account for distribution to the
Paying Agent for payment to Class A Certificateholders on the
applicable Payment Date;
(ii) an amount equal to the Class A Investor Default Amount
for such Distribution Date shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(iii) an amount equal to the Class A Servicing Fee for such
Distribution Date, plus the amount of any Class A Servicing Fee
previously due but not distributed to the Servicer on a prior
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Distribution Date, shall be distributed to the Servicer (unless such
amount has been netted against deposits to the Collection Account in
accordance with Section 4.03 of the Agreement); and
(iv) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as set forth in Section
4.07.
(b) On each Distribution Date, an amount equal to the Class B
Available Funds with respect to such Distribution Date will be distributed or
deposited in the following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not distributed to Class B Certificateholders or
deposited to the Interest Funding Account on a prior Distribution Date,
plus the amount of any Class B Additional Interest for such
Distribution Date and any Class B Additional Interest previously due
but not distributed to Class B Certificateholders or deposited to the
Interest Funding Account on a prior Distribution Date, shall be
deposited in the Interest Funding Account for distribution to the
Paying Agent for payment to Class B Certificateholders on the
applicable Payment Date;
(ii) an amount equal to the Class B Servicing Fee for such
Distribution Date, plus the amount of any Class B Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer (unless such
amount has been netted against deposits to the Collection Account in
accordance with Section 4.03 of the Agreement); and
(iii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as set forth in Section
4.07.
(c) On each Distribution Date, an amount equal to the Collateral
Available Funds with respect to such Distribution Date will be distributed or
deposited in the following priority:
(i) an amount equal to the Collateral Servicing Fee for such
Distribution Date, plus the amount of any Collateral Servicing Fee
previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer (unless such
amount has been netted against deposits to the Collection Account in
accordance with Section 4.03 of the Agreement); and
(ii) the balance, if any, shall constitute Excess Spread and
shall be allocated and distributed or deposited as set forth in Section
4.07.
(d) On each Distribution Date with respect to the Revolving
Period, an amount equal to the Available Principal Collections deposited in the
Collection Account for the related Monthly Period shall be distributed in the
following order of priority:
(i) an amount equal to the excess, if any, of the Collateral
Invested Amount over the Required Collateral Invested Amount shall be
paid to the Collateral Interest Holder for application in accordance
with the Loan Agreement; and
(ii) the balance of such Available Principal Collections shall
be treated as Shared Principal Collections and applied in accordance
with Section 4.04 of the Agreement.
(e) On each Distribution Date with respect to the Controlled
Accumulation Period, an amount equal to the Available Principal Collections
deposited in the Collection Account for the related Monthly Period shall be
distributed in the following order of priority:
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(i) an amount equal to the lesser of (x) the Controlled
Deposit Amount and (y) the sum of the Class Adjusted Invested Amount
and the Class B Adjusted Invested Amount shall be deposited in the
Principal Funding Account;
(ii) for each Distribution Date prior to the Distribution Date
on which the Class B Invested Amount is paid in full, after giving
effect to paragraph (i) above, an amount equal to the balance, if any,
of such Available Principal Collections shall be paid to the Collateral
Interest Holder for application in accordance with the Loan Agreement
to the extent the Collateral Invested Amount exceeds the Required
Collateral Invested Amount;
(iii) for each Distribution Date beginning on the Distribution
Date on which the Class B Invested Amount shall have been paid in full,
an amount up to the Collateral Invested Amount shall be paid to the
Collateral Interest Holder for application in accordance with the Loan
Agreement; and
(iv) the balance of such Available Principal Collections shall
be treated as Shared Principal Collections and applied in accordance
with Section 4.04 of the Agreement.
(f) On each Distribution Date with respect to the Early
Amortization Period, an amount equal to Available Principal Collections
deposited in the Collection Account for the related Monthly Period shall be
distributed or deposited in the following order of priority:
(i) an amount up to the Class A Adjusted Invested Amount on
such Distribution Date shall be deposited in the Principal Funding
Account for distribution to the Class A Certificateholders;
(ii) for each Distribution Date beginning on the Distribution
Date on which the Class A Invested Amount is paid in full, an amount up
to the Class B Adjusted Invested Amount on such Distribution Date shall
be deposited in the Principal Funding Account for distribution to the
Class B Certificateholders;
(iii) for each Distribution Date beginning on the Distribution
Date on which the Class B Invested Amount is paid in full, an amount up
to the Collateral Invested Amount on such Distribution Date shall be
paid to the Collateral Interest Holder for application in accordance
with the Loan Agreement; and
(iv) for each Distribution Date, after giving effect to
paragraphs (i), (ii) and (iii) above, an amount equal to the balance,
if any, of such Available Principal Collections will be treated as
Shared Principal Collections and applied in accordance with Section
4.04 of the Agreement.
Section 4.06. Defaulted Amounts; Investor Charge-Offs. (a) On
each Determination Date, the Servicer shall calculate the Class A Investor
Default Amount, if any, for the related Distribution Date. If, on any
Distribution Date, the Class A Required Amount for the related Monthly Period
exceeds the sum of (x) the amount of Reallocated Principal Collections allocated
to Series [199_-_] with respect to such Monthly Period and (y) the amount of
Excess Spread and the Excess Finance Charge Collections allocable to Series
[199_-_] with respect to such Monthly Period, the Collateral Invested Amount, if
any, will be reduced by the amount of such excess, but not by more than the
Class A Investor Default Amount for such Distribution Date. In the event that
such reduction would cause the Collateral Invested Amount to be a negative
number, the Collateral Invested Amount will be reduced to zero and the Class B
Invested Amount shall be reduced by the amount by which the Collateral Invested
Amount would have been reduced below zero, but not by more than the excess, if
any, of the Class A Investor Default Amount for such Distribution Date over the
amount of such reduction, if any, of the Collateral Invested Amount with respect
to such Distribution Date. In the event that such reduction would cause the
Class B Invested Amount to be a negative number, the Class B Invested Amount
shall be reduced to zero, and the Class A
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Invested Amount shall be reduced by the amount by which the Class B Invested
Amount would have been reduced below zero, but not by more than the excess, if
any, of the Class A Investor Default Amount for such Distribution Date over the
aggregate amount of the reductions, if any, of the Collateral Invested Amount
and the Class B Invested Amount for such Distribution Date (a "Class A Investor
Charge-Off"). Class A Investor Charge-Offs shall thereafter be reimbursed and
the Class A Invested Amount increased (but not by an amount in excess of the
aggregate unreimbursed Class A Investor Charge-Offs) on any Distribution Date by
the amount of Excess Spread and Excess Finance Charge Collections allocated and
available for that purpose pursuant to subsection 4.07(b). References to
"negative numbers" above shall be determined without regard to the requirement
that the Invested Amount of a Class not be reduced below zero.
(b) On each Determination Date, the Servicer shall calculate the
Class B Investor Default Amount, if any, for the related Distribution Date. If,
on any Distribution Date, the Class B Required Amount for such Distribution Date
exceeds the sum of (x) the amount of Excess Spread and Excess Finance Charge
Collections allocated to Series [199_-_] with respect to the related Monthly
Period which are allocated and available to pay such amount pursuant to
subsection 4.07(c) and (y) the Reallocated Principal Collections allocable to
the Collateral Interest and not required to pay the Class A Required Amount with
respect to such Distribution Date, then the Collateral Invested Amount shall be
reduced by the amount of such excess. In the event that such reduction would
cause the Collateral Invested Amount to be a negative number, the Collateral
Invested Amount shall be reduced to zero, and the Class B Invested Amount shall
be reduced by the amount by which the Collateral Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class B
Investor Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Collateral Invested Amount with respect to such
Distribution Date (a "Class B Investor Charge-Off"). Class B Investor
Charge-Offs shall thereafter be reimbursed and the Class B Invested Amount
increased (but not by an amount in excess of the aggregate unreimbursed Class B
Investor Charge-Offs) on any Distribution Date by the amount of Excess Spread
and Excess Finance Charge Collections allocated and available for that purpose
pursuant to subsection 4.07(d). References to "negative numbers" above shall be
determined without regard to the requirement that the Invested Amount of a Class
not be reduced below zero.
(c) On each Determination Date, the Servicer shall calculate the
Collateral Default Amount. If on any Distribution Date the Collateral Default
Amount for the previous Monthly Period exceeds the amount of Excess Spread and
Excess Finance Charge Collections allocated to Series [199_-_] with respect to
the related Monthly Period which are allocated and available to pay such amount
pursuant to subsection 4.07(g), the Collateral Invested Amount will be reduced
by the amount of such excess but not by more than the lesser of the Collateral
Default Amount and the Collateral Invested Amount for such Distribution Date (a
"Collateral Charge-Off"). The Collateral Invested Amount will be reimbursed
after any reduction pursuant to this Section 4.06 on any Distribution Date by
the amount of Excess Spread and Excess Finance Charge Collections allocated and
available on such Distribution date for that purpose as described under
subsection 4.07(h).
Section 4.07. Excess Spread; Excess Finance Charge Collections
Bookmark not defined. The Servicer shall apply, or shall cause the Trustee to
apply by written instruction to the Trustee, on each Distribution Date, Excess
Spread and Excess Finance Charge Collections allocated to Series [199_-_] with
respect to the related Monthly Period, to make the following distributions or
deposits in the following order of priority:
(a) an amount equal to the Class A Required Amount, if any,
with respect to such Distribution Date shall be distributed by the
Trustee to fund the Class A Required Amount in accordance with, and in
the priority set forth in, subsections 4.05(a)(i), (ii) and (iii);
(b) an amount equal to the aggregate amount of Class A
Investor Charge-Offs which have not been previously reimbursed shall be
treated as a portion of Available Principal Collections for such
Distribution Date;
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(c) an amount equal to the Class B Required Amount, if any,
with respect to such Distribution Date will be used to fund the Class B
Required Amount and be applied first in accordance with, and in the
priority set forth in, subsections 4.05(b) (i) and (ii) and then any
remaining amount up to the amount of the Class B Investor Default
Amount shall be treated as a portion of Available Principal Collections
for such Distribution Date;
(d) an amount equal to the aggregate amount by which the Class
B Invested Amount has been reduced pursuant to clauses (c), (d) and (e)
of the definition of "Class B Invested Amount" in Section 2.01 of this
Supplement (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) shall be treated
as a portion of Available Principal Collections for such Distribution
Date;
(e) an amount equal to Collateral Monthly Interest for such
Distribution Date, plus the amount of any Collateral Monthly Interest
previously due but not distributed to the Collateral Interest Holder on
a prior Distribution Date, plus the amount of any Collateral Additional
Interest for such Distribution Date and any Collateral Additional
Interest previously due but not distributed to the Collateral Interest
Holder on a prior Distribution Date, shall be distributed to the
Collateral Interest Holder for application in accordance with the Loan
Agreement;
(f) an amount equal to the Monthly Servicing Fee for such
Distribution Date that has not been paid to the Servicer and any
Monthly Servicing Fee due but not paid to the Servicer on a prior
Distribution Date shall be paid to the Servicer;
(g) an amount equal to the Collateral Default Amount, if any,
for such Distribution Date shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(h) an amount equal to the aggregate amount by which the
Collateral Invested Amount has been reduced pursuant to clauses (c),
(d) and (e) of the definition of "Collateral Invested Amount" (but not
in excess of the aggregate amount of such reductions which have not
been previously reimbursed) shall be treated as a portion of Available
Principal Collections for such Distribution Date;
(i) on each Distribution Date from and after the Reserve
Account Funding Date, but prior to the date on which the Reserve
Account terminates pursuant to subsection 4.12(f), an amount up to the
excess, if any, of the Required Reserve Account Amount over the
Available Reserve Account Amount shall be deposited into the Reserve
Account;
(j) an amount equal to the aggregate of any other amounts then
required to be applied pursuant to the Loan Agreement (to the extent
such amounts are required to be applied pursuant to the Loan Agreement
out of Excess Spread and Excess Finance Charge Collections) shall be
distributed to the Collateral Interest Holder for application in
accordance with the Loan Agreement; and
(k) the balance, if any, will constitute a portion of Excess
Finance Charge Collections for such Distribution Date and will be
available for allocation to other Series or to the Holders of the
Transferor Certificates as described in Section 4.09.
Section 4.08. Reallocated Principal Collections. On each
Distribution Date, the Servicer shall apply, or shall cause the Trustee to
apply, Reallocated Principal Collections with respect to such Distribution Date,
to make the following distributions or deposits in the following order of
priority:
(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Distribution Date over (ii) the
amount of Excess Spread and Excess Finance Charge
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Collections allocated to Series [199_-_] with respect to the related Monthly
Period shall be distributed by the Trustee to fund any deficiency pursuant to
and in the priority set forth in subsections 4.05(a)(i), (ii) and (iii); and
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Distribution Date over (ii) the
amount of Excess Spread and Excess Finance Charge Collections allocated and
available to the Class B Certificates pursuant to subsection 4.07(c) on such
Distribution Date shall be applied first to fund any deficiency pursuant to
subsections 4.05(b)(i) and (ii) and then to fund any deficiency pursuant to and
in the priority set forth in subsection 4.07(c).
On each Distribution Date, the Collateral Invested Amount shall
be reduced by the amount of Reallocated Principal Collections for such
Distribution Date. In the event that such reduction would cause the Collateral
Invested Amount (after giving effect to any Collateral Charge-Offs for such
Distribution Date) to be a negative number, the Collateral Invested Amount
(after giving effect to any Collateral Charge-Offs for such Distribution Date)
shall be reduced to zero and the Class B Invested Amount shall be reduced by the
amount by which the Collateral Invested Amount would have been reduced below
zero. In the event that the reallocation of Reallocated Principal Collections
would cause the Class B Invested Amount (after giving effect to any Class B
Investor Charge-Offs for such Distribution Date) to be a negative number on any
Distribution Date, Reallocated Principal Collections shall be reallocated on
such Distribution Date in an aggregate amount not to exceed the amount which
would cause the Class B Invested Amount (after giving to any Class B Investor
Charge-Offs for such Distribution Date) to be reduced to zero. References to
"negative numbers" above shall be determined without regard to the requirement
that the Invested Amount of a Class not be reduced below zero.
Section 4.09. Excess Finance Charge Collections. Series [199_-_]
shall be an Excess Allocation Series. On each Distribution Date, (a) the
Servicer shall allocate the aggregate amount for all outstanding Excess
Allocation Series that the related Supplements specify are to be treated as a
portion of Excess Finance Charge Collections for such Distribution Date
(collectively, "Excess Finance Charge Collections"), pro rata, in proportion to
the Finance Charge Shortfalls (as such term is defined in the Supplement for
each such Series), if any, with respect to each such Series and (b) the Servicer
shall withdraw (or shall instruct the Trustee in writing to withdraw) from the
Collection Account and pay to the Holders of the Transferor Certificates an
amount equal to the excess, if any, of (x) the Excess Finance Charge Collections
for such Distribution Date over (y) the aggregate amount for all Excess
Allocation Series that the related Supplements specify are Finance Charge
Shortfalls (as such term is defined in the Supplement for each such Series) for
such Distribution Date; provided, however, that the sharing of Excess Finance
Charge Collections among Excess Allocation Series will cease if the Transferor
shall deliver to the Trustee an Officer's Certificate to the effect that, in the
reasonable belief of the Transferor, the continued sharing of Excess Finance
Charge Collections among Excess Allocation Series would have adverse regulatory
implications with respect to the Transferor, UCS or any Account Owner. Following
the delivery by the Transferor of such an Officer's Certificate to the Trustee,
there will not be any further sharing of Excess Finance Charge Collections among
Excess Allocation Series. The "Finance Charge Shortfall" for Series [199_-_] for
any Distribution Date will be equal to the excess, if any, of (a) the full
amount required to be paid, without duplication, pursuant to subsections
4.05(a), 4.05(b) and 4.05(c) and subsections 4.07(a) through (j) on such
Distribution Date over (b) the sum of (i) the Reallocated Investor Finance
Charge Collections, (ii) if such Monthly Period relates to a Distribution Date
with respect to the Controlled Accumulation Period or Early Amortization Period,
the amount of Principal Funding Investment Proceeds, if any, with respect to
such Distribution Date and (iii) the amount of funds, if any, to be withdrawn
from the Reserve Account which, pursuant to subsection 4.12(d), are required to
be included in Class A Available Funds with respect to such Distribution Date.
[Section 4.10. Reallocated Investor Finance Charge Collections.
(a) That portion of Group [I] Investor Finance Charge Collections for any
Distribution Date equal to the amount of Reallocated Investor Finance Charge
Collections for such Distribution Date will be allocated to Series [199_-_] and
will be distributed as set forth in this Supplement.]
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(b) Reallocated Investor Finance Charge Collections with respect
to any Distribution Date shall equal the sum of (i) the aggregate amount of
Series [199_-_] Monthly Interest, Investor Default Amount, Series [199_-_]
Monthly Fees and Series [199_-_] Additional Amounts for such Distribution Date
and (ii) that portion of excess Group [I] Investor Finance Charge Collections to
be included in Reallocated Investor Finance Charge Collections pursuant to
subsection (c) hereof; provided, however, that if the amount of Group [I]
Investor Finance Charge Collections for such Distribution Date is less than the
sum of (w) Group [I] Investor Monthly Interest, (x) Group [I] Investor Default
Amount, (y) Group [I] Investor Monthly Fees and (z) Group [I] Investor
Additional Amounts, then Reallocated Investor Finance Charge Collections shall
equal the sum of the following amounts for such Distribution Date:
(A) The product of (I) Group [I] Investor Finance Charge
Collections (up to the amount of Group [I] Investor Monthly Interest) and (II) a
fraction, the numerator of which is Series [199_-_] Monthly Interest and the
denominator of which is Group [I] Investor Monthly Interest;
(B) the product of (I) Group [I] Investor Finance Charge
Collections less the amount of Group [I] Investor Monthly Interest (up to the
Group [I] Investor Default Amount) and (II) a fraction, the numerator of which
is the Investor Default Amount and the denominator of which is the Group [I]
Investor Default Amount;
(C) the product of (I) Group [I] Investor Finance Charge
Collections less the amount of Group [I] Investor Monthly Interest and the Group
[I] Investor Default Amount (up to Group [I] Investor Monthly Fees) and (II) a
fraction, the numerator of which is Series [199_-_] Monthly Fees and the
denominator of which is Group [I] Investor Monthly Fees; and
(D) the product of (I) Group [I] Investor Finance Charge
Collections less the sum of (i) Group [I] Investor Monthly Interest, (ii) the
Group [I] Investor Default Amount and (iii) Group [I] Investor Monthly Fees and
(II) a fraction, the numerator of which is Series [199_-_] Additional Amounts
and the denominator of which is Group [I] Investor Additional Amounts.
(c) If the amount of Group [I] Investor Finance Charge
Collections for such Distribution Date exceeds the sum of (i) Group [I] Investor
Monthly Interest, (ii) Group [I] Investor Default Amount, (iii) Group [I]
Investor Monthly Fees and (iv) Group [I] Investor Additional Amounts, then
Reallocated Investor Finance Charge Collections for such Distribution Date shall
include an amount equal to the product of (x) the amount of such excess and (y)
a fraction, the numerator of which is the Invested Amount as of the last day of
the second preceding Monthly Period (or, for Series [199_-_] only, with respect
to the first Distribution Date, as of the Closing Date) and the denominator of
which is the sum of such Invested Amount and the aggregate invested amounts for
all other Series included in Group [I] as of such last day (or, for Series
[199_-_] only, with respect to the First Distribution Date, as of the Closing
Date).]
[Section 4.11. Shared Principal Collections. Subject to Section
4.04 of the Agreement, Shared Principal Collections for any Distribution Date
will be allocated to Series [199_-_] in an amount equal to the product of (x)
the aggregate amount of Shared Principal Collections with respect to all
Principal Sharing Series for such Distribution Date and (y) a fraction, the
numerator of which is the Series [199_-_] Principal Shortfall for such
Distribution Date and the denominator of which is the aggregate amount of
Principal Shortfalls for all the Series which are Principal Sharing Series for
such Distribution Date. The "Series [199_-_] Principal Shortfall" will be equal
to (a) for any Distribution Date with respect to the Revolving Period, zero, (b)
for any Distribution Date with respect to the Controlled Accumulation Period,
the excess, if any, of the Controlled Deposit Amount with respect to such
Distribution Date over the amount of Available Principal Collections for such
Distribution Date (excluding any portion thereof attributable to Shared
Principal Collections) and (c) for any Distribution Date with respect to the
Early Amortization Period, the excess, if any, of the Invested Amount over the
amount of Available Principal Collections for such Distribution Date (excluding
any portion thereof attributable to Shared Principal Collections).]
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Section 4.12. Reserve Account. (a) The Servicer shall establish
and maintain, in the name of the Trustee, on behalf of the Trust, for the
benefit of the Class A Certificateholders and the Collateral Interest Holder, an
Eligible Deposit Account (the "Reserve Account") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Class A Certificateholders and the Collateral Interest Holder. The Reserve
Account shall initially be established with the Trustee. The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Reserve Account and in all proceeds thereof. The Reserve Account shall be
under the sole dominion and control of the Trustee for the benefit of the Class
A Certificateholders and the Collateral Interest Holder. If at any time the
Reserve Account ceases to be an Eligible Deposit Account, the Trustee (or the
Servicer on its behalf) shall within 10 Business Days (or such longer period,
not to exceed 30 calendar days, as to which each Rating Agency shall consent)
establish a new Reserve Account meeting the conditions specified above as an
Eligible Deposit Account, and shall transfer any cash or any investments to such
new Reserve Account. The Trustee, at the direction of the Servicer, shall (i)
make withdrawals from the Reserve Account from time to time in an amount up to
the Available Reserve Account Amount at such time, for the purposes set forth in
this Supplement, and (ii) on each Distribution Date (from and after the Reserve
Account Funding Date) prior to the termination of the Reserve Account make a
deposit into the Reserve Account in the amount specified in, and otherwise in
accordance with, subsection 4.07(i).
(b) Funds on deposit in the Reserve Account shall be invested at
the written direction of the Servicer by the Trustee in Eligible Investments.
Funds on deposit in the Reserve Account on any Transfer Date, after giving
effect to any withdrawals from the Reserve Account on such Transfer Date, shall
be invested in such investments that will mature so that such funds will be
available for withdrawal on or prior to the following Transfer Date. The Trustee
shall maintain for the benefit of the Class A Certificateholders and the
Collateral Interest Holder possession of the negotiable instruments or
securities, if any, evidencing such Eligible Investments. No such Eligible
Investment shall be disposed of prior to its maturity; provided, however, that
the Trustee may sell, liquidate or dispose of any such Eligible Investment
before its maturity, at the written direction of the Servicer, if such sale,
liquidation or disposal would not result in a loss of all or part of the
principal portion of such Eligible Investment or if, prior to the maturity of
such Eligible Investment, a default occurs in the payment of principal, interest
or any other amount with respect to such Eligible Investment. On each
Distribution Date, all interest and earnings (net of losses and investment
expenses) accrued since the preceding Distribution Date on funds on deposit in
the Reserve Account shall be retained in the Reserve Account (to the extent that
the Available Reserve Account Amount is less than the Required Reserve Account
Amount) and the balance, if any, shall be deposited in the Collection Account
and treated as collections of Finance Charge Receivables allocable to Series
[199_-_]. For purposes of determining the availability of funds or the balance
in the Reserve Account for any reason under this Supplement, except as otherwise
provided in the preceding sentence, investment earnings on such funds shall be
deemed not to be available or on deposit.
(c) On the Determination Date preceding each Distribution Date
with respect to the Controlled Accumulation Period and the first Special Payment
Date, the Servicer shall calculate the "Reserve Draw Amount" which shall be
equal to the excess, if any, of the Covered Amount with respect to such
Distribution Date or Special Payment Date over the Principal Funding Investment
Proceeds with respect to such Distribution Date or Special Payment Date;
provided, that such amount will be reduced to the extent that funds otherwise
would be available for deposit in the Reserve Account under subsection 4.07(i)
with respect to such Distribution Date or Special Payment Date.
(d) In the event that for any Distribution Date the Reserve Draw
Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on the
related Transfer Date by the Trustee (acting in accordance with the instructions
of the Servicer), deposited into the Collection Account and included in Class A
Available Funds for such Distribution Date.
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(e) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Trustee, acting in accordance with the written instructions of the
Servicer, shall withdraw from the Reserve Account, and pay to the Collateral
Interest Holder for application in accordance with the Loan Agreement, an amount
equal to such Reserve Account Surplus.
(f) Upon the earliest to occur of (i) the day on which the
Invested Amount is paid in full to the Series [199_-_] Certificateholders, (ii)
if the Controlled Accumulation Period has not commenced, the occurrence of a Pay
Out Event with respect to Series [199_-_], (iii) if the Controlled Accumulation
Period has commenced, the earlier of the first Special Payment Date and the
Expected Final Payment Date and (iv) the termination of the Trust pursuant to
the Agreement, the Trustee, acting in accordance with the instructions of the
Servicer, after the prior payment of all amounts owing to the Class A
Certificateholders which are payable from the Reserve Account as provided
herein, shall withdraw from the Reserve Account and pay to the Collateral
Interest Holder for application in accordance with the Loan Agreement all
amounts, if any, on deposit in the Reserve Account and the Reserve Account shall
be deemed to have terminated for purposes of this Supplement.
[Section 4.13. Determination of LIBOR. (a) On each LIBOR
Determination Date, the Trustee will determine LIBOR, which shall be the rate
for deposits in United States dollars for a period equal to the relevant
Interest Period (commencing on the first day of such Interest Period) which
appears on Telerate page 3750 as of 11:00 a.m., London time, on such date. Upon
such determination, the Trustee shall notify the Servicer of LIBOR for such
LIBOR Determination Date. If such rate does not appear on Telerate Page 3750,
the rate for the LIBOR Determination Date will be determined on the basis of the
rates at which deposits in United States dollars are offered by the Reference
Banks at approximately 11:00 a.m., London time, on that day to prime banks in
the London interbank market for a period equal to the relevant Interest Period
(commencing on the first day of such Interest Period). The Servicer will request
the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
for that LIBOR Determination Date will be the arithmetic mean of the quotations.
If fewer than two quotations are provided as requested, the rate for that LIBOR
Determination Date will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Servicer, at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
European banks for a period equal to the relevant Interest Period (commencing on
the first day of such Interest Period). If the banks selected by the Servicer
are not quoting rates as provided in the immediately preceding sentence, LIBOR
for such Interest Period will be LIBOR in effect for the immediately preceding
Interest Period.
(b) The Servicer shall determine, and promptly notify the Trustee
of, the Class A Certificate Rate and the Class B Certificate Rate for the
applicable Interest Period. The Class A Certificate Rate and Class B Certificate
Rate applicable to the then current and the immediately preceding Interest
Periods may be obtained by any Investor Certificateholder by telephoning the
Trustee at its Corporate Trust Office at (212) 250-5326.
(c) On each LIBOR Determination Date prior to 3:00 p.m. New York
City time, the Trustee shall send to the Servicer by facsimile, notification of
LIBOR for the following Interest Period.]
Section 4.14. Investment Instructions. Any investment
instructions required to be given to the Trustee pursuant to the terms hereof
must be given to the Trustee no later than 10:00 a.m. (New York City time) on
the date such investment is to be made. In the event the Trustee receives such
investment instruction later than such time, the Trustee may, but shall have no
obligation to, make such investment. In the event the Trustee is unable to make
an investment required in an investment instruction received by the Trustee
after 10:00 a.m. (New York City time) on such day, such investment shall be made
by the Trustee on the next succeeding Business Day. In no event shall the
Trustee be liable for any investment not made pursuant to investment
instructions received after 10:00 a.m. (New York City time) on the day such
investment is requested to be made.
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ARTICLE V
Distributions and Reports to Series [199_-_] Certificateholders
Section 5.01. Distributions. (a) On each Payment Date, the Paying
Agent shall distribute to each Class A Certificateholder of record on the
related Record Date (other than as provided in Section 12.02 of the Agreement)
such Class A Certificateholder's pro rata share of the amounts on deposit in the
Interest Funding Account or otherwise held by the Paying Agent that are
allocated and available on such Payment Date to pay interest on the Class A
Certificates pursuant to this Supplement.
(b) On each Special Payment Date and on the Expected Final
Payment Date, the Paying Agent shall distribute to each Class A
Certificateholder of record on the related Record Date (other than as provided
in Section 12.02 of the Agreement) such Class A Certificateholder's pro rata
share of the amounts on deposit in the Principal Funding Account or otherwise
held by the Paying Agent that are allocated and available on such date to pay
principal of the Class A Certificates pursuant to this Supplement up to a
maximum amount on any such date equal to the Class A Invested Amount on such
date (unless there has been an optional repurchase of the Series [199_-_]
Certificateholders' Interest pursuant to Section 10.01 of the Agreement, in
which event the foregoing limitation will not apply).
(c) On each Payment Date, the Paying Agent shall distribute to
each Class B Certificateholder of record on the related Record Date (other than
as provided in Section 12.02 of the Agreement) such Class B Certificateholder's
pro rata share of the amounts on deposit in the Interest Funding Account or
otherwise held by the Paying Agent that are allocated and available on such
Payment Date to pay interest on the Class B Certificates pursuant to this
Supplement.
(d) On each Special Payment Date, and on the Expected Final
Payment Date, the Paying Agent shall distribute to each Class B
Certificateholder of record on the related Record Date (other than as provided
in Section 12.02 of the Agreement) such Class B Certificateholder's pro rata
share of the amounts on deposit in the Principal Funding Account or otherwise
held by the Paying Agent that are allocated and available on such date to pay
principal of the Class B Certificates pursuant to this Supplement up to a
maximum amount on any such date equal to the Class B Invested Amount on such
date (unless there has been an optional repurchase of the Series [199_-_]
Certificateholders' Interest pursuant to Section 10.01 of the Agreement, in
which event the foregoing limitation will not apply).
(e) The distributions to be made pursuant to this Section 5.01
are subject to the provisions of Sections 2.06, 9.02, 10.01 and 12.02 of the
Agreement and Sections 8.01 and 8.02 of this Supplement.
(f) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution, distributions to Series [199_-_]
Certificateholders hereunder shall be made by check mailed to each Series
[199_-_] Certificateholder at such Series [199_-_] Certificateholder's address
appearing in the Certificate Register without presentation or surrender of any
Series [199_-_] Certificate or the making of any notation thereon; provided,
however, that with respect to Series [199_-_] Certificates registered in the
name of a Clearing Agency, such distributions shall be made to such Clearing
Agency in immediately available funds.
Section 5.02. Reports and Statements to Series [199_-_]
Certificateholders. (a) On each Distribution Date, the Paying Agent, on behalf
of the Trustee, shall forward to each Series [199_-_] Certificateholder a
statement substantially in the form of Exhibit C prepared by the Servicer.
(b) Not later than each Determination Date, the Servicer shall
deliver to the Trustee, the Paying Agent, each Rating Agency and the Collateral
Interest Holder (i) a statement substantially in the form of Exhibit C prepared
by the Servicer and (ii) a certificate of a Servicing Officer substantially in
th
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form of Exhibit D.
(c) A copy of each statement or certificate provided pursuant to
paragraph (a) or (b) may be obtained by any Series [199_-_] Certificateholder or
any Certificate Owner thereof by a request in writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning with
calendar year [200_], the Paying Agent, on behalf of the Trustee, shall furnish
or cause to be furnished to each Person who at any time during the preceding
calendar year was a Series [199_-_] Certificateholder, a statement prepared by
the Servicer containing the information which is required to be contained in the
statement to Series [199_-_] Certificateholders, as set forth in paragraph (a)
above aggregated for such calendar year or the applicable portion thereof during
which such Person was a Series [199_-_] Certificateholder, together with other
information as is required to be provided by an issuer of indebtedness under the
Code. Such obligation of the Servicer shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by the
Paying Agent pursuant to any requirements of the Code as from time to time in
effect.
ARTICLE VI
Pay Out Events
Section 6.01. Pay Out Events. If any one of the following events
shall occur with respect to the Series [199_-_] Certificates:
(a) the occurrence of an Insolvency Event relating to the
Transferor;
(b) the Trust becomes an investment company within the meaning of
the Investment Company Act;
(c) failure on the part of the Transferor (i) to make any payment
or deposit required by the terms of the Agreement or this Supplement on or
before the date occurring five Business Days after the date such payment or
deposit is required to be made therein or herein or (ii) duly to observe or
perform any other covenants or agreements of the Transferor set forth in the
Agreement or this Supplement, which failure has a material adverse effect on the
Series [199_-_] Certificateholders and which continues unremedied for a period
of 60 days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Transferor by the Trustee, or
to the Transferor and the Trustee by any Holder of the Series [199_-_]
Certificates;
(d) any representation or warranty made by the Transferor in the
Agreement or this Supplement, or any information contained in a computer file or
microfiche list required to be delivered by the Transferor pursuant to Section
2.01 or subsection 2.08(f) of the Agreement shall prove to have been incorrect
in any material respect when made or when delivered, which continues to be
incorrect in any material respect for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Transferor by the Trustee, or to the Transferor and the
Trustee by any Holder of the Series [199_-_] Certificates and as a result of
which the interests of the Series [199_-_] Certificateholders are materially and
adversely affected for such period; provided, however, that a Pay Out Event
pursuant to this subsection 6.01(d) shall not be deemed to have occurred
hereunder if the Transferor has accepted reassignment of the related Receivable,
or all of such Receivables, if applicable, during such period in accordance with
the provisions of the Agreement;
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(e) a failure by the Transferor to convey Receivables in
Additional Accounts or Participations to the Trust within five Business Days
after the day on which it is required to convey such Receivables or
Participations pursuant to subsection 2.09(a) of the Agreement;
(f) any Servicer Default shall occur;
(g) the average Series Adjusted Portfolio Yield for any three
consecutive Monthly Periods is reduced to a rate which is less than the average
of the Base Rates for such period;
(h) the Class A Invested Amount and the Class B Invested Amount
shall not be paid in full on the Expected Final Payment Date; or
(i) a Transfer Restriction Event shall occur;
then, in the case of any event described in subparagraph (c), (d) or (f), after
the applicable grace period, if any, set forth in such subparagraphs, either the
Trustee or the Holders of Series [199_-_] Certificates evidencing more than 50%
of the aggregate unpaid principal amount of Series [199_-_] Certificates by
notice then given in writing to the Transferor and the Servicer (and to the
Trustee if given by the Series [199_-_] Certificateholders) may declare that a
Pay Out Event has occurred with respect to Series [199_-_] as of the date of
such notice, and, in the case of any event described in subparagraph (a), (b),
(e), (g), (h) or (i), a Pay Out Event shall occur with respect to Series
[199_-_] without any notice or other action on the part of the Trustee or the
Series [199_-_] Certificateholders immediately upon the occurrence of such
event.
ARTICLE VII
Optional Repurchase; Series Termination
Section 7.01. Optional Repurchase. (a) On any day occurring on or
after the date on which the Invested Amount is reduced to [5]% or less of the
Initial Invested Amount, the Transferor shall have the option to purchase the
Series [199_-_] Certificateholders' Interest, at a purchase price equal to (i)
if such day is a Distribution Date, the Reassignment Amount for such
Distribution Date or (ii) if such day is not a Distribution Date, the
Reassignment Amount for the Distribution Date following such day.
(b) The Transferor shall give the Servicer and the Trustee at
least 30 days prior written notice of the date on which the Transferor intends
to exercise such purchase option. Not later than 12:00 noon, New York City time,
on such day the Transferor shall deposit the Reassignment Amount into the
Collection Account in immediately available funds. Such purchase option is
subject to payment in full of the Reassignment Amount. Following the deposit of
the Reassignment Amount into the Collection Amount in accordance with the
foregoing, the Invested Amount for Series [199_-_] shall be reduced to zero and
the Series [199_-_] Certificateholders shall have no further interest in the
Receivables. The Reassignment Amount shall be distributed as set forth in
subsection 8.01(b).
Section 7.02. Series Termination. (a) If, on the [ ] Distribution
Date, the Invested Amount (after giving effect to all changes therein on such
date) would be greater than zero, the Servicer, on behalf of the Trustee, shall,
within the 40-day period which begins on such Distribution Date, solicit bids
for the sale of Principal Receivables and the related Finance Charge Receivables
(or, interests therein) in an amount equal to the Invested Amount at the close
of business on the last day of the Monthly Period preceding the Series [199_-_]
Termination Date (after giving effect to all distributions required to be made
on the Series [199_-_] Termination Date, except pursuant to this Section 7.02).
Such bids shall require that such sale shall (subject to subsection 7.02(b))
occur on the Series [199_-_] Termination Date. The Transferor and the Collateral
Interest Holder shall be entitled to participate in, and to receive from the
Trustee a copy of each other bid submitted in connection with, such bidding
process.
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(b) The Servicer, on behalf of the Trustee, shall sell such
Receivables (or interests therein) on the Series [199_-_] Termination Date to
the bidder who made the highest cash purchase offer. The proceeds of any such
sale shall be treated as Collections on the Receivables allocated to the Series
[199_-_] Certificateholders pursuant to the Agreement and this Supplement;
provided, however, that the Servicer shall determine conclusively the amount of
such proceeds which are allocable to Finance Charge Receivables and the amount
of such proceeds which are allocable to Principal Receivables. During the period
from the [ ] Distribution Date to the Series [199_-_] Termination Date, the
Servicer shall continue to collect payments on the Receivables and allocate and
deposit such Collections in accordance with the provisions of the Agreement and
the Supplements.
ARTICLE VIII
Final Distributions
Section 8.01. Sale of Receivables or Certificateholders' Interest
pursuant to Section 2.06 or 10.01 of the Agreement and Section 7.01 or 7.02 of
this Supplement.
(a)(i) The amount to be paid by the Transferor with respect to
Series [199_-_] in connection with a reassignment of Receivables to the
Transferor pursuant to Section 2.06 of the Agreement shall equal the
Reassignment Amount for the first Distribution Date following the Monthly Period
in which the reassignment obligation arises under the Agreement.
(ii) The amount to be paid by the Transferor with respect to
Series [199_-_] in connection with a repurchase of the
Certificateholders' Interest pursuant to Section 10.01 of the Agreement
shall equal the sum of (x) the Reassignment Amount for the Distribution
Date of such repurchase and (y) the sum of (A) the excess, if any, of
(I) a price equivalent to the average of bids quoted on the Record Date
preceding the date of repurchase or, if not a Business Day, on the next
succeeding Business Day by at least two recognized dealers selected by
the Trustee for the purchase by such dealers of a security which is
similar to the Class A Certificates with a remaining maturity
approximately equal to the remaining maturity of the Class A
Certificates and rated by each Rating Agency in the rating category
originally assigned to the Class A Certificates over (II) the portion
of the Reassignment Amount attributable to the Class A Certificates and
(B) the excess, if any, of (I) a price equivalent to the average of
bids quoted on such Record Date, or if not a Business Day, on the next
succeeding Business Day by at least two recognized dealers selected by
the Trustee for the purchase by such dealers of a security which is
similar to the Class B Certificates with a remaining maturity
approximately equal to the remaining maturity of the Class B
Certificates and rated by each Rating Agency in the rating category
originally assigned to the Class B Certificates over (II) the portion
of the Reassignment Amount attributable to the Class B Certificates.
(b) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 7.01 or any amounts allocable to the
Series [199_-_] Certificateholders' Interest deposited into the Collection
Account pursuant to Section 7.02, the Trustee shall, in accordance with the
written direction of the Servicer, not later than 12:00 noon, New York City
time, on the related Distribution Date, make deposits or distributions of the
following amounts (in the priority set forth below and, in each case after
giving effect to any deposits and distributions otherwise to be made on such
date) in immediately available funds: (i) (x) the Class A Invested Amount on
such Distribution Date will be distributed to the Paying Agent for payment to
the Class A Certificateholders and (y) an amount equal to the sum of (A) Class A
Monthly Interest for such Distribution Date, (B) any Class A Monthly Interest
previously due but not distributed to the Class A Certificateholders or
deposited in the Interest Funding Account on a prior Distribution Date and (C)
the amount of Class A Additional Interest, if any, for such Distribution Date
and any Class A Additional Interest previously due but not distributed to the
Class A Certificateholders or
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deposited in the Interest Funding Account on any prior Distribution Date, will
be distributed to the Paying Agent for payment to the Class A
Certificateholders, (ii) (x) the Class B Invested Amount on such Distribution
Date will be distributed to the Paying Agent for payment to the Class B
Certificateholders and (y) an amount equal to the sum of (A) Class B Monthly
Interest for such Distribution Date, (B) any Class B Monthly Interest previously
due but not distributed to the Class B Certificateholders or deposited in the
Interest Funding Account on a prior Distribution Date and (C) the amount of
Class B Additional Interest, if any, for such Distribution Date and any Class B
Additional Interest previously due but not distributed to the Class B
Certificateholders or deposited in the Interest Funding Account on any prior
Distribution Date, will be distributed to the Paying Agent for payment to the
Class B Certificateholders and (iii) the balance, if any, will be distributed to
the Collateral Interest Holder for application in accordance with the Loan
Agreement.
(c) Notwithstanding anything to the contrary in this Supplement
or the Agreement, all amounts distributed to the Paying Agent pursuant to
subsection 8.01(b) for payment to the Series [199_-_] Certificateholders shall
be deemed distributed in full to the Series [199_-_] Certificateholders on the
date on which such funds are distributed to the Paying Agent pursuant to this
Section and shall be deemed to be a final distribution pursuant to Section 12.02
of the Agreement.
Section 8.02. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables pursuant to Section 9.01 of the Agreement. (a)
Not later than 12:00 noon, New York City time, on the Distribution Date
following the date on which the Insolvency Proceeds are deposited into the
Collection Account pursuant to subsection 9.01(b) of the Agreement, the Trustee
shall in accordance with the written direction of the Servicer (in the following
priority and, in each case, after giving effect to any deposits and
distributions otherwise to be made on such Distribution Date) (i) deduct an
amount equal to the Class A Invested Amount on such Distribution Date from the
portion of the Insolvency Proceeds allocated to Series [199_-_] Allocable
Principal Collections and distribute such amount to the Paying Agent for payment
to the Class A Certificateholders, provided that the amount of such distribution
shall not exceed the product of (x) the portion of the Insolvency Proceeds
allocated to Series [199_-_] Allocable Principal Collections and (y) the
Principal Allocation Percentage with respect to the related Monthly Period, (ii)
deduct an amount equal to the Class B Invested Amount on such Distribution Date
from the portion of the Insolvency Proceeds allocated to Series [199_-_]
Allocable Principal Collections and distribute such amount to the Paying Agent
for payment to the Class B Certificateholders, provided that the amount of such
distribution shall not exceed (x) the product of (A) the portion of such
Insolvency Proceeds allocated to Series [199_-_] Allocable Principal Collections
and (B) the Principal Allocation Percentage with respect to the related Monthly
Period minus (y) the amount distributed to the Paying Agent pursuant to clause
(i) of this sentence and (iii) deduct an amount equal to the Collateral Invested
Amount, if any, on such Distribution Date from the portion of the Insolvency
Proceeds allocated to Series [199_-_] Allocable Principal Collections and
distribute such amount to the Collateral Interest Holder for application in
accordance with the Loan Agreement, provided that the amount of such
distribution shall not exceed (x) the product of (1) the portion of the
Insolvency Proceeds allocated to Series [199_-_] Allocable Principal Collections
and (2) the Principal Allocation Percentage with respect to such Monthly Period
minus (y) the amounts distributed to the Paying Agent pursuant to clauses (i)
and (ii) of this sentence. To the extent that the product of (A) the portion of
the Insolvency Proceeds allocated to Series [199_-_] Allocable Principal
Collections and (B) the Principal Allocation Percentage with respect to the
related Monthly Period exceeds the aggregate amounts distributed to the Paying
Agent pursuant to the preceding sentence, the excess shall be allocated to the
Transferor's Interest and shall be released to the Holders of the Transferor
Certificates on such Distribution Date.
(b) Not later than 12:00 noon, New York City time, on such
Distribution Date, the Trustee shall in accordance with the written direction of
the Servicer (in the following priority and, in each case, after giving effect
to any deposits and distributions otherwise to be made on such Distribution
Date) (i) deduct an amount equal to the sum of (w) Class A Monthly Interest for
such Distribution Date, (x) any Class A Monthly Interest previously due but not
distributed to the Class A Certificateholders or deposited in the Interest
Funding Account on a prior Distribution Date and (y) the amount of Class A
Additional
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Interest, if any, for such Distribution Date and any Class A Additional Interest
previously due but not distributed to the Class A Certificateholders or
deposited in the Interest Funding Account on a prior Distribution Date from the
portion of the Insolvency Proceeds allocated to Collections of Finance Charge
Receivables and distribute such amount to the Paying Agent for payment to the
Class A Certificateholders, provided that the amount of such distribution shall
not exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Series [199_-_] Allocable Finance Charge Collections, (y) the Floating
Allocation Percentage with respect to the related Monthly Period and (z) the
Class A Floating Percentage with respect to such Monthly Period and (ii) deduct
an amount equal to the sum of (w) Class B Monthly Interest for such Distribution
Date, (x) Class B Monthly Interest previously due but not distributed to the
Class B Certificateholders or deposited in the Interest Funding Account on a
prior Distribution Date and (y) the amount of Class B Additional Interest, if
any, for such Distribution Date and any Class B Additional Interest previously
due but not distributed to the Class B Certificateholders or deposited in the
Interest Funding Account on a prior Distribution Date from the portion of the
Insolvency Proceeds allocated to Series [199_-_] Allocable Finance Charge
Collections and distribute such amount to the Paying Agent for payment to the
Class B Certificateholders, provided that the amount of such distribution shall
not exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Series [199_-_] Allocable Finance Charge Collections, (y) the Floating
Allocation Percentage with respect to the related Monthly Period and (z) the
Class B Floating Percentage with respect to such Monthly Period. To the extent
that the product of (A) the portion of the Insolvency Proceeds allocated to
Series [199_-_] Allocable Finance Charge Collections and (B) the Floating
Allocation Percentage with respect to the related Monthly Period exceeds the
aggregate amount distributed to the Paying Agent pursuant to the preceding
sentence, the excess shall be released to the Collateral Interest Holder for
application by the Collateral Interest Holder in accordance with the Loan
Agreement.
(c) Notwithstanding anything to the contrary in this Supplement
or the Agreement, all amounts distributed to the Paying Agent pursuant to this
Section for payment to the Series [199_-_] Certificateholders shall be
distributed in full to the Series [199_-_] Certificateholders on the date on
which funds are distributed to the Paying Agent pursuant to this Section and
shall be deemed to be a final distribution pursuant to Section 12.02 of the
Agreement.
ARTICLE IX
Miscellaneous Provisions
Section 9.01. Ratification of Agreement. As supplemented by this
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Supplement shall be read, taken and
construed as one and the same instrument.
Section 9.02. Counterparts. This Supplement may be executed in
two or more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.
Section 9.03. Governing Law. THIS SUPPLEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
34
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Supplement
to be duly executed and delivered by their respective duly authorized officers
on the day and year first above written.
UNIVERSAL BANK,
Transferor
By:_____________________________
Name:
Title:
UNIVERSAL CARD SERVICES CORP.,
Servicer
By:_____________________________
Name:
Title:
BANKERS TRUST COMPANY,
not in its individual capacity, but solely
as Trustee,
By:_____________________________
Name:
Title:
35
<PAGE>
EXHIBIT A-1
-----------
FORM OF CLASS A CERTIFICATE
---------------------------
REGISTERED $____________(1)
No. R-__ CUSIP No. ________
Unless this Class A Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Universal Bank or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
UNIVERSAL CARD MASTER TRUST
SERIES [199_-_]
CLASS A [FLOATING RATE] ASSET BACKED CERTIFICATE
Expected Final Payment Date:
The [ ] Distribution Date
Each $1,000 minimum denomination represents a
1/[ ] undivided interest
in Class A of the
UNIVERSAL CARD MASTER TRUST, SERIES [199_-_]
Evidencing an undivided interest in certain assets of a trust, the corpus of
which consists primarily of an interest in receivables generated from time to
time in the ordinary course of business in a portfolio of consumer revolving
credit card accounts serviced by
UNIVERSAL CARD SERVICES CORP.,
and other assets and interests constituting the Trust under the Pooling and
Servicing Agreement referred to below.
(Not an interest in or obligation of Universal Card Services Corp., Universal
Bank or any of their respective affiliates)
This certifies that CEDE & CO. (the "Class A Certificateholder") is the
registered owner of a fractional undivided interest in certain assets of a trust
(the "Trust") created pursuant to the Amended and Restated Pooling and Servicing
Agreement, dated as of April 24, 1998 (as amended and supplemented, the
- ----------
(1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
A-1-1
<PAGE>
"Agreement"), as supplemented by the Series [199_-_] Supplement dated as of [ ],
[199_] (as amended and supplemented, the "Supplement"), among Universal Bank, as
Transferor, Universal Card Services Corp., as Servicer, and Bankers Trust
Company, a New York banking corporation, as trustee (the "Trustee"). The corpus
of the Trust consists of (i) the Transferor's ownership interest in a portfolio
of receivables (the "Receivables") existing in the consumer revolving credit
card accounts identified under the Agreement from time to time (the "Accounts"),
(ii) all Receivables generated under the Accounts from time to time thereafter,
(iii) funds collected or to be collected from cardmembers in respect of the
Receivables, (iv) all funds which are from time to time on deposit in the
Collection Account, the Special Funding Account and any other Series Accounts
and (v) all other assets and interests constituting the Trust. The Holder of
this Certificate is entitled to the benefits of the subordination of the Class B
Certificates and the Collateral Interest to the extent provided in the
Supplement. Although a summary of certain provisions of the Agreement and the
Supplement is set forth below and in the Summary of Terms and Conditions
attached hereto and made a part hereof, this Class A Certificate does not
purport to summarize the Agreement and the Supplement and reference is made to
the Agreement and the Supplement for information with respect to the interests,
rights, benefits, obligations, proceeds and duties evidenced hereby and the
rights, duties and obligations of the Trustee. A copy of the Agreement and the
Supplement (without schedules) may be requested from the Trustee by writing to
the Trustee at the Corporate Trust Office. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement or the Supplement, as applicable.
This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement and the Supplement, to which
Agreement and Supplement, each as amended and supplemented from time to time,
the Class A Certificateholder by virtue of the acceptance hereof assents and is
bound.
It is the intent of the Transferor and the Class A
Certificateholders that, for federal, state and local income and franchise tax
purposes, the Class A Certificates will qualify as indebtedness of the
Transferor secured by the Receivables. The Class A Certificateholder, by the
acceptance of this Class A Certificate, agrees to treat this Class A Certificate
for federal, state and local income and franchise tax purposes as debt of the
Transferor.
In general, payments of principal with respect to the Class A
Certificates are limited to the Class A Invested Amount, which may be less than
the unpaid principal balance of the Class A Certificates. The Expected Final
Payment Date is the [ ] Distribution Date, but principal with respect to the
Class A Certificates may be paid earlier or later under certain circumstances
described in the Agreement and the Supplement. If for one or more months during
the Controlled Accumulation Period there are not sufficient funds to pay the
Controlled Deposit Amount, then to the extent that excess funds are not
available on subsequent Distribution Dates with respect to the Controlled
Accumulation Period to make up for such shortfalls, the final payment of
principal of the Class A Certificates will occur later than the Expected Final
Payment Date.
A-1-2
<PAGE>
Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee, by manual signature, this Class A Certificate
shall not be entitled to any benefit under the Agreement or the Supplement or be
valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Class A
Certificate to be duly executed.
UNIVERSAL BANK,
By:_____________________________
Name:
Title:
Dated:_______________
A-1-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates described in the
within-mentioned Agreement and Supplement.
BANKERS TRUST COMPANY,
as Trustee,
By:_____________________________
Authorized Officer
or
By:_____________________________
as Authenticating Agent
for the Trustee,
By:_____________________________
Authorized Officer
A-1-4
<PAGE>
UNIVERSAL CARD MASTER TRUST
SERIES [199_-_]
CLASS A [FLOATING RATE] ASSET BACKED CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise
generally from the purchase of goods and services and amounts advanced to
cardmembers as cash advances and Finance Charge Receivables. This Class A
Certificate is one of a Series of Certificates entitled Universal Card Master
Trust, Series [199_-_] (the "Series [199_-_] Certificates"), and one of a Class
thereof entitled Class A Series [199_-_] [Floating Rate] Asset Backed
Certificates, (the "Class A Certificates"), each of which represents a
fractional, undivided interest in certain assets of the Trust. The assets of the
Trust are allocated in part to the investor certificateholders of all
outstanding Series (the "Certificateholders' Interest") with the remainder
allocated to the Holders of the Transferor Certificates. The aggregate interest
represented by the Class A Certificates at any time in the Principal Receivables
in the Trust shall not exceed an amount equal to the Class A Invested Amount at
such time. The Class A Initial Invested Amount is $[ ]. The Class A Invested
Amount on any date will be an amount equal to (a) the Class A Initial Invested
Amount, minus (b) the aggregate amount of principal payments made to the Class A
Certificateholders on or prior to such date, minus (c) the excess, if any, of
the aggregate amount of Class A Investor Charge-Offs for all prior Distribution
Dates over Class A Investor Charge-Offs reimbursed pursuant to subsection
4.07(b) of the Supplement prior to such date.
Subject to the terms and conditions of the Agreement, the
Transferor may, from time to time, direct the Trustee, on behalf of the Trust,
to issue one or more new Series of Investor Certificates, which will represent
fractional, undivided interests in certain of the Trust Assets.
On each Distribution Date, the Paying Agent shall distribute to
each Class A Certificateholder of record on the last day of the preceding
calendar month (each a "Record Date") such Class A Certificateholder's pro rata
share of such amounts (including amounts on deposit in the Collection Account)
as are payable to the Class A Certificateholders pursuant to the Agreement and
the Supplement. Distributions with respect to this Class A Certificate will be
made by the Paying Agent by check mailed to the address of the Class A
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class A Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class A
Certificate) except that with respect to Class A Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class A Certificate will be made only upon presentation and surrender of this
Class A Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Series [199_-_] Certificateholders
in accordance with the Agreement and the Supplement.
On any day occurring on or after the day on which the Invested
Amount is reduced to [5]% or less of the Initial Invested Amount, the Transferor
has the option to repurchase the Series [199_-_] Certificateholders' Interest in
the Trust. The repurchase price will be equal to (a) if such day is a
Distribution Date, the Reassignment Amount for such Distribution Date or (b) if
such day is not a Distribution Date, the Reassignment Amount for the
Distribution Date following such day. Following the deposit of the Reassignment
Amount in the Collection Account, Series [199_-_] Certificateholders will not
have any interest in the Receivables and the Series [199_-_] Certificates will
represent only the right to receive such Reassignment Amount.
A-1-5
<PAGE>
This Class A Certificate does not represent an obligation of, or
an interest in, the Transferor or the Servicer or any affiliate of either of
them and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency or instrumentality. This Class A
Certificate is limited in right of payment to certain Collections with respect
to the Receivables (and certain other amounts), all as more specifically set
forth hereinabove and in the Agreement and the Supplement.
The Class A Certificates are issuable only in minimum
denominations of $1,000 and integral multiples of $1,000. The transfer of this
Class A Certificate shall be registered in the Certificate Register upon
surrender of this Class A Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer, in a form satisfactory to the Trustee or the
Transfer Agent and Registrar, duly executed by the Class A Certificateholder or
such Class A Certificateholder's attorney, and duly authorized in writing with
such signature guaranteed, and thereupon one or more new Class A Certificates of
authorized denominations and for the same aggregate fractional undivided
interest will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations
therein set forth, Class A Certificates are exchangeable for new Class A
Certificates evidencing like aggregate fractional, undivided interests as
requested by the Class A Certificateholder surrendering such Class A
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar and any agent of any of them, may treat the person in whose
name this Class A Certificate is registered as the owner hereof for all
purposes, and neither the Servicer nor the Trustee, the Paying Agent, the
Transfer Agent and Registrar, nor any agent of any of them, shall be affected by
notice to the contrary except in certain circumstances described in the
Agreement.
THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. ASSIGNMENT
A-1-6
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee _______________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________
(name and address of assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:___________________ Signature Guaranteed:__________________________(2)
- ----------
(2) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatsoever.
A-1-7
<PAGE>
EXHIBIT A-2
-----------
FORM OF CLASS B CERTIFICATE
---------------------------
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE
ACCOUNT OF A BENEFIT PLAN (AS DEFINED BELOW).
REGISTERED $____________(1)
No. R-__ CUSIP No. ________
Unless this Class B Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Universal Bank or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
UNIVERSAL CARD MASTER TRUST
SERIES [199_-_]
CLASS B [FLOATING RATE] ASSET BACKED CERTIFICATE
Expected Final Payment Date:
The [ ] Distribution Date
Each $1,000 minimum denomination represents a
1/[ ] undivided interest
in Class B of the
UNIVERSAL CARD MASTER TRUST, SERIES [199_-_]
Evidencing an undivided interest in certain assets of a trust, the corpus of
which consists primarily of an interest in receivables generated from time to
time in the ordinary course of business in a portfolio of consumer revolving
credit card accounts serviced by
UNIVERSAL CARD SERVICES CORP.,
and other assets and interests constituting the Trust under the Pooling and
Servicing Agreement referred to below.
(Not an interest in or obligation of Universal Card Services Corp., Universal
Bank or any of their respective affiliates).
- ----------
(1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
A-2-1
<PAGE>
This certifies that CEDE & CO. (the "Class B Certificateholder") is the
registered owner of a fractional, undivided interest in certain assets of a
trust (the "Trust") created pursuant to the Amended and Restated Pooling and
Servicing Agreement, dated as of April 24, 1998 (as amended and supplemented,
the "Agreement"), as supplemented by the Series [199_-_] Supplement dated as of
[ ], [199_] (as amended and supplemented, the "Supplement"), among Universal
Bank, as Transferor, Universal Card Services Corp., as Servicer, and Bankers
Trust Company, a New York banking corporation, as trustee (the "Trustee"). The
corpus of the Trust consists of (i) the Transferor's ownership interest in a
portfolio of receivables (the "Receivables") existing in the consumer revolving
credit card accounts identified under the Agreement from time to time (the
"Accounts"), (ii) all Receivables generated under the Accounts from time to time
thereafter, (iii) funds collected or to be collected from cardmembers in respect
of the Receivables, (iv) all funds which are from time to time on deposit in the
Collection Account, the Special Funding Account, and the other Series Accounts
and (v) all other assets and interests constituting the Trust. The Holder of
this Certificate is entitled to the benefits of the subordination of the
Collateral Interest to the extent provided in the Supplement. Although a summary
of certain provisions of the Agreement and the Supplement is set forth below and
in the Summary of Terms and Conditions attached hereto and made a part hereof,
this Class B Certificate does not purport to summarize the Agreement and the
Supplement and reference is made to the Agreement and the Supplement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Agreement and the Supplement (without schedules) may
be requested from the Trustee by writing to the Trustee at the Corporate Trust
Office. To the extent not defined herein, the capitalized terms used herein have
the meanings ascribed to them in the Agreement or the Supplement, as applicable.
This Class B Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement and the Supplement, to which
Agreement and Supplement, each as amended and supplemented from time to time,
the Class B Certificateholder by virtue of the acceptance hereof assents and is
bound.
This Class B Certificate may not be acquired by or for the
account of any employee benefit plan, trust or account, including an individual
retirement account, that is subject to the Employee Retirement Income Security
Act of 1974, as amended, or that is described in Section 4975(e)(1) of the
Internal Revenue Code of 1986, as amended, or an entity whose underlying assets
include plan assets by reason of a plan's investment in such entity (a "Benefit
Plan"). By accepting and holding this Class B Certificate, the Holder hereof
shall be deemed to have represented and warranted that it is not a Benefit Plan.
By acquiring any interest in this Class B Certificate, the applicable
Certificate Owner or Owners shall be deemed to have represented and warranted
that it or they are not Benefit Plans.
THIS CLASS B CERTIFICATE IS SUBORDINATED TO THE EXTENT NECESSARY
TO FUND PAYMENTS ON THE CLASS A CERTIFICATES TO THE EXTENT SPECIFIED IN THE
SUPPLEMENT.
It is the intent of the Transferor and the Class B
Certificateholders that, for federal, state and local income and franchise tax
purposes, the Class B Certificates will qualify as indebtedness of the
Transferor secured by the Receivables. The Class B Certificateholder, by the
acceptance of this Class B Certificate, agrees to treat this Class B Certificate
for federal, state and local income and franchise tax purposes as debt of the
Transferor.
In general, payments of principal with respect to the Class B
Certificates are limited to the Class B Invested Amount, which may be less then
the unpaid principal balance of the Class B Certificates. The Expected Final
Payment Date is the [ ] Distribution Date, but principal with respect to the
Class B Certificates may be paid earlier or later under certain circumstances
described in the
A-2-2
<PAGE>
Agreement and the Supplement. If for one or more months during the Controlled
Accumulation Period there are not sufficient funds to pay the Controlled Deposit
Amount, then to the extent that excess funds are not available on subsequent
Distribution Dates with respect to the Accumulation Period to make up for such
shortfalls, the final payment of principal of the Certificates will occur later
than the Expected Final Payment Date.
Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee, by manual signature, this Class B Certificate
shall not be entitled to any benefit under the Agreement or the Supplement or be
valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Class B
Certificate to be duly executed.
UNIVERSAL BANK,
By:_____________________________
Name:
Title:
Dated:___________
A-2-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates described in the
within-mentioned Agreement and Supplement.
BANKERS TRUST COMPANY,
as Trustee,
By:_____________________________
Authorized Officer
A-2-4
<PAGE>
UNIVERSAL CARD MASTER TRUST
SERIES [199_-_]
CLASS B [FLOATING RATE] ASSET BACKED CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise
generally from the purchase of goods and services and amounts advanced to
cardmembers as cash advances and Finance Charge Receivables. This Class B
Certificate is one of a Series of Certificates entitled Universal Card Master
Trust, Series [199_-_] (the "Series [199_-_] Certificates"), and one of a class
thereof entitled Class B Series [199_-_] [Floating Rate] Asset Backed
Certificates, (the "Class B Certificates"), each of which represents a
fractional, undivided interest in certain assets of the Trust. The assets of the
Trust are allocated in part to the investor certificateholders of all
outstanding Series (the "Certificateholders' Interest") with the remainder
allocated to the Holders of the Transferor Certificates. The aggregate interest
represented by the Class B Certificates at any time in the Principal Receivables
in the Trust shall not exceed an amount equal to the Class B Invested Amount at
such time. The Class B Initial Invested Amount is $[ ]. The Class B Invested
Amount on any date will be an amount equal to (a) the Class B Initial Invested
Amount, minus (b) the aggregate amount of principal payments made to the Class B
Certificateholders prior to such date, minus (c) the aggregate amount of Class B
Investor Charge-Offs for all prior Distribution Dates, minus (d) the amount of
Reallocated Principal Collections allocated on all prior Distribution Dates
pursuant to subsection 4.08(a) of the Supplement (excluding any Reallocated
Principal Collections that have resulted in a reduction in the Collateral
Invested Amount pursuant to Section 4.08), minus (e) an amount equal to the
amount by which the Class B Invested Amount has been reduced to cover the Class
A Investor Default Amount on all prior Distribution Dates, and plus (f) the
amount of Excess Spread and Excess Finance Charge Collections allocated to
Series [199_-_] and applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e);
provided, however, that the Class B Invested Amount may not be reduced below
zero.
Subject to the terms and conditions of the Agreement, the
Transferor may, from time to time, direct the Trustee, on behalf of the Trust,
to issue one or more new Series of Investor Certificates, which will represent
fractional, undivided interests in certain of the Trust Assets.
On each Distribution Date, the Paying Agent shall distribute to
each Class B Certificateholder of record on the last day of the preceding
calendar month (each a "Record Date") such Class B Certificateholder's pro rata
share of such amounts (including amounts on deposit in the Collection Account)
as are payable to the Class B Certificateholders pursuant to the Agreement and
the Supplement. Distributions with respect to this Class B Certificate will be
made by the Paying Agent by check mailed to the address of the Class B
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class B Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class B
Certificate) except that with respect to Class B Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class B Certificate will be made only upon presentation and surrender of this
Class B Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Series [199_-_] Certificateholders
in accordance with the Agreement and the Supplement.
On any day occurring on or after the day on which the Invested
Amount is reduced to [5]% or less of the Initial Invested Amount, the Transferor
has the option to repurchase the Series [199_-_]
A-2-5
<PAGE>
Certificateholders' Interest in the Trust. The repurchase price will be equal to
(a) if such day is a Distribution Date, the Reassignment Amount for such
Distribution Date or (b) if such day is not a Distribution Date, the
Reassignment Amount for the Distribution Date next following such day. Following
the deposit of the Reassignment Amount in the Collection Account, Series
[199_-_] Certificateholders will not have any interest in the Receivables and
the Series [199_-_] Certificates will represent only the right to receive such
Reassignment Amount.
This Class B Certificate does not represent an obligation of, or
an interest in, the Transferor or the Servicer or any affiliate of either of
them and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other governmental agency or instrumentality. This Class B
Certificate is limited in right of payment to certain Collections with respect
to the Receivables (and certain other amounts), all as more specifically set
forth hereinabove and in the Agreement and the Supplement.
The Class B Certificates are issuable only in minimum
denominations of $1,000 and integral multiples of $1,000. The transfer of this
Class B Certificate shall be registered in the Certificate Register upon
surrender of this Class B Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer, in a form satisfactory to the Trustee or the
Transfer Agent and Registrar, duly executed by the Class B Certificateholder or
such Class B Certificateholder's attorney, and duly authorized in writing with
such signature guaranteed, and thereupon one or more new Class B Certificates of
authorized denominations and for the same aggregate fractional undivided
interest will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations
therein set forth, Class B Certificates are exchangeable for new Class B
Certificates evidencing like aggregate fractional undivided interests as
requested by the Class B Certificateholder surrendering such Class B
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar and any agent of any of them, may treat the person in whose
name this Class B Certificate is registered as the owner hereof for all
purposes, and neither the Servicer nor the Trustee, the Paying Agent, the
Transfer Agent and Registrar, nor any agent of any of them, shall be affected by
notice to the contrary except in certain circumstances described in the
Agreement.
THIS CLASS B CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. ASSIGNMENT
A-2-6
<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee _______________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________
(name and address of assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints ____________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:___________________ Signature Guaranteed:__________________________(2)
- ----------
(2) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatsoever.
A-2-7
<PAGE>
EXHIBIT B
FORM OF MONTHLY PAYMENT INSTRUCTIONS AND
NOTIFICATION TO THE TRUSTEE
------------------------------
UNIVERSAL CARD MASTER TRUST
SERIES [199_-_]
------------------------------
The undersigned, a duly authorized representative of Universal
Card Services Corp. ("UCS"), as Servicer pursuant to the Amended and Restated
Pooling and Servicing Agreement dated as of April 24, 1998 (as amended and
supplemented, the "Pooling and Servicing Agreement"), among UCS, Universal Bank
(the "Bank"), as Transferor and Bankers Trust Company, as trustee (the
"Trustee"), does hereby certify as follows:
1. Capitalized terms used in this Certificate have their
respective meanings set forth in the Pooling and Servicing Agreement or the
Series [199_-_] Supplement dated as of [ ], [199_], among UCS, the Bank and the
Trustee (as amended and supplemented, the "Supplement"), as applicable.
2. UCS is the Servicer.
3. The undersigned is a Servicing Officer.
I. INSTRUCTION TO MAKE A WITHDRAWAL
Pursuant to subsections 4.05(a), (b) and (c), the Servicer does
hereby instruct the Trustee (i) to make withdrawals from the Collection Account
on ___________, ____, which date is a Distribution Date under the Supplement, in
the aggregate amounts (equal to the Class A Available Funds, Class B Available
Funds and Collateral Available Funds, respectively) as set forth below in
respect of the following amounts and (ii) to apply the proceeds of such
withdrawals in accordance with subsections 4.05(a), (b) and (c):
B-1
<PAGE>
With respect to the Class A Certificates,
A) Pursuant to subsection 4.05(a)(i):
(1) Interest at the Class A Certificate Rate for the related Interest
Period on the outstanding principal balance of the Class A
Certificates..................................................$_______
(2) Class A Monthly Interest previously due but not paid......$_______
(3) Class A Additional Interest and any Class A Additional Interest
previously due but not paid...................................$_______
B) Pursuant to subsection 4.05(a)(ii):
Class A Investor Default Amount for the preceding Monthly
Period........................................................$_______
C) Pursuant to subsection 4.05(a)(iii):
(1) The Class A Servicing Fee for the preceding Monthly
Period........................................................$_______
(2) Accrued and unpaid Class A Servicing
Fees..........................................................$_______
With respect to the Class B Certificates,
A) Pursuant to subsection 4.05(b)(i):
(1) Interest at the Class B Certificate Rate for the preceding Monthly
Period on the Class B Invested Amount.........................$_______
(2) Class B Monthly Interest previously due but not paid......$_______
(3) Class B Additional Interest and any Class B Additional Interest
previously due but not paid...................................$_______
B) Pursuant to subsection 4.05(b)(ii):
(1) The Class B Servicing Fee for the preceding Monthly
Period........................................................$_______
(2) Accrued and unpaid Class B Servicing
Fees..........................................................$_______
B-2
<PAGE>
With respect to the Collateral Interest
A) Pursuant to subsection 4.05(c)(i):
(1) The Collateral Servicing Fee for the preceding Monthly
Period........................................................$_______
(2) Accrued and unpaid Collateral Servicing Fee, if
applicable....................................................$_______
Pursuant to subsections 4.05(d), (e) and (f), the Servicer hereby
instructs the Trustee (i) to make withdrawals from the Collection Account on
____________, which date is a Distribution Date under the Supplement, in the
aggregate amounts (equal to the Available Principal Collections) as set forth
below in respect of the following amounts and (ii) to apply the proceeds of such
withdrawals in accordance with subsections 4.05(d), (e) and (f):
A) Pursuant to subsection 4.05(d):
(1) The excess, if any, of the Collateral Invested Amount over the
Required Collateral Invested Amount paid to the Collateral Interest
Holder pursuant to the Loan Agreement.........................$_______
(2) Amount to be treated as Shared Principal Collections......$_______
B) Pursuant to subsection 4.05(e):
(1) The lesser of the Controlled Deposit Amount and the sum of the
Class A Adjusted Invested Amount and the Class B Adjusted Invested
Amount deposited in the Principal Funding
Account.......................................................$_______
(2) Prior to the date the Class B Invested Amount is paid in full,
excess of the Collateral Invested Amount over the Required Collateral
Invested Amount paid to the Collateral Interest Holder pursuant to the
Loan Agreement................................................$_______
(3) After the Class B Invested Amount is paid in full, the amount paid
to the Collateral Interest Holder (up to the Collateral Invested
Amount) pursuant to the Loan Agreement........................$_______
(4) Amount to be treated as Shared Principal Collections......$_______
C) Pursuant to subsection 4.05(f):
(1) An amount up to the Class A Adjusted Invested Amount deposited in
the Principal Funding Account.................................$_______
B-3
<PAGE>
(2) On and after the Distribution Date on which the Class A Invested
Amount is paid in full, an amount up to the Class B Invested Amount
deposited in the Principal Funding Account....................$_______
(3) On and after the Distribution Date on which the Class B Invested
Amount is paid in full, an amount up to the Collateral Invested Amount
paid to the Collateral Interest Holder pursuant to the Loan
Agreement.....................................................$_______
(4) Amount to be treated as Shared Principal Collections......$_______
Pursuant to Section 4.07, the Servicer does hereby instruct the
Trustee to apply on __________, which is a Distribution Date under the
Supplement, any Excess Spread and Excess Finance Charge Collections allocated to
Series [199_-_] as follows:
A) Pursuant to subsection 4.07(a):
Class A Required Amount applied in the priority set forth in
subsections 4.05(a)(i), (ii) and (iii)........................$_______
B) Pursuant to subsection 4.07(b):
Aggregate amount of Class A Investor Charge-Offs not previously
reimbursed allocated to Available Principal
Collections...................................................$_______
C) Pursuant to subsection 4.07(c):
Class B Required Amount applied first in the priority set forth in
subsections 4.05(b)(i) and (ii) and any remaining amount up to the
Class B Investor Default Amount allocated to Available Principal
Collections...................................................$_______
D) Pursuant to subsection 4.07(d):
The amount by which the "Class B Invested Amount" has been reduced
pursuant to clauses (c), (d) and (e) of the definition thereof
allocated to Available Principal
Collections...................................................$_______
E) Pursuant to subsection 4.07(e):
(1) Collateral Monthly Interest...............................$_______
(2) Collateral Monthly Interest previously due but not
paid..........................................................$_______
B-4
<PAGE>
(3) Collateral Additional Interest and any Collateral Additional
Interest previously due and not paid..........................$_______
F) Pursuant to subsection 4.07(f):
Monthly Servicing Fee for such Distribution Date that has not been paid
to the Servicer and any Monthly Servicing Fee previously due but not
paid to the Servicer..........................................$_______
G) Pursuant to subsection 4.07(g):
Collateral Default Amount allocated to Available Principal
Collections...................................................$_______
H) Pursuant to subsection 4.07(h):
The amount by which the "Collateral Invested Amount" has been reduced
pursuant to clauses (c), (d) and (e) of the definition thereof
allocated to Available Principal Collections..................$_______
I) Pursuant to subsection 4.07(i):
The excess of the Required Reserve Account Amount over the Available
Reserve Amount deposited into the Reserve Account.............$_______
J) Pursuant to subsection 4.07(j):
Paid to the Collateral Interest Holder pursuant to the Loan
Agreement.....................................................$_______
K) Pursuant to subsection 4.07(k):
Treated as Excess Finance Charge Collections and allocated to other
Series or paid to the Holders of the Transferor
Certificates..................................................$_______
Pursuant to Section 4.08, the Servicer does hereby instruct the
Trustee to apply on __________, which is a Distribution Date under the Pooling
and Servicing Agreement, $__________ of Reallocated Principal Collections to
fund any deficiencies in the Required Amount after applying Class A Available
Funds, Class B Available Funds, Excess Spread and Excess Finance Charge
Collections thereto.
B-5
<PAGE>
II. INSTRUCTION TO MAKE CERTAIN PAYMENTS
Pursuant to Section 5.01, the Servicer does hereby instruct the
Trustee to pay in accordance with Section 5.01 from the Interest Funding Account
or the Principal Funding Account, as applicable, on __________, which date is a
Payment Date under the Supplement, the following amounts as set forth below:
A) Pursuant to subsection 5.01(a):
Interest to be distributed to Class A
Certificateholders...........................................$________
B) Pursuant to subsection 5.01(b):
On the Expected Final Payment Date or a Special Payment Date, principal
to be distributed to the Class A
Certificateholders...........................................$________
C) Pursuant to subsection 5.01(c):
Interest to be distributed to Class B Certificateholders.....$________
D) Pursuant to subsection 5.01(d):
On the Expected Final Payment Date or a Special Payment Date, on or
after the date Class A Invested Amount is paid in full, principal to be
distributed to the Class B Certificateholders................$________
III. ACCRUED AND UNPAID AMOUNTS
After giving effect to the withdrawals and transfers to be made
in accordance with this notice, the following amounts will be accrued and unpaid
with respect to all Monthly Periods preceding the current calendar month.
1. Subsection 4.06(a):
The aggregate amount of all unreimbursed Class A Investor
Charge-Offs..................................................$________
2. Subsections 4.06(a), (b) and 4.08(a):
The aggregate amount by which the "Class B Invested Amount" has been
reduced pursuant to clauses (c), (d) and (e) of the definition
thereof......................................................$________
3. Subsections 4.06(a), (b), (c) and 4.08(a) and (b):
The aggregate amount by which the "Collateral Invested Amount" has been
reduced pursuant to clauses (c), (d) and (e) of the definition
thereof......................................................$________
B-6
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ____ day of _____, ____.
UNIVERSAL CARD SERVICES CORP.
By:_____________________________
Name:
Title:
B-7
<PAGE>
EXHIBIT C
FORM OF MONTHLY STATEMENT
UNIVERSAL CARD MASTER TRUST
SERIES [199_-_]
Pursuant to the Amended and Restated Pooling and Servicing
Agreement dated as of April 24, 1998 (hereinafter as such agreement may have
been or may be from time to time, amended or otherwise modified, the "Pooling
and Servicing Agreement"), among Universal Card Services Corp. ("UCS"), as
Servicer, Universal Bank (the "Bank"), as Transferor, and Bankers Trust Company,
as trustee (the "Trustee"), as supplemented by the Series [199_-_] Supplement
dated as of [ ], [199_] (the "Supplement") among UCS, the Bank and the Trustee,
UCS, as Servicer, is required to prepare certain information each month
regarding current distributions to the Series [199_-_] Certificateholders and
the performance of the Universal Card Master Trust (the "Trust") during the
previous month. The information which is required to be prepared with respect to
the Distribution Date of __________, and with respect to the performance of the
Trust during the month of __________ is set forth below. Certain of the
information is presented on the basis of an original principal amount of $1,000
per Series [199_-_] Certificate (a "Certificate"). Certain other information is
presented based on the aggregate amounts for the Trust as a whole. Capitalized
terms used in this Monthly Statement have their respective meanings set forth in
the Pooling and Servicing Agreement and the Supplement.
A) Information regarding distributions in respect of the Class A
Certificates per $1,000 original certificate principal amount.......
$--------
(1) The total amount of the distribution in respect of Class A
Certificates, per $1,000 original certificate principal
amount...............................................$_______
(2) The amount of the distribution set forth in paragraph 1
above in respect of interest on the Class A Certificates, per
$1,000 original certificate principal
amount..............................................$________
(3) The amount of the distribution set forth in paragraph 1
above in respect of principal of the Class A Certificates, per
$1,000 original certificate principal
amount..............................................$________
B) Class A Investor Charge Offs and Reimbursement of Charge
Offs.............................................................$________
(1) The amount of Class A Investor Charge
Offs................................................$________
(2) The amount of Class A Investor Charge Offs set forth in
paragraph 1 above, per $1,000 original certificate principal
amount..............................................$________
(3) The total amount reimbursed in respect of Class A Investor
Charge Offs.........................................$________
C-2
<PAGE>
(4) The amount set forth in paragraph 3 above, per $1,000
original certificate principal amount...............$________
(5) The amount, if any, by which the outstanding principal
balance of the Class A Certificates exceeds the Class A
Invested Amount after giving effect to all transactions on
such Distribution Date..............................$________
C) Information regarding distributions in respect of the Class B
Certificates, per $1,000 original certificate principal amount...$________
(1) The total amount of the distribution in respect of Class B
Certificates, per $1,000 original certificate principal
amount..............................................$________
(2) The amount of the distribution set forth in paragraph 1
above in respect of interest on the Class B Certificates, per
$1,000 original certificate principal
amount..............................................$________
(3) The amount of the distribution set forth in paragraph 1
above in respect of principal of the Class B Certificates, per
$1,000 original certificate principal
amount..............................................$________
D) Amount of reductions in Class B Invested Amount pursuant to clauses (c),
(d), and (e) of the definition of Class B Invested Amount........$________
(1) The amount of reductions in Class B Invested Amount
pursuant to clauses (c), (d) and (e) of the definition of
Class B Invested
Amount..............................................$________
(2) The amount of the reductions in the Class B Invested
Amount set forth in paragraph 1 above, per $1,000 original
certificate principal
amount..............................................$________
(3) The total amount reimbursed in respect of such reductions
in the Class B Invested
Amount..............................................$________
(4) The amount set forth in paragraph 3 above, per $1,000
original certificate principal
amount..............................................$________
(5) The amount, if any, by which the outstanding principal
balance of the Class B Certificates exceeds the Class B
Invested Amount after giving effect to all transactions on
such Distribution Date..............................$________
E) Information regarding certain distributions to the Collateral Interest
Holder...........................................................$________
C-3
<PAGE>
(1) The amount distributed to the Collateral Interest Holder
in respect of interest on the Collateral Invested
Amount..............................................$________
(2) The amount distributed to the Collateral Interest Holder
in respect of principal on the Collateral Invested
Amount..............................................$________
F) Amount of reductions in Collateral Invested Amount pursuant to clauses
(c), (d), and (e) of the definition of Collateral Invested
Amount...........................................................$________
(1) The amount of reductions in the Collateral Invested Amount
pursuant to clauses (c), (d) and (e) of the definition of
Collateral Invested
Amount..............................................$________
(2) The total amount reimbursed in respect of such reductions
in the Collateral Invested
Amount..............................................$________
UNIVERSAL CARD SERVICES CORP.,
Servicer
By:_____________________________
Name:
Title:
C-4
<PAGE>
RECEIVABLES --
Beginning of the Month Principal Receivables: $_________
Beginning of the Month Finance Charge Receivables: $_________
Beginning of the Month Discounted Receivables: $_________
Beginning of the Month Premium Receivables: $_________
Beginning of the Month Total Receivables: $_________
Removed Principal Receivables: $_________
Removed Finance Charge Receivables: $_________
Removed Total Receivables: $_________
Additional Principal Receivables: $_________
Additional Finance Charge Receivables: $_________
Additional Total Receivables: $_________
Discounted Receivables Generated this Period: $_________
Premium Receivables Generated this Period $_________
End of the Month Principal Receivables: $_________
End of the Month Finance Charge Receivables: $_________
End of the Month Discounted Receivables: $_________
End of the Month Premium Receivables: $_________
End of the Month Total Receivables: $_________
$---------
SPECIAL FUNDING ACCOUNT Balance
Aggregate Invested Amount (all Master Trust Series) $_________
End of the Month Transferor Amount $_________
C-5
<PAGE>
DELINQUENCIES AND LOSSES --
End of the Month Delinquencies: RECEIVABLES
31-60 Days Delinquent $_________
61-90 Days Delinquent $_________
91+ Days Delinquent $_________
Total 31+ Days Delinquent $_________
Defaulted Accounts During the Month $_________
C-6
<PAGE>
INVESTED AMOUNTS --
Class A Initial Invested Amount $_________
Class B Initial Invested Amount $_________
Collateral Initial Invested Amount $_________
INITIAL INVESTED AMOUNT $_________
Class A Invested Amount $_________
Class B Invested Amount $_________
Collateral Invested Amount $_________
INVESTED AMOUNT $_________
Class A Adjusted Invested Amount $_________
Class B Adjusted Invested Amount $_________
ADJUSTED INVESTED AMOUNT $_________
MONTHLY SERVICING FEE $_________
INVESTOR DEFAULT AMOUNT $_________
GROUP [I] INFORMATION --
WEIGHTED AVERAGE CERTIFICATE RATE FOR ALL SERIES IN $_________
GROUP [I]
GROUP [I] INVESTOR FINANCE CHARGE COLLECTIONS
$_________
GROUP [I] INVESTOR ADDITIONAL AMOUNTS
$_________
GROUP [I] INVESTOR DEFAULT AMOUNT $_________
GROUP [I] INVESTOR MONTHLY FEES $_________
GROUP [I] INVESTOR MONTHLY INTEREST
C-7
<PAGE>
$________]SERIES [199_-_] INFORMATION --
SERIES [199_-_] ALLOCATION PERCENTAGE ________%
SERIES [199_-_] ALLOCABLE FINANCE CHARGE COLLECTIONS
$_________
SERIES [199_-_] ADDITIONAL AMOUNTS $_________
SERIES [199_-_] ALLOCABLE DEFAULTED AMOUNT
$_________
SERIES [199_-_] MONTHLY FEES $_________
SERIES [199_-_] ALLOCABLE PRINCIPAL COLLECTIONS
$_________
SERIES [199_-_] REQUIRED TRANSFEROR AMOUNT
$_________
FLOATING ALLOCATION PERCENTAGE ________%
INVESTOR FINANCE CHARGE COLLECTIONS ________%
INVESTOR DEFAULT AMOUNT $_________
REALLOCATED INVESTOR FINANCE CHARGE COLLECTIONS $_________
PRINCIPAL ALLOCATION PERCENTAGE ________%
AVAILABLE PRINCIPAL COLLECTIONS $_________
CLASS A AVAILABLE FUNDS --
CLASS A FLOATING PERCENTAGE
________%
Class A Floating Percentage of Reallocated
Investor Finance Charge Collections $_________
Other Amounts $_________
TOTAL CLASS A AVAILABLE FUNDS $_________
Class A Monthly Interest $_________
Class A Investor Default Amount $_________
C-8
<PAGE>
Class A Servicing Fee $_________
TOTAL CLASS A EXCESS SPREAD $_________
CLASS A REQUIRED AMOUNT $_________
CLASS B AVAILABLE FUNDS -- $_________
CLASS B FLOATING PERCENTAGE ________%
CLASS B AVAILABLE FUNDS $_________
Class B Monthly Interest $_________
Class B Servicing Fee $_________
COLLATERAL AVAILABLE FUNDS COLLATERAL FLOATING PERCENTAGE ________%
COLLATERAL AVAILABLE FUNDS $_________
Collateral Interest Servicing Fee $_________
TOTAL COLLATERAL EXCESS SPREAD $_________
TOTAL CLASS B EXCESS SPREAD $_________
C-9
<PAGE>
EXCESS SPREAD --
TOTAL EXCESS SPREAD $_________
Excess Spread Applied to Class A Required Amount $_________
Excess Spread Applied to Class A Investor Charge Offs $_________
Excess Spread Applied to Class B Required Amount $_________
Excess Spread Applied to Reductions of Class B Invested Amount
pursuant to clauses (c), (d) and (e) $_________
Excess Spread Applied to Collateral Monthly Interest $_________
Excess Spread Applied to Unpaid Monthly Servicing Fee $_________
Excess Spread Applied to Collateral Default Amount $_________
Excess Spread Applied to Reductions of Collateral Invested Amount
Pursuant to Clauses (c), (d) and (e) $_________
Excess Spread Applied to Reserve Account $_________
Excess Spread Applied to Other Amounts Owed to Collateral Interest
Holder $_________
TOTAL EXCESS FINANCE CHARGE COLLECTIONS ELIGIBLE FOR OTHER EXCESS
ALLOCATION SERIES $_________
EXCESS FINANCE CHARGES COLLECTIONS
TOTAL EXCESS FINANCE CHARGE COLLECTIONS FOR ALL ALLOCATION SERIES $_________
SERIES [199_-_] EXCESS FINANCE CHARGE COLLECTIONS --
EXCESS FINANCE CHARGE COLLECTIONS ALLOCATED TO SERIES [199_-_] $_________
Excess Finance Charge Collections Applied to Class A
Required Amount $_________
Excess Finance Charge Collections Applied to Class A Investor
Charge Offs $_________
Excess Finance Charge Collections Applied to Class B Required
Amount $_________
Excess Finance Charge Collections Applied to Reductions of Class B
Invested Amount Pursuant to Clauses (c), (d) and (e) $_________
Excess Finance Charge Collections Applied to Collateral Monthly
Interest $_________
Excess Finance Charge Collections Applied to Unpaid Monthly
Servicing Fee $_________
C-10
<PAGE>
Excess Finance Charge Collections Applied to Collateral Default
Amount $_________
Excess Finance Charge Collections Applied to Reductions of
Collateral Invested Amount Pursuant to Clauses (c), (d) and (e) $_________
Excess Finance Charge Collections Applied to Reserve Account $_________
Excess Finance Charge Collections Applied to Other Amounts Owed to
Collateral Interest Holder $_________
YIELD AND BASE RATE --
Base Rate (Current Month) _________%
Base Rate (Prior Month) _________%
Base Rate (Two Months Ago) _________%
THREE MONTH AVERAGE BASE RATE _________%
Series Adjusted Portfolio Yield (Current Month) _________%
Series Adjusted Portfolio Yield (Prior Month) _________%
Series Adjusted Portfolio Yield (Two Months Ago) _________%
THREE MONTH AVERAGE SERIES ADJUSTED PORTFOLIO YIELD _________%
PRINCIPAL COLLECTIONS --
CLASS A PRINCIPAL PERCENTAGE _________%
Class A Principal Collections $_________
CLASS B PRINCIPAL PERCENTAGE _________%
Class B Principal Collections $_________
COLLATERAL PRINCIPAL PERCENTAGE ________%
Collateral Principal Collections $_________
AVAILABLE PRINCIPAL COLLECTIONS $_________
REALLOCATED PRINCIPAL COLLECTIONS $_________
C-11
<PAGE>
SERIES [199_-_] PRINCIPAL SHORTFALL $_________
SHARED PRINCIPAL COLLECTIONS ALLOCABLE FROM OTHER PRINCIPAL SHARING
SERIES $_________
ACCUMULATION -- -
Controlled Accumulation Amount $_________
Deficit Controlled Accumulation Amount $_________
CONTROLLED DEPOSIT AMOUNT $_________
PRINCIPAL FUNDING ACCOUNT BALANCE $_________
SHARED PRINCIPAL COLLECTIONS ELIGIBLE FOR OTHER PRINCIPAL SHARING
SERIES $_________
INVESTOR CHARGE OFFS AND REDUCTIONS
CLASS A INVESTOR CHARGE OFFS $_________
REDUCTIONS IN CLASS B INVESTED AMOUNT (OTHER THAN BY PRINCIPAL
PAYMENTS) $_________
REDUCTIONS IN COLLATERAL INVESTED AMOUNT (OTHER THAN BY PRINCIPAL
PAYMENTS) $_________
PREVIOUS CLASS A CHARGE OFFS REIMBURSED $_________
PREVIOUS CLASS B INVESTED AMOUNT REDUCTIONS REIMBURSED $_________
PREVIOUS COLLATERAL INVESTED AMOUNT REDUCTIONS REIMBURSED $_________
UNIVERSAL CARD SERVICES CORP.,
Servicer
By:_____________________________
Name:
Title:
C-12
<PAGE>
EXHIBIT D
FORM OF MONTHLY SERVICER'S CERTIFICATE
UNIVERSAL CARD SERVICES CORP.
UNIVERSAL CARD MASTER TRUST
SERIES [199_-_]
The undersigned, a duly authorized representative of Universal
Card Services Corp., as Servicer ("UCS"), pursuant to the Pooling and Servicing
Agreement dated as of April 24, 1998 (as amended and supplemented, the
"Agreement"), as supplemented by the Series [199_-_] Supplement (as amended and
supplemented, the "Series Supplement"), among UCS, as Servicer, Universal Bank,
as Transferor, and Bankers Trust Company, as Trustee, does hereby certify as
follows:
A) Capitalized terms used in this Certificate have their
respective meanings as set forth in the Agreement or the Series Supplement, as
applicable.
2. UCS is, as of the date hereof, the Servicer under the
Agreement.
3. The undersigned is a Servicing Officer.
4. This Certificate relates to the Distribution Date occurring
on __________ ____, 199__.
5. As of the date hereof, to the best knowledge of the
undersigned, the Servicer has performed in all material respects all
its obligations under the Agreement through the Monthly Period
preceding such Distribution Date [or, if there has been a default in
the performance of any such obligation, set forth in detail the (i)
nature of such default, (ii) the action taken by the Servicer, if any,
to remedy such default and (iii) the current status of each such
default; if applicable, insert "None"].
D-1
<PAGE>
6. As of the date hereof, to the best knowledge of the
undersigned, no Pay Out Event occurred on or prior to such Distribution
Date.
IN WITNESS WHEREOF, the undersigned has duly executed and
delivered this Certificate this ____ day of ____ __, ____.
UNIVERSAL CARD SERVICES CORP.,
Servicer
By:_____________________________
Name:
Title:
D-2
April 24, 1998
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attn: Corporate Trust and Agency Group -
Structured Finance
Ladies and Gentlemen:
In consideration of Bankers Trust Company (the "Trustee") entering into the
Pooling and Servicing Agreement dated as of August 1, 1995, as amended by the
Amended and Restated Pooling and Servicing Agreement dated as of April 24, 1998,
as amended and supplemented (the "Agreement"), with Universal Card Services
Corp., a direct, wholly-owned subsidiary of Citibank, N.A. ("UCS"), Citibank,
N.A., a national banking association organized under the laws of the United
States of America ("Citibank"), hereby agrees as follows:
1. Citibank guarantees to the Trustee, on behalf of the Trust, for the
benefit of the Certificateholders (as each such term is defined in the
Agreement), the performance of each of the obligations of UCS under the
provisions of the Agreement ("Obligations") subject to the terms set
forth below (the "Guarantee"). This is a guarantee of payment and
performance when due and not of collection.
2. Notice of acceptance of the Guarantee, of default or non-performance by
UCS is expressly waived, and action under this Guarantee shall be
subject to no other condition than the giving of a written request by
the Trustee, stating the fact of default or non-performance, mailed to
Citibank, N.A. at the following address: Citibank, N.A., Office of
Corporate Finance, 153 East 53rd Street, 6th Floor, New York, New York
10043.
3. The obligations of Citibank under the Guarantee shall in no way be
impaired by:
o any extension, amendment, modification or renewal of the
Agreement or of the Obligations;
o any waiver of any event of default, extension of time or
failure to enforce any of the Obligations;
o any extension, moratorium or other relief granted to UCS
pursuant to any applicable law or statute.
4. This Guarantee and the obligations of Citibank hereunder shall be
irrevocably valid until:
1
<PAGE>
o return by the Trustee of the original of this Guarantee; or
o the close of business in New York on September 1, 2016 ("Final
Termination Date").
No claim by the Trustee may be asserted under this Guarantee after the
Final Termination Date.
5. This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York. Citibank shall be obligated to take
action hereunder only at the principal office of Citibank in New York,
New York.
Citibank shall have no obligation to take action hereunder during any period
when performance by UCS, in accordance with the provisions of the Agreement,
would constitute a violation of any applicable laws (other than bankruptcy,
liquidation, reorganization or similar laws affecting the enforcement of the
rights of creditors generally).
IN WITNESS WHEREOF, Citibank has caused these presents to be executed by its
duly authorized officer this 24th day of April nineteen hundred ninety-eight.
Very truly yours,
CITIBANK, N.A.
By: /s/ Martin Waters
------------------------
Vice President
2
[LETTERHEAD OF CITIGROUP INC.]
June 29, 1999
Universal Card Master Trust
c/o Universal Card Services Corp.
8787 Baypine Road
Jacksonville, Florida 32256
Universal Bank, N.A.
200 Brookstone Centre, Suite 110
Columbus, Georgia 31904
Universal Card Services Corp.
8787 Baypine Road
Jacksonville, Florida 32256
Ladies and Gentlemen:
This opinion is being provided to you by the undersigned, as an
Associate General Counsel--Corporate Law of Citigroup Inc., the ultimate parent
company of Universal Bank, N.A. ("Universal Bank"). I have acted as counsel to
Universal Card Master Trust (the "Trust"), Universal Bank and Universal Card
Services Corp. ("UCS"), in connection with their filing with the Securities and
Exchange Commission of a Registration Statement on Form S-3 (registration number
333-79497) (the "Registration Statement"), registering under the Securities Act
of 1933, as amended (the "Act"), Asset Backed Certificates representing
undivided interests in certain assets of the Trust (the "Certificates"). The
Certificates of a particular series will be issued pursuant to the Amended and
Restated Pooling and Servicing Agreement dated as of April 24, 1998 (the
"Pooling and Servicing Agreement"), among Universal Bank, as transferor, UCS, as
servicer and Bankers Trust Company, as trustee, and a related Series Supplement
to the Pooling and Servicing Agreement (a "Series Supplement") among Universal
Bank, as transferor, UCS, as servicer and Bankers Trust Company, as trustee,
substantially in the forms filed as Exhibits 4.1 and 4.2, respectively, to the
Registration Statement.
I, or attorneys under my supervision, have examined and am familiar
with such corporate records of the Company, certificates and other documents as
I have deemed appropriate as a basis for the opinions expressed below.
<PAGE>
Universal Card Master Trust
Universal Bank, N.A.
Universal Card Services Corp.
Page 2
On the basis of such examination and review, I advise you that, in my
opinion:
1. When the Series Supplement relating to a particular series of
Certificates is duly and validly authorized, executed and
delivered by Universal Bank, as transferor, UCS, as servicer and
Bankers Trust Company, as trustee, such Series Supplement will
constitute the valid and legally binding obligation of Universal
Bank, as transferor, and UCS, as servicer, subject, as to
enforcement, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of
creditors generally and the rights of creditors of banks in
particular, as such laws may relate to Universal Bank and to
general principles of equity; and
2. When the issuance, execution and delivery of the Certificates of
a particular series have been duly authorized by Universal Bank,
as transferor, and when such Certificates have been duly
executed and delivered by Universal Bank in accordance with the
Pooling and Servicing Agreement and the related Series
Supplement and authenticated by the Trustee and issued and sold
as contemplated by the Registration Statement and the Prospectus
delivered pursuant to Section 5 of the Act in connection
therewith, the Certificates will be legally and validly issued,
fully paid and nonassessable and entitled to the benefits
provided by such Series Supplement and the Pooling and Servicing
Agreement.
The opinions expressed herein are limited to the laws of the State of
New York and the Federal laws of the United States of America.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the heading "Legal
Matters" in the Prospectus relating to the Certificates. I do not admit by
giving this consent that I am in the category of persons whose consent is
required under Section 7 of the Act.
Very truly yours,
/s/ Marla Berman Lewitus
Marla Berman Lewitus
Associate General Counsel--Corporate Law
[Letterhead of]
CRAVATH, SWAINE & MOORE
[New York Office]
June 29, 1999
Universal Card Master Trust
Asset Backed Certificates
Dear Sirs:
We have acted as special Federal tax counsel to Universal
Bank, N.A. ("Universal Bank") in connection with the filing by Universal Bank,
Universal Card Services Corp. ("UCS") and Universal Card Master Trust (the
"Trust") with the Securities and Exchange Commission of a Registration Statement
on Form S-3 (the "Registration Statement") registering Asset Backed
Certificates, representing fractional undivided interests in certain assets of
the Trust (the "Certificates"). The Certificates of a particular series will be
issued pursuant to the Amended and Restated Pooling and Servicing Agreement,
dated as of April 24, 1998, (the "Pooling and Servicing Agreement") among
Universal Bank, UCS and Bankers Trust Company, as Trustee (the "Trustee"), and a
Series Supplement to the Pooling and Servicing Agreement among those parties,
each substantially in the forms filed as Exhibits 4.1 and 4.2, respectively, to
the Registration Statement.
We hereby confirm that the statements set forth in the
prospectus (the "Prospectus") forming a part of the Registration Statement under
the heading "Tax matters" accurately describe the material Federal income tax
consequences to holders of the Certificates issued pursuant to the Prospectus
and described therein.
<PAGE>
2
We know that we are referred to under the headings "Tax
matters" and "Legal opinions" in the Prospectus forming a part of the
Registration Statement, and we hereby consent to such use of our name therein
and to the use of this opinion for filing with the Registration Statement as
Exhibits 8.1 and 23.2 thereto.
Very truly yours,
/s/ Cravath, Swaine & Moore
Universal Bank, N.A.
200 Brookstone Centre, Suite 110
Columbus, Georgia 31904
Universal Card Services Corp.
8787 Baypine Road
Jacksonville, Florida 32256
Universal Card Master Trust
In care of Universal Card Services Corp.
8787 Baypine Road
Jacksonville, Florida 32256
