AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 19, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
(ISSUER OF CERTIFICATES)
<TABLE>
<S> <C>
AMERICAN EXPRESS AMERICAN EXPRESS RECEIVABLES
CENTURION BANK FINANCING CORPORATION II
</TABLE>
(ORIGINATORS OF THE TRUST DESCRIBED HEREIN)
(EXACT NAMES OF REGISTRANTS AS SPECIFIED IN THEIR RESPECTIVE CHARTERS)
<TABLE>
<S> <C> <C> <C>
UTAH 11-2869526 DELAWARE 13-3854638
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
<TABLE>
<S> <C>
6985 UNIONPARK CENTER WORLD FINANCIAL CENTER
MIDVALE, UTAH 84047 200 VESEY STREET
(801) 565-5000 NEW YORK, NEW YORK 10285
(212) 640-2000
</TABLE>
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF EACH REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
LOUISE M. PARENT, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
AMERICAN EXPRESS COMPANY
WORLD FINANCIAL CENTER
200 VESEY STREET
NEW YORK, NEW YORK 10285
(212) 640-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copies to:
<TABLE>
<S> <C>
ROBERT D. KRAUS, ESQ. ALAN KNOLL, ESQ.
CAROL V. SCHWARTZ, ESQ. ORRICK, HERRINGTON & SUTCLIFFE LLP
GROUP COUNSEL 666 FIFTH AVENUE
AMERICAN EXPRESS COMPANY NEW YORK, NEW YORK 10103
WORLD FINANCIAL CENTER (212) 506-5000
200 VESEY STREET
NEW YORK, NEW YORK 10285
(212) 640-2000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this registration statement becomes effective as determined by
market conditions.
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING
BOX. / /
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. /X/
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT, PLEASE CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. / / ____________
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX
AND LIST THE SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER
EFFECTIVE REGISTRATION STATEMENT FOR THE SAME OFFERING. / / ____________
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED AMOUNT OF
TITLE OF SHARES AMOUNT TO BE MAXIMUM AGGREGATE MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Asset Backed Certificates....... $1,000,000 100% $1,000,000 $278
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
In accordance with Rule 429 of the General Rules and Regulations under the
Securities Act of 1933, as amended, the Prospectus included herein is a combined
prospectus which also relates to $246,000,000 of unissued Asset Backed
Certificates registered under Registration Statement No. 33-95784. A filing fee
of $84,827.62 was paid with Registration Statement No. 33-95784 in connection
with such unissued Asset Backed Certificates.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
The information in this prospectus supplement and the accompanying prospectus is
not complete and may be amended. We may not sell these securities until we
deliver a final prospectus supplement and accompanying prospectus. This
prospectus supplement and the accompanying prospectus are not an offer to sell
nor are they seeking an offer to buy these securities in any state where the
offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED , 1998
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1998
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
ISSUER
AMERICAN EXPRESS CENTURION BANK
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
TRANSFERORS
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
SERVICER
SERIES 1998-
$ FLOATING RATE ASSET BACKED CERTIFICATES
<TABLE>
<S> <C> <C> <C>
Class A certificates Class B certificates
The Trust will issue-- -------------------- --------------------
CONSIDER CAREFULLY THE Principal amount $ $
RISK FACTORS BEGINNING Certificate rate One-Month LIBOR One-Month LIBOR
ON PAGE S-10 IN THIS plus % annually plus % annually
PROSPECTUS SUPPLEMENT
AND PAGE 8 IN THE Interest paid Monthly Monthly
PROSPECTUS. First interest
payment date [ , 199 ] [ , 199 ]
A certificate is not a Expected final
deposit and neither the payment date [ , 200 ] [ , 200 ]
certificates nor the Legal final maturity [ , 200 ] [ , 200 ]
underlying accounts or Price to public per
receivables are insured or certificate $ ( %) $ ( %)
guaranteed by the Federal Underwriting discount
Deposit Insurance per certificate $ ( %) $ ( %)
Corporation or any other Proceeds to transferors
governmental agency. per certificate $ ( %) $ ( %)
The certificates will
represent interests in the
trust only and will not Credit Enhancement--
represent interests in or
obligations of American The Class B certificates are subordinated to the Class A certificates.
Express Company or any Subordination of the Class B certificates provides credit enhancement for the
of its affiliates. Class A certificates.
This prospectus The trust is also issuing a collateral interest in the amount of $ that is
supplement may be used subordinated to the Class A certificates and the Class B certificates.
to offer and sell the Subordination of the collateral interest provides credit enhancement for both
certificates only if the Class A and the Class B certificates.
accompanied by the
prospectus. This prospectus supplement and the accompanying prospectus relate to the
offering of the certificates only.
</TABLE>
Neither the SEC nor any state securities commission has approved the
certificates or determined that this prospectus supplement or the prospectus
is accurate or complete. Any representation to the contrary is a criminal
offense.
Underwriters of the Class A certificates
Underwriters of the Class B certificates
, 1998
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the certificates in two separate
documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
your series of certificates and (b) this prospectus supplement, which describes
the specific terms of your series of certificates.
IF THE TERMS OF YOUR SERIES OF CERTIFICATES VARY BETWEEN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION
IN THIS PROSPECTUS SUPPLEMENT.
We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following Table of Contents and the Table of
Contents included in the accompanying prospectus provide the pages on which
these captions are located.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement and the accompanying prospectus are defined under the
caption 'Index of Defined Terms' beginning on page S-40 in this document and
under the caption 'Index of Defined Terms' beginning on page 73 in the
accompanying prospectus.
------------------------
S-2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY OF SERIES TERMS........................ S-4
The Trust.................................... S-4
The Transferors and the Servicer............. S-4
Offered Securities........................... S-4
Distribution Dates........................ S-4
Interest.................................. S-4
Principal................................. S-4
The Collateral Interest...................... S-5
Credit Enhancement........................... S-5
Other Interests in the Trust................. S-5
Other Series of Certificates.............. S-5
The Transferor Certificates............... S-5
The Receivables.............................. S-5
Collections by the Servicer.................. S-6
Allocations to You and Your Series........... S-6
Step 1: Allocations Among Series.......... S-6
Step 2: Allocations Within Your Series.... S-6
Step 3: Reallocations Among Series........ S-6
Step 4: Final Allocations Among Class A,
Class B and the Collateral Interest..... S-6
Applications of Collections.................. S-7
Finance Charge Collections................ S-7
Excess Spread............................. S-7
Principal Collections..................... S-7
Pay-Out Events............................... S-8
Reallocated Investor Finance Charge
Collections............................... S-8
Shared Principal Collections................. S-9
Excess Finance Charge Collections............ S-9
Optional Repurchase.......................... S-9
Registration................................. S-9
Tax Status................................... S-9
ERISA Considerations......................... S-9
Certificate Ratings.......................... S-9
Exchange Listing............................. S-9
RISK FACTORS................................... S-10
Limited Amounts of Credit Enhancement........ S-10
Effect of Subordination of Class B
Certificates; Principal Payments.......... S-10
Certificate Ratings.......................... S-10
INTRODUCTION................................... S-11
MATURITY CONSIDERATIONS........................ S-11
<PAGE>
<CAPTION>
PAGE
----
<S> <C>
THE TOTAL PORTFOLIO............................ S-13
General...................................... S-13
Loss and Delinquency Experience.............. S-13
Revenue Experience........................... S-14
Payment Rates................................ S-15
Account Holder Monthly Payment Rates of the
Total Portfolio........................... S-15
THE RECEIVABLES................................ S-15
USE OF PROCEEDS................................ S-17
RFC II, CENTURION AND CREDCO................... S-17
RFC II....................................... S-17
Centurion.................................... S-17
Credco....................................... S-18
THE SERVICER................................... S-18
SERIES PROVISIONS.............................. S-18
Interest Payments............................ S-18
Principal Payments........................... S-20
Subordination of the Class B Certificates and
the Collateral Interest................... S-22
Allocation Percentages....................... S-22
Principal Funding Account.................... S-25
Reserve Account.............................. S-26
Reallocation of Cash Flows................... S-27
Application of Collections................... S-28
Required Collateral Invested Amount.......... S-32
Defaulted Receivables; Investor Charge-
Offs...................................... S-32
Paired Series................................ S-34
Pay-Out Events............................... S-34
Servicing Compensation and Payment of
Expenses.................................. S-35
Optional Repurchase.......................... S-36
Series Termination........................... S-36
Reports...................................... S-36
ERISA CONSIDERATIONS........................... S-37
Class A Certificates......................... S-37
Class B Certificates......................... S-38
Consultation with Counsel.................... S-38
UNDERWRITING................................... S-38
INDEX OF DEFINED TERMS......................... S-40
ANNEX I........................................ A-1
</TABLE>
S-3
<PAGE>
SUMMARY OF SERIES TERMS
This summary highlights selected information from this document and does not
contain all of the information that you need to consider in making your
investment decision. This summary provides general, simplified descriptions of
matters which, in some cases, are highly technical and complex. More detail is
provided in other sections of this document and in the prospectus.
Do not rely upon this summary for a full understanding of the matters which need
to be considered in connection with any potential investment in the Series
1998- certificates.
To understand all of the terms of the offering of the Series 1998- certificates,
read carefully this entire document and the accompanying prospectus.
THE TRUST
The certificates will be issued by American Express Credit Account Master Trust.
The trust is a master trust and its trustee is The Bank of New York.
THE TRANSFERORS AND THE SERVICER
American Express Centurion Bank and American Express Receivables Financing
Corporation II are the transferors of the receivables to the trust and American
Express Travel Related Services Company, Inc. is the servicer of the
receivables.
OFFERED SECURITIES
American Express Credit Account Master Trust is offering:
$ of Class A certificates; and
$ of Class B certificates.
In this document, references to Series 1998- certificates include both Class A
and Class B certificates.
Beneficial interests in the Series 1998- certificates may be purchased in
minimum denominations of $1,000 and integral multiples of $1,000.
The Series 1998- certificates are expected to be issued on ,
1998.
DISTRIBUTION DATES
Distribution dates for the Series 1998- certificates will be ,
199 _ and, after that, will be the 15th day of each month, if the 15th is a
business day and, if not, the following business day.
INTEREST
Interest on the Series 1998- certificates will be paid on each distribution
date. Interest for each distribution date will accrue from and including the
preceding distribution date to but excluding that distribution date. However,
interest paid on the first distribution date will accrue from and including
, 1998 to but excluding that first distribution date.
The Class A certificates will bear interest at one-month LIBOR as determined
each month plus % per annum.
The Class B certificates will bear interest at one-month LIBOR as determined
each month plus % per annum.
You may obtain the interest rates for the current interest period and the
immediately preceding interest period by telephoning the trustee at (212)
815-5738.
See 'Series Provisions--Interest Payments' in this prospectus supplement for a
description of how and when LIBOR will be determined, for a discussion of the
determination of amounts available to pay interest and for the definition of
business day.
PRINCIPAL
Principal on the Series 1998- certificates is expected to be paid on
, 200 , or, if that date is not a business day, the next business
day; however, certain circumstances could cause principal to be paid earlier or
later, or in reduced amounts. There is no penalty for early or late payment of
principal. If certain adverse events known as pay-out events occur, principal
may be paid earlier than expected. If collections of the credit card receivables
are less than expected or are collected more slowly than expected, then
principal payments may be delayed. No principal will be
S-4
<PAGE>
paid on the Class B certificates until the Class A certificates are paid in
full. The final payment of principal and interest on the Series 1998-
certificates will be made no later than , 200 , or, if that date
is not a business day, the next business day.
See 'Maturity Considerations' and 'Series Provisions--Allocation Percentages'
and '--Principal Payments' in this prospectus supplement for a discussion of the
determination of amounts available to pay principal.
THE COLLATERAL INTEREST
The trust is also issuing an interest in the assets of the trust that is
subordinated to the Series 1998- certificates called the collateral interest.
The initial size of the collateral interest is $ , representing %
of the initial aggregate principal amount of the Series 1998- certificates and
the collateral interest. The holder of the collateral interest will have voting
and certain other rights as if the collateral interest were a subordinated class
of Series 1998- certificates.
THE COLLATERAL INTEREST IS NOT BEING OFFERED THROUGH THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS.
CREDIT ENHANCEMENT
Credit enhancement for the Series 1998- certificates is for the benefit of
Series 1998- only and you are not entitled to the benefits of any credit
enhancement available to other series.
Subordination of the Class B certificates provides credit enhancement for the
Class A certificates. Subordination of the collateral interest provides credit
enhancement for both the Class A certificates and the Class B certificates. The
collateral invested amount and the Class B invested amount must be reduced to
zero before the Class A invested amount will suffer any loss of principal or
interest. The collateral invested amount must be reduced to zero before the
Class B invested amount will suffer any loss of principal or interest.
See 'Series Provisions--Reallocation of Cash Flows,' '--Application of
Collections' and '--Defaulted Receivables; Investor Charge-Offs' in this
prospectus supplement for a description of the events which may lead to a
reduction of the Class A invested amount, the Class B invested amount and the
collateral invested amount.
OTHER INTERESTS IN THE TRUST
OTHER SERIES OF CERTIFICATES
The trust has issued other series of certificates and expects to issue
additional series of certificates. When issued by the trust, the certificates of
each of those series also represent an interest in the assets of the trust. You
can review a summary of each series previously issued and currently outstanding
under the caption 'Annex I: Other Series' included at the end of this prospectus
supplement. The trust may issue additional series with terms that may be
different from any other series without prior review or consent by any
certificateholders.
THE TRANSFEROR CERTIFICATES
The interest in the trust not represented by the Series 1998- certificates, the
collateral interest and the other interests issued by the trust is the
transferors' interest and is represented by the transferor certificates. The
transferors' interest does not provide credit enhancement for your series or any
other series.
THE RECEIVABLES
The primary assets of the trust are receivables in designated
Optima(Registered)* Card, Optima Line of Credit and Sign &
Travel(Registered)*/Special Purpose revolving credit accounts and, in the
future, may include other charge or credit accounts or products. The receivables
consist of principal receivables and finance charge receivables.
See 'The Receivables' in this prospectus supplement, and 'Centurion's Revolving
Credit Businesses' and 'The Accounts' in the accompanying prospectus.
- ---------------
* Optima(Registered) and Sign & Travel(Registered) are federally registered
servicemarks of American Express Company and its affiliates.
S-5
<PAGE>
COLLECTIONS BY THE SERVICER
The servicer will collect payments on the receivables, will deposit those
collections in an account and will keep track of those collections that are
finance charge receivables and those that are principal receivables.
ALLOCATIONS TO YOU AND YOUR SERIES
Each month, the Servicer will allocate collections of finance charge
receivables, collections of principal receivables and the amount of receivables
that are not collected and are written off as uncollectible, called the
defaulted amount. Set forth below, is a brief description of how these finance
charge collections, principal collections and defaulted amounts are allocated to
you and your series, addressed in four steps. Allocations of finance charge
collections involve each of Steps 1, 2, 3 and 4. However, allocations of
principal collections and the defaulted amount involve only Steps 1, 2 and 4.
THE FOLLOWING DISCUSSION IS A SIMPLIFIED DESCRIPTION OF CERTAIN ALLOCATION
PROVISIONS AND IS QUALIFIED BY THE FULL DESCRIPTIONS OF THESE PROVISIONS IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
STEP 1: ALLOCATIONS AMONG SERIES
Finance Charge Collections, Principal Collections and Defaulted Amount: Each
month, the servicer will allocate finance charge collections, principal
collections and the defaulted amount among:
o your series, based on the size of its invested amount (initially
$ ); and
o other outstanding series, based on the sizes of their respective invested
amounts.
STEP 2: ALLOCATIONS WITHIN YOUR SERIES
Finance Charge Collections, Principal Collections and Defaulted Amount: Finance
charge collections, principal collections and the defaulted amount that are
allocated to your series in Step 1 will then be further allocated, based on
varying percentages, among:
o the Series 1998- certificates and the collateral interest, based on the size
of its invested amount; and
o the transferors' interest, which will receive the remainder of these finance
charge collections, principal collections and defaulted amounts.
STEP 3: REALLOCATIONS AMONG SERIES
Finance Charge Collections: Collections of finance charge receivables to be
allocated to the Series 1998- certificates and the collateral interest in Step 2
will then be combined with the collections of finance charge receivables to be
allocated to any other series in a group of series, designated as series which
will share finance charge collections pro rata, based upon the relative size of
the required payments to each series in that group as compared to the total
required payments of all series in that group. See 'The Pooling and Servicing
Agreement Generally--Reallocations Among Different Series Within a Reallocation
Group' in the accompanying prospectus.
STEP 4: FINAL ALLOCATIONS AMONG CLASS A, CLASS B AND THE COLLATERAL INTEREST
Finance Charge Collections, Principal Collections and Defaulted Amount: The
finance charge collections reallocated in Step 3, together with the principal
collections and defaulted amount allocated in Step 2, will then be further
allocated, based on varying percentages, among:
o the Class A certificates, based on the Class A invested amount (initially
$ );
o the Class B certificates, based on the Class B invested amount (initially
$ ); and
o the collateral interest, based on the collateral invested amount (initially
$ ).
See 'Series Provisions--Allocation Percentages' in this prospectus supplement
and 'The Pooling and Servicing Agreement Generally--Reallocations Among
Different Series Within a Reallocation Group' in the accompanying prospectus.
The Series 1998- certificates will be the series issued by the trust in
group . Any issuance of a new series in group may reduce or increase the
amount of finance charge collections allocated to the Series 1998- certificates.
See 'Risk Factors--Effect of the Issuance of New Series' in the accompanying
prospectus.
You are entitled to receive payments of interest and principal based upon
allocations to your series. The
S-6
<PAGE>
invested amount, which is the primary basis for allocations to your series, is
the sum of (a) the Class A invested amount, (b) the Class B invested amount and
(c) the collateral invested amount. The Class A invested amount, the Class B
invested amount and the collateral invested amount will initially equal the
outstanding principal amount of the Class A certificates, the Class B
certificates and the collateral interest. The invested amount of a series or
class will decline as a result of principal payments and may decline if
receivables are written off or for other reasons. If the invested amount for
your series or class declines, amounts allocated and available for payment to
you may be reduced.
For a description of the events which may lead to these reductions, see 'Series
Provisions-- Reallocation of Cash Flows' in this prospectus supplement.
APPLICATIONS OF COLLECTIONS
FINANCE CHARGE COLLECTIONS
Collections of finance charge receivables allocated to the Class A certificates
will be used to pay interest due to Class A, Class A's portion of the servicing
fee due to the servicer and to cover Class A's portion of receivables that are
written off as uncollectible. Any remaining amount will become excess spread and
be applied as described below.
Collections of finance charge receivables allocated to the Class B certificates
will be used to pay interest due to Class B and Class B's portion of the
servicing fee due to the servicer. Any remaining amount will become excess
spread and be applied as described below.
Collections of finance charge receivables allocated to the collateral interest
will be used, under certain circumstances, to pay the collateral interest's
portion of the servicing fee due to the servicer. Any remaining amount will
become excess spread and be applied as described below.
EXCESS SPREAD
Each month the excess spread will be used in the following order of priority:
o first to make up deficiencies to Class A;
o then to make up deficiencies to Class B;
o then to pay interest on the collateral interest and to make up deficiencies
to the collateral interest;
o then to make up deficiencies to the servicer;
o then to make up for reductions of the collateral invested amount if it is
below its minimum required amount;
o then to fund, if necessary, a reserve account maintained to cover certain
interest payment shortfalls, if any;
o then to pay any other amounts owing to the provider of the collateral
interest; and
o finally to other series or to the holders of the transferor certificates.
PRINCIPAL COLLECTIONS
Your series's share of principal collections will be applied each month as
follows:
Collections of principal receivables allocated to the collateral interest and
the Class B certificates may be reallocated, if necessary, to make payments due
on the Class A certificates that have not been paid by either the Class A's
share of collections of finance charge receivables or excess spread. If required
Class A amounts are satisfied, the collateral interest also provides the same
type of protection to the Class B certificates.
Collections of principal receivables allocated to your series and not used as
described in the preceding paragraph are combined with shared principal
collections from other series, to the extent necessary and available, and
treated as available principal collections.
Available principal collections may be paid, or accumulated and then paid, to
you as payments of principal. The amount, priority and timing of your principal
payments, if any, depend on whether your series is in the revolving period, the
controlled accumulation period or the early amortization period.
During the revolving period, no principal will be paid to you or accumulated in
a trust account.
During the controlled accumulation period, principal collections will then be
deposited in a trust account, up to a controlled amount, to pay first the Class
A invested amount, then to pay the Class B invested amount and then to pay the
S-7
<PAGE>
collateral invested amount on their expected final payment date.
During the early amortization period, principal collections are then used to pay
first the Class A invested amount, then to pay the Class B invested amount and
then to pay the collateral invested amount.
As available principal collections are accumulated for the Class A certificates
and the Class B certificates, the minimum required credit enhancement (i.e., the
collateral interest) will decrease and the available principal collections will
be paid to the holder of the collateral interest to the extent of this decrease.
Collections of principal receivables allocated to your series and not used as
described above may be paid to other series, to the extent necessary, or to the
holders of the transferor certificates.
See 'Maturity Considerations,' 'Series Provisions--Principal Payments' and
'--Application of Collections' in this prospectus supplement.
PAY-OUT EVENTS
Certain adverse events called pay-out events might lead to the start of an early
amortization period. A pay-out event for your series will include the following
events:
o any transferor does not make any required payment or deposit within five
business days of the date such payment or deposit is due;
o any transferor materially violates any other obligation or agreement causing
you to be adversely affected, if (a) the transferor does not remedy the
violation within 60 days after it has received written notice and (b) you
continue to be materially and adversely affected for the 60-day period;
o any transferor provides certain representations, warranties or other
information which were materially incorrect at the time they were provided
causing you to be adversely affected, if (a) they continue to be materially
incorrect 60 days after the transferor has received written notice and (b)
you continue to be materially and adversely affected for the 60-day period;
o a transferor fails to transfer additional assets to the trust within five
business days after the date required;
o certain defaults by the servicer that have a material adverse affect on you;
o the yield on the trust portfolio allocated to Series 1998- averaged over
three consecutive months is less than the weighted average interest rate for
Series 1998- , calculated by taking into account the interest rate on Class
A, Class B and the collateral interest, plus the servicing fee for Series
1998- ;
o you are not paid in full on the expected final payment date;
o any transferor is unable to transfer receivables to the trust as required
under the pooling and servicing agreement;
o certain events of insolvency or receivership relating to a transferor or
other holder of the original transferor certificate; or
o the trust becomes an 'investment company' under the Investment Company Act of
1940.
For a more detailed discussion of the pay-out events, see 'Series
Provisions--Pay-Out Events' in this prospectus supplement. In addition, see
'Description of the Certificates--Pay-Out Events and Reinvestment Events' in the
accompanying prospectus.
REALLOCATED INVESTOR FINANCE CHARGE COLLECTIONS
Collections of finance charge receivables to be allocated to the investor
certificates of each series in group __ will be combined and will be available
for certain required payments to all series in that group. These amounts will be
reallocated pro rata, based on the size of the required payment for each of the
series in that group __ as compared with the total required payments for all of
the series in that group.
See 'The Pooling and Servicing Agreement Generally--Reallocations Among
Different Series Within a Reallocation Group' and 'Risk Factors-- Effect of the
Issuance of New Series' in the accompanying prospectus.
S-8
<PAGE>
SHARED PRINCIPAL COLLECTIONS
This series will be included in a group of series designated as 'principal
sharing series.' To the extent that collections of principal receivables
allocated to this series are not needed to make payments or deposits to a trust
account for the benefit of your series, these collections will be applied to
cover principal payments for other principal sharing series, if any. Any
reallocation for this purpose will not reduce the invested amount for your
series. In addition, you may receive the benefits of collections of principal
receivables and certain other amounts allocated to other principal sharing
series. There can be no assurance that the trust will issue other principal
sharing series in your group.
See 'The Pooling and Servicing Agreement Generally--Sharing of Principal
Collections Among Principal Sharing Series' in the accompanying prospectus.
EXCESS FINANCE CHARGE COLLECTIONS
Series 1998- is an 'excess allocation series.' See 'The Pooling and Servicing
Agreement Generally-- Sharing of Excess Finance Charge Collections Among Excess
Allocation Series' in the accompanying prospectus.
OPTIONAL REPURCHASE
The transferors have the option to repurchase your Series 1998- certificates
when the invested amount for your series has been reduced to __% or less of the
initial invested amount for your series. See 'Series Provisions--Optional
Repurchase' in this prospectus supplement.
REGISTRATION
The Series 1998- certificates will be registered in the name of Cede & Co., as
the nominee of The Depository Trust Company. You will not receive a definitive
certificate representing your interest, except in limited circumstances. See
'Description of the Certificates--Definitive Certificates' in the accompanying
prospectus.
You may elect to hold your Series 1998- certificates through DTC, in the United
States, or Cedel Bank, societe anonyme or the Euroclear System in Europe. See
'Description of the Certificates--Book-Entry Registration' in the accompanying
prospectus.
We expect that the Series 1998- certificates will be delivered in book-entry
form through the facilities of DTC, Cedel and Euroclear on or about
, 1998.
TAX STATUS
Orrick, Herrington & Sutcliffe LLP, as special tax counsel to the transferors,
is of the opinion that under existing law your Series 1998- certificates will be
characterized as debt for federal income tax purposes. See 'Tax Matters' in the
accompanying prospectus for additional information concerning the application of
federal income tax laws.
ERISA CONSIDERATIONS
Subject to important considerations described under 'ERISA Considerations' in
this prospectus supplement and the accompanying prospectus, the Class A
certificates are eligible for purchase by persons investing assets of employee
benefit plans or individual retirement accounts.
The Class B certificates are not eligible for purchase by persons investing
assets of employee benefit plans or individual retirement accounts.
CERTIFICATE RATINGS
At issuance, the Class A certificates will be rated in the highest rating
category by at least one nationally recognized rating organization and the Class
B certificates will be rated in one of the three highest rating categories by at
least one nationally recognized rating organization. See 'Risk Factors--
Certificate Ratings' in this prospectus supplement and 'Risk Factors--Limited
Nature of Rating' in the accompanying prospectus.
EXCHANGE LISTING
We will apply to list the Series 1998- certificates on the Luxembourg Stock
Exchange. We cannot guarantee that the application for the listing will be
accepted. You should consult with Banque Generale du Luxembourg, the Luxembourg
listing agent, for the Series 1998- certificates, 50 J.F. Kennedy, L-2951,
Luxembourg, phone number 352-4242-3175, to determine whether or not the Series
1998- certificates are listed on the Luxembourg Stock Exchange.
S-9
<PAGE>
RISK FACTORS
You will find a section called 'Risk Factors' in the accompanying
prospectus. The information in that section applies generally to all series,
including yours. The information in this section applies more specifically to
your series.
You should consider the risk factors discussed under the caption 'Risk
Factors' in the accompanying prospectus and the risk factors discussed below
before deciding whether to purchase any of the Series 1998- certificates.
<TABLE>
<S> <C>
LIMITED AMOUNTS OF CREDIT ENHANCEMENT Credit Enhancement May Not Be Sufficient to Prevent Loss: Credit
Enhancement provided for your series of certificates is limited. The
only sources of payment for your certificates are the assets of the
trust allocated to your series. If problems develop with the
receivables, such as an increase in losses on the receivables or if
there are problems in the collection and transfer of the receivables to
the trust, it is possible that you may not receive the full amount of
interest and principal that you would otherwise receive.
EFFECT OF SUBORDINATION OF CLASS B Class B Certificates Are Subordinated to the Class A Certificates; Trust
CERTIFICATES; PRINCIPAL PAYMENTS Assets May Be Diverted from Class B to Pay Class A: If you purchase a
Class B certificate, your right to receive principal payments is
subordinated to the payment in full of the Class A certificates. No
principal will be paid to you until the full amount of principal has
been paid on the Class A certificates. In addition, if Class A's share
of collections of finance charge receivables allocated to Series
1998- , excess spread, and the collateral interest's share of
principal collections are not sufficient to make all required payments
for the Class A certificates, collections of principal receivables
allocated to Class B may be diverted to Class A. Also, if Class A's
share of losses on the receivables exceeds the collections and credit
enhancement available to cover those losses, and the collateral invested
amount is reduced to zero, the Class B invested amount may be reduced to
avoid reducing the Class A invested amount. If this occurs, the Class B
invested amount and future allocations to Class B would be reduced.
Accordingly, you may receive payments of interest or principal later
than you expect or you may not receive the full amount of principal and
interest due to you. See 'Series Provisions--Allocation Percentages' and
'--Subordination of the Class B Certificates and the Collateral
Interest' in this prospectus supplement.
CERTIFICATE RATINGS Ratings Can Be Lowered or Withdrawn After You Purchase Your Certificates
and the Market Value of Your Certificates May Be Reduced: The ratings
assigned to the Series 1998- certificates are based upon many factors,
including the credit quality of the receivables, the continued ability
of the account owners to create and transfer new receivables and the
amount of credit enhancement provided. The ratings are not a
recommendation to purchase, hold or sell any of the Series 1998-
certificates. The ratings also are not intended and should not be relied
upon to determine the marketability of the Series 1998- certificates,
the market value of the Series 1998- certificates or whether the
Series 1998- certificates are a suitable investment for you. Any
rating agency may lower its rating or withdraw its rating entirely if,
in the sole judgment of the rating agency, the credit quality of the
certificates has declined or is in question. If any rating assigned to
your certificates is lowered or withdrawn, the market value of your
certificates may be reduced.
</TABLE>
S-10
<PAGE>
INTRODUCTION
The following provisions of this prospectus supplement (the 'PROSPECTUS
SUPPLEMENT') contain more detailed information concerning the asset backed
certificates offered hereby. The certificates will be issued by American Express
Credit Account Master Trust (the 'TRUST') pursuant to the terms of a pooling and
servicing agreement (the 'POOLING AND SERVICING AGREEMENT') among American
Express Travel Related Services Company, Inc. ('TRS'), as servicer (in such
capacity, the 'SERVICER'), American Express Centurion Bank ('CENTURION') and
American Express Receivables Financing Corporation II ('RFC II'), as transferors
(each, in such capacity, a 'TRANSFEROR'), and The Bank of New York, as trustee
(in such capacity, the 'TRUSTEE').
On or about , 1998 (the 'CLOSING DATE'), the Trust will
issue $ of its Class A Series 1998- Floating Rate Asset Backed
Certificates (the 'CLASS A CERTIFICATES') and $ of its Class B Series
1998- Floating Rate Asset Backed Certificates (the 'CLASS B CERTIFICATES' and,
together with the Class A Certificates, the 'SERIES 1998- CERTIFICATES'). In
addition, the Trust will issue a specified undivided interest in the Trust
Assets (the 'COLLATERAL INTEREST') in the initial amount of $ which
will be subordinated to the Series 1998-_ Certificates as described herein. For
purposes of this Prospectus Supplement, the 'COLLATERAL INTEREST' shall be
deemed to be the 'COLLATERAL INVESTED AMOUNT' for the Series 1998- Certificates
for all purposes under the accompanying prospectus (the 'PROSPECTUS').
MATURITY CONSIDERATIONS
The Pooling and Servicing Agreement and the Supplement for Series 1998-
(the 'SERIES 1998- SUPPLEMENT') provide that the Class A Certificateholders
will not receive payments of principal until the 200 Distribution
Date (the 'EXPECTED FINAL PAYMENT DATE'), or earlier in the event of a Pay-Out
Event which results in the commencement of the Early Amortization Period. Class
A Certificateholders will receive payments of principal on each Distribution
Date following the Monthly Period in which a Pay-Out Event occurs (each such
Distribution Date, a 'SPECIAL PAYMENT DATE') until the Class A Invested Amount
has been paid in full or the Series 1998- Termination Date has occurred. The
Class B Certificateholders will not begin to receive payments of principal until
the final principal payment on the Class A Certificates has been made.
On each Distribution Date during the Controlled Accumulation Period,
amounts equal to the least of (a) Available Principal Collections (see 'Series
Provisions--Principal Payments' in this Prospectus Supplement) for the related
Monthly Period on deposit in the Collection Account, (b) the Controlled Deposit
Amount, which is equal to the sum of the Controlled Accumulation Amount for such
Monthly Period and any Deficit Controlled Accumulation Amount (both as defined
under 'Series Provisions--Application of Collections--Payments of Principal' in
this Prospectus Supplement) and (c) the sum of the Class A Adjusted Invested
Amount and the Class B Adjusted Invested Amount will be deposited in the
Principal Funding Account for Series 1998- held by the Trustee (the 'PRINCIPAL
FUNDING ACCOUNT') until the Expected Final Payment Date or the first Special
Payment Date. See 'Series Provisions--Principal Payments' in this Prospectus
Supplement for a discussion of the circumstances under which the commencement of
the Controlled Accumulation Period may be delayed.
Subject to satisfaction of the Rating Agency Condition, the Transferors
may, at or after the time at which the Controlled Accumulation Period commences
for Series 1998- , cause the Trust to issue another Series (or some portion
thereof, to the extent that the full principal amount of such other Series is
not otherwise outstanding at such time) as a Paired Series with respect to
Series 1998- to be used to finance the increase in the Transferor Amount caused
by the accumulation of principal in the Principal Funding Account with respect
to Series 1998- . Although no assurances can be given as to whether such other
Series will be issued and, if issued, the terms thereof, the outstanding
principal amount of such Series may vary from time to time (whether or not a
Pay-Out Event occurs with respect to the Series 1998- Certificates), and the
interest rate with respect to certificates of such other Series may be
established on its date of issuance and may be reset periodically. Further,
since the terms of the Series 1998- Certificates will vary from the terms of
such other Series, the Pay-Out Events or Reinvestment Events with respect to
such other Series will vary from the Pay-Out Events with respect to Series
1998- and may include Pay-Out Events or Reinvestment Events which are unrelated
to the status of the Transferors or the Servicer or the Receivables, such as
Pay-Out Events or Reinvestment Events related to the continued availability and
rating of certain providers of Series Enhancement to such other Series. If a
Pay-Out
S-11
<PAGE>
Event or Reinvestment Event does occur with respect to any such Paired Series
prior to the payment in full of the Series 1998- Certificates, the final
payment of principal to the Series 1998- Certificateholders may be delayed.
Should a Pay-Out Event occur with respect to the Series 1998- Certificates
and the Early Amortization Period commence, any amount on deposit (a) in the
Principal Funding Account will be paid to the Series 1998- Certificateholders
on the First Special Payment Date and the Series 1998- Certificateholders will
be entitled to receive Available Principal Collections on each Distribution Date
with respect to such Early Amortization Period as described herein until the
Class A Invested Amount and Class B Invested Amount are paid in full or until
the Series 1998- Termination Date occurs and (b) in the Special Funding Account
will be released and treated as Shared Principal Collections to the extent
needed to cover principal payments due to or for the benefit of any Series,
including Series 1998- , entitled to the benefits of Shared Principal
Collections. See 'Description of the Certificates--Pay-Out Events and
Reinvestment Events' in the accompanying Prospectus and 'Series
Provisions--Pay-Out Events' in this Prospectus Supplement.
The ability of the Series 1998- Certificateholders to receive payments of
principal on the Expected Final Payment Date depends on the payment rates on the
Receivables, the amount of outstanding Receivables, delinquencies, charge-offs
and new borrowings on the Accounts, the potential issuance by the Trust of
additional Series and the availability of Shared Principal Collections. Monthly
payment rates on the Receivables may vary because, among other things, account
holders may fail to make required minimum payments, may only make payments as
low as the minimum required amount or may make payments as high as the entire
outstanding balance. Monthly payment rates may also vary due to seasonal
purchasing and payment habits of account holders and to changes in any terms of
incentive programs in which account holders participate. See the table entitled
'Account Holder Monthly Payment Rates of the Total Portfolio' under 'The Total
Portfolio--Payment Rates' in this Prospectus Supplement. The Transferors cannot
predict, and no assurance can be given, as to the account holders monthly
payment rates that will actually occur in any future period, as to the actual
rate of payment of principal of the Series 1998- Certificates or whether the
terms of any subsequently issued Series might have an impact on the amount or
timing of any such payment of principal. See 'Risk Factors--Payments and
Maturity; Dependency on Account Holder Repayments' and 'The Pooling and
Servicing Agreement Generally--Sharing of Principal Collections Among Principal
Sharing Series' in the accompanying Prospectus.
In addition, the amount of outstanding Receivables and the delinquencies,
charge-offs and new borrowings on the Accounts may vary from month to month due
to seasonal variations, the availability of other sources of credit, legal
factors, general economic conditions and spending and borrowing habits of
individual account holders. There can be no assurance that collections of
Principal Receivables with respect to the Trust Portfolio, and thus the rate at
which Series 1998- Certificateholders could expect to receive payments of
principal on their Series 1998- Certificates during the Early Amortization
Period or the rate at which the Principal Funding Account could be funded during
the Controlled Accumulation Period, will be similar to the historical experience
set forth in the table entitled 'Account Holder Monthly Payment Rates of the
Total Portfolio' under 'The Total Portfolio--Payment Rates' in this Prospectus
Supplement. As described under 'Series Provisions--Principal Payments' in this
Prospectus Supplement, the Transferors may shorten the Controlled Accumulation
Period and, in such event, there can be no assurance that there will be
sufficient time to accumulate all amounts necessary to pay the Class A Invested
Amount and the Class B Invested Amount on the Expected Final Payment Date. In
addition, the Trust, as a master trust, has issued, and from time to time may
issue, additional Series, and there can be no assurance that the terms of any
such Series might not have an impact on the timing or amount of payments
received by the Series 1998- Certificateholders. Further, if a Pay-Out Event
occurs, the average life and maturity of the Class A Certificates and the Class
B Certificates could be significantly reduced, thereby reducing the anticipated
yield on such Certificates.
Due to the reasons set forth above, there can be no assurance that deposits
in the Principal Funding Account will be made on or prior to the Expected Final
Payment Date in an amount equal to the sum of the Class A Invested Amount and
the Class B Invested Amount or that the actual number of months elapsed from the
date of issuance of the Class A Certificates and Class B Certificates to their
respective final Distribution Dates will equal the expected number of months.
See 'Risk Factors--Payments and Maturity; Dependency on Account Holder
Repayments' in the accompanying Prospectus.
S-12
<PAGE>
THE TOTAL PORTFOLIO
GENERAL
The primary assets of the Trust (the 'TRUST PORTFOLIO') are receivables
(the 'RECEIVABLES') generated from time to time in a portfolio of designated
Optima Card, Optima Line of Credit and Sign & Travel revolving credit accounts
and, in the future, may include other charge or credit accounts or products
(collectively, the 'ACCOUNTS').
The Accounts were selected from the total portfolio of Optima Card, Optima
Line of Credit and Sign & Travel accounts owned by Centurion (the 'TOTAL
PORTFOLIO') based upon the eligibility criteria specified in the Pooling and
Servicing Agreement applied with respect to the Accounts as of their selection
date. See 'Risk Factors--Effect of Addition of Trust Assets on Credit Quality'
in the accompanying Prospectus for a description of those eligibility criteria.
Set forth below is certain information with respect to the Total Portfolio. See
'Centurion's Revolving Credit Businesses' and 'The Accounts' in the accompanying
Prospectus. The Total Portfolio's yield, loss, delinquency and payment rate is
comprised of segments which may, when taken individually, have yield, loss,
delinquency and payment rate characteristics different from those of the overall
Total Portfolio of credit card accounts. As of , 1998, the
Receivables in the Trust Portfolio represented approximately % of the Total
Portfolio. Because the Trust Portfolio is only a portion of the Total Portfolio,
actual yield, loss, delinquency and payment rate experience with respect to the
Receivables may be different from that set forth below for the Total Portfolio.
There can be no assurance that the yield, loss, delinquency and payment rate
experience relating to the Receivables in the Trust Portfolio will be comparable
to the historical experience relating to the receivables in the Total Portfolio
set forth below.
LOSS AND DELINQUENCY EXPERIENCE
The following tables set forth the loss and delinquency experience for the
Total Portfolio for each of the periods shown.
LOSS EXPERIENCE OF THE TOTAL PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
[ ] MONTHS ENDED -----------------------------
, 1998 1997 1996 1995
------------------ ------- ------- -------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(1)..........................
Total Gross Charge-Offs(2)..................................
Total Recoveries............................................
---------- ------- ------- -------
Total Net Charge-Offs(3)....................................
---------- ------- ------- -------
---------- ------- ------- -------
Total Net Charge-Offs as a Percentage of Average Receivables
Outstanding............................................... %(4) % % %
</TABLE>
- ------------------
(1) Average Receivables Outstanding for each indicated period is calculated as
the average of the month-end receivables balances for such period.
(2) Total Gross Charge-Offs for each indicated period include charge-offs of
principal, finance charges and certain fees for such period.
(3) Total Net Charge-Offs for each indicated period is equal to Total Gross
Charge-Offs for such period, net of recoveries during such period.
(4) This percentage is an annualized figure.
S-13
<PAGE>
AVERAGE RECEIVABLES DELINQUENT AS A PERCENTAGE OF THE TOTAL PORTFOLIO(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
[ ] MONTHS ENDED , ---------------------------------------------------------------------------------
1998 1997 1996 1995
------------------------- ------------------------- ------------------------- -------------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
OF AVERAGE OF AVERAGE OF AVERAGE OF AVERAGE
DOLLAR RECEIVABLES DOLLAR RECEIVABLES DOLLAR RECEIVABLES DOLLAR RECEIVABLES
AMOUNT OUTSTANDING(2) AMOUNT OUTSTANDING(2) AMOUNT OUTSTANDING(2) AMOUNT OUTSTANDING(2)
-------- -------------- -------- -------------- -------- -------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average
Receivables
Outstanding(3)..
Average
Receivables
Delinquent:
31 to 60 Days..
61 to 90 Days..
91 Days or
More.........
-------- ------- -------- ------- -------- ------- -------- -------
Total............
-------- ------- -------- ------- -------- ------- -------- -------
-------- ------- -------- ------- -------- ------- -------- -------
</TABLE>
- ------------------
(1) Average Receivables Delinquent for each indicated period is calculated as
the average of month-end delinquent amounts for such period.
(2) The resulting percentages are the result of dividing the Average Receivables
Delinquent for the indicated period by the Average Receivables Outstanding
for such period.
(3) Average Receivables Outstanding for each indicated period is calculated as
the average of the month-end receivables balances for such period.
REVENUE EXPERIENCE
The revenues for the Total Portfolio from finance charges and fees billed
to account holders are set forth in the following table for each of the periods
shown.
The historical revenue figures in the tables include interest on purchases
and cash advances and fees accrued during the cycle. Cash collections on the
receivables may not reflect the historical experience in the table. During
periods of increasing delinquencies, billings of finance charges and fees may
exceed cash payments as amounts collected on receivables lag behind amounts
billed to account holders. Conversely, as delinquencies decrease, cash payments
may exceed billings of finance charges and fees as amounts collected in a
current period may include amounts billed during prior periods. Revenues from
finance charges and fees on both a billed and a cash basis will be affected by
numerous factors, including the periodic finance charges on the receivables, the
amount of fees paid by account holders, the percentage of account holders who
pay off their balances in full each month and do not incur periodic finance
charges on purchases and changes in the level of delinquencies on the
receivables. See 'Risk Factors' in the accompanying Prospectus.
S-14
<PAGE>
REVENUE EXPERIENCE OF THE TOTAL PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
[ ] MONTHS ENDED -----------------------------
, 1998 1997 1996 1995
------------------ ------- ------- -------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(1)..........................
Total Finance Charges and Fees Billed(2)....................
Total Finance Charges and Fees Billed as a Percentage of
Average Receivables Outstanding........................... (3)
</TABLE>
- ------------------
(1) Average Receivables Outstanding for each indicated period is calculated as
the average of the month-end receivables balances for such period.
(2) Total Finance Charges and Fees Billed are comprised of periodic finance
charges, cash advance fees, annual membership fees and certain other fees.
(3) This percentage is an annualized figure.
The revenues for the Total Portfolio shown in the table above are related
to finance charges, together with certain fees, billed to holders of the
accounts. The revenues related to finance charges depend in part upon the
collective preference of account holders to use their accounts as revolving
credit facilities for purchases and cash advances and paying off account
balances over several months as opposed to convenience use, where the account
holders prefer instead to pay off their entire account balance each month,
thereby avoiding finance charges. Revenues related to finance charges and fees
also depend on the types of charges and fees assessed by the Account Owners on
the accounts in the Total Portfolio. Accordingly, revenues will be affected by
future changes in the types of charges and fees assessed on the accounts and
other factors. See 'Certain Legal Aspects of the Receivables--Consumer
Protection Laws' in the accompanying Prospectus. Neither the Servicer nor any
Account Owner nor any of their respective affiliates has any basis to predict
how any future changes in the use of the accounts by account holders or in the
terms of accounts may affect the revenue for the Total Portfolio.
PAYMENT RATES
The following table sets forth the highest and lowest account holder
monthly payment rates for the Total Portfolio during any month in the period
shown and the average account holder monthly payment rates for all months during
each period shown, calculated as the percentage equivalent of a fraction. For
the highest and lowest monthly payment rates, the numerator of the fraction is
equal to all payments from account holders as posted to the accounts during the
applicable month, and the denominator is equal to the aggregate amount of
receivables billed to account holders during the prior month. For the monthly
average payment rate, the numerator of the fraction is equal to all payments
from account holders as posted to the accounts during the indicated period,
divided by the number of months in the period, and the denominator is equal to
the average of the month-end receivables balances for such period.
ACCOUNT HOLDER MONTHLY PAYMENT RATES OF THE TOTAL PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
[ ] MONTHS ENDED -----------------------------
, 1998 1997 1996 1995
------------------ ------- ------- -------
<S> <C> <C> <C> <C>
Lowest Month................................................
Highest Month...............................................
Monthly Average.............................................
</TABLE>
THE RECEIVABLES
The Receivables (including Receivables in Accounts closed at the request of
Account holders) in the Accounts, as of , 1998, totaled
$ , comprised of $ of Principal Receivables and $
of Finance Charge Receivables.
In the following two paragraphs and in all of the following tables,
references to 'Accounts,' 'Receivables,' 'Receivables Outstanding' and 'total
receivables' include, respectively, all Accounts other
S-15
<PAGE>
than Accounts closed at the request of Account holders and all Receivables
(including both Finance Charge Receivables and Principal Receivables) other than
Receivables in Accounts closed at the request of Account holders.
The following tables summarize the Trust Portfolio by various criteria as
of , 1998. Because the future composition of the Trust Portfolio
may change over time, these tables are not necessarily, indicative of the
composition of the Trust Portfolio at any time subsequent to ,
1998.
COMPOSITION BY ACCOUNT BALANCE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNT BALANCE RANGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
--------------------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Credit Balance................................................
Zero Balance..................................................
$1 to $1,000..................................................
$1,001 to $5,000..............................................
$5,001 to $10,000.............................................
$10,001 or More...............................................
--------- --------- ----------- -----------
Total.......................................................
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
COMPOSITION BY CREDIT LIMIT
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
CREDIT LIMIT RANGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
------------------ --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Less than $1,000..............................................
$1,001 to $5,000..............................................
$5,001 to $10,000.............................................
$10,001 or More...............................................
Total (Optima Accounts).....................................
--------- --------- ----------- -----------
No Pre-Set Spending Limit (Sign & Travel Accounts)............
--------- --------- ----------- -----------
Grand Total.................................................
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
COMPOSITION BY PERIOD OF DELINQUENCY
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
PERIOD OF DELINQUENCY NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
(DAYS CONTRACTUALLY DELINQUENT) ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
------------------------------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Current to 30 Days............................................
31 to 60 Days.................................................
61 to 90 Days.................................................
91 or More....................................................
--------- --------- ----------- -----------
Total.......................................................
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
S-16
<PAGE>
COMPOSITION BY ACCOUNT AGE
TRUST PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL OF TOTAL
NUMBER OF NUMBER OF RECEIVABLES RECEIVABLES
ACCOUNT AGE ACCOUNTS ACCOUNTS OUTSTANDING OUTSTANDING
----------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Not More than 12 Months.......................................
12 Months to 17 Months........................................
18 Months to 23 Months........................................
24 Months to 35 Months........................................
36 Months to 47 Months........................................
48 Months to 59 Months........................................
60 Months to 71 Months........................................
72 Months or More.............................................
--------- --------- ----------- -----------
Total.......................................................
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
As of , 1998, approximately %, %, %, % and %
of the Receivables related to Account holders having billing addresses in
[California, New York, Texas, Florida, and New Jersey], respectively. Not more
than 5% of the Receivables related to Account holders having billing addresses
in any other single state.
USE OF PROCEEDS
The net proceeds from the sale of the Certificates, before the deduction of
expenses, will be paid to the Transferors. RFC II will use such proceeds to pay
Credco the purchase price of the Receivables, if any, transferred to RFC II by
Credco pursuant to the RFC II Purchase Agreement. Each of Credco and Centurion
will use its proceeds for general corporate purposes.
RFC II, CENTURION AND CREDCO
RFC II
American Express Receivables Financing Corporation II ('RFC II') was
incorporated under the laws of the State of Delaware on August 7, 1995. All of
its outstanding common stock is owned by American Express Travel Related
Services Company, Inc. ('TRS'). TRS is a wholly owned subsidiary of American
Express Company ('AMERICAN EXPRESS'), a publicly-held corporation engaged
principally, through its subsidiaries, in providing travel related services,
investor diversified financial services and international banking services
throughout the world. RFC II was organized for the limited purpose of issuing
securities of the type offered hereby, purchasing, holding, owning and selling
receivables and any activities incidental to and necessary or convenient for the
accomplishment of such purposes. Neither TRS, as the stockholder of RFC II, nor
RFC II's board of directors intends to change the business purpose of RFC II.
RFC II's executive offices are located at American Express Tower, World
Financial Center, Room 138, 200 Vesey Street, New York, New York 10285-4405.
CENTURION
American Express Centurion Bank ('CENTURION') was incorporated in 1987
under the laws of the State of Utah as an industrial loan company. It received
FDIC insurance in 1989. Its principal office is located at 6985 Union Park
Center, Midvale, Utah 84047. Centurion is a wholly owned subsidiary of TRS.
Centurion is the surviving company of a 1996 merger with an affiliated bank
which was also named American Express Centurion Bank. Prior to the merger, the
affiliated bank was one of the Transferors. In connection with the merger,
Centurion assumed all of the rights and obligations of the affiliated bank as a
Transferor under the Pooling and Servicing Agreement and with respect to the
Accounts owned by it.
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As of , 1998, Centurion had total deposits of approximately
$ billion, total assets of approximately $ billion and total equity capital
of approximately $ billion. Centurion had net income of approximately $
million for the year ended , 1998.
CREDCO
Credco is a wholly owned subsidiary of TRS primarily engaged in the
business of purchasing charge card account receivables generated by TRS and
Centurion and certain revolving credit account receivables generated by
Centurion. Its principal office is located at 301 N. Walnut Street, Wilmington,
Delaware 19801.
As of , 1998, and based upon the [ ] Report on Form
10-[ ] of Credco at such date, Credco had total assets of approximately $
billion and total equity capital of approximately $ billion. Credco had net
income of approximately $ million for the [ period ended
, 1998.
THE SERVICER
As of , 1998, TRS, the Servicer, had approximately $
billion in total assets, approximately $ billion in total liabilities and
redeemable preferred stock and approximately $ billion in shareholder's
equity.
SERIES PROVISIONS
The Series 1998- Certificates will be issued pursuant to the Pooling and
Servicing Agreement and a Supplement specifying the Principal Terms of the
Certificates (the 'SERIES 1998- SUPPLEMENT'), the forms of which have been filed
as exhibits to the Registration Statement of which the Prospectus and this
Prospectus Supplement are a part. The following summary describes certain terms
applicable to the Series 1998- Certificates. Reference should be made to the
Prospectus for additional information concerning the Series 1998- Certificates
and the Pooling and Servicing Agreement. See 'The Pooling and Servicing
Agreement Generally' in the accompanying Prospectus.
INTEREST PAYMENTS
Interest on the Class A Certificates and the Class B Certificates will
accrue from the Closing Date on the outstanding principal balances of the Class
A Certificates and the Class B Certificates at the Class A Certificate Rate and
Class B Certificate Rate, respectively. Interest will be distributed on
, 1998, and on the 15th day of each month thereafter (or, if such
day is not a business day, the next succeeding business day) (each, a
'DISTRIBUTION DATE') to the Series 1998- Certificateholders in whose names the
Series 1998- Certificates were registered at the close of business on the last
day of the calendar month preceding the date of such payment (each, a 'RECORD
DATE'). For purposes of this Prospectus Supplement and the accompanying
Prospectus, a 'BUSINESS DAY' is, unless otherwise indicated, any day other than
a Saturday, a Sunday or a day on which banking institutions in New York, New
York or any other state in which the principal executive offices of Centurion or
the Trustee are located or are authorized or obligated by law or executive order
to be closed. Interest for any Distribution Date will accrue from and including
the preceding Distribution Date (or, in the case of the first Distribution Date,
from and including the Closing Date) to but excluding such Distribution Date. On
each Distribution Date, Interest due to the Class A Certificateholders will be
equal to the product of (i) the actual number of days in the related Interest
Period divided by 360, (ii) the Class A Certificate Rate for the related Monthly
Period, and (iii) the outstanding principal balance of the Class A Certificates
as of the preceding Record date (or in the case of the first Distribution Date,
as of the Closing Date). Interest due on the Class A Certificates but not paid
on any Distribution Date will be payable on the next succeeding Distribution
Date together with additional interest on such amount at the Class A Certificate
Rate plus 2% per annum. Such additional interest shall accrue on the same basis
as interest on the Class A Certificates, and shall accrue from the Distribution
Date such overdue interest became due, to but excluding the Distribution Date on
which such additional interest is paid.
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The Class A Certificates will bear interest from the Closing Date through
, 199 , and during each Interest Period thereafter, at the rate of
% per annum above LIBOR prevailing on the related LIBOR Determination Date
with respect to each such period (the 'CLASS A CERTIFICATE RATE').
On each Distribution Date, Class A Monthly Interest and Class A Monthly
Interest previously due but not paid to the Class A Certificateholders and any
Class A Additional Interest will be paid to the Class A Certificateholders.
Payments to the Class A Certificateholders in respect of interest on the Class A
Certificates on any Distribution Date will be funded from Class A Available
Funds for the related Monthly Period. To the extent Class A Available Funds
allocated to the interest of the holders of the Class A Certificates (the 'CLASS
A CERTIFICATEHOLDERS' INTEREST') for such Monthly Period are insufficient to pay
such interest, Excess Spread and Excess Finance Charge Collections allocated to
Series 1998- and Reallocated Principal Collections allocable first to the
Collateral Invested Amount and then the Class B Invested Amount will be used to
make such payments. 'CLASS A AVAILABLE FUNDS' means, with respect to any Monthly
Period, an amount equal to the sum of (i) the Class A Floating Percentage of
Reallocated Investor Finance Charge Collections allocated to the Series 1998-
Certificates and the Collateral Interest with respect to such Monthly Period
(including any investment earnings and certain other amounts that are to be
treated as collections of Finance Charge Receivables allocable to Series 1998-
in accordance with the Pooling and Servicing Agreement and the Series 1998-
Supplement), (ii) if such Monthly Period relates to a Distribution Date with
respect to the Controlled Accumulation Period, Principal Funding Investment
Proceeds, if any, with respect to the related Distribution Date, and (iii)
amounts, if any, to be withdrawn from the Reserve Account that must be included
in Class A Available Funds pursuant to the Series 1998- Supplement with respect
to such Distribution Date.
Interest will accrue on the Class B Certificates at the Class B Certificate
Rate from the Closing Date. Interest will be distributed on , 199
and on each Distribution Date thereafter to Class B Certificateholders in an
amount equal to the product of (i) the actual number of days in the related
Interest Period divided by 360, (ii) the Class B Certificate Rate for the
related Interest Period, and (iii) the outstanding principal balance of the
Class B Certificates as of the preceding Record Date (or in the case of the
first Distribution Date, as of the Closing Date). Interest due on the Class B
Certificates but not paid on any Distribution Date will be payable on the next
succeeding Distribution Date together with additional interest on such amount at
the Class B Certificate Rate plus 2% per annum. Such additional interest shall
accrue on the same basis as interest on the Class B Certificates, and shall
accrue from the Distribution Date such overdue interest became due, to but
excluding the Distribution Date on which such additional interest is paid.
The Class B Certificates will bear interest from the Closing Date through
, 199 , and during each Interest Period thereafter, at the rate of
% per annum above LIBOR prevailing on the related LIBOR Determination Date
with respect to each such period (the 'CLASS B CERTIFICATE RATE').
On each Distribution Date, Class B Monthly Interest and Class B Monthly
Interest previously due but not paid to the Class B Certificateholders and any
Class B Additional Interest will be paid to the Class B Certificateholders.
Payments to the Class B Certificateholders in respect of interest on the Class B
Certificates on any Distribution Date will be funded from Class B Available
Funds for the related Monthly Period. To the extent Class B Available Funds
allocated to the interest of the holders of the Class B Certificates (the 'CLASS
B CERTIFICATEHOLDERS' INTEREST') for such Monthly Period are insufficient to pay
such interest, Excess Spread and Excess Finance Charge Collections allocated to
Series 1998- and Reallocated Principal Collections allocable to the Collateral
Invested Amount and not required to pay the Class A Required Amount or reimburse
Class A Investor Charge-Offs will be used to make such payments. 'CLASS B
AVAILABLE FUNDS' means, with respect to any Monthly Period, an amount equal to
the Class B Floating Percentage of Reallocated Investor Finance Charge
Collections allocated to the Series 1998- Certificates and the Collateral
Interest with respect to such Monthly Period (including any investment earnings
and certain other amounts that are to be treated as collections of Finance
Charge Receivables in accordance with the Pooling and Servicing Agreement).
The Trustee will determine LIBOR with respect to the Series 1998-
Certificates on the second business day prior to the Closing Date for the period
from the Closing Date through , 199 and for each Interest Period
thereafter, on the second business day prior to the Distribution Date on which
such Interest Period commences (each, a 'LIBOR DETERMINATION DATE'). For
purposes of calculating LIBOR, a business day is any
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business day on which dealings in deposits in United States dollars are
transacted in the London interbank market.
'LIBOR' means, as of any LIBOR Determination Date, the rate for deposits in
United States dollars for a one-month period (commencing on the first day of the
relevant Interest Period) which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such LIBOR Determination Date. If such rate does not appear on
Telerate Page 3750, the rate for that LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a one-month period
(commencing on the first day of the relevant Interest Period). The Trustee will
request the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
for that LIBOR Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, 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 one-month period (commencing on the first day of the
relevant 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.
'TELERATE PAGE 3750' means 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).
'REFERENCE BANKS' means four major banks in the London interbank market
selected by the Servicer.
The Class A Certificate Rate and the Class B Certificate Rate applicable to
the then current and immediately preceding Interest Periods may be obtained by
telephoning the Trustee at its Corporate Trust Office at (212) 815-5738.
PRINCIPAL PAYMENTS
The revolving period (the 'REVOLVING PERIOD') begins on the Closing Date
and ends on the day before the commencement of the Controlled Accumulation
Period or, if earlier, the Early Amortization Period. During the Revolving
Period, no principal payments will be made to or for the benefit of the Series
1998- Certificateholders. Unless a Pay-Out Event has occurred, the controlled
accumulation period (the 'CONTROLLED ACCUMULATION PERIOD') is expected to begin
at the close of business on the last day of the 200 Monthly Period,
but may be delayed as described herein, and ends on the earliest to occur of (a)
the commencement of an Early Amortization Period, (b) the payment in full of the
Invested Amount and (c) , 200 (the 'SERIES 1998- TERMINATION
DATE'). During the Controlled Accumulation Period (on or prior to the Expected
Final Payment Date), principal will be deposited in the Principal Funding
Account as described below and on the Expected Final Payment Date will be
distributed to Class A Certificateholders up to the Class A Invested Amount and
then to Class B Certificateholders up to the Class B Invested Amount. During the
early amortization period (the 'EARLY AMORTIZATION PERIOD'), which will begin
upon the occurrence of a Pay-Out Event, and until the Series 1998- Termination
Date occurs, principal will be paid first to the Class A Certificateholders
until the Class A Invested Amount has been paid in full, and then to the Class B
Certificateholders until the Class B Invested Amount has been paid in full.
Unless a reduction in the Required Collateral Invested Amount has occurred, no
principal payments will be made in respect of the Collateral Invested Amount
until the final principal payment has been made to the Class A
Certificateholders and the Class B Certificateholders.
On each Distribution Date with respect to the Controlled Accumulation
Period, the Trustee will deposit in the Principal Funding Account an amount
equal to the least of (a) Available Principal Collections on deposit in the
Collection Account with respect to such Distribution Date, (b) the Controlled
Deposit Amount for such Distribution Date and (c) the sum of the Class A
Adjusted Invested Amount and the Class B Adjusted Invested Amount, until the
Principal Funding Account Balance equals the sum of the Class A Invested Amount
and the Class B Invested Amount. Amounts on deposit in the Principal Funding
Account will be paid to the Class A
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Certificateholders and, if the amount on deposit in the Principal Funding
Account exceeds the Class A Invested Amount, to the Class B Certificateholders
on the Expected Final Payment Date.
If a Pay-Out Event occurs with respect to the Series 1998- Certificates
during the Controlled Accumulation Period, the Early Amortization Period will
commence and any amount on deposit in the Principal Funding Account will be paid
first to the Class A Certificateholders on the first Special Payment Date and
then, after the Class A Invested Amount is paid in full, to the Class B
Certificateholders. If, on the Expected Final Payment Date, monies on deposit in
the Principal Funding Account are insufficient to pay the Class A Invested
Amount and the Class B Invested Amount, a Pay-Out Event will occur and the Early
Amortization Period will commence. After payment in full of the Class A Invested
Amount, the Class B Certificateholders will be entitled to receive an amount
equal to the Class B Invested Amount.
'AVAILABLE PRINCIPAL COLLECTIONS' means, with respect to any Monthly
Period, an amount equal to the sum of (1) an amount equal to the Principal
Allocation Percentage of the Series Allocation Percentage of all collections of
Principal Receivables received during such Monthly Period (minus certain
Reallocated Principal Collections used to fund the Class A Required Amount and
the Class B Required Amount (collectively, the 'REQUIRED AMOUNT')), (2) any
Shared Principal Collections with respect to other Principal Sharing Series that
are allocated to Series 1998- , and (3) certain other amounts which pursuant to
the Series 1998- Supplement are to be treated as Available Principal Collections
with respect to the related Distribution Date.
The Controlled Accumulation Period is currently expected to commence at the
close of business on the last day of the 200 Monthly Period; however,
the date on which the Controlled Accumulation Period actually commences may be
delayed if the Controlled Accumulation Period Length (determined as described
below) is less than the number of months remaining between each Period Length
Determination Date (defined herein) and the Expected Final Payment Date.
Beginning on the Determination Date immediately preceding the 200
Distribution Date and on each Determination Date thereafter until the Controlled
Accumulation Period actually commences (each, a 'PERIOD LENGTH DETERMINATION
DATE'), the Transferors will determine the 'CONTROLLED ACCUMULATION PERIOD
LENGTH' based on, among other things, the then current principal payment rate on
the Accounts and the principal amount of Principal Sharing Series that are
entitled to share principal with Series 1998- ; provided, however, that the
Controlled Accumulation Period Length will not be less than one month. If the
Controlled Accumulation Period Length is less than 12 months, the Controlled
Accumulation Period will commence later than the close of business on the last
day of the 200 Monthly Period and the number of months in the
Controlled Accumulation Period will be equal to the Controlled Accumulation
Period Length. The effect of the foregoing calculation is to reduce the
Controlled Accumulation Period Length based on the invested amounts of other
Principal Sharing Series that are scheduled to be in their revolving periods and
thus scheduled to create Shared Principal Collections during the Controlled
Accumulation Period. In addition, if the Controlled Accumulation Period Length
shall have been determined to be less than 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, 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.
On each Distribution Date with respect to the Early Amortization Period
until the Class A Invested Amount has been paid in full or the Series 1998-
Termination Date occurs, the holders of the Class A Certificates will be
entitled to receive Available Principal Collections in an amount up to the Class
A Invested Amount. After payment in full of the Class A Invested Amount, the
holders of the Class B Certificates will be entitled to receive, on each
Distribution Date, Available Principal Collections until the earlier of the date
the Class B Invested Amount is paid in full and the Series 1998- Termination
Date. After payment in full of the Class B Invested Amount, the holder of the
Collateral Interest (the 'COLLATERAL INTEREST HOLDER') will be entitled to
receive, on each Distribution Date, Available Principal Collections until the
earlier of the date the Collateral Invested Amount is paid in full and the
Series 1998- Termination Date.
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SUBORDINATION OF THE CLASS B CERTIFICATES AND THE COLLATERAL INTEREST
The Class B Certificateholders' Interest and the Collateral Interest will
be subordinated to the extent necessary to fund certain payments with respect to
the Class A Certificates. In addition, the Collateral Interest will be
subordinated to the extent necessary to fund certain payments with respect to
the Class B Certificates. Certain principal payments otherwise allocable to the
Class B Certificateholders may be reallocated to the Class A Certificateholders
and the Class B Invested Amount may be reduced. Similarly, certain principal
payments otherwise allocable to the Collateral Interest may be reallocated to
the Class A Certificateholders and the Class B Certificateholders and the
Collateral Invested Amount may be reduced. If the Collateral Invested Amount is
reduced to zero, holders of the Class B Certificates will bear directly the
credit and other risks associated with their interest in the Trust. To the
extent the Class B Invested Amount is reduced, the percentage of collections of
Finance Charge Receivables allocated to the Class B Certificateholders in
subsequent Monthly Periods will be reduced. Moreover, to the extent the amount
of such reduction in the Class B Invested Amount is not reimbursed, the amount
of principal distributable to the Class B Certificateholders will be reduced. If
the Class B Invested Amount is reduced to zero, the Class A Certificateholders
will bear directly the credit and other risks associated with their undivided
interest in the Trust. In the event of a reduction in the Class A Invested
Amount, the Class B Invested Amount or the Collateral Invested Amount, the
amount of principal and interest available to fund payments with respect to the
Class A Certificates and the Class B Certificates will be decreased. See
'--Allocation Percentages,' '--Reallocation of Cash Flows,' '--Application of
Collections--Excess Spread; Excess Finance Charge Collections' below.
ALLOCATION PERCENTAGES
Pursuant to the Pooling and Servicing Agreement, the Servicer will allocate
among Series 1998- and all other Series outstanding all collections of Finance
Charge Receivables and Principal Receivables and the Defaulted Amount with
respect to such Monthly Period as described under 'The Pooling and Servicing
Agreement Generally--Allocations' in the accompanying Prospectus and, with
respect to Series 1998- specifically, as described below.
Pursuant to the Pooling and Servicing Agreement, during each Monthly
Period, the Servicer will allocate to Series 1998- its Series Allocable Finance
Charge Collections, Series Allocable Principal Collections and Series Allocable
Defaulted Amount.
'SERIES ALLOCABLE FINANCE CHARGE COLLECTIONS,' 'SERIES ALLOCABLE PRINCIPAL
COLLECTIONS' and 'SERIES ALLOCABLE DEFAULTED AMOUNT' mean, with respect to
Series 1998- and for any Monthly Period, the product of (a) the Series
Allocation Percentage for Series 1998- 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 Defaulted Amounts with respect to such Monthly Period,
respectively.
'SERIES ALLOCATION PERCENTAGE' means, with respect to Series 1998- and for
any Monthly Period, the percentage equivalent of a fraction, the numerator of
which is the sum of the Series Adjusted Invested Amount for Series 1998- as of
the last day of the immediately preceding Monthly Period and the denominator of
which is the Trust Adjusted Invested Amount.
'SERIES ADJUSTED INVESTED AMOUNT' means, with respect to Series 1998- and
for any Monthly Period, the Initial Invested Amount for Series 1998- , less the
excess, if any, of all reductions in the Invested Amount (other than any
reductions occasioned by payments of principal to the Series 1998-
Certificateholders or to the Collateral Interest Holder) as of the last day of
the preceding Monthly Period over the aggregate amount of any reimbursement of
such reductions as of such last day.
The Series Allocable Finance Charge Collections and the Series Allocable
Defaulted Amount for Series 1998- with respect to any Monthly Period will be
allocated to the Series 1998- Certificates and the Collateral Interest based on
the Floating Allocation Percentage and the remainder of such Series Allocable
Finance Charge Collections and Series Allocable Defaulted Amount will be
allocated to the interest of the holders of the Transferor Certificates (the
'TRANSFERORS' INTEREST'). The 'FLOATING ALLOCATION PERCENTAGE' means, with
respect to any Monthly Period, the percentage equivalent (which percentage shall
never exceed 100%) of a
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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 (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 with respect to
the first Monthly Period, 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.
Investor Finance Charge Collections (which for any Monthly Period is equal
to the product of the Floating Allocation Percentage ; and the Series Allocable
Finance Charge Collections) will be reallocated among all Series in the
[ ] group of Series ('GROUP ') as set forth in 'The Pooling and
Servicing Agreement Generally--Reallocations Among Different Series Within a
Reallocation Group' in the accompanying Prospectus. Reallocated Investor Finance
Charge Collections allocated to Series 1998- and the Investor Default Amount
will be further allocated between the Class A Certificateholders, the Class B
Certificateholders and the Collateral Interest Holder in accordance with the
Class A Floating Percentage, the Class B Floating Percentage and the Collateral
Floating Percentage, respectively. The 'CLASS A FLOATING PERCENTAGE' means, 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 (or with respect to the first Monthly Period, as of the
Closing Date) and the denominator of which is equal to the Adjusted Invested
Amount as of the close of business on such day (or, with respect to the first
Monthly Period, the Initial Invested Amount). The 'CLASS B FLOATING PERCENTAGE'
means, 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 (or with respect to the first Monthly
Period, as of the Closing Date) and the denominator of which is equal to the
Adjusted Invested Amount at the close of business on such day (or with respect
to the first Monthly Period, the Initial Invested Amount). The 'COLLATERAL
FLOATING PERCENTAGE' means, 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 Collateral Invested Amount as of the close of
business on the last day of the preceding Monthly Period (or with respect to the
first Monthly Period, as of the Closing Date) and the denominator of which is
equal to the Adjusted Invested Amount as of the close of business on such day
(or with respect to the first Monthly Period, the Initial Invested Amount).
Series Allocable Principal Collections for Series 1998- will be allocated
to the Series 1998- Certificates and the Collateral Interest based on the
Principal Allocation Percentage and the remainder of such Series Allocable
Principal Collections will be allocated to the Transferors' Interest. The
'PRINCIPAL ALLOCATION PERCENTAGE' means, with respect to any 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 1998- as of the last day of the immediately preceding
Monthly Period (or, in the case of the first Monthly Period, the Closing Date)
and (b) during the Controlled Accumulation Period or the Early Amortization
Period, the Series Adjusted Invested Amount for Series 1998- as of the last day
of the Revolving Period and the denominator of which is the product of (i) the
sum of the total amount of Principal Receivables in the Trust as of the last day
of the immediately preceding Monthly Period (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 Monthly Period, the Closing Date) and (ii) the
Series Allocation Percentage for Series 1998- as of the last day of the
immediately preceding Monthly Period; provided, however, that because the Series
1998- Certificates offered hereby are subject to being paired with a future
Series upon satisfaction of the Rating Agency Condition, if a Pay-Out Event or a
Reinvestment Event (as those terms are defined in the related Supplement) occurs
with respect to a Paired Series during the Controlled Accumulation Period with
respect to Series 1998- , the Transferor may, by written notice delivered to the
Trustee and the Servicer, 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 the
Transferor shall have received written notice from each nationally recognized
rating agency specified in the Series 1998- Supplement (each, with respect to
Series 1998- , a 'RATING AGENCY') that such designation will satisfy the Rating
Agency Condition and the Transferor 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
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reasonable belief of the Transferor, 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 with respect to Series 1998- .
Such amounts so allocated to the Series 1998- Certificates and the
Collateral Interest will be further allocated to the Class A Certificateholders,
the Class B Certificateholders and the Collateral Interest Holder based on the
Class A Principal Percentage, the Class B Principal Percentage and the
Collateral Principal Percentage, respectively. The 'CLASS A PRINCIPAL
PERCENTAGE' means, with respect to any Monthly Period (i) during the Revolving
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Class A Invested Amount as of the last
day of the immediately preceding Monthly Period (or, in the case of the first
Monthly Period, the Class A Initial Invested Amount), and the denominator of
which is the Invested Amount as of such day (or, in the case of the first
Monthly Period, the Initial Invested Amount) 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 such day. The 'CLASS B
PRINCIPAL PERCENTAGE' means, with respect to any Monthly Period, (i) during the
Revolving Period, the percentage equivalent (which percentage shall never exceed
100%) of a fraction, the numerator of which is the Class B Invested Amount as of
the last day of the immediately preceding Monthly Period (or, in the case of the
first Monthly Period, the Class B Initial Invested Amount) and the denominator
of which is the Invested Amount as of such day (or, in the case of the first
Monthly Period, the Initial Invested Amount) 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 such day. The 'COLLATERAL
PRINCIPAL PERCENTAGE' means, 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 (or, in the case of
the first Monthly Period, the Collateral Initial Invested Amount) and the
denominator of which is the Invested Amount as of such day (or in the case of
the first Monthly Period, the Initial Invested Amount) 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 such
day.
As used herein, the following terms have the meanings indicated:
'CLASS A INITIAL INVESTED AMOUNT' means $ .
'CLASS A INVESTED AMOUNT' for any date means an amount equal to (i) the
Class A Initial Invested Amount, less (ii) the amount of principal payments made
to holders of the Class A Certificates on or prior to such date, less (iii) the
excess, if any, of the aggregate amount of Class A Investor Charge-Offs for all
prior Distribution Dates over the aggregate amount of any reimbursements of
Class A Investor Charge-Offs for all Distribution Dates prior to such date.
'CLASS B INITIAL INVESTED AMOUNT' means $ .
'CLASS B INVESTED AMOUNT' for any date means an amount equal to (i) the
Class B Initial Invested Amount, less (ii) the amount of principal payments made
to holders of the Class B Certificates on or prior to such date, less (iii) the
aggregate amount of Class B Investor Charge-Offs for all prior Distribution
Dates, less (iv) the aggregate amount of Reallocated Principal Collections for
all prior Distribution Dates which have been used to fund the Class A Required
Amount and the Class B Required Amount with respect to such Distribution Dates
(excluding any Reallocated Principal Collections that have resulted in a
reduction of the Collateral Invested Amount), less (v) 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 as described below
under '--Defaulted Receivables; Investor Charge-Offs,' plus (vi) the aggregate
amount of Excess Spread and Excess Finance Charge Collections allocated to
Series 1998- and applied on all prior Distribution Dates for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (iii), (iv) and
(v); provided, however, that the Class B Invested Amount may not be reduced
below zero.
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'CLASS A ADJUSTED INVESTED AMOUNT' for any date means an amount equal to
the 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.
'ADJUSTED INVESTED AMOUNT' for any date means the sum of the Class A
Adjusted Invested Amount and the Class B Adjusted Invested Amount.
'COLLATERAL INITIAL INVESTED AMOUNT' means $ .
'COLLATERAL INVESTED AMOUNT' for any date means an amount equal to (i) the
Collateral Initial Invested Amount, less (ii) the aggregate amount of principal
payments made to the Collateral Interest Holder prior to such date, less (iii)
the aggregate amount of Collateral Charge-Offs for all prior Distribution Dates,
less (iv) the aggregate amount of Reallocated Principal Collections for all
prior Distribution Dates, less (v) an amount equal to the aggregate amount by
which the Collateral Invested Amount has been reduced to fund the Class A
Investor Default Amount and the Class B Investor Default Amount on all prior
Distribution Dates as described below under '--Defaulted Receivables; Investor
Charge-Offs,' and plus (vi) the aggregate amount of Excess Spread and Excess
Finance Charge Collections allocated to Series 1998- and applied on all prior
Distribution Dates for the purpose of reimbursing amounts deducted pursuant to
the foregoing clauses (iii), (iv) and (v); 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.
'SERIES REQUIRED TRANSFEROR AMOUNT' for any date means % of the
Invested Amount.
PRINCIPAL FUNDING ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, the Principal Funding Account as a deposit account meeting
the eligibility requirements specified in the Pooling and Servicing Agreement
(an 'ELIGIBLE DEPOSIT ACCOUNT') held for the benefit of the Series 1998-
Certificateholders. During the Controlled Accumulation Period, the Servicer will
transfer collections in respect of Principal Receivables, Shared Principal
Collections allocated to Series 1998- and other amounts described herein to be
treated in the same manner as collections of Principal Receivables from the
Collection Account to the Principal Funding Account as described below under
'--Application of Collections.'
Unless a Pay-Out Event has occurred with respect to the Series 1998-
Certificates, all amounts on deposit in the Principal Funding Account (the
'PRINCIPAL FUNDING ACCOUNT BALANCE') on any Distribution Date (after giving
effect to any deposits to, or withdrawals from, the Principal Funding Account to
be made on such Distribution Date) will be invested to the following
Distribution Date by the Trustee at the direction of the Servicer in Eligible
Investments. On each Distribution Date with respect to the Controlled
Accumulation Period the interest and other investment income (net of investment
expenses and losses) earned on such investments (the 'PRINCIPAL FUNDING
INVESTMENT PROCEEDS') will be withdrawn from the Principal Funding Account and
will be treated as a portion of Class A Available Funds. If such investments
with respect to any such Distribution Date yield less than the Class A
Certificate Rate, the Principal Funding Investment Proceeds with respect to such
Distribution Date will be less than the Covered Amount for such Distribution
Date. It is intended that any such shortfall will be funded from other Class A
Available Funds (including a withdrawal from the Reserve Account, if necessary,
as described below under '--Reserve Account'). The Available Reserve Account
Amount at any time will be limited and there can be no assurance that sufficient
funds will be available to fund any such shortfall. The '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 payment in full of the Class A Invested Amount, an amount equal to
one-twelfth of the product of (i) the Class A Certificate Rate and (ii) the
Principal Funding Account Balance, if any, as of the preceding Distribution
Date.
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RESERVE ACCOUNT
The Servicer will establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account for the benefit of the Class A
Certificateholders and the Collateral Interest Holder (the 'RESERVE ACCOUNT').
The Reserve Account is established to assure the subsequent distribution of
interest on the Class A Certificates as provided in this Prospectus Supplement
during the Controlled Accumulation Period. On each Distribution Date from and
after the Reserve Account Funding Date (defined below), but prior to the
termination of the Reserve Account, the Trustee, acting pursuant to the
Servicer's instructions, will apply Excess Spread and Excess Finance Charge
Collections allocated to Series 1998- (in the order of priority described below
under '--Application of Collections--Payment of Fees, Interest and Other Items')
to increase the amount on deposit in the Reserve Account (to the extent such
amount is less than the Required Reserve Account Amount). In addition, on each
such Distribution Date, the Transferors will have the option, but will not be
required, to make a deposit in the Reserve Account to the extent that the amount
on deposit in the Reserve Account, after giving effect to any Excess Spread and
Excess Finance Charge Collections allocated and available to be deposited in the
Reserve Account on such Distribution Date, is less than the Required Reserve
Account Amount. The 'RESERVE ACCOUNT FUNDING DATE' will be the Distribution Date
with respect to the Monthly Period that 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. The
'REQUIRED RESERVE ACCOUNT AMOUNT' for any Distribution Date on or after the
Reserve Account Funding Date will be equal to 0.5% of the Class A Invested
Amount as of the preceding Distribution Date, or any other percentage (which may
be 0%) of the Class A Invested Amount designated by the Transferors provided
that the designation of such other percentage by the Transferors shall have
received the prior written consent of the Collateral Interest Holder and shall
have satisfied the Rating Agency Condition. On each Distribution Date, after
giving effect to any deposit to be made to, and any withdrawal to be made from,
the Reserve Account on such Distribution Date, the Trustee will withdraw from
the Reserve Account an amount equal to the excess, if any, of the amount on
deposit in the Reserve Account over the Required Reserve Account Amount and
shall distribute such excess to the Collateral Interest Holder for application
in accordance with the terms of the Loan Agreement.
Provided that the Reserve Account has not terminated as described below,
all amounts on deposit in the Reserve Account on any Distribution Date (after
giving effect to any deposits to, or withdrawals from, the Reserve Account to be
made on such Distribution Date) will be invested through the following
Distribution Date by the Trustee at the direction of the Servicer in Eligible
Investments. The interest and other investment income (net of investment
expenses and losses) earned on such investments (the 'INTEREST FUNDING
INVESTMENT PROCEEDS') will be retained in the Reserve Account (to the extent the
amount on deposit therein is less than the Required Reserve Account Amount) or
deposited in the Collection Account and treated as collections of Finance Charge
Receivables allocable to Series 1998- .
On or before each Distribution Date with respect to the Controlled
Accumulation Period (on or prior to the Expected Final Payment Date) and on the
first Special Payment Date (if such Special Payment Date occurs on or prior to
the Expected Final Payment Date), a withdrawal will be made from the Reserve
Account, and the amount of such withdrawal will be deposited in the Collection
Account and included in Class A Available Funds in an amount equal to the lesser
of (a) the Available Reserve Account Amount (defined below) with respect to such
Distribution Date or Special Payment Date and (b) 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 the amount of such withdrawal will
be reduced to the extent that funds otherwise would be available to be deposited
in the Reserve Account on such Distribution Date or Special Payment Date. On
each Distribution Date, the amount available to be withdrawn from the Reserve
Account (the 'AVAILABLE RESERVE ACCOUNT AMOUNT') will be equal to the lesser of
the amount on deposit in the Reserve Account (before giving effect to any
deposit to be made to the Reserve Account on such Distribution Date) and the
Required Reserve Account Amount for such Distribution Date.
The Reserve Account will be terminated following the earlier to occur of
(a) the termination of the Trust pursuant to the Pooling and Servicing
Agreement, (b) the date on which the Series 1998- Certificates are paid in full
and (c) if the Controlled Accumulation Period has not commenced, the occurrence
of a Pay-Out Event with respect to the Series 1998- Certificates or, if the
Controlled Accumulation Period has commenced, the earlier of
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the first Special Payment Date and the Expected Final Payment Date. Upon the
termination of the Reserve Account, all amounts on deposit therein (after giving
effect to any withdrawal from the Reserve Account on such date as described
above) will be distributed to the Collateral Interest Holder for application in
accordance with the terms of the Loan Agreement. Any amounts withdrawn from the
Reserve Account and distributed to the Collateral Interest Holder as described
above will not be available for distribution to the Class A Certificateholders.
REALLOCATION OF CASH FLOWS
With respect to each Distribution Date, on each Determination Date, the
Servicer will determine the amount (the 'CLASS A REQUIRED AMOUNT'), which will
be equal to the amount, if any, by which (a) the sum of (i) Class A Monthly
Interest for such Distribution Date, (ii) any Class A Outstanding Monthly
Interest, (iii) any Class A Additional Interest, (iv) if TRS or an affiliate of
TRS is no longer the Servicer, the Class A Servicing Fee for such Distribution
Date and any unpaid Class A Servicing Fee and (v) the Class A Investor Default
Amount, if any, for such Distribution Date exceeds (b) the sum of (i) the amount
of Principal Funding Investment Proceeds, if any, with respect to such
Distribution Date, (ii) the Class A Floating Percentage of Reallocated Investor
Finance Charge Collections (including any investment earnings treated as
collections of Finance Charge Receivables in accordance with the Pooling and
Servicing Agreement) and (iii) the amount of funds, if any, withdrawn from the
Reserve Account and allocated to the Class A Certificates pursuant to the Series
1998- Supplement. If the Class A Required Amount is greater than zero, Excess
Spread and Excess Finance Charge Collections allocated to Series 1998- and
available for such purpose will be used to fund the Class A Required Amount with
respect to such Distribution Date. If such Excess Spread and Excess Finance
Charge Collections are insufficient to fund the Class A Required Amount,
collections of Principal Receivables allocable first to the Collateral Invested
Amount and then to the Class B Certificates for the related Monthly Period
('REALLOCATED PRINCIPAL COLLECTIONS') will then be used to fund the remaining
Class A Required Amount. If Reallocated Principal Collections with respect to
the related Monthly Period, together with Excess Spread and Excess Finance
Charge Collections allocated to Series 1998- , are insufficient to fund the
Class A Required Amount for such related Monthly Period, then the Collateral
Invested Amount 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 will be reduced by the amount by which the Collateral
Invested Amount would have been reduced below zero (but not by more than the
excess of the Class A Investor Default amount, if any, for 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 will be reduced to zero and the Class A Invested Amount will be
reduced by the amount by which the Class B Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class A
Investor Default Amount for such Distribution Date over the amount of the
reductions, if any, of the Collateral Invested Amount and the Class B Invested
Amount with respect to such Distribution Date as described above. Any such
reduction in the Class A Invested Amount will have the effect of slowing or
reducing the return of principal and interest to the Class A Certificateholders.
In such case, the Class A Certificateholders will bear directly the credit and
other risks associated with their undivided interest in the Trust. See
'--Defaulted Receivables; Investor Charge-Offs' below.
With respect to each Distribution Date, on each Determination Date, the
Servicer will determine the amount (the 'CLASS B REQUIRED AMOUNT'), which will
be equal to the sum of (a) the amount, if any, by which the sum of (i) Class B
Monthly Interest for such Distribution Date, (ii) any Class B Outstanding
Monthly Interest, (iii) any Class B Additional Interest, and (iv) if TRS or an
affiliate of TRS is no longer the Servicer, the Class B Servicing Fee for such
Distribution Date and any unpaid Class B Servicing Fee exceeds the Class B
Floating Percentage of Reallocated Investor Finance Charge Collections
(including any investment earnings treated as collections of Finance Charge
Receivables in accordance with the Pooling and Servicing Agreement) and (b) the
Class B Investor Default Amount. If the Class B Required Amount is greater than
zero, Excess Spread and Excess Finance Charge Collections allocated to Series
1998- and not required to pay the Class A Required Amount or reimburse Class A
Investor Charge-Offs will be used to fund the Class B Required Amount with
respect to such Distribution Date. If such Excess Spread and Excess Finance
Charge Collections available with respect to such
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<PAGE>
Distribution Date are less than the Class B Required Amount, Reallocated
Principal Collections allocable to the Collateral Interest and not required to
pay the Class A Required Amount for the related Monthly Period will then be used
to fund the remaining Class B Required Amount. If such Reallocated Principal
Collections allocable to the Collateral Interest with respect to the related
Monthly Period are insufficient to fund the remaining Class B Required Amount,
then the Collateral Invested Amount will be reduced by the amount of such
insufficiency (but not by more than the Class B Investor Default Amount for such
Distribution Date). In the event that such reduction would cause the Collateral
Invested Amount to be a negative number, the Collateral Invested Amount will be
reduced to zero, and the Class B Invested Amount will be reduced by the amount
by which the Collateral Invested Amount would have been reduced below zero (but
not by more than the excess of the Class B Investor Default Amount for such
Distribution Date over the amount of such reduction of the Collateral Invested
Amount), and the Class B Certificateholders will bear directly the credit and
other risks associated with their undivided interests in the Trust. See
'--Defaulted Receivables; Investor Charge-Offs' below.
Reductions of the Class A Invested Amount or Class B Invested Amount shall
thereafter be reimbursed and the Class A Invested Amount or Class B Invested
Amount increased on each Distribution Date by the amount, if any, of Excess
Spread and Excess Finance Charge Collections allocable and available to
reimburse such amounts. See 'Application of Collections--Excess Spread; Excess
Finance Charge Collections' below. When such reductions of the Class A Invested
Amount and Class B Invested Amount have been fully reimbursed, reductions of the
Collateral Invested Amount shall be reimbursed and the Collateral Invested
Amount increased up to the Required Collateral Invested Amount in a similar
manner.
APPLICATION OF COLLECTIONS
Payment of Fees, Interest and Other Items. On each Distribution Date, the
Trustee, acting pursuant to the Servicer's instructions, will apply the Class A
Available Funds, Class B Available Funds and Collateral Available Funds (see
'--Interest Payments' above) on deposit in the Collection Account in the
following priority:
(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 any Class A Outstanding Monthly Interest, plus
additional interest with respect to any such Class A Outstanding Monthly
Interest at a rate equal to the Class A Certificate Rate plus 2% per
annum (the 'CLASS A ADDITIONAL INTEREST'), will be distributed to
holders of the Class A Certificates;
(ii) if TRS or an affiliate of TRS is no longer the Servicer, an
amount equal to the Class A Servicing Fee for such Distribution Date,
plus the amount of any Class A Servicing Fee previously due but not
distributed to the Servicer on a prior Distribution Date, will be
distributed to the Servicer;
(iii) an amount equal to the Class A Investor Default Amount for
such Distribution Date will be treated as a portion of Available
Principal Collections for such Distribution Date; and
(iv) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed or deposited as described under '--Excess
Spread; Excess Finance Charge Collections' below.
(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 Outstanding Monthly
Interest, plus any additional interest with respect to any such Class B
Outstanding Monthly Interest at a rate equal to the Class B Certificate
Rate plus 2% per annum ('CLASS B ADDITIONAL INTEREST'), will be
distributed to the holders of the Class B Certificates;
(ii) if TRS or an affiliate of TRS is no longer the Servicer, 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, will be
distributed to the Servicer; and
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<PAGE>
(iii) the balance, if any, shall constitute Excess Spread and shall
be allocated and distributed or deposited as described under '--Excess
Spread; Excess Finance Charge Collections' below.
(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) if TRS or an affiliate of TRS is no longer the Servicer, an
amount equal to the Collateral Interest Servicing Fee for such
Distribution Date, plus the amount of any Collateral Interest Servicing
Fee previously due but not distributed to the Servicer on a prior
Distribution Date, will be paid to the Servicer; and
(ii) the balance, if any, will constitute a portion of Excess
Spread and will be allocated and distributed or deposited as described
under '--Excess Spread; Excess Finance Charge Collections' below.
'CLASS A MONTHLY INTEREST' means, with respect to any Distribution Date, an
amount equal to the product of (i) the Class A Certificate Rate for such
Distribution Date, (ii) the outstanding principal balance of the Class A
Certificates as of the preceding Record Date and (iii) a fraction, the numerator
of which is the actual number of days in the period from and including the
preceding Distribution Date to but excluding such Distribution Date and the
denominator of which is 360; provided, that with respect to the first
Distribution Date, Class A Monthly Interest shall be equal to the interest
accrued on the outstanding principal balance of the Class A Certificates at the
Class A Certificate Rate from the Closing Date to but excluding the first
Distribution Date.
'CLASS A OUTSTANDING MONTHLY INTEREST' means, with respect to any
Distribution Date, the amount of Class A Monthly Interest previously due but not
paid to the Class A Certificateholders.
'CLASS B MONTHLY INTEREST' means, with respect to any Distribution Date, an
amount equal to the product of (i) the Class B Certificate Rate for such
Distribution Date (ii) the Class B Invested Amount as of the preceding Record
Date and (iii) a fraction, the numerator of which is the actual number of days
in the period from and including the preceding Distribution Date to but
excluding such Distribution Date and the denominator of which is 360; provided,
that with respect to the first Distribution Date, Class B Monthly Interest shall
be equal to the interest accrued on the Class B Invested Amount at the Class B
Certificate Rate for the period from the Closing Date to but excluding the first
Distribution Date.
'CLASS B OUTSTANDING MONTHLY INTEREST' means, with respect to any
Distribution Date, the amount of Class B Monthly Interest previously due but not
paid to the Class B Certificateholders.
'COLLATERAL AVAILABLE FUNDS' means, with respect to any Monthly Period, an
amount equal to the Collateral Floating Percentage of Reallocated Investor
Finance Charge Collections (including any investment earnings and certain other
amounts that are to be treated as collections of Finance Charge Receivables
allocable to Series 1998- in accordance with the Pooling and Servicing Agreement
and the Series 1998- Supplement),
'EXCESS SPREAD' means, with respect to any Distribution Date, an amount
equal to the sum of the amounts described in clause (A)(iv) above, clause
(B)(iii) above and clause (C)(ii) above,
Excess Spread; Excess Finance Charge Collections. On each Distribution
Date, the Trustee, acting pursuant to the Servicer's instructions, will apply
Excess Spread and Excess Finance Charge Collections allocated to Series 1998-
with respect to the related Monthly Period, to make the following distributions
or deposits in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to the related Monthly Period will be used to fund any deficiency
pursuant to clauses (A)(i), (ii) and (iii) above under '--Payment of Fees,
Interest and Other Items' in such order of priority;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed will be treated as a
portion of Available Principal Collections for such Distribution Date as
described below under '--Payments of Principal';
(c) an amount equal to the interest accrued with respect to the
outstanding aggregate principal balance of the Class B Certificates not
otherwise distributed to the Class B Certificateholders on such
Distribution
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<PAGE>
Date will accrue at the Class B Certificate Rate and be paid to Class B
Certificateholders, except that any such interest previously due but not
paid will accrue at the Class B Certificate Rate plus 2% per annum;
(d) an amount equal to the Class B Required Amount, if any, with
respect to such Distribution Date will be (1) used to fund any deficiency
pursuant to clause (B)(ii) above under '--Payment of Fees, Interest and
Other Items' in such order of priority and (II) then treated, up to the
Class B Investor Default Amount, as a portion of Available Principal
Collections for such Distribution Date;
(e) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (iii), (iv) and (v) of
the definition of 'Class B Invested Amount' under '--Allocation
Percentages' above (but not in excess of the aggregate amount of such
reductions which have not been previously reimbursed) will be treated as a
portion of Available Principal Collections for such Distribution Date;
(f) 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 and any Collateral Additional Interest previously
due but not distributed to the Collateral Interest Holder on a prior
Distribution Date, will be distributed to the Collateral Interest Holder
for application in accordance with the Loan Agreement;
(g) an amount equal to the Monthly Servicing Fee due but not paid to
the Servicer on such Distribution Date or a prior Distribution Date shall
be paid to the Servicer;
(h) an amount equal to the Collateral Default Amount shall be treated
as a portion of Available Principal Collections with respect to such
Distribution Date;
(i) an amount equal to the aggregate amount by which the Collateral
Invested Amount has been reduced pursuant to clauses (iii), (iv) and (v) of
the definition of 'Collateral Invested Amount' under '--Allocation
Percentages' above (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;
(j) on each Distribution Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve Account terminates
as described under '--Reserve Account' above, an amount up to the excess,
if any, of the Required Reserve Account Amount over the Available Reserve
Account Amount shall be deposited into the Reserve Account;
(k) an amount equal to the aggregate of any other amounts then
required to be applied pursuant to the Loan Agreement among the
Transferors, the Trustee, the Servicer and the Collateral Interest Holder
(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
(1) 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 Excess Allocation Series or to the holders of the
Transferor Certificates as described in 'The Pooling and Servicing
Agreement Generally--Sharing of Excess Finance Charge Collections Among
Excess Allocation Series' in the accompanying Prospectus.
'COLLATERAL MONTHLY INTEREST' means, with respect to any Distribution Date,
an amount equal to the product of (i)(A) a fraction, the numerator of which is
the actual number of days in the period from and including the preceding
Distribution Date to but excluding such Distribution Date and the denominator of
which is 360, times (B) the Collateral Rate and (ii) the Collateral Invested
Amount as of the close of business on the last day of the preceding Monthly
Period; provided, however, with respect to the first Distribution Date,
Collateral Monthly Interest shall be equal to the interest accrued on the
Collateral Initial Invested Amount at the Collateral Rate for the period from
the Closing Date to but excluding the first Distribution Date.
'COLLATERAL RATE' means a rate specified in the Loan Agreement not to
exceed one-month LIBOR plus 1.00% per annum.
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'COLLATERAL ADDITIONAL INTEREST' means, with respect to any Distribution
Date, additional interest with respect to Collateral Monthly Interest due but
not paid to the Collateral Interest Holder on a prior Distribution Date at a
rate equal to the Collateral Rate.
Payments of Principal. On each Distribution Date, the Trustee, acting
pursuant to the Servicer's instructions, will distribute Available Principal
Collections (see '--Principal Payments' above) on deposit in the Collection
Account in the following priority:
(i) on each Distribution Date with respect to the Revolving Period,
all such Available Principal Collections will be distributed or deposited
in the following priority:
(A) an amount equal to the excess, if any, of the Collateral
Invested Amount over the Required Collateral Invested Amount will be
paid to the Collateral Interest Holder; and
(B) the balance will be treated as Shared Principal Collections and
applied as described under 'The Pooling and Servicing Agreement
Generally--Sharing of Principal Collections Among Principal Sharing
Series' in the accompanying Prospectus;
(ii) on each Distribution Date with respect to the Controlled
Accumulation Period, all such Available Principal Collections will be
distributed or deposited in the following priority:
(A) an amount equal to the lesser of (x) the Controlled Deposit
Amount and (y) the sum of the Class A Adjusted Invested Amount and the
Class B Adjusted Invested Amount will be deposited in the Principal
Funding Account;
(B) for each Distribution Date before the Class B Invested Amount
is paid in full, an amount equal to the balance, if any, of such
Available Principal Collections will be paid to the Collateral Interest
Holder, for application in accordance with the Loan Agreement, to the
extent the Collateral Invested Amount is greater than the Required
Collateral Invested Amount;
(C) 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 will be paid to the Collateral Interest
Holder; and
(D) for each Distribution Date, the balance, if any, of Available
Principal Collections not applied pursuant to paragraphs (A) and (B) or
(C) (as applicable) above will be treated as Shared Principal
Collections and applied as described under 'The Pooling and Servicing
Agreement Generally-- Sharing of Principal Collections Among Principal
Sharing Series' in the accompanying Prospectus; and
(iii) on each Distribution Date with respect to the Early Amortization
Period, all such Available Principal Collections will be distributed as
follows:
(A) an amount up to the Class A Adjusted Invested Amount will be
distributed to the Class A Certificateholders;
(B) 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 will be distributed to the Class B
Certificateholders;
(C) 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 will be paid to the Collateral Interest
Holder; and
(D) for each Distribution Date, after giving effect to paragraphs
(A), (B) and (C) above, an amount equal to the balance, if any, of such
Available Principal Collections will be allocated to Shared Principal
Collections and applied in accordance with the Pooling and Servicing
Agreement.
'CONTROLLED ACCUMULATION AMOUNT' means for any Distribution Date with
respect to the Controlled Accumulation Period, $ ; provided,
however, that, if the commencement of the Controlled Accumulation Period is
delayed as described above under '--Principal Payments,' the Controlled
S-31
<PAGE>
Accumulation Amount for each Distribution Date with respect to the Controlled
Accumulation Period may be different for each Distribution Date with respect to
the Controlled Accumulation Period and will be determined by the Transferors in
accordance with the Series 1998- Supplement based on the principal payment rates
for the Accounts and on the invested amounts of other Principal Sharing Series
that are scheduled to be in their revolving periods and then scheduled to create
Shared Principal Collections during the Controlled Accumulation Period.
'DEFICIT CONTROLLED ACCUMULATION AMOUNT' means (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.
'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.
REQUIRED COLLATERAL INVESTED AMOUNT
The 'REQUIRED COLLATERAL INVESTED AMOUNT' with respect to any Distribution
Date means (i) initially $ and (ii) thereafter on each Distribution
Date an amount equal to the greater of (a) % of the sum of the Class A
Adjusted Invested Amount, the Class B Adjusted Invested Amount and the
Collateral Invested Amount, in each case, on such Distribution Date (after any
adjustments made on such Distribution Date) and (b) $ ; provided,
however, that (1) if certain reductions in the Collateral Invested Amount are
made or if a Pay-Out Event occurs, the Required Collateral Invested Amount for
such Distribution Date shall equal the Required Collateral Invested Amount for
the Distribution Date immediately preceding the occurrence of such reduction or
Pay-Out Event, (2) in no event shall the Required Collateral Invested Amount
exceed the unpaid principal amount of the Series 1998- 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.
With respect to any Distribution Date, if the Collateral Invested Amount is
less than the Required Collateral Invested Amount, certain Excess Spread and
Excess Finance Charge Collections, if available, will be allocated to increase
the Collateral Invested Amount to the extent of such shortfall.
DEFAULTED RECEIVABLES; INVESTOR CHARGE-OFFS
On each Determination Date, the Servicer will calculate the Investor
Default Amount for the preceding Monthly Period. The term 'INVESTOR DEFAULT
AMOUNT' means, for any Monthly Period, the product of (i) the Floating
Allocation Percentage with respect to such Monthly Period and (ii) the Series
Allocable Defaulted Amount for such Monthly Period. A portion of the Investor
Default Amount will be allocated to the Class A Certificates (the 'CLASS A
INVESTOR DEFAULT AMOUNT') on each Distribution Date in an amount equal to the
product of the Class A Floating Percentage applicable during the related Monthly
Period and the Investor Default Amount for such Monthly Period. A portion of the
Investor Default Amount will be allocated to the Class B Certificates (the
'CLASS B INVESTOR DEFAULT AMOUNT') in an amount equal to the product of the
Class B Floating Percentage applicable during the related Monthly Period and the
Investor Default Amount for such Monthly Period. An amount equal to the Class A
Investor Default Amount for each Monthly Period will be paid from Class A
Available Funds, Excess Spread and Excess Finance Charge Collections allocated
to Series 1998- and from Reallocated Principal Collections, if applicable, and
applied as described above in '--Application of Collections--Payment of Fees,
Interest and Other Items.' An amount equal to the Class B Investor Default
Amount for each Monthly Period will be paid from Excess Spread and Excess
Finance Charge Collections allocated to Series 1998- and from Reallocated
Principal Collections allocable to the Collateral Invested Amount, if
applicable, and applied as described above in '--Application of
Collections--Excess Spread; Excess Finance Charge Collections.'
S-32
<PAGE>
On each Distribution Date, if the Class A Required Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance Charge
Collections allocable to Series 1998- and Reallocated Principal Collections, the
Collateral Invested Amount 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 will be reduced by the amount by which the Collateral
Invested Amount would have been reduced below zero, but not by more than the
excess, if any, of the Class A Investor Default Amount for 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 will be reduced to zero, and the Class A Invested Amount will be
reduced by the amount by which the Class B Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class A
Investor Default Amount for such Distribution Date over the amount of the
reductions, if any, of the Collateral Invested Amount and of the Class B
Invested Amount with respect to such Distribution Date as described above (a
'CLASS A INVESTOR CHARGE-OFF'), which will have the effect of slowing or
reducing the return of principal to the holders of the Class A Certificates. If
the Class A Invested Amount has been reduced by the amount of any Class A
Investor Charge-Offs, it will thereafter be increased on any Distribution Date
(but not by an amount in excess of the aggregate Class A Investor Charge-Offs)
by the amount of Excess Spread and Excess Finance Charge Collections allocable
to Series 1998- available for such purpose as described above under
'--Application of Collections--Excess Spread; Excess Finance Charge
Collections.'
On each Distribution Date, if the Class B Required Amount for such
Distribution Date exceeds the sum of Excess Spread and Excess Finance Charge
Collections allocable to Series 1998- and not required to pay the Class A
Required Amount or reimburse Class A Investor Charge-Offs and Reallocated
Principal Collections allocable to the Collateral Interest and not required to
pay the Class A Required Amount, then the Collateral Invested Amount will be
reduced by the amount of such excess, but not by more than the Class B Investor
Default Amount for such Monthly Period. 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 will be
reduced by the amount by which the Collateral Invested Amount would have been
reduced below zero, but not by more than the excess, if any, of the Class B
Investor Default Amount for 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'). The Class B Invested Amount
will also be reduced by the amount of Reallocated Principal Collections in
excess of the Collateral Invested Amount and the amount of any portion of the
Class B Invested Amount allocated to the Class A Certificates to avoid a
reduction in the Class A Invested Amount. The Class B Invested Amount will
thereafter be increased on any Distribution Date (but not by an amount in excess
of the amount of such reductions in the Class B Invested Amount) by the amount
of Excess Spread and Excess Finance Charge Collections allocable to Series
1998- available for such purpose as described above under '--Application of
Collections--Excess Spread; Excess Finance Charge Collections.'
On each Distribution Date, if the Collateral Floating Percentage of the
Investor Default Amount (the 'COLLATERAL DEFAULT AMOUNT') for such Distribution
Date exceeds the amount of Excess Spread and Excess Finance Charge Collections
allocated to Series 1998- which is allocated and available to fund such amount
as described above under '--Application of Collections--Excess Spread; Excess
Finance Charge Collections,' 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 Interest will also be reduced by the
amount of Reallocated Principal Collections and the amount of any portion of the
Collateral Invested Amount allocated to the Class A Certificates to avoid a
reduction in the Class A Invested Amount or to the Class B Certificates to avoid
a reduction in the Class B Invested Amount. The Collateral Invested Amount will
thereafter be increased on any Distribution Date (but not by an amount in excess
of the amount of such reductions in the Collateral Invested Amount) by the
amount of Excess Spread and Excess Finance Charge Collections allocated to
Series 1998- allocated and available for that purpose as described above under
'--Application of Collections--Excess Spread; Excess Finance Charge
Collections.'
S-33
<PAGE>
PAIRED SERIES
The Series 1998- Certificates may be paired with one or more other Series
(each, a 'PAIRED SERIES') at or after the commencement of the Controlled
Accumulation Period if the Rating Agency Condition is satisfied. As funds are
accumulated in the Principal Funding Account, the invested amount in the Trust
of such Paired Series will increase by up to a corresponding amount. Upon
payment in full of the Series 1998- Certificates, assuming that there have been
no unreimbursed charge-offs with respect to any related Paired Series, the
aggregate invested amount of such related Paired Series will have been increased
by an amount up to an aggregate amount equal to the Invested Amount paid to or
deposited for the benefit of the Series 1998- Certificateholders after the
Series 1998- Certificates were paired with the Paired Series. The issuance of a
Paired Series will be subject to the conditions described under 'The Pooling and
Servicing Agreement Generally--New Issuances' in the Prospectus. There can be no
assurance, however, that the terms of any Paired Series might not have an impact
on the timing or amount of payments received by the Series 1998-
Certificateholders. See 'Risk Factors--Effect of the Issuance of New Series' and
'The Pooling and Servicing Agreement Generally--Paired Series' in the
accompanying Prospectus.
PAY-OUT EVENTS
The 'PAY-OUT EVENTS' with respect to the Series 1998- Certificates will
include each of the following:
(a) the occurrence of an Insolvency Event (as such term is defined in
the Prospectus) with respect to any Transferor or other holder of the
Original Transferor Certificate;
(b) the Trust becomes an investment company within the meaning of the
Investment Company Act of 1940, as amended;
(c) a failure on the part of any Transferor (i) to make any payment or
deposit required under the Pooling and Servicing Agreement or the Series
1998- Supplement within five business days after the day such payment or
deposit is required to be made or (ii) to observe or perform any other
covenant or agreement of such Transferor set forth in the Pooling and
Servicing Agreement or the Series 1998- Supplement, which failure has a
material adverse effect on the Series 1998- Certificateholders and which
continues unremedied for a period of 60 days after written notice;
(d) any representation or warranty made by any Transferor in the
Pooling and Servicing Agreement or the Series 1998- Supplement or any
information required to be given by any Transferor to the Trustee to
identify the Accounts proves to have been incorrect in any material respect
when made or delivered and continues to be incorrect in any material
respect for a period of 60 days after written notice and as a result of
which the interests of the Series 1998- Certificateholders are materially
and adversely affected; provided, however, that a Pay-Out Event shall not
be deemed to occur thereunder if a Transferor has repurchased the related
Receivables or all such Receivables, if applicable, during such period (or
such longer period as the Trustee may specify not to exceed an additional
60 days) in accordance with the provisions of the Pooling and Servicing
Agreement;
(e) a failure by a Transferor to convey Receivables in Additional
Accounts or Participation Interests to the Trust within five business days
after the day on which it is required to convey such Receivables or
Participation Interests pursuant to the Pooling and Servicing Agreement or
the Series 1998- Supplement;
(f) the occurrence of any Servicer Default which would have an Adverse
Effect;
(g) a reduction of the average Series Adjusted Portfolio Yield for any
three consecutive Monthly Periods to a rate less than the average of the
Base Rates for such three Monthly Periods;
(h) the failure to pay in full the Class A Invested Amount and the
Class B Invested Amount on the Expected Final Payment Date; and
(i) any Transferor is unable for any reason to transfer Receivables to
the Trust in accordance with the Pooling and Servicing Agreement or the
Series 1998- Supplement.
Then, in the case of any event described above 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 1998- Certificates evidencing more
than % of the aggregate unpaid principal amount of Series 1998- Certificates
by notice then given in writing to the Transferors and the Servicer (and to the
Trustee if given by the Series 1998- Certificateholders) may declare that a
Pay-Out Event has occurred with respect to Series 1998- as of the date of
S-34
<PAGE>
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 1998-
without any notice or other action on the part of the Trustee immediately upon
the occurrence of such event.
For purposes of the Pay-Out Event described in clause (g) above, the terms
'Base Rate' and 'Series Adjusted Portfolio Yield' will be defined as follows
with respect to the Series 1998- Certificates:
'BASE RATE' means, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is equal to the sum
of Class A Monthly Interest, Class B Monthly Interest, Collateral Monthly
Interest and the Monthly Servicing Fee with respect to the Series 1998-
Certificates and the Collateral Interest for the related Distribution Date and
the denominator of which is the Invested Amount as of the last day of the
preceding Monthly Period.
'SERIES ADJUSTED PORTFOLIO YIELD' means, with respect to any Monthly
Period, the annualized percentage equivalent of a fraction, (i) the numerator of
which is equal to (a) Reallocated Investor Finance Charge Collections (including
any investment earnings and certain other amounts that are to be treated as
collections of Finance Charges Receivables allocable to Series 1998- in
accordance with the Pooling and Servicing Agreement) for such Monthly Period,
plus (b) the amount of Principal Funding Investment Proceeds for the related
Distribution Date, plus (c) provided that each Rating Agency has consented to
the inclusion thereof in calculating the Series Adjusted Portfolio Yield, any
Excess Finance Charge Collections that are allocated to Series 1998- , plus (d)
the amount of funds withdrawn from the Reserve Account and included in Class A
Available Funds for the Distribution Date with respect to such Monthly Period,
and less (e) the Investor Default Amount for the Distribution Date with respect
to such Monthly Period, and (ii) the denominator of which is the Invested Amount
as of the last day of the preceding Monthly Period.
If the proceeds of any sale of the Receivables following the occurrence of
an Insolvency Event with respect to a Transferor, as described in the
accompanying Prospectus under 'Description of the Certificates--Pay-Out Events
and Reinvestment Events,' allocated to the Class A Invested Amount and the
proceeds of any collections on the Receivables in the Collection Account are not
sufficient to pay in full the remaining amount due on the Class A Certificates,
the Class A Certificateholders will suffer a corresponding loss and no such
proceeds will be available to the Class B Certificateholders. See 'Certain Legal
Aspects of the Receivables--Certain Matters Relating to Insolvency and
Receivership' in the accompanying Prospectus for a discussion of the impact of
recent federal legislation on the Trustee's ability to liquidate the
Receivables.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The share of the Servicing Fee allocable to the Series 1998-
Certificateholders and the Collateral Interest Holder 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 (or, in the case of the first Distribution Date, the product
of (i) the actual number of days from and including the Closing Date to and
including , 199 , divided by 365, (ii) the Servicing Fee Rate and (iii) the
Initial Invested Amount), less (ii) the product of (A) any amount on deposit in
the Special Funding Account as of the last day of the Monthly Period preceding
such Distribution Date and (B) the Series Allocation Percentage for Series 1998-
with respect to such Monthly Period (the amount calculated pursuant to this
clause (b) is referred to as the 'SERVICING BASE AMOUNT'). 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. The share of the Monthly
Servicing Fee allocable to the Class B Certificateholders with respect to any
Distribution Date (the 'CLASS B SERVICING FEE') shall be equal to one-twelfth of
the product of (a) the Class B Floating Percentage, (b) the Servicing Fee Rate
and (c) the Servicing-Base Amount. The share of the Monthly Servicing Fee
allocable to the Collateral Interest with respect to any Distribution Date (the
'COLLATERAL INTEREST SERVICING FEE') shall be equal to one-twelfth of the
product of (a) the Collateral Floating Percentage, (b) the Servicing Fee Rate
and (c) the Servicing Base Amount. The remainder of the Servicing Fee shall be
paid by the holders of the Transferor Certificates or the certificateholders of
other Series (as provided in the related Supplements) and in no event will the
Trust, the Trustee or the Series 1998- Certificateholders be liable for the
share of the Servicing Fee to be paid by the holders of the Transferor
Certificates or the certificateholders of any other Series.
S-35
<PAGE>
OPTIONAL REPURCHASE
On any Distribution Date occurring on or after the date that the sum of the
Class A Invested Amount and the Class B Invested Amount is reduced to $ ( %
of the initial outstanding aggregate principal amount of the Class A
Certificates, the Class B Certificates and the Collateral Interest) or less, the
Transferors will have the option to repurchase the Class A Certificateholders'
Interest, the Class B Certificateholders' Interest and the Collateral Interest.
The purchase price will be equal to the sum of the Class A Invested Amount and
the Class B Invested Amount (less the Principal Funding Account Balance, if
any), the Collateral Invested Amount, if any, and accrued and unpaid interest on
the Class A Certificates, the Class B Certificates and the Collateral Interest
(and accrued and unpaid interest with respect to interest amounts that were due
but not paid on such Distribution Date or any prior Distribution Date) through
(a) if the day on which such repurchase occurs is a Distribution Date, the day
preceding such Distribution Date or (b) if the day on which such repurchase
occurs is not a Distribution Date, the day preceding the Distribution Date next
following such day. Such proceeds will be allocated first to pay amounts due to
the Class A Certificateholders, then, to pay amounts due to the Class B
Certificateholders and finally, to pay amounts due to the Collateral Interest
Holder. Following any such repurchase, the Receivables will be assigned to the
Transferors and the Class A Certificateholders, the Class B Certificateholders
and the Collateral Interest Holder will have no further rights with respect
thereto. In the event that the Transferors fail for any reason to deposit the
aggregate purchase price for such Receivables, the Trust will continue to hold
the Receivables and payments will continue to be made to the Class A
Certificateholders, Class B Certificateholders and the Collateral Interest
Holder as described herein.
SERIES TERMINATION
If, on the Distribution Date, which is two months prior to the Series
1998- Termination Date, the Invested Amount (after giving effect to all changes
therein on such date) exceeds zero, the Servicer will, within the 40-day period
beginning on such date, solicit bids for the sale of interests in the Principal
Receivables or certain Principal Receivables, together in each case with the
related Finance Charge Receivables, in an amount equal to the Invested Amount at
the close of business on the last day of the Monthly Period preceding the
Termination Date (after giving effect to all distributions required to be made
on the Termination Date other than from the proceeds of the sale). The
Transferor and the Collateral Interest Holder will be entitled to participate
in, and to receive notice of each bid submitted in connection with, such bidding
process. Upon the expiration of such 40-day period, the Trustee will determine
(a) which bid is the highest cash purchase offer (the 'HIGHEST BID') and (b) the
amount (the 'AVAILABLE FINAL DISTRIBUTION AMOUNT') which otherwise would be
available in the Collection Account on the Termination Date for distribution to
the Series 1998- Certificateholders and the Collateral Interest Holder. The
Servicer will sell such Receivables on the Termination Date to the bidder who
provided the Highest Bid and will deposit the proceeds of such sale in the
Collection Account for allocation (together with the Available Final
Distribution Amount) to the interest of the holders of the Series
1998- Certificates and the Collateral Interest in the order of priority
specified herein.
REPORTS
No later than the third business day prior to each Distribution Date, the
Servicer will forward to the Trustee, the Paying Agent, each Rating Agency and
the Collateral Interest Holder, a statement (the 'MONTHLY REPORT') prepared by
the Servicer setting forth certain information with respect to the Trust and the
Class A Certificates and the Class B Certificates, including: (a) the aggregate
amount of Principal Receivables and Finance Charge Receivables in the Trust as
of the end of such Monthly Period; (b) the Invested Amount, the Class A Invested
Amount, the Class B Invested Amount and the Collateral Invested Amount at the
close of business on the last day of the preceding Monthly Period; (c) the
Series Allocation Percentage, the Floating Allocation Percentage, the Class A
Floating Percentage, the Class B Floating Percentage and the Collateral Floating
Percentage and the Principal Allocation Percentage, the Class A Principal
Percentage, the Class B Principal Percentage and the Collateral Principal
Percentage; (d) the amount of collections of Principal Receivables and Finance
Charge Receivables processed during the related Monthly Period and the portion
thereof allocated to the interest of the holders of the Series 1998-
Certificates; (e) the aggregate outstanding balance of Accounts that were 31, 61
and 91 days or more delinquent as of the end of such Monthly Period; (f) the
Investor Default Amount, the Class A Investor Default Amount, the Class B
Investor Default Amount and the Collateral Default Amount and the Defaulted
Amount with respect to such Monthly Period; (g) the aggregate amount, if any, of
Class A Investor
S-36
<PAGE>
Charge-Offs, Class B Investor Charge-Offs, any reductions in the Class B
Invested Amount pursuant to clauses (iv) and (v) of the definition of 'Class B
Invested Amount,' and the amounts by which the Collateral Invested Amount has
been reduced pursuant to clauses (iii), (iv) and (v) of the definition of
'Collateral Invested Amount' and any Class A or Class B Investor Charge-Offs
reimbursed on the related Monthly Period, for such Monthly Period; (h) the
Monthly Servicing Fee, Class A Servicing Fee, Class B Servicing Fee and
Collateral Interest Servicing Fee for such Monthly Period; (i) the Series
Adjusted Portfolio Yield for such Monthly Period; (j) the Base Rate for such
Monthly Period; (k) Reallocated Principal Collections; and (1) Shared Principal
Collections.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ('ERISA'), and Section 4975 of the Internal Revenue Code (the 'CODE')
prohibit a pension, profit sharing or other employee benefit plan or an
individual retirement account (a 'PLAN') from engaging in certain transactions
involving 'plan assets' with persons that are 'parties in interest' under ERISA
or 'disqualified persons' under the Code (collectively, 'PARTIES IN INTEREST')
with respect to the Plan. A violation of these 'prohibited transaction' rules
may generate excise tax and other liabilities under ERISA and the Code for such
persons. For example, a prohibited transaction would arise, unless an exemption
is applicable, if a Certificate were viewed as debt of either Transferor and
such Transferor were a Party in Interest with respect to a Plan that acquired
the Certificate. Plans that are government plans (as defined in Section 3(32) of
ERISA) and certain church plans (as defined in Section 3(33) of ERISA) are not
subject to ERISA requirements.
CLASS A CERTIFICATES
A violation of the prohibited transaction rules could occur if the Class A
Certificates were to be purchased with assets of any Plan if the Transferors,
the Trustee, the Underwriters or any of their affiliates were a Party in
Interest with respect to such Plan, unless a statutory, regulatory or
administrative exemption is available or an exemption applies under a regulation
(the 'PLAN ASSET REGULATION') issued by the Department of Labor ('DOL'). The
Transferors, the Trustee, the Underwriters and their affiliates are likely to be
Parties in Interest with respect to many Plans. Before purchasing the Class A
Certificates, a Plan fiduciary or other Plan investor should consider whether a
prohibited transaction might arise by reason of relationship between the Plan
and the Transferors, the Trustee, any Underwriter or any of their affiliates and
consult their counsel regarding the purchase in light of the considerations
described below and in the accompanying Prospectus.
Under certain circumstances, the Plan Asset Regulation treats the assets in
which a Plan holds an equity interest as 'plan assets' of such Plan. Because the
Class A Certificates will represent beneficial interests in the Trust, and
despite the agreement of the Transferors and the Certificate Owners to treat the
Class A Certificates as debt instruments, the Class A Certificates are likely to
be considered equity interests in the Trust for purposes of the Plan Asset
Regulation, with the result that the assets of the Trust are likely to be
treated as 'plan assets' of the investing Plans for purposes of ERISA and
Section 4975 of the Code, unless the exception for 'publicly-offered securities'
is applicable as described in the accompanying Prospectus. It is anticipated
that the Class A Certificates will meet the criteria for treatment as
'public-offered securities' as described in the accompany Prospectus. No
restrictions will be imposed on the transfer of the Class A Certificates. It is
expected that the Class A Certificates will be held by at least 100 Independent
Investors at the conclusion of the initial public offering, although no
assurance can be given, and no monitoring or other measures will be taken to
ensure, that such condition is met. See 'ERISA Considerations' in the
accompanying Prospectus. The Class A Certificates will be sold as part of the
offering pursuant to an effective registration statement under the Securities
Act and then will be timely registered under the Exchange Act.
If the forgoing exception under the Plan Asset Regulation were not
satisfied, transactions involving the Trust and Parties in Interest with respect
to a Plan that purchases or holds Class A Certificates might be prohibited under
Section 406 of ERISA and/or Section 4975 of the Code and result in excise tax
and other liabilities under ERISA and Section 4975 of the Code unless an
exemption were available. The five DOL class exemptions described in the
accompanying Prospectus may not provide relief for all transactions involving
the assets of the Trust even if they would otherwise apply to the purchase of a
Class A Certificate by a Plan.
S-37
<PAGE>
CLASS B CERTIFICATES
The Class B Underwriters currently do not expect that the Class B
Certificates will be held by at least 100 Independent Investors and, therefore,
do not expect that such Class B Certificates will qualify as publicly-offered
securities under the Plan Asset Regulation. Accordingly, the Class B
Certificates may not be acquired or held by (a) any employee benefit plan that
is subject to ERISA, (b) any plan or other arrangement (including an individual
retirement account or Keogh Plan) that is subject to Section 4975 of the Code,
or (c) any entity whose underlying assets include 'plan assets' under the
regulation by reason of any such plan's investment in the entity. By its
acceptance of a Class B Certificate, each Class B Certificate Owner will be
deemed to have represented and warranted that it is not and will not be subject
to the foregoing limitation.
CONSULTATION WITH COUNSEL
In light of the foregoing fiduciaries or other persons contemplating
purchasing the Class A Certificates on behalf of or with 'plan assets' of any
Plan should consult their own counsel regarding whether the Trust's assets
represented by the Class A Certificates would be considered 'plan assets,' the
consequences that would apply if the Trust's assets were considered 'plan
assets,' and the possibility of exemptive relief from the prohibited transaction
rules.
Finally, Plan fiduciaries and other Plan investors should consider the
fiduciary standards under ERISA or other applicable law in the context of the
Plan's particular circumstances before authorizing an investment of a portion of
the Plan's assets in the Class A Certificates. Accordingly, among other factors,
Plan fiduciaries and other Plan investors should consider whether the investment
(i) satisfies the diversification requirement of ERISA or other applicable law,
(ii) is in accordance with the Plan's governing instruments, and (iii) is
prudent in light of the 'Risk Factors' and other factors discussed in this
Prospectus Supplement and the accompanying Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
(the 'UNDERWRITING AGREEMENT') among the Transferors, TRS, the underwriters of
the Class A Certificates named below (the 'CLASS A UNDERWRITERS') and the
underwriters of the Class B Certificates named below (the 'CLASS B
UNDERWRITERS,' and together with the Class A Underwriters, the 'UNDERWRITERS'),
the Transferors have agreed to cause the Trust to sell to the Underwriters, and
the Underwriters have agreed to purchase, the principal amount of the Class A
Certificates and Class B Certificates set forth opposite their names:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS A
UNDERWRITERS OF THE CLASS A CERTIFICATES CERTIFICATES
- ---------------------------------------- -------------------
<S> <C>
Total...................................................................
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
CLASS B
UNDERWRITERS OF THE CLASS B CERTIFICATES CERTIFICATES
- ---------------------------------------- -------------------
<S> <C>
Total...................................................................
</TABLE>
The Underwriting Agreement provides that the obligation of the Class A
Underwriters to pay for and accept delivery of the Class A Certificates and the
obligation of the Class B Underwriters to pay for and accept delivery of the
Class B Certificates are subject to the approval of certain legal matters by
their counsel and to certain other
S-38
<PAGE>
conditions. All of the Series 1998- Certificates offered hereby will be issued
if any will be issued if any are issued. Offering expenses are estimated to be
$ .
The Class A Underwriters propose initially to offer the Class A
Certificates to the public at the price set forth on the cover page hereof and
to certain dealers at such price less concessions not in excess of % of the
principal amount of the Class A Certificates. The Class A Underwriters may
allow, and such dealers may reallow, concessions not in excess of % of the
principal amount of the Class A Certificates to certain brokers and dealers.
After the initial public offering, the public offering price and other selling
terms may be changed by the Class A Underwriters.
The Class B Underwriters propose initially to offer the Class B
Certificates to the public at the price set forth on the cover page hereof and
to certain dealers at such price less concessions not in excess of % of the
principal amount of the Class B Certificates. The Class B Underwriters may
allow, and such dealers may reallow, concessions not in excess of % of the
principal amount of the Class B Certificates to certain brokers and dealers.
After the initial public offering, the public offering price and other selling
terms may be changed by the Class B Underwriters.
Each Underwriter has represented and agreed that (a) 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 Series 1998- Certificates
in, from or otherwise involving the United Kingdom; (b) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue or sale of the Series 1998-
Certificates to a person who is of a kind described in Article II (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 or passed
on; (c) if it is an authorized person under Chapter III of part I of the
Financial Services Act 1986, it has only promoted and will 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
Series 1998- Certificates described in this Prospectus Supplement and the
Prospectus if that person is of a kind described either in Section 76(2) of the
Financial Services Act 1986 or in Regulation 1.04 of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991; and (d) it is a person of a
kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exceptions) Order 1996.
The Underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the Series 1998- Certificates in accordance with Regulation M under the Exchange
Act. Over-allotment transactions involve syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the Series 1998- Certificates so long as
the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Series 1998- Certificates in the open
market after the distribution has been completed in order to cover syndicate
short positions. Penalty bids permit the Underwriters to reclaim a selling
concession from a syndicate member when the Series 1998- Certificates originally
sold by such syndicate member are purchased in a syndicate covering transaction.
Such over-allotment transactions, stabilizing transactions, syndicate-covering
transactions and penalty bids may cause the prices of the Series 1998-
Certificates to be higher than they would be in the absence of such
transactions. Neither the Seller nor any of the Underwriters represent that the
Underwriters will engage in any such transactions or that such transactions,
once commenced, will not be discontinued without notice at any time.
The Transferors will indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or contribute to
payments the Underwriters may be required to make in respect thereof.
S-39
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM PAGE(S)
- ---- -------
<S> <C>
Accounts.................................... S-13
Adjusted Invested Amount.................... S-25
American Express............................ S-17
Available Final Distribution Amount......... S-36
Available Principal Collections............. S-21
Available Reserve Account Amount............ S-26
Base Rate................................... S-35
business day................................ S-18
Centurion................................... S-11, S-17
Class A Additional Interest................. S-28
Class A Adjusted Invested Amount............ S-25
Class A Available Funds..................... S-19
Class A Certificate Rate.................... S-19
Class A Certificateholders' Interest........ S-19
Class A Certificates........................ S-11
Class A Floating Percentage................. S-23
Class A Initial Invested Amount............. S-24
Class A Invested Amount..................... S-24
Class A Investor Charge-Off................. S-33
Class A Investor Default Amount............. S-32
Class A Monthly Interest.................... S-29
Class A Outstanding Monthly Interest........ S-29
Class A Principal Percentage................ S-24
Class A Required Amount..................... S-27
Class A Servicing Fee....................... S-35
Class A Underwriters........................ S-38
Class B Additional Interest................. S-28
Class B Adjusted Invested Amount............ S-25
Class B Available Funds..................... S-19
Class B Certificate Rate.................... S-19
Class B Certificateholders' Interest........ S-19
Class B Certificates........................ S-11
Class B Floating Percentage................. S-23
Class B Initial Invested Amount............. S-24
Class B Invested Amount..................... S-24
Class B Investor Charge-Off................. S-33
Class B Investor Default Amount............. S-32
Class B Monthly Interest.................... S-29
Class B Outstanding Monthly Interest........ S-29
Class B Principal Percentage................ S-24
Class B Required Amount..................... S-27
Class B Servicing Fee....................... S-35
Class B Underwriters........................ S-38
Closing Date................................ S-11
Code........................................ S-37
Collateral Additional Interest.............. S-31
Collateral Available Funds.................. S-29
Collateral Charge-Off....................... S-33
Collateral Default Amount................... S-33
Collateral Floating Percentage.............. S-23
<PAGE>
<CAPTION>
TERM PAGE(S)
- ---- -------
<S> <C>
Collateral Initial Invested Amount.......... S-25
Collateral Interest......................... S-11
Collateral Interest Holder.................. S-21
Collateral Interest Servicing Fee........... S-35
Collateral Invested Amount.................. S-25
Collateral Monthly Interest................. S-30
Collateral Principal Percentage............. S-24
Collateral Rate............................. S-30
Controlled Accumulation Amount.............. S-31
Controlled Accumulation Period.............. S-20
Controlled Accumulation Period Length....... S-21
Controlled Deposit Amount................... S-32
Covered Amount.............................. S-25
Deficit Controlled Accumulation Amount...... S-32
Distribution Date........................... S-18
DOL......................................... S-37
Early Amortization Period................... S-20
Eligible Deposit Account.................... S-25
ERISA....................................... S-37
Excess Spread............................... S-29
Expected Final Payment Date................. S-11
Floating Allocation Percentage.............. S-22
Group __.................................... S-23
Highest Bid................................. S-36
Initial Invested Amount..................... S-23
Interest Funding Investment Proceeds........ S-26
Invested Amount............................. S-25
Investor Default Amount..................... S-32
LIBOR....................................... S-20
LIBOR Determination Date.................... S-19
Loan Agreement.............................. S-30
Monthly Report.............................. S-36
Monthly Servicing Fee....................... S-35
Paired Series............................... S-34
Parties in Interest......................... S-37
Pay-Out Events.............................. S-34
Period Length Determination Date............ S-21
Plan........................................ S-37
Plan Asset Regulation....................... S-37
Pooling and Servicing Agreement............. S-11
Principal Allocation Percentage............. S-23
Principal Funding Account................... S-11
Principal Funding Account Balance........... S-25
Principal Funding Investment Proceeds....... S-25
Prospectus.................................. S-11
Prospectus Supplement....................... S-11
Rating Agency............................... S-23
Reallocated Principal Collections........... S-27
Receivables................................. S-13
Record Date................................. S-18
</TABLE>
S-40
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE(S)
- ---- -------
Reference Banks............................. S-20
<S> <C>
Required Amount............................. S-21
Required Collateral Invested Amount......... S-32
Required Reserve Account Amount............. S-26
Reserve Account............................. S-26
Reserve Account Funding Date................ S-26
Revolving Period............................ S-20
RFC II...................................... S-11, S-17
Series 1998- Certificates................... S-11
Series 1998- Supplement..................... S-11, S-18
Series 1998- Termination Date............... S-20
Series Adjusted Invested Amount............. S-22
Series Adjusted Portfolio Yield............. S-35
Series Allocable Defaulted Amount........... S-22
Series Allocable Finance Charge
Collections............................... S-22
Series Allocable Principal Collections...... S-22
Series Allocation Percentage................ S-22
Series Required Transferor Amount........... S-25
Servicer.................................... S-11
Servicing Base Amount....................... S-35
Servicing Fee Rate.......................... S-35
Special Payment Date........................ S-11
Telerate Page 3750.......................... S-20
Total Portfolio............................. S-13
Transferor.................................. S-11
Transferors' Interest....................... S-22
TRS......................................... S-11, S-17
Trust....................................... S-11
Trust Portfolio............................. S-13
Trustee..................................... S-11
Underwriters................................ S-38
Underwriting Agreement...................... S-38
</TABLE>
S-41
<PAGE>
ANNEX I
OTHER SERIES
The table below sets forth the principal characteristics of all other
Series issued by the Trust and currently outstanding. For more specific
information with respect to the Series listed below, any prospective investor
should contact Centurion at (801) 565-5023. Centurion will provide, without
charge, to any prospective purchaser of the Series 1998- Certificates, a copy of
the Prospectus Supplement for any Series listed below.
SERIES 1996-1
Initial Invested Amount ......................................... $1,000,000,000
Class A Initial Invested Amount ................................... $865,000,000
Class A Certificate Rate ....................................... 6.80% per annum
Class B Initial Invested Amount .................................... $60,000,000
Class B Certificate Rate ....................................... 6.95% per annum
Controlled Accumulation Amount (subject to adjustment) .......... $77,083,333.34
Commencement of Controlled Accumulation Period (subject to
adjustment) ...................................................... May 1, 2000
Annual Servicing Fee Percentage ................................. 2.0% per annum
Collateral Initial Invested Amount ................................. $75,000,000
Enhancement for the Class A and Class B
Certificates ...................................... Collateral Invested Amount
Other enhancement for the Class A
Certificates ....................... Subordination of the Class B Certificates
Expected Final Payment Date ......................... May 2001 Distribution Date
Series Issuance Date .............................................. May 16, 1996
Group .................................................................. Group I
SERIES 1997-1
Initial Invested Amounts ........................................ $1,000,000,000
Class A Initial Invested Amount ................................... $865,000,000
Class A Certificate Rate ....................................... 6.40% per annum
Class B Initial Invested Amount .................................... $60,000,000
Class B Certificate Rate ....................................... 6.55% per annum
Controlled Accumulation Amount (subject to adjustment) .......... $77,083,333.34
Commencement of Controlled Accumulation Period (subject to
adjustment) ................................................ September 1, 2001
Annual Servicing Fee Percentage ................................. 2.0% per annum
Collateral Initial Invested Amount ................................. $75,000,000
Enhancement for the Class A and Class B
Certificates ...................................... Collateral Invested Amount
Other enhancement for the Class A
Certificates ....................... Subordination of the Class B Certificates
Expected Final Payment Date ................... September 2002 Distribution Date
Series Issuance Date ........................................... August 28, 1997
Group .................................................................. Group I
SERIES 1998-1
Initial Invested Amounts ........................................ $1,000,000,000
Class A Initial Invested Amount ................................... $825,000,000
Class A Certificate Rate .................. One-Month LIBOR plus 0.09% per annum
Class B Initial Invested Amount .................................... $80,000,000
Class B Certificate Rate .................. One-Month LIBOR plus 0.25% per annum
Controlled Accumulation Amount (subject to adjustment) .......... $75,416,666.67
Commencement of Controlled Accumulation Period
(subject to adjustment) ......................................... June 1, 2002
Annual Servicing Fee Percentage ................................. 2.0% per annum
Collateral Initial Invested Amount ................................. $95,000,000
Enhancement for the Class A and Class B
Certificates ...................................... Collateral Invested Amount
Other enhancement for the Class A
Certificates ....................... Subordination of the Class B Certificates
Expected Final Payment Date ........................ June 2003 Distribution Date
Series Issuance Date ............................................. June 23, 1998
Group ................................................................. Group II
A-1
<PAGE>
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
ISSUER
SERIES 1998-
$
CLASS A FLOATING RATE ASSET BACKED CERTIFICATES
$
CLASS B FLOATING RATE ASSET BACKED CERTIFICATES
AMERICAN EXPRESS CENTURION BANK
AND
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
TRANSFERORS
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
SERVICER
LOGO
----------------------------------
PROSPECTUS SUPPLEMENT
----------------------------------
UNDERWRITERS OF THE CLASS A CERTIFICATES
UNDERWRITERS OF THE CLASS B CERTIFICATES
You should rely only on the information contained or incorporated by reference
in this prospectus supplement and the accompanying prospectus. We have not
authorized anyone to provide you with different information.
We are not offering the Class A certificates or the Class B certificates in any
state where the offer is not permitted.
We do not claim the accuracy of the information in this prospectus supplement
and the accompanying prospectus as of any date other than the dates stated on
their respective covers.
Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the Class A certificates and Class B certificates and with
respect to their unsold allotments or subscriptions. In addition, all dealers
selling the Class A certificates or Class B certificates will deliver a
prospectus supplement and prospectus until , 199 .
DATED , 1998
<PAGE>
The information in this prospectus and the accompanying prospectus supplement is
not complete and may be amended. We may not sell these securities until we
deliver a final prospectus and accompanying prospectus supplement. This
prospectus and the accompanying prospectus supplement are not an offer to sell
nor are they seeking an offer to buy these securities in any state where the
offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED ___________, 1998
PROSPECTUS
LOGO
AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST
ISSUER
AMERICAN EXPRESS CENTURION BANK
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
TRANSFERORS
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.
SERVICER
ASSET BACKED CERTIFICATES
<TABLE>
<S> <C>
THE TRUST--
CONSIDER CAREFULLY THE
RISK FACTORS BEGINNING o may periodically issue asset backed certificates in one or more series
ON PAGE 8 IN THIS PROSPECTUS with one or more classes; and
AND PAGE
S-10 IN THE ACCOMPANYING o will own--
PROSPECTUS SUPPLEMENT.
o receivables in a portfolio of consumer revolving credit card
accounts;
A certificate is not a
deposit and neither the o payments due on those receivables; and
certificates nor the
underlying accounts or o other property described in this prospectus and in the accompanying
receivables are insured or prospectus supplement.
guaranteed by the Federal
Deposit Insurance THE CERTIFICATES--
Corporation or any other
governmental agency. o will represent interests in the trust and will be
paid only from the trust assets;
The certificates will o offered with this prospectus will be rated in one of the four highest
represent interests in the rating categories by at least one nationally recognized rating
trust only and will not organization;
represent interests in or
obligations of American o may have one or more forms of enhancement; and
Express Company or any
of its affiliates. o will be issued as part of a designated series which may include one or
more classes of certificates and enhancement.
This prospectus may be
used to offer and sell any
series of certificates only THE CERTIFICATEHOLDERS--
if accompanied by the
prospectus supplement for o will receive interest and principal payments from
that series. a varying percentage of credit card account
collections.
</TABLE>
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
, 1998
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about the certificates in two separate
documents that progressively provide more detail: (a) this prospectus, which
provides general information, some of which may not apply to a particular series
of certificates, including your series, and (b) the accompanying prospectus
supplement, which will describe the specific terms of your series of
certificates, including:
o the timing of interest and principal payments;
o financial and other information about the receivables;
o information about enhancement for each class;
o the ratings for each class; and
o the method for selling the certificates.
IF THE TERMS OF A PARTICULAR SERIES OF CERTIFICATES VARY BETWEEN THIS
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN
THE PROSPECTUS SUPPLEMENT.
You should rely only on the information provided in this prospectus and the
accompanying prospectus supplement including the information incorporated by
reference. We have not authorized anyone to provide you with different
information. We are not offering the certificates in any state where the offer
is not permitted. We do not claim the accuracy of the information in this
prospectus or the accompanying prospectus supplement as of any date other than
the dates stated on their respective covers.
We include cross-references in this prospectus and in the accompanying
prospectus supplement to captions in these materials where you can find further
related discussions. The following table of contents and the table of contents
included in the accompanying prospectus supplement provide the pages on which
these captions are located.
You can find a listing of the pages where capitalized terms used in this
prospectus are defined under the caption 'Index of Defined Terms' beginning on
page 73 in this prospectus.
---------------------------
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUMMARY............................. 5
The Trust And The Trustee.................... 5
Trust Assets................................. 5
Information About The Receivables............ 5
Collections By The Servicer.................. 5
Allocation Of Trust Assets................... 6
Interest Payments On The Certificates........ 6
Principal Payments On The Certificates ...... 6
Revolving Period.......................... 6
Principal Accumulation and Amortization
Periods................................. 6
Early Accumulation and Amortization
Periods................................. 6
Reallocated Investor Finance Charge
Collections............................... 7
Shared Excess Finance Charge Collections..... 7
Shared Principal Collections................. 7
Credit Enhancement........................... 7
Tax Status................................... 7
Certificate Ratings.......................... 7
RISK FACTORS................................... 8
Limited Liquidity............................ 8
Potential Priority of Certain Liens.......... 8
Certain Matters Relating to the Insolvency or
Receivership of a Transferor or Other
Holder of the Original Transferor
Certificate............................... 8
Potential Effects of Consumer Protection
Laws...................................... 10
Potential Effect of Non-Compliance with
CEBA...................................... 10
Payments and Maturity; Dependency on Account
Holder Repayments......................... 11
Social, Legal and Economic Factors........... 11
Competition in the Credit Card Industry ..... 12
Ability of an Account Owner to Change Terms
of the Accounts; Decrease in Finance
Charges................................... 13
Effect of Subordination...................... 13
Basis Risk................................... 13
Limited Nature of Rating..................... 14
Effect of Issuance of New Series............. 14
Effect of Addition of Trust Assets on Credit
Quality................................... 14
Potential Effect from Creation of Prefunding
Account................................... 15
Allocations.................................. 15
USE OF PROCEEDS................................ 16
THE TRUST...................................... 16
CENTURION'S REVOLVING CREDIT BUSINESSES........ 17
General...................................... 17
Underwriting and Authorization Procedures.... 19
<PAGE>
<CAPTION>
PAGE
----
<S> <C>
Billing and Payments......................... 19
Collection Efforts........................... 20
Year 2000.................................... 21
RFC II, CREDCO, CENTURION AND TRS.............. 23
RFC II....................................... 23
Credco....................................... 23
Centurion.................................... 23
TRS.......................................... 23
MERGER OR CONSOLIDATION OF A TRANSFERROR OR THE
SERVICER .................................... 23
ASSUMPTION OF A TRANSFEROR'S OBLIGATIONS....... 24
THE ACCOUNTS................................... 25
DESCRIPTION OF THE CERTIFICATES ............... 26
General...................................... 26
Book-Entry Registration...................... 27
DTC Year 2000 Issues......................... 29
Definitive Certificates...................... 30
Interest..................................... 30
Principal.................................... 31
Pay-Out Events and Reinvestment Events ...... 33
Servicing Compensation and Payment of
Expenses.................................. 34
THE POOLING AND SERVICING AGREEMENT
GENERALLY.................................... 35
Conveyance of Receivables.................... 35
Representations and Warranties............... 35
The Transferor Certificates; Additional
Transferors............................... 38
Additions of Accounts or Participation
Interests................................. 38
Removal of Accounts.......................... 39
Discount Option.............................. 39
Premium Option............................... 40
Indemnification.............................. 41
Collection and Other Servicing Procedures.... 41
New Issuances................................ 42
Collection Account........................... 44
Deposits in Collection Account............... 44
Allocations.................................. 46
Groups of Series............................. 46
Reallocations Among Different Series Within a
Reallocation Group........................ 47
Sharing of Excess Finance Charge Collections
Among Excess Allocation Series............ 50
Sharing of Principal Collections Among
Principal Sharing Series.................. 50
Paired Series................................ 51
Special Funding Account...................... 51
Funding Period............................... 51
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Defaulted Receivables; Rebates and Fraudulent
Charges................................... 52
Credit Enhancement........................... 53
Servicer Covenants........................... 55
Certain Matters Regarding the Servicer ...... 55
Servicer Default............................. 55
Evidence as to Compliance.................... 56
Amendments................................... 57
Defeasance................................... 58
List of Certificateholders................... 58
The Trustee.................................. 58
DESCRIPTION OF THE PURCHASE AGREEMENTS......... 59
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES....... 60
Transfer of Receivables...................... 60
Certain Matters Relating to Insolvency and
Receivership.............................. 61
Consumer Protection Laws..................... 63
TAX MATTERS.................................... 64
<PAGE>
<CAPTION>
PAGE
----
<S> <C>
Federal Income Tax Consequences--General..... 64
Treatment of the Certificates as Debt........ 64
Treatment of the Trust....................... 65
Treatment of the Trust as a FASIT............ 66
Taxation of Interest Income of U.S.
Certificate Owners........................ 66
Sale or Exchange of Certificates............. 67
Non-U.S. Certificate Owners.................. 67
Information Reporting and Backup
Withholding............................... 68
State and Local Taxation..................... 69
ERISA CONSIDERATIONS........................... 69
PLAN OF DISTRIBUTION........................... 70
LEGAL MATTERS.................................. 71
REPORTS TO CERTIFICATEHOLDERS ................. 71
WHERE YOU CAN FIND MORE INFORMATION............ 71
INDEX OF DEFINED TERMS......................... 73
</TABLE>
4
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES NOT
CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO CONSIDER IN MAKING YOUR
INVESTMENT DECISION. TO UNDERSTAND ALL OF THE TERMS OF AN OFFERING OF THE
CERTIFICATES, READ CAREFULLY THIS ENTIRE DOCUMENT AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT.
THIS SUMMARY PROVIDES AN OVERVIEW OF THE TRUST ASSETS INCLUDING, IN PARTICULAR,
THE RECEIVABLES AND HOW SUCH RECEIVABLES WILL BE ALLOCATED AND OTHER INFORMATION
TO AID IN YOUR UNDERSTANDING AND IS QUALIFIED BY THE FULL DESCRIPTION OF SUCH
INFORMATION IN THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT.
THE TRUST AND THE TRUSTEE
American Express Credit Account Master Trust was formed under a pooling and
servicing agreement among American Express Travel Related Services Company,
Inc., as servicer, American Express Centurion Bank and American Express
Receivables Financing Corporation II, as transferors, and The Bank of New York,
as trustee.
The trust is a master trust under which one or more series of certificates will
be issued through a series supplement to the pooling and servicing agreement.
Some classes or series may not be offered by this prospectus; for example, they
may be offered in a private placement.
The trust may engage only in the following activities:
o acquiring and holding specified assets;
o issuing and making payments on the certificates and other interests issued by
the trust; and
o engaging in related activities.
TRUST ASSETS
The transferors have transferred to the trust the receivables from designated
Optima(Registered)* Card, Optima Line of Credit and Sign &
Travel(Registered)*/Special Purpose revolving credit accounts and, in the future
may include other charge or credit accounts or products. All new receivables
generated in those accounts will be transferred automatically to the trust. The
total amount of receivables in the trust will fluctuate daily as new receivables
are generated and payments are received on existing accounts. Additional assets
may be transferred to the trust. See 'The Accounts' and 'The Pooling and
Servicing Agreement Generally--Additions of Accounts or Participation Interests'
in this Prospectus.
The trust assets also include payments due on the receivables and other proceeds
of the receivables and of related credit insurance policies. However, the trust
assets will exclude payments on receivables written off as uncollectible.
Additional trust assets may include:
o monies deposited in certain of the trust's bank accounts and investments of
those monies; and
o instruments and rights providing enhancement, including credit enhancement to
a series or class.
The transferors may remove, subject to certain limitations and conditions,
receivables that they have transferred to the trust. See 'The Pooling and
Servicing Agreement Generally--Removal of Accounts' in this prospectus.
INFORMATION ABOUT THE RECEIVABLES
The receivables arise in accounts selected and assigned to the trust from the
transferors' total portfolio based on criteria established in the pooling and
servicing agreement and applied on the date of their selection. The receivables
consist of principal receivables and finance charge receivables. See
'Centurion's Revolving Credit Businesses' and 'The Accounts' in this prospectus.
COLLECTIONS BY THE SERVICER
American Express Travel Related Services Company, Inc. services the receivables
under the terms of the pooling and servicing agreement but, in limited cases,
may resign or be removed and either the trustee or a third party may be
appointed as the new servicer. The servicer receives a servicing fee from the
trust for each series. Each series is obligated to pay a portion of the
servicing fee. See 'Description of the Certificates--Servicing Compensation and
Payment of Expenses' and 'The Pooling and Servicing Agreement Generally--
Certain Matters Regarding the Servicer' in this prospectus.
- ------------------
* Optima(Registered) and Sign & Travel(Registered) are federally registered
servicemarks of American Express Company and its affiliates.
5
<PAGE>
The servicer receives collections on the receivables, deposits those collections
in an account and keeps track of those collections for finance charge
receivables and principal receivables. The servicer then allocates those
collections as summarized below.
ALLOCATION OF TRUST ASSETS
The trust assets will be allocated to the holders of certificates and other
interests of each series and to the holder of the transferor certificates. The
transferor certificates represent the remaining interest in the assets of the
trust not represented by the certificates and other interest issued by the
trust.
Certificateholders are only entitled to amounts allocated to their series equal
to the interest and principal payments on their certificates. See 'The Pooling
and Servicing Agreement Generally--Allocations' et seq. in this prospectus.
INTEREST PAYMENTS ON THE CERTIFICATES
Each certificate of a series will represent the right to receive payments of
interest as described in the accompanying prospectus supplement. If a series of
certificates consists of more than one class, each class may differ in, among
other things, priority of payments, payment dates, interest rates, method for
computing interest and rights to series enhancement.
Each class of certificates may have fixed, floating or any other type of
interest rate. Generally, interest will be paid monthly, quarterly or on other
scheduled dates over the life of the certificates.
If interest is paid less frequently than monthly, collections of finance charge
receivables may be deposited monthly in one or more trust accounts and invested
under guidelines established by one or more rating agencies until paid to
certificateholders. Interest payments for any series of certificates will be
funded from collections of finance charge receivables allocated to the series,
any applicable enhancement and, if and to the extent specified in the
accompanying prospectus supplement, monies earned while collections were
invested pending payment to certificateholders. See 'Description of the
Certificates--Interest' and 'The Pooling and Servicing Agreement
Generally--Allocations' et seq. in this prospectus.
PRINCIPAL PAYMENTS ON THE CERTIFICATES
Each certificate of a series will represent the right to receive payments of
principal as described in the accompanying prospectus supplement. If a series of
certificates consists of more than one class, each class may differ in, among
other things, the amounts allocated for principal payments, priority of
payments, payment dates, maturity, and rights to series enhancement.
REVOLVING PERIOD
Each series of certificates will begin with a period, known as the revolving
period, during which the trust will not pay or accumulate principal for the
related certificateholders. During the revolving period, the trust will usually
pay available principal to the holders of the transferor certificates but may
pay amounts due to holders of certificates of other series.
Following the revolving period, each class of certificates will have one or a
combination of the following periods in which:
o principal is accumulated in specified amounts and paid on a scheduled date;
o principal is paid in specified amounts at scheduled intervals;
o principal is accumulated in varying amounts following certain adverse events
and paid on a scheduled date; and
o principal is paid in varying amounts each month based on the amount of
principal receivables collected following certain adverse events.
PRINCIPAL ACCUMULATION AND AMORTIZATION PERIODS
The time at which principal payments will begin and the period over which
principal payments will be made will vary from one series to another and within
a series from one class to another. The principal payment provisions for each
series and class will be included in the accompanying prospectus supplement.
EARLY ACCUMULATION AND AMORTIZATION PERIODS
If a pay-out event has occurred with respect to a series, either an early
accumulation period or an early amortization period will begin and the trust
will either deposit available principal in a trust account for payment on the
expected final payment date or pay all available principal to the
certificateholders of that series on each distribution date. If the series has
more than one class, each
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class may have a different priority for these payments. A pay-out event may
affect more than one series.
For a detailed discussion of the pay-out events, see 'Description of the
Certificates--Pay-Out Events and Reinvestment Events' in this prospectus and
'Series Provisions--Pay-Out Events' in the accompanying prospectus supplement.
REALLOCATED INVESTOR FINANCE CHARGE COLLECTIONS
The certificates of a series may be included in a group, called a 'reallocation
group,' that reallocates collections of receivables and other amounts or
obligations among the series is that group. Collections of finance charge
receivables which would otherwise be allocated to each series in the
reallocation group will instead be combined and will be available for certain
required payments to all series in that group. Any issuance of a new series in a
reallocation group may reduce or increase the amount of finance charge
collections allocated to another other series of certificates in that group.
For a more detailed discussion, see 'The Pooling and Servicing Agreement
Generally--Reallocation Among Different Series Within a Reallocation Group' and
'Risk Factors--Effect of the Issuance of New Series' in this prospectus.
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Any series may be included in a group of series. If specified in the
accompanying prospectus supplement, to the extent that collections of finance
charge receivables allocated to a series are not needed for that series, those
collections may be applied to cover shortfalls of other series in the same
group.
See 'The Pooling and Servicing Agreement Generally--Sharing of Excess Finance
Charge Collections Among Excess Allocation Series' in this prospectus.
SHARED PRINCIPAL COLLECTIONS
If specified in the accompanying prospectus supplement, to the extent that
collection of principal receivables allocated to any series are not needed for
that series, those collections may be applied to cover principal payments for
other series in the same group.
See 'The Pooling and Servicing Agreement Generally--Sharing of Principal
Collections Among Principal Sharing Series' in this prospectus.
CREDIT ENHANCEMENT
Each class of a series may be entitled to credit enhancement. Credit enhancement
for the certificates of any class may take the form of one or more of the
following:
o subordination
o collateral interest
o insurance policy
o cash collateral guaranty or account
o letter of credit
o surety bond
o spread account
o reserve account
o swap arrangement
The type, characteristics and amount of any credit enhancement will be:
o based on several factors, including the characteristics of the receivables
and accounts at the time a series of certificates is issued; and
o established based on the requirements of the rating agencies.
See 'The Pooling and Servicing Agreement Generally--Credit Enhancement' and
'Risk Factors--Limited Nature of Rating' in this prospectus.
TAX STATUS
For information concerning the application of the federal income tax laws,
including whether the certificates will be characterized as debt for federal
income tax purposes, see 'Tax Matters' in this prospectus.
CERTIFICATE RATINGS
Any certificate offered by this prospectus and the accompanying prospectus
supplement will be rated in one of the four highest rating categories by at
least one nationally recognized rating organization.
A rating is not a recommendation to buy, sell or hold securities and may be
revised or withdrawn at any time by the assigning agency. Each rating should be
evaluated independently of any other rating. See 'Risk Factors--Limited Nature
of Rating' in this prospectus.
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RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING FACTORS BEFORE YOU DECIDE WHETHER OR NOT TO
PURCHASE THE CERTIFICATES.
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LIMITED LIQUIDITY Limited Ability to Resell Certificates: The underwriters may assist in
resales of the certificates but they are not required to do so. A
secondary market for any certificates may not develop. If a secondary
market does develop, it might not continue or it might not be
sufficiently liquid to allow you to resell any of your certificates
POTENTIAL PRIORITY OF CERTAIN LIENS If the Transfer of Receivables Were Held to Be Merely a Grant of a
Security Interest, Other Interests May Have Priority Over Your
Certificates: The transferors have transferred the receivables to
the trust. However, a court could conclude that the transferors still
own the receivables and that the trust holds only a security
interest. The transferors have taken steps to give the trustee a
'first priority perfected security interest' in the receivables in
the event a court concludes the transferors still own the
receivables. If a court concludes that the transfer to the trust is
only a grant of a security interest in the receivables, a tax or
government lien (or other lien permitted under the law without the
consent of the transferors) on the transferors' property arising
before new receivables come into existence may get paid before the
trust's interest in the receivables. Also, if either transferor
became insolvent or entered bankruptcy and the Federal Deposit
Insurance Corporation were appointed conservator or receiver of that
transferor, the FDIC's administrative expenses might be paid from the
receivables before the trust received any payments on the
receivables. See 'Certain Legal Aspects of the Receivables--Transfer
of Receivables' and 'The Pooling and Servicing Agreement
Generally--Representations and Warranties' in this prospectus.
CERTAIN MATTERS RELATING TO THE INSOLVENCY If a Conservator or Receiver Is Appointed for Centurion, or if RFC II
OR RECEIVERSHIP OF A TRANSFEROR OR OTHER or TRS Became Debtors in a Bankruptcy Case, Assets Could Be Sold at a
HOLDER OF THE ORIGINAL TRANSFEROR Loss and Protections Provided to Certificateholders May Be
CERTIFICATE Overridden: The Federal Deposit Insurance Act, as amended by the
Financial Institutions Reform, Recovery and Enforcement Act of 1989,
and policy statements issued by the FDIC, provide that the FDIC
should respect a security interest granted by American Express
Centurion Bank ('CENTURION') where the security interest (a) is
validly perfected before Centurion's insolvency and (b) was not taken
in contemplation of Centurion's insolvency or with the intent to
hinder, delay or defraud Centurion or its creditors.
FDIC staff positions taken prior to the passage of FIRREA do not
suggest that the FDIC would interrupt the timely transfer to the
trust of payments collected on the receivables.
If the FDIC were to assert a different position, payments of principal
and interest on your certificates could be delayed and possibly
reduced. For example, under the FDIA, the FDIC could--
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o require the trustee to go through an administrative claims
procedure to establish its right to those payments;
o request a stay of proceedings with respect to Centurion; or
o reject Centurion's sales contract and limit the trust's resulting
claim to 'actual direct compensatory damages.'
American Express Receivables Financing Corporation II ('RFC II') is a
subsidiary of American Express Travel Related Services Company, Inc.
('TRS'). RFC II's certificate of incorporation limits the nature of
its business and restricts its ability to commence a voluntary case
or proceeding under the bankruptcy code without the unanimous consent
of its directors. If it became a debtor in a bankruptcy case and its
transfer of the receivables to the trust were viewed as a pledge of
the receivables to secure a borrowing, your payments of outstanding
principal and interest could be delayed and possibly reduced.
Also, if TRS became a debtor in a bankruptcy case and TRS was
substantively consolidated with RFC II, your payments of outstanding
principal and interest could be delayed and possibly reduced.
If a conservator or receiver were appointed for any transferor or other
holder of the original transferor certificate, this could cause an
early amortization of principal on all outstanding series. Under the
terms of the pooling and servicing agreement, new principal
receivables would not be transferred to the trust unless otherwise
instructed by the bankruptcy trustee, receiver or conservator for any
transferor or other holder of the original transferor certificate, or
by the holder of the original transferor certificate itself. The
trustee would sell the receivables unless a sufficient amount of the
holders of certificates, and anyone else authorized to vote on those
matters, gave the trustee other instructions. The trust would then
terminate earlier than was planned and you could have a loss if the
sale of the receivables produced insufficient amounts to pay you in
full. However, the conservator or receiver may have the power--
o regardless of the terms of the pooling and servicing agreement, (a)
to prevent the early amortization, (b) to prevent the early sale of
the receivables and termination of the trust or (c) to require new
principal receivables to continue being transferred to the trust;
or
o regardless of the instructions of those authorized to direct the
trustee's actions under the pooling and servicing agreement, (a) to
require the early sale of the receivables, (b) to require
termination of the trust and retirement of the certificates or ( c)
to prohibit the continued transfer of principal receivables to the
trust.
In addition, if a conservator or receiver is appointed for the
servicer, the conservator or receiver may have the power to prevent
either the trustee or the certificateholders from appointing a new
servicer.
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See 'Certain Legal Aspects of the Receivables--Certain Matters Relating
to Insolvency and Receivership' in this prospectus.
POTENTIAL EFFECTS OF CONSUMER PROTECTION Consumer Protection Laws May Restrict the Servicer's and the
LAWS Transferors' Ability to Collect Receivables and Maintain Yield on
Portfolio and Lead to Pay-Out Event or Inability to Pay Certificates
in Full: Federal and state consumer protection laws regulate the
creation and enforcement of consumer loans. Congress and the states
could further regulate the credit card and consumer credit industry
in ways that make it more difficult for the servicer to collect
payments on the receivables or that reduce the finance charges and
other fees that Centurion can charge on credit card account balances.
For example, if Centurion were required to reduce its finance charges
and other fees, resulting in a corresponding decrease in the
accounts' effective yield, this could lead to a pay-out event,
resulting in the payment of principal sooner than expected.
The transferors and Credco make representations and warranties relating
to the validity and enforceability of the accounts and the
receivables. Subject to certain conditions described under 'The
Pooling and Servicing Agreement Generally--Representations and
Warranties' and '--Servicer Covenants' in this prospectus, the
transferors or the servicer, as the case may be, must accept
reassignment of each receivable that does not comply in all material
respects with all requirements of applicable law. However, we do not
anticipate that the trustee will make any examination of the
receivables or the related records for the purpose of determining the
presence or absence of defects, compliance with representations and
warranties, or for any other purpose. The only remedy if any
representation or warranty is violated, and the violation continues
beyond the period of time for correction of the violation, is that
the transferors or the servicer, as the case may be, must accept
reassignment of the receivables affected by the violation, subject to
certain conditions described under 'The Pooling and Servicing
Agreement Generally--Representations and Warranties,' '--Servicer
Covenants' in this prospectus. See also 'Certain Legal Aspects of the
Receivables--Consumer Protection Laws' in this prospectus.
If a cardholder sought protection under federal or state bankruptcy or
debtor relief laws, a court could reduce or discharge completely the
cardholder's obligations to repay amounts due on its account and, as
a result, the related receivables would be written off as
uncollectible. The certificateholders could suffer a loss if no funds
are available from credit enhancement or other sources. See 'The
Pooling and Servicing Agreement Generally--Defaulted Receivables;
Rebates and Fraudulent Charges' in the prospectus.
POTENTIAL EFFECT OF NON-COMPLIANCE WITH If Centurion Violates Certain Provisions of CEBA, TRS and American
CEBA Express Could Be Required to Take Certain Actions under the Bank
Holding Company Act: The Competitive Equality Banking Act of 1987
('CEBA') prohibits certain overdrafts by Centurion on its account at
the Federal Reserve
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Bank or by an affiliate on its account at Centurion. If Centurion or
its affiliates violate these provisions, Centurion could be deemed to
be a 'bank' under the Bank Holding Company Act. If this occurs, TRS
and American Express would be required either to divest control of
Centurion or to comply with other provisions of the Bank Holding
Company Act.
PAYMENTS AND MATURITY; DEPENDENCY ON Principal May Be Paid Earlier Than Expected Creating a Reinvestment
ACCOUNT HOLDER REPAYMENTS Risk to Certificateholders or Later Than Expected Resulting in a
Failure to Receive Payment When Expected: The receivables in the
trust may be paid at any time and there is no assurance that new
receivables will be generated or will be generated at levels needed
to maintain the trust. To prevent the early amortization of the
certificates, new receivables must be generated and added to the
trust. The trust is required to maintain a certain minimum amount of
receivables. Such generation of new receivables is affected in part,
by Centurion's ability to compete in the current industry environment
and by customers changing borrowing and payment patterns. If there is
a decline in the generation of new receivables you may be repaid your
principal prior to the expected date.
One development which affects the level of finance charge collections
is the increased convenience use of credit cards. Convenience use
means that the customers pay their account balances in full on or
prior to the due date. The customer, therefore, avoids all finance
charges on his account. This decreases the effective yield on the
accounts and could cause an early amortization of the certificates.
The pooling and servicing agreement requires that the balance of
principal receivables in the trust not fall below a specified level.
If the level of principal receivables does fall below the required
level, an early amortization of the certificates could occur. To
maintain the level of principal receivables in the trust, the
transferors periodically add receivables through the designation of
additional accounts for inclusion in the trust. If the transferors
are not able to add additional accounts when required, an early
amortization of the certificates will occur.
Changes in finance charges also will affect payment patterns on the
receivables and thus may result in a decline in yield. A significant
decrease in monthly payment rates could slow the return or
accumulation of principal during an amortization period or
accumulation period.
See 'Maturity Considerations' in the accompanying prospectus
supplement.
SOCIAL, LEGAL AND ECONOMIC FACTORS Social, Legal and Economic Factors Affect Credit Card Payments and Are
Unpredictable and May Cause a Delay or Default in Payment: Changes
in credit card use, payment patterns and the rate of defaults by
cardholders may result from a variety of social, legal and economic
factors. Social factors include changes in consumer confidence levels
and attitudes towards incurring debt, the public's perception of the
use of credit cards and changing attitudes regarding the stigma of
personal bankruptcy.
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Economic factors include the rate of inflation, the unemployment
rates, tax law changes and relative interest rates offered for
various types of loans. The use of incentive programs, such as gift
awards for account usage, may also affect account use. The
transferors cannot predict whether or how social, legal or economic
factors will affect account use and payment patterns in the future.
COMPETITION IN THE CREDIT CARD INDUSTRY Competition in The Credit Card Industry Could Lead to Early Payment of
Your Certificates: The credit card industry is highly competitive.
The credit card programs operated by American Express and its
affiliates, which include the Optima Card, the American Express Card,
the American Express Gold Card and the Platinum Card, face
substantial and increasingly intense competition from other financial
institutions that have VISA(Registered)* and MasterCard(Registered)*
credit card programs, such as MBNA, Citicorp and Bank of America. As
a network, Centurion and TRS also face intense competition from card
systems like VISA, MasterCard, Diners Club(Registered), Morgan
Stanley Dean Witters' NOVUSSM Network and JCB. Competition also
exists from businesses that issue their own cards or extend credit in
other ways to their customers, such as retailers and airline
associations; although this competition is more limited because these
products have more limited acceptance than the credit card products
issued by American Express and its affiliates. In addition, many
United States banks issue credit cards which have an annual fee while
issuers of the Discover Card on the NOVUS Network, as well as many
issuers of VISA and MasterCard cards generally charge no annual fee.
Card issuers compete with each other by offering a variety of products
and services, including premium cards with enhanced services or lines
of credit, airline frequent flyer program mileage credits and other
reward or rebate programs, 'teaser' promotional rates and co-branded
arrangements with partners that offer benefits to cardholders.
Recently, mergers and consolidations of banking and financial services
companies have produced larger card issuers which compete with
greater resources, economies of scale and potential brand
recognition. There has also been an increased use of debit cards for
point of sale purchases as many banks have replaced traditional ATM
cards with general purpose debit cards bearing a VISA or MasterCard
logo.
The principal competitive factors that affect the card business of
American Express and its affiliates are:
o the quality of the services provided to cardmembers and businesses
that accept the card;
o the number, spending habits and credit performance of cardmembers;
o the number and quality of businesses that accept the card;
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* VISA(Registered) and MasterCard(Registered) are federally registered
servicemarks of VISA U.S.A., Inc. and MasterCard International Inc.,
respectively.
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o the payment terms available to cardmembers and businesses that
accept the card;
o the number and quality of competing products available to
cardmembers and businesses that accept the card;
o the success of targeted marketing and promotion programs; and
o reputation and brand recognition.
The competitive nature of the credit card industry may result in a
reduced amounts of finance charge receivables collected and available
to pay interest on the certificates and may also affect Centurion's
ability to originate new accounts and generate new receivables. Such
events could cause a pay-out event to occur and an early amortization
of the certificates.
See 'Description of the Certificates--Pay-Out Events and Reinvestment
Events' in this Prospectus.
ABILITY OF AN ACCOUNT OWNER TO CHANGE A Change in the Terms of the Receivables May Adversely Affect the
TERMS OF THE ACCOUNTS; DECREASE IN FINANCE Amount or Timing of Collections and May Cause an Early Payment of
CHARGES Your Certificates: As owner of the accounts, Centurion retains the
right to change various account terms including finance charges,
other fees and the required monthly minimum payment. Such changes may
be voluntary on the part of Centurion or may be forced by law or
market conditions. Changes in interest and fees could decrease the
effective yield on the accounts and this could result in an early
amortization of your certificates. Changes could also cause a
reduction in the credit ratings on your certificates.
EFFECT OF SUBORDINATION Class B Certificates Are Subordinated to Class A Certificates; Trust
Assets May Be Diverted From Class B to Pay Class A: Where one or
more classes in a series are subordinated, principal payments on the
subordinated class or classes generally will not begin until the
senior class or classes are repaid. Additionally, if collections of
finance charge receivables allocated to a series are insufficient to
cover amount due for that series' senior certificates, the invested
amount for the subordinated certificates might be reduced. This would
reduce the amount of the collections of finance charge receivables
available to the subordinated certificates in future periods and
could cause a possible delay or reduction in principal and interest
payments on the subordinated certificates. If receivables had to be
sold, the net proceeds of that sale available to pay principal would
be paid first to senior certificateholders and any remaining net
proceeds would be paid to the subordinated certificateholders.
BASIS RISK Credit Card Rates May Decline Without a Corresponding Change in Amounts
Needed to Pay Certificates: The accounts generally have finance
charges set at a variable rate based on a designated index such as
the prime rate. Certificates may bear interest at a fixed-rate or at
a floating-rate based on another specified index. If the rate charged
on the accounts declines, collections of finance charge receivables may
reduced without a corresponding reduction in the amounts payable as
be interest on the
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certificates and other amounts paid from collections of finance charge
receivables.
LIMITED NATURE OF RATING Credit Ratings Assigned to Your Certificates Are Limited In
Nature: Each credit rating assigned to your certificates reflects
that rating agency's assessment only of the likelihood that interest
and principal will be paid when required under the pooling and
servicing agreement, not when expected. Each rating is based on that
rating agency's determination of the value of receivables in the
trust and the availability of any credit enhancement.
The ratings do not address the following:
o the likelihood that the principal or interest on your certificates
will be prepaid, paid on a scheduled date or paid on any particular
date before the termination date of your series;
o the possibility that your certificates will be paid early or the
possibility of the imposition of United States withholding tax for
non-U.S. Certificateholders;
o the marketability of the certificates, or any market price; or
o that an investment in the certificates is a suitable investment for
you.
A rating is not a recommendation to purchase, hold or sell certificates
of a series or class of a series.
EFFECT OF ISSUANCE OF NEW SERIES Issuance of Additional Series by the Trust May Adversely Affect Your
Payments or Rights: The trust is a master trust and has issued other
series of certificates and is expected to issue additional series
from time to time. All of such certificates are payable from the
receivables in the trust. The trust may issue additional series with
terms that are different from your series without the prior review or
consent of any certificateholders. It is a condition to the issuance
of each new series that each rating agency that has rated an
outstanding series confirm in writing that the issuance of the new
series will not result in a reduction or withdrawal of its rating.
However, the terms of a new series could affect the timing and
amounts of payments on any other outstanding series including your
series. The owners of the certificates of any new series will have
voting rights which will reduce the percentage interest represented
by your series. Such voting rights may relate to the ability to
approve waivers and give consents. The actions which may be affected
include directing the appointment of a successor servicer following a
servicer default, amending the pooling and servicing agreement and
directing a reassignment of the entire portfolio of accounts.
See 'The Pooling and Servicing Agreement Generally--Groups of Series'
in this prospectus.
EFFECT OF ADDITION OF TRUST ASSETS ON Credit Quality of Trust Assets May Change By the Addition of New
CREDIT QUALITY Assets: The transferors expect that they will periodically add
additional accounts to the trust and may, at times be obligated to
add additional accounts. Additional accounts may include accounts
which were originated using criteria that are different
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than those applicable to the accounts currently designated to the
trust. There are many reasons which could cause such differences
including the fact that the additional accounts were originated at a
different date or were acquired from an institution which used
different underwriting standards or procedures. Consequently, there
is no assurance that future additional accounts will have the same
credit quality as those currently designated to the trust.
In addition, the pooling and servicing agreement allows the transferors
to add participation interests in other assets to the trust. The
addition of such participation interests and of additional accounts
will be subject to the satisfaction of certain conditions described
in this prospectus under 'The Pooling and Servicing Agreement
Generally--Additions of Accounts or Participation Interests.'
POTENTIAL EFFECT FROM CREATION OF Amounts In Prefunding Account Not Invested in Receivables May Result in
PREFUNDING ACCOUNT Early Return of Principal and Reinvestment Risk: The transferors
may, in connection with any series, create a pre-funding account and
deposit a portion of the proceeds of the series into the account.
Moneys in the account will be invested in additional principal
receivables. However, any money in the pre-funding account not used
by a specific date must be paid to the holders of the certificates of
that series. This will result in an early return of principal. The
transferors do not expect to pay a prepayment penalty or premium in
such event. If you receive an early payment you may not be able to
reinvest at a rate equivalent to the rate on the certificates which
were paid early.
See 'The Pooling and Servicing Agreement Generally--Funding Period' for
a description of the material characteristics of a pre-funding
account.
ALLOCATIONS Trust Assets May Be Allocated to One or More Specific Series or Groups
and Not Be Available to Your Series: A series supplement or an
amendment to the pooling and servicing agreement may provide that
portions of the receivables or participation interests in the trust
be allocated to one or more series or groups. If such an allocation
were to occur, if the allocation was not to your series or a group in
which your series is included, your series would not be able to
benefit from such receivables or participation interests. Such an
allocation is dependent upon:
o satisfying the rating agency condition; and
o delivering an officer's certificate of the trust by the servicer
that states that the servicer reasonably believes that the
allocation will not have certain negative effects, called 'adverse
effects.'
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USE OF PROCEEDS
The net proceeds from the sale of the asset backed certificates (the
'CERTIFICATES') of any series (each, a 'SERIES') offered hereby, before the
deduction of expenses, will be paid to the Transferors. Unless otherwise
specified in the related prospectus supplement (each, a 'PROSPECTUS
SUPPLEMENT'), RFC II will use such proceeds to pay Credco the purchase price of
the Receivables transferred to RFC II by Credco pursuant to the RFC II Purchase
Agreement. Each of Credco and Centurion will use its proceeds for general
corporate purposes.
THE TRUST
American Express Credit Account Master Trust (the 'TRUST') was formed
pursuant to a pooling and servicing agreement (the 'POOLING AND SERVICING
AGREEMENT') among American Express Travel Related Services Company, Inc.
('TRS'), as servicer (in such capacity, the 'SERVICER'), American Express
Centurion Bank ('CENTURION') and American Express Receivables Financing
Corporation II ('RFC II'), as transferors (each, in such capacity, a
'TRANSFEROR'), and The Bank of New York, as trustee (in such capacity, the
'TRUSTEE'). The Trust has not engaged and will not engage in any business
activity other than (a) acquiring and holding the Receivables and the other
Trust Assets and proceeds therefrom, (b) issuing Certificates, a certificate
evidencing the interest of the Transferors and their permitted transferees (the
'TRANSFERORS' INTEREST') in the Trust retained by the Transferor (the 'ORIGINAL
TRANSFEROR CERTIFICATE') and one or more certificates held by transferees of a
portion of the Transferors' Interest (each, a 'SUPPLEMENTAL CERTIFICATE' and,
together with the Original Transferor Certificate, the 'TRANSFEROR
CERTIFICATES'), (c) making payments thereon and on any Series Enhancements and
(d) related activities. As a consequence, the Trust has not had, and is not
expected to have, any source of capital other than the Trust Assets. The Trust
has been and will be administered in accordance with the laws of the State of
New York.
'SERIES ENHANCEMENT' means, with respect to any Series or Class of
Certificates, any Credit Enhancement (as defined herein) for the benefit of
Certificateholders of such Series or Class. The subordination of any Series or
Class of Certificates to another Series or Class of Certificates shall be deemed
to be Series Enhancement.
On the first Series Closing Date, the Transferors will convey to the Trust,
without recourse, all Receivables in certain Optima Card, Optima Line of Credit
and Sign & Travel revolving credit accounts (the 'INITIAL ACCOUNTS') that
existed at the close of business on April 25, 1996 (the 'INITIAL CUT-OFF DATE')
and that met the criteria specified in the Pooling and Servicing Agreement for
an Eligible Account as applied, in connection with each such account, at the
close of business on the cycle billing date for such account occurring in the
monthly period beginning at the close of business on September 1, 1995, and
ending at the close of business on September 30, 1995 (the 'INITIAL SELECTION
DATE'), and all Receivables arising under such Accounts from time to time
thereafter, in exchange for the net cash proceeds from the sale of one or more
Series of Certificates plus the Transferor Certificates representing the
Transferors' Interest. In addition, the Transferors may convey from time to time
to the Trust, without recourse, all Receivables existing in certain New Accounts
and Aggregate Addition Accounts and Participation Interests, if any, at the
close of business on each applicable date of designation thereof.
'AGGREGATE ADDITION ACCOUNTS' means revolving credit or other charge or
credit accounts established pursuant to a revolving credit agreement or other
charge or credit agreement, respectively, between an Account Owner and the
person or persons obligated to make payments thereunder, excluding any merchant,
which is designated by such Account Owner to be included as an Account.
'NEW ACCOUNTS' are those Eligible Accounts that the Transferors may from
time to time, at their sole discretion, designate to be included as Accounts
subject to the limitations and conditions specified in this paragraph. For
purposes of the definition of New Accounts, Eligible Accounts will be deemed to
include only types of revolving credit accounts or other credit accounts which
are included as Initial Accounts or which have previously been included in any
Aggregate Addition if the assignment related to such Aggregate Addition provides
that such type of account or other credit account is permitted to be designated
as a New Account. Until such time as each applicable Rating Agency otherwise
consents, the number of New Accounts may be subject to certain restrictions. To
the extent New Accounts are designated for inclusion in the Trust, the
Transferors will deliver to the Trustee, at least semiannually, an opinion of
counsel with respect to the Receivables in New
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Accounts included as Accounts confirming the creation and perfection of each
transfer of such Receivables. If such opinion of counsel with respect to
Receivables in any New Accounts is not so received, all Receivables arising in
the New Accounts to which such failure relates will be removed from the Trust.
The designation of New Accounts may be made at random or in accordance with the
application of specific criteria determined from time to time at the discretion
of the Transferors, but will be subject to the satisfaction of certain
conditions, including among others that (a) the New Accounts will all be
Eligible Accounts; (b) such designation will not result in the occurrence of a
Pay-Out Event or Reinvestment Event; and (c) such designation will not have been
made in contemplation of an Insolvency Event with respect to any Transferor or
any similar event with respect to Credco. New Accounts and Aggregate Addition
Accounts are collectively referred to herein as 'ADDITIONAL ACCOUNTS.'
'PARTICIPATION INTERESTS' mean participations representing undivided
interests in a pool of assets primarily consisting of credit account
receivables, consumer loan receivables, charge card receivables or other self-
liquidating financial assets. To the extent that such participations encompass
previously issued credit-card or other asset-backed securities, such securities
(i) either will have been registered under the Securities Act or will have been
held for the 'holding period' prescribed by Rule 144(k) under the Securities Act
and (ii) will have been acquired in a bona fide secondary market transaction,
rather than from the issuer thereof or one of such issuer's affiliates or such
securities will have otherwise been acquired in compliance with the Securities
Act.
Any Participation Interests to be included as Trust Assets or any Eligible
Accounts, other than New Accounts, designated to be included as Accounts after
the Initial Selection Date, are collectively referred to herein as an 'AGGREGATE
ADDITION.'
The assets of the Trust (the 'TRUST ASSETS') will consist of receivables
arising from time to time (the 'RECEIVABLES') and any Participation Interests
hereafter conveyed to the Trust, all monies due or to become due thereunder, the
proceeds of the Receivables, all monies and other property on deposit in certain
accounts maintained for the benefit of the Certificateholders, and the right to
recoveries of charged-off Receivables ('RECOVERIES') allocable to the Trust for
the benefit of the Certificateholders. Pursuant to the Pooling and Servicing
Agreement, the Transferors will have the right and in certain circumstances will
be obligated to designate from time to time Additional Accounts to be included
as Accounts and, to the extent that any Transferor owns the Receivables arising
in such Accounts, such Transferor will convey to the Trust, pursuant to the
Pooling and Servicing Agreement, all Receivables of such Additional Accounts or
Participation Interests. Under the Pooling and Servicing Agreement, each
Transferor may convey Participation Interests to the Trust. Matters relating to
the designation of Additional Accounts and the conveyance of Receivables of such
Additional Accounts or Participation Interests to the Trust are discussed at
greater length under 'The Pooling and Servicing Agreement Generally--Additions
of Accounts or Participation Interests' in this Prospectus. In addition, each
Transferor may, but is not obligated to, designate from time to time
Participation Interests or Receivables from Accounts to be removed from the
Trust. See 'The Pooling and Servicing Agreement Generally--Removal of Accounts'
in this Prospectus.
CENTURION'S REVOLVING CREDIT BUSINESSES
GENERAL
Pursuant to the RFC II Purchase Agreement, Credco transferred to RFC II,
and pursuant to the Pooling and Servicing Agreement, RFC II and Centurion
transferred to the Trust, certain Receivables generated from transactions made
by persons who are holders of revolving credit card accounts, whether branded
'Optima' Card accounts or otherwise (each, an 'OPTIMA CARD ACCOUNT'), Optima
Line of Credit accounts (each, an 'OPTIMA LINE OF CREDIT ACCOUNT') and Sign &
Travel revolving credit accounts (each, a 'SIGN & TRAVEL ACCOUNT'). Optima Card
Accounts and Optima Line of Credit Accounts are sometimes referred to herein as
'OPTIMA ACCOUNTS.' Cards issued by Centurion are currently accepted worldwide,
and may be used for the purchase of merchandise and services. The Sign & Travel
Account is currently available only to holders (each, a 'CARDMEMBER') of
American Express Card, American Express Gold Card and Platinum Card accounts,
excluding corporate card accounts (each such account, a 'CHARGE CARD ACCOUNT'),
but, in the future, may be available to corporate card account holders. The
Optima Card Account, Optima Line of Credit Account and the
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Sign & Travel Account (such accounts, the 'REVOLVING CREDIT ACCOUNTS') are owned
by Centurion and are primarily serviced either by Centurion at its headquarters
and its application processing branch or by TRS at its operations centers.
Subject to certain conditions, the Transferors may convey to the Trust
receivables arising in charge or credit accounts or other charge or credit
products that may be of a type not currently included as Accounts. Such accounts
and products may be originated, underwritten, used or collected in a different
manner than the accounts described below and may differ with respect to loss and
delinquency experience, revenue experience and historical payment rates. Such
accounts and products may also have different terms than the accounts described
below and may be subject to different servicing, charge-off and collection
practices. Consequently, the addition to the Trust of receivables arising in
such accounts or from such products could have the effect of reducing the
Portfolio Yield.
Optima Card Accounts. The Optima Card Account is accessed primarily by use
of the Optima Card and may be used to purchase merchandise and services from
participating service establishments or to obtain cash advances through check
access, by using a loan activator check available only to make payments on
outstanding balances on the Cardmember's Charge Card Account or from automated
teller machines. The Optima Card Account was first offered in early 1987. All
Optima Card Accounts are originated by Centurion and are generated by direct
mail solicitations and telemarketing to prospects. Offers are made to existing
Cardmembers having a credit history with a Charge Card Account and to
non-Cardmembers. In addition, Centurion offers Optima Card Accounts that are
originated under affinity or co-branded programs between Centurion and certain
unaffiliated entities. Centurion also distributes unsolicited or 'Take-One'
applications and runs print advertisements and radio and television
advertisements for Optima Card Accounts and has a toll free telephone number for
requests for information and applications. Receivables are also generated by
soliciting the transfer of account balances from competitors' accounts.
Optima Line of Credit Accounts. The Optima Line of Credit Account is an
unsecured revolving line of credit that is offered as an additional benefit in
association with certain approved Cardmembers' Charge Card Accounts. The Optima
Line of Credit Accounts may be accessed by writing a check supplied to
Cardmembers by Centurion, by using a loan activator check available only to make
payments on outstanding balances on the customer's Charge Card Account, or to
obtain cash from automatic teller machines. The predecessor to the Optima Line
of Credit Account was established in 1985. The Optima Line of Credit Accounts
owned by Centurion were principally generated through (i) applications mailed
directly to existing Cardmembers. (ii) direct mail solicitations to existing or
prospective Cardmembers for accounts on a pre-approved credit basis and (iii)
with respect to certain Optima Line of Credit Accounts, purchases of accounts
from other financial institutions providing lines of credit to Cardmembers.
Sign & Travel/Special Purpose Accounts. The Sign & Travel/Special Purpose
Accounts are features currently associated with consumer Charge Card Accounts
although Corporate Charge Card Account holders may be offered this feature in
the future. Prior to 1994, all Cardmembers had access to Sign & Travel Accounts.
Since 1994, only qualified Cardmembers who have been Charge Card Account holders
in good standing, usually for at least one year, have been invited to obtain a
Sign & Travel Account. A Cardmember may use the Sign & Travel Account for
certain travel-related purchases and may access the Sign & Travel Account by
indicating to the travel product merchant or to TRS, as Servicer, the preference
to have such travel items billed to the Sign & Travel Account. Certain
nontravel-related charges may be allowed in the future. In addition, selected
Cardmembers are invited to enroll in the Sign & Travel Express service that
automatically bills eligible travel purchases to the Cardmember's Sign & Travel
Account. Selected Cardmembers may also use this feature to repay over time
certain other designated charges. Currently this capability is offered only with
respect to merchandise purchases on the Charge Card Account above a designated
amount, usually $350. This feature is referred to as the 'Special Purchase
Account'. The predecessor to the Sign & Travel Account was established in 1965
as a closed-end credit account and was changed to an open-end credit account in
1983. All Sign & Travel Accounts are owned by Centurion.
Over a period of time, beginning in the later half of 1998 and continuing
through 2000, Sign & Travel Accounts are expected to become a feature of a
multi-functional product offered by Centurion. Such product will consist of a
pay-in-full feature for purchasing merchandise and one or more interest-bearing
revolving credit
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features including the Sign & Travel Account. It is anticipated that, in
addition to the Receivables generated by the Sign & Travel Accounts, the
receivables generated by such other revolving credit features may, in the
future, be conveyed to the Trust.
UNDERWRITING AND AUTHORIZATION PROCEDURES
Optima Card Accounts. Centurion uses two types of approval processes in
determining whether to open an Optima Card Account: the 'pre-approved process'
and the 'full application process.' The pre-approved process involves
determining in advance that a person will qualify for an Optima Card Account.
Centurion determines the minimum credit criteria required for a consumer to
receive an offer. These criteria were developed from proprietary risk models and
commercially available risk evaluation scores. Credit bureaus provide Centurion
with the credit attributes, scores, and encrypted names and addresses of persons
passing the minimum criteria. Centurion then screens out persons with prior
Centurion delinquencies and incidents of fraud, and uses its proprietary risk
and response modeling to finalize the solicitation pool. Centurion may also
determine the eligibility of such persons to receive an offer based on such
person's activities (e.g., membership in a rewards program, holding credit
cards, magazine or newspaper subscriptions, and college enrollment).
The full application process is used for evaluation of unsolicited
applications. The primary sources of these applications are the 'inbound'
telemarketing program that features a toll-free telephone number and, on a
limited basis, the American Express 'Take One' boxes located in a variety of
public establishments. The full application process entails receiving a
completed application, evaluating the application using proprietary scoring
models and credit bureau information, screening out prior Centurion
delinquencies and incidents of fraud, and verifying that the information on the
application is both accurate and provided by the true applicant.
In addition to the credit review performed in connection with origination
of accounts, Centurion has established credit authorization procedures
applicable to Optima Card Account utilizations. Utilizations of such Optima Card
Accounts are subject to authorization at the time of such utilization based upon
the Cardmember's past spending and payment activity and personal resources.
Certain utilizations, such as purchases indicating out-of-pattern spending,
initial utilizations on new accounts and charges to non-current accounts, are
subject to closer credit scrutiny. The credit limits for Optima Card Accounts
generally range from $500 to $15,000, although the credit limits applicable to
certain Optima Card Accounts may be as high as $100,000.
Optima Line of Credit Accounts. Optima Line of Credit Accounts are no
longer actively solicited. They had been underwritten pursuant to procedures
similar to those for Optima Card Accounts. Authorization based on Account
holders' past spending and payment behavior and personal resources occurs at the
time of utilization.
Sign & Travel Accounts. Centurion extends the right to access a Sign &
Travel Account to qualified Cardmembers after they have been Charge Card Account
holders in good standing for one year. There is no preset spending limit on
these accounts. However, utilizations of the Sign & Travel Account are subject
to approval through a credit authorization process similar to credit
authorization procedures applicable to the Optima Card Account.
BILLING AND PAYMENTS
The accounts owned by Centurion have various billing and payment
structures, including various annual fees and monthly finance charges. Each
account holder is subject to an agreement governing the terms and conditions of
the Optima Card Account, the Optima Line of Credit Account and the Sign & Travel
Account, as applicable. Pursuant to each such agreement, Centurion reserves the
right to change or terminate any terms, conditions, service or features of the
account (including increasing or decreasing monthly finance charges, fees or
minimum payments or changing the order in which payments made by account holders
will be applied to satisfy amounts owing by account holders). Such changes are
subject to the requirements of applicable laws and to certain limitations in the
Pooling and Servicing Agreement described herein. Any announced increase in the
formula used to calculate the APR (defined below) or other change making the
terms of an account more stringent, generally becomes effective on a designated
future date, absent instructions from the account holder to the contrary, or in
any event, upon subsequent use of the account.
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Optima Card Accounts. Generally, an Optima Card Account holder is charged
(i) an annual fee for the Optima Card of $0.00 to $80.00, (ii) a variable APR
finance charge on merchandise and services purchased and on cash advances equal
to the prime rate as published in The Wall Street Journal ( the 'PRIME RATE')
plus a spread ranging from 2.00% to 13.99%, depending on the Cardmember's
tenure, spending and payment patterns and type of product, (iii) amounts payable
for certain uses of the Optima Card, including the standard network fee of 2% on
cash advances obtained through an automated teller machine, with a $2.50 minimum
charge and a $20 maximum charge, and a 1% fee for obtaining American Express
Travelers Cheques, and (iv) if applicable, insufficient funds fees, late fees,
overlimit fees and other fees. Optima Card Accounts are billed by Centurion on a
cycle basis. Generally, Optima Card Account holders must make a minimum payment
equal to the greater of (a) $15 or, if the balance is less than $15, such
balance, and (b) 1/50th of the new balance, plus any amount which is past due.
Payments on the Optima Card Accounts are currently generally applied, in order
of application, to balances in respect of finance charges and fees, cash
advances, and merchandise and services.
Optima Line of Credit Accounts. Billing and payment for Optima Line of
Credit Accounts are the same as for Optima Card Accounts.
Sign & Travel Accounts. There are no annual fee or other fees imposed for
the use of the Sign & Travel Account except for a monthly finance charge, based
on an annual percentage rate (an 'APR'), on the outstanding balance on the Sign
& Travel Account. The APR for the Sign & Travel Account balances is variable
equal to the Prime Rate plus 9.9%. Sign & Travel Accounts not in good standing
are assessed interest at an APR equal to the Prime Rate plus 13.99%. The Sign &
Travel Account is billed by Centurion on a cycle basis at the same time as the
obligor's Charge Card Account. Generally, Sign & Travel Account holders must
make a monthly minimum payment equal to the greater of (a) $20.00 or, if the
balance is less than $20.00, such balance, and (b) 1/50th of the new balance,
plus any amount which is past due. Currently, payments made on the Charge Card
or Sign & Travel Accounts are generally applied first, to past due Sign & Travel
Account balances, second, to past due Charge Card Account balances, third, to
current Sign & Travel Account minimum payments, fourth, to current Charge Card
Account balances, and finally, to outstanding Sign & Travel Account balances.
Each minimum monthly payment is applied first to finance charges and then to the
appropriate principal balance designated in the preceding sentence. After the
incorporation of a Sign & Travel Account into the multifunctional product
referred to under 'General--Sign & Travel/Special Purpose Accounts' above, it is
expected that payments made on such product shall be applied first to the
pay-in-full feature, and then to the revolving features. It is expected that the
lower rate-bearing features will be paid off prior to the higher rate-bearing
features.
COLLECTION EFFORTS
Efforts to collect delinquent Optima Card Accounts, Optima Line of Credit
Accounts and Sign & Travel Accounts are made by Centurion and collection
agencies and attorneys retained by Centurion. Under current practice, Centurion
includes a request for payment of overdue amounts on all billing statements upon
delinquency. Centurion uses its proprietary risk evaluation systems to determine
the appropriate collection strategy. Account holders whom Centurion considers a
high risk may be contacted by either a letter or a telephone call when the
account becomes delinquent or sooner based on a number of factors, including the
account holder's tenure and the amount owed in relation to prior spending and
payment behavior. An Account is generally considered to be delinquent if the
minimum payment specified in the Account holder's most recent billing statement
is not received by the next statement cycle date. If Centurion determines that
the account holder is unable to pay the outstanding balance, the account is
'pre-empted'--i.e., the card is cancelled, credit privileges are revoked, and
more intensive collection action is initiated. For all other account holders,
credit privileges are generally cancelled no later than 90 days from initial
billing. For both the preempted accounts and those reaching the 90-days status,
attorney demand letters may also be sent. If an account remains delinquent, it
may be sent to collection agencies who continue with telephone calls, letters
and telegrams. Legal action may be instituted. Centurion may enter into
arrangements with account holders to extend or otherwise change payment
schedules to maximize collections. In the future, Centurion may sell its rights
to certain collections to collection agencies.
Generally, it is Centurion's practice to cause the Receivables in an
Account to be charged-off no later than the date on which such Account becomes
six contractual payments past due (i.e., approximately 180 days from initial
billing), although charge-offs may be made earlier in some circumstances, such
as confirmed bankruptcies.
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The credit evaluation, servicing, charge-off and collection practices of
Centurion may change over time in accordance with its business judgment and
applicable law.
The Federal Financial Institutions Examination Council, on June 30, 1998,
proposed a revised policy statement on the classification of retail credit. If
adopted, the revised policy statement could establish, effective January 1,
2001, a uniform charge-off period of 150 days delinquency for open-end and
closed-end credit. Alternatively, the proposal also contains guidance that
would, effective January 1, 1999, standardize the methodology for implementing
the existing 180 day charge-off policy requirement for open-end credit. The
revised policy statement could also, effective January 1, 1999, provide guidance
for loans affected by bankruptcy, fraudulent activity and death; establish
standards for re-aging, extending, deferring or rewriting of past due accounts;
and broaden the circumstances under which partial payments are recognized as
full payments for purposes of determining that a loan is no longer delinquent.
YEAR 2000
The Year 2000 ('Y2K') issue is the result of computer programs having been
written using two digits rather than four to define a year. Some programs may
recognize a date using '00' as the year 1900 rather than 2000. This
misinterpretation could result in the failure of major systems or
miscalculations, which could have a material impact on American Express and its
businesses or subsidiaries through business interruption or shutdown, financial
loss, reputational damage and legal liability to third parties. American Express
began addressing the Y2K issue in 1995 and has established a plan for
resolution, which involves the remediation, decommissioning and replacement of
relevant systems, including mainframe, mid-range and desktop computers,
application software, operating systems, systems software, date back-up archival
and retrieval services, telephone and other communications systems, and hardware
peripherals and facilities dependent on embedded technology. As a part of our
plan, we have generally followed and utilized the specific policies and
guidelines established by the Federal Financial Institutions Examination
Council, as well as other U.S. and international regulatory agencies.
Additionally, we continue to participate in Y2K related industry consortia
sponsored by various partners and suppliers. Progress is reviewed regularly with
American Express' senior management and Board of Directors.
Our Y2K compliance effort related to information technology ('IT') systems
is divided into two initiatives. The first, which is the much larger initiative,
is known internally as 'Millenniax,' and relates to mainframe and other
technological systems maintained by the American Express Technologies
organization ('AET'). The second, known as 'Business T,' relates to the
technological assets that are owned, managed or maintained by American Express'
individual business units. Business T also encompasses the remediation of non-IT
systems. These initiatives involve a substantial number of employees and
external consultants. This multiple sourcing approach is intended to mitigate
the risk of becoming dependent on any one vendor or resource. While the vast
majority of our systems that require modification are being remediated, in some
cases we have chosen to migrate to new applications that are already Y2K
compliant.
American Express' plans for remediation with respect to Millenniax and
Business T include the following program phases: (i) employee awareness and
mobilization, (ii) inventory collection and assessment, (iii) impact analysis,
(iv) remediation/decommission, (v) testing and (vi) implementation. As part of
the first three phases, we have identified American Express' mission-critical
systems for purposes of prioritization. American Express' goals are to
substantially complete remediation of critical systems by the end of 1998,
complete testing of those systems by early 1999, and to continue compliance
efforts, including but not limited to, the testing of systems on an integrated
basis and independent validation of such testing, through 1999.** We are
currently on schedule to meet these goals. With respect to systems maintained by
American Express, the first three phases referred to above have been
substantially completed for both Millenniax and Business T. As of October 31,
1998, for Millenniax, the remediation/decommission, testing and implementation
phases are approximately 80%, 65% and 55% complete, respectively. For Business
T, such phases are approximately 70%, 55% and 55% complete, respectively.
Certain critical systems have already been made Y2K compliant, such as the
Worldwide Credit Authorization System, and we have completed testing of the
global point of sale infrastructure. As a result, we have begun issuing Year
2000 dated charge and credit cards.
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Our most commonly used methodology for remediation is the sliding window.
Once an application/system has been remediated, we apply specific types of
tests, such as stress, regression, unit, future date and baseline to ensure that
the remediation process has achieved Y2K compliance while maintaining the
fundamental data processing integrity of the particular system. To assist with
remediation and testing, we are using various standardized tools obtained from a
variety of vendors.
American Express' cumulative costs since inception of the Y2K initiatives
were $311 million through September 30, 1998 and are estimated to be in the
range of $210-$235 million for the remainder through 2000.** These include both
remediation costs and costs related to replacements that were or will be
required as a result of Y2K. These costs, which are expensed as incurred, relate
to both Millenniax and Business T, and have not had, nor are they expected to
have, a material adverse impact on American Express' results of operations or
financial condition.** Costs related to Millenniax, which represent most of the
total Y2K costs of American Express, are managed by and included in the
Corporate and Other segment; costs related to Business T are included in the
business segments. Y2K costs related to Millenniax represent 15%, 5% and 1% of
the AET budget for the years 1998, 1999 and 2000, respectively. Millenniax costs
have been substantially offset by an earnings payout from Travelers Inc. related
to the 1993 sale of the Shearson Lehman Brothers Division, sales of securities
and adjustment of valuation allowances related to certain corporate assets.
American Express has not deferred other critical technology projects or
investment spending as a result of Y2K. However, because American Express must
continually prioritize allocation of finite financial and human resources,
certain non-critical spending initiatives have been deferred.
American Express' major businesses are heavily dependent upon internal
computer systems, and all have significant interaction with systems of third
parties, both domestically and internationally. American Express is working with
key external parties, including merchants, clients, counterparties, vendors,
exchanges, utilities, suppliers, agents and regulatory agencies to mitigate the
potential risks to us of Y2K. The failure of external parties to resolve their
own Y2K issues in a timely manner could result in a material financial risk to
American Express. As part of our overall compliance program, American Express is
actively communicating with third parties through face-to-face meetings and
correspondence, on an ongoing basis, to ascertain their state of readiness.
Although numerous third parties have indicated to us in writing that they are
addressing their Y2K issues on a timely basis, the readiness of third parties
overall varies across the spectrum. Because American Express' Y2K compliance is
dependent on key third parties being complaint on a timely basis, there can be
no assurances that American Express' efforts alone will resolve all Y2K issues.
At this point, American Express has not completed its assessment of
reasonably likely Y2K systems failures and related consequences. However,
American Express is in the process of preparing specific Y2K contingency plans
for all key American Express business units to mitigate the potential impact of
such failures. This effort is a full-scale initiative that includes both
internal and external experts under the guidance of a Company-wide steering
committee. Our contingency plans, which will be based in part on an assessment
of the magnitude and probability of potential risks, will primarily focus on
proactive steps to prevent Y2K failures from occurring, or if they should occur,
to detect them quickly, minimize their impact and expedite their repair. The Y2K
contingency plans will supplement disaster recovery and business continuity
plans already in place, and are expected to include measures such as selecting
alternative suppliers and channels of distribution, and developing our own
technology infrastructure in lieu of those provided by third parties.
Development of the Y2K contingency plans is expected to be substantially
complete by the end of the first quarter of 1999, and will continue to be
refined throughout 1999 as additional information related to our exposures is
gathered.**
Statements in this Y2K discussion marked with two asterisks are
forward-looking statements which are subject to risks and uncertainties.
Important factors that could cause results to differ materially from these
forward-looking statements include, among other things, the ability of American
Express to successfully identify systems containing two-digit codes, the nature
and amount of programming required to fix the affected systems, the costs of
labor and consultants related to such efforts, the continued availability of
such resources, and the ability of third parties that interface with American
Express to successfully address their Y2K issues.
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RFC II, CREDCO, CENTURION AND TRS
RFC II
RFC II, a Transferor, was incorporated under the laws of the State of
Delaware on August 7, 1995. All of its outstanding common stock is owned by TRS.
TRS is a wholly owned subsidiary of American Express Company ('AMERICAN
EXPRESS'), a publicly-held corporation engaged principally, through its
subsidiaries, in providing travel related services, investors diversified
financial services and international banking services throughout the world. RFC
II was organized for the limited purpose of issuing securities of the type
offered hereby, purchasing, holding, owning and selling receivables and any
activities incidental to and necessary or convenient for the accomplishment of
such purposes. Neither TRS, as stockholder of RFC II, nor RFC II's board of
directors, intends to change the business purpose of RFC II. RFC II's executive
offices are located at American Express Tower, World Financial Center, 200 Vesey
Street, Room 138, New York, New York 10285-4405.
CREDCO
American Express Credit Corporation ('CREDCO'), is a wholly owned
subsidiary of TRS primarily engaged in the business of purchasing charge card
account receivables generated by TRS and certain revolving credit account
receivables generated by Centurion. Its principal office is located at 301 N.
Walnut Street, Wilmington, Delaware 19801.
CENTURION
Centurion, a Transferor, was incorporated under Utah laws as an industrial
loan company in 1987 and received FDIC insurance in 1989. Its principal office
is located at 6985 Union Park Center, Midvale, Utah 84047. Centurion is a wholly
owned subsidiary of TRS.
Centurion is the surviving company of a 1996 merger with an affiliated bank
which was also named American Express Centurion Bank. Prior to the merger, the
affiliated bank was one of the Transferors. In connection with the merger,
Centurion assumed all of the rights and obligations of the affiliated bank as a
Transferor under the Pooling and Servicing Agreement and with respect to the
Accounts owned by it.
TRS
TRS, a company incorporated under the laws of the State of New York on May
3, 1982, is a wholly owned subsidiary of American Express and the parent company
of Centurion, RFC II and Credco. TRS, directly or through its subsidiaries,
provides a variety of products and services, including the Charge Card Accounts,
consumer loans, American Express(Registered) Travelers Cheques, corporate and
consumer travel products and services, magazine publishing, database marketing
and management and insurance. TRS' principal office is located at American
Express Tower, World Financial Center, 200 Vesey Street, New York, New York
10285.
MERGER OR CONSOLIDATION OF A TRANSFEROR OR THE SERVICER
According to the Pooling and Servicing Agreement, no Transferor is
permitted to consolidate with or merge into, or to sell all or substantially all
of its assets as an entirety to, any other entity (in each case, a 'SURVIVING
TRANSFEROR COMPANY') unless, as specified in the Pooling and Servicing
Agreement, (i) the Surviving Transferor Company is organized under the laws of
the United States of America, any state thereof or the District of Columbia,
(ii) the Surviving Transferor Company, the Transferors and the Trustee shall
have entered into and delivered to the Trustee a supplement to the Pooling and
Servicing Agreement (in form reasonably satisfactory to the Trustee) providing
for the Surviving Transferor Company to assume all of such Transferor's
obligations under the Pooling and Servicing Agreement, (iii) such Transferor
shall have delivered to the Trustee (a) an officer's certificate and an Opinion
of Counsel regarding the enforceability against the Surviving Transferor Company
of such assumption agreement and (b) a Tax Opinion (which shall also be
addressed and delivered to each nationally recognized statistical rating
organization selected by the Transferors, as specified in the applicable
Supplement (each rating agency rating any Series, a 'RATING AGENCY')), (iv) all
Uniform Commercial Code ('UCC') filings, if any, required to perfect the
interest of the Trustee in the Receivables to be
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conveyed by the Surviving Transferor Company shall have been duly made and
copies thereof shall have been delivered by the Surviving Transferor Company to
the Trustee, (v) the Trustee shall have received an opinion of counsel with
respect to the satisfaction of clause (vi) and certain other matters specified
in the Pooling and Servicing Agreement, and (vii) if the Surviving Transferor
Company shall be eligible to be a debtor in a case under Title 11 of the United
States Code (the 'BANKRUPTCY CODE'), such Transferor shall have delivered to the
Rating Agencies (with a copy to the Servicer and the Trustee) notice of the
assumption of such Transferor's obligations by the Surviving Transferor Company
and the Transferors, the Servicer and the Trustee shall have received written
notification that such action will not result in any Rating Agency reducing or
withdrawing its then existing rating of the Certificates of any outstanding
Series or Class with respect to which it is a Rating Agency (the notification in
writing by each Rating Agency to the Transferors, the Servicer and the Trustee
that any action will not result in such a reduction or withdrawal is referred to
herein as the 'RATING AGENCY CONDITION') or, if the Surviving Transferor Company
shall not be eligible to be a debtor in a case under the Bankruptcy Code, such
Transferor shall have delivered to the Rating Agencies notice of the assumption
of such Transferor's obligations by the Surviving Transferor Company.
According to the Pooling and Servicing Agreement, the Servicer is not
permitted to consolidate with or merge into, or to sell all or substantially all
of its assets to, any other entity (in each case, a 'SURVIVING SERVICER
COMPANY') unless, in addition to certain other conditions specified in the
Pooling and Servicing Agreement, such Surviving Servicer Company is an Eligible
Servicer, such Surviving Servicer Company is a corporation organized and
existing under the laws of the United States of America, any state thereof or
the District of Columbia, and such Surviving Transferor Company expressly
assumes (by entering into and delivering to the Trustee a supplement to the
Pooling and Servicing Agreement in form reasonably satisfactory to the Trustee)
the obligations of the Servicer under the Pooling and Servicing Agreement.
ASSUMPTION OF A TRANSFEROR'S OBLIGATIONS
A Transferor may, from time to time, consider a transfer of all or a
portion of its credit or charge accounts (if any) and a transfer of all or a
portion of its respective receivables arising thereunder, which may include all,
but not less than all, of the Accounts and such Transferor's remaining
respective interests in (a) the Receivables arising thereunder, (b)
Participations and (c) the Trust (collectively the 'ASSIGNED ASSETS'), together
with all servicing functions, if any, and other obligations under the Pooling
and Servicing Agreement or relating to the transactions contemplated thereby
(collectively, the 'ASSUMED OBLIGATIONS'), to another entity (the 'ASSUMING
ENTITY') which may be an entity that is not affiliated with the Transferors.
Pursuant to the Pooling and Servicing Agreement, each Transferor is permitted to
assign, convey and transfer Assigned Assets and Assumed Obligations to the
Assuming Entity without the consent or approval of the holders of any
Certificates if the following conditions, among others, are satisfied: (i) the
Assuming Entity, such Transferor and the Trustee shall have entered into and
delivered to the Trustee a supplement to the Pooling and Servicing Agreement or
an assumption agreement providing for the Assuming Entity to assume the Assumed
Obligations, including the obligation under the Pooling and Servicing Agreement
to transfer such Transferor's interest in the Receivables arising under the
Accounts and the Receivables arising under any Additional Accounts to the Trust,
(ii) all UCC filings required to perfect the interest of the Trustee in the
Receivables arising under such Accounts shall have been duly made and copies
thereof shall have been delivered by such Transferor to the Trustee, (iii) if
the Assuming Entity shall be eligible to be a debtor in a case under the
Bankruptcy Code, such Transferor shall have delivered to the Rating Agencies
(with a copy to the Servicer and the Trustee) notice of such transfer and
assumption, and the Rating Agency Condition shall have been satisfied or, if the
Assuming Entity shall not be eligible to be a debtor under the Bankruptcy Code,
such Transferor shall have delivered to the Rating Agencies notice of such
transfer and assumption, and (iv) the Trustee shall have received an opinion of
counsel with respect to the satisfaction of clause (ii) above and certain other
matters specified in the Pooling and Servicing Agreement, and (v) the Trustee
shall have received a Tax Opinion. The Pooling and Servicing Agreement provides
that the Transferors, the Assuming Entity and the Trustee may enter into
amendments to the Pooling and Servicing Agreement to permit the transfer and
assumption described above without the consent of the holders of any
Certificates. After any permitted transfer and assumption, the Assuming Entity
will be considered to be a 'Transferor' for all purposes hereof, and such
Transferor will have no further liability or obligation under the Pooling and
Servicing Agreement, other than those liabilities that arose prior to such
transfer.
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THE ACCOUNTS
The Receivables have arisen or will arise in certain revolving credit
accounts that have been selected from the total portfolio (the 'TOTAL
PORTFOLIO') of Optima Card Accounts, Optima Line of Credit Accounts and Sign &
Travel Accounts owned by Centurion and in the future may include other charge or
credit accounts or products owned by Centurion or other Account Owners,
including revolving credit features of the Charge Card Accounts (all selected
accounts and products described in this sentence are referred to herein as the
'ACCOUNTS'), in each case, on the basis of criteria set forth in the Pooling and
Servicing Agreement. An account in the Total Portfolio must be an Eligible
Account to be selected for inclusion in the portfolio of Accounts, the
Receivables of which will be owned by the Trust (the 'TRUST PORTFOLIO'). The
Accounts include and may include all related accounts that satisfy certain
conditions set forth in the Pooling and Servicing Agreement or are originated as
a result of (a) a credit or charge card being lost or stolen or (b) the
conversion of an Account into another type of Eligible Account.
'ELIGIBLE ACCOUNT' means a credit or charge account or product owned by an
Account Owner and its successors and permitted assignees which, as of the
respective date of designation, is a credit or charge account or product in
existence and maintained by an Account Owner or such successors or assignees, is
payable in United States dollars, has not been sold or pledged to any other
party except for any other Account Owner that has entered into a Receivables
Purchase Agreement, a Transferor or an Additional Transferor, does not have
receivables which have been sold or pledged to any other party other than Credco
pursuant to the Credco Purchase Agreement or a Transferor, except as provided
below has an Account holder who has not been confirmed by the Servicer in its
computer files as being involved in any voluntary or involuntary bankruptcy
proceeding, has an Account holder who has provided as his or her most recent
billing address an address located in the United States, its territories or
possessions or Canada or a United States military address (provided, however,
that, at any time, up to 3% of the Accounts may have Account holders who have
provided as their most recent billing addresses, addresses outside of such
jurisdictions), has not been identified as an account or product with respect to
which the related card has been lost or stolen (if such account or product is a
credit card or charge card account or product), does not have receivables that
are Defaulted Receivables and does not have any receivables that have been
identified by the Servicer as having been incurred as a result of fraudulent use
of any related credit card or charge card; and with respect to Aggregate
Addition Accounts, certain other accounts or products which shall have satisfied
the Rating Agency Condition. Accounts which relate to bankrupt obligors or
certain charged-off receivables may be designated as Accounts provided that the
amount of Principal Receivables in any such Account is deemed to be zero for
purposes of all allocations under the Pooling and Servicing Agreement.
Pursuant to the Pooling and Servicing Agreement, in certain circumstances,
the Transferors will be obligated (subject to certain limitations and
conditions) to designate, from time to time, Eligible Accounts to be included as
Accounts and, pursuant to the RFC II Purchase Agreement, to the extent that
Credco owns any Receivables arising in such Accounts, Credco will be required to
convey to RFC II for ultimate conveyance to the Trust the Receivables of such
Accounts. Such Accounts must meet the eligibility criteria set forth in the
Pooling and Servicing Agreement as of the date on which the Transferors
designate such Accounts to be Additional Accounts. Under the Pooling and
Servicing Agreement, each Transferor also has the right to convey Participation
Interests to the Trust subject to the conditions described in the Pooling and
Servicing Agreement. See 'The Pooling and Servicing Agreement
Generally--Additions of Accounts or Participation Interests' in this Prospectus
for a more detailed discussion of the circumstances and manner in which the
Receivables arising in Additional Accounts or Participation Interests will be
conveyed to the Trust.
As of each date with respect to which Additional Accounts are designated,
to the extent that Credco transfers to RFC II Receivables arising in such
Accounts, Credco will represent and warrant to RFC II that the Receivables
generated under the Additional Accounts meet the eligibility requirements set
forth in the RFC II Purchase Agreement and, to the extent that any Transferor
transfers any such Receivables or Participation Interests, such Transferor will
represent and warrant to the Trust that such Receivables or Participation
Interests, if any, meet the eligibility requirements set forth in the Pooling
and Servicing Agreement. See 'The Pooling and Servicing Agreement
Generally--Conveyance of Receivables' in this Prospectus. Because the Initial
Accounts were designated as of the Initial Selection Date and subsequent
Aggregate Addition Accounts may be designated
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from time to time, there can be no assurance that all of such Accounts will
continue to meet the eligibility requirements as of any Series Closing Date.
Subject to certain limitations and restrictions, the Transferors may also
designate certain Accounts or Participation Interests, if any, for removal from
the Trust (the 'REMOVED ACCOUNTS'), in which case such Participation Interests
or the Receivables of the Removed Accounts will be reassigned to the Transferors
and Credco may, but shall not be required to, repurchase Receivables in the
Removed Accounts. Throughout the term of the Trust, the Receivables in the Trust
will consist of Receivables generated under the Accounts, Participation
Interests, if any, and the Receivables generated under Additional Accounts, but
will not include the Receivables generated under Removed Accounts or removed
Participation Interests.
In the future, Centurion or any other Transferor may determine to transfer
to the Trust all or a portion of any merchant discount or other fees or charges
relating to transactions in the Accounts, some of which may be similar to
interchange fees that are assessed in transactions on bank card networks.
Pursuant to the Pooling and Servicing Agreement, such fees would be treated as
Finance Charge Receivables.
The Prospectus Supplement relating to a Series will provide certain
information about the portfolio of Accounts in the Trust as of the date
specified. Such information will include the amount of Principal Receivables,
the amount of Finance Charge Receivables, the range of principal balances of the
Accounts, the range of credit lines of the Accounts, the range of ages of the
Accounts, the material geographic distribution of the Accounts, the types of
Accounts and delinquency statistics relating to the Accounts.
'FINANCE CHARGE RECEIVABLES' include periodic finance charges, cash advance
fees, administrative fees, late charges, credit insurance premiums, annual
membership fees and certain other fees, Discount Receivables, if any, and the
interest portion of any Participation Interests as determined pursuant to the
applicable Supplement. 'PRINCIPAL RECEIVABLES' include amounts charged by
Account holders for merchandise and services, amounts advanced to Account
holders as cash advances or otherwise borrowed by Account holders under any line
of credit existing under an Account, Premium Receivables, if any, and the
principal portion of any Participation Interests as determined pursuant to the
applicable Supplement. Recoveries will be treated as Finance Charge Receivables.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued from time to time pursuant to the Pooling
and Servicing Agreement and a related Supplement to the Pooling and Servicing
Agreement (each, a 'SUPPLEMENT') substantially in the forms filed as exhibits to
the Registration Statement of which this Prospectus is a part. The Trustee will
provide a copy of the Pooling and Servicing Agreement and the related Supplement
(without exhibits or schedules) to Certificateholders on written request. The
following summary describes certain terms of the Pooling and Servicing Agreement
and the related Supplement and is qualified in its entirety by reference to the
Pooling and Servicing Agreement and the related Supplement.
The Certificates will evidence undivided beneficial interests in the Trust
Assets allocated to such Certificates, representing the right to receive from
such Trust Assets funds up to (but not in excess of) the amounts required to
make payments of interest and principal in the manner described below.
The Certificates will initially be represented by one or more Certificates
registered in the name of the nominee of The Depository Trust Company ('DTC')
together with any successor depository selected by the Transferors, the
'DEPOSITORY'), except as set forth below. Unless otherwise stated in the related
Prospectus Supplement, the Certificates will be available for purchase in
minimum denominations of $1,000 and integral multiples thereof in book-entry
form. The Transferors have been informed by DTC that DTC's nominee will be Cede
& Co. ('CEDE'). Accordingly, Cede is expected to be the holder of record of the
Certificates. Except under the limited circumstances described herein, no
Certificateholder will be entitled to receive a Definitive Certificate
representing such person's interest in the Certificates. Unless and until
Definitive Certificates are issued under the limited circumstances described
herein, all references herein to actions by Certificateholders shall refer to
actions taken by DTC upon instructions from its Participants (as defined
herein), and all references herein to
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distributions, notices, reports and statements to Certificateholders shall refer
to distributions, notices, reports and statements to Cede, as the registered
holder of the Certificates, for distribution to the beneficial owners of the
Certificates in accordance with DTC procedures. See '--Book-Entry Registration'
and '--Definitive Certificates' below.
Payments of interest and principal will be made on each related Interest
Payment Date to the Certificateholders in whose names the Certificates were
registered on the last day of the calendar month preceding such Interest Payment
Date, unless otherwise specified in the related Prospectus Supplement (each, a
'RECORD DATE').
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement,
Certificateholders may hold their Certificates through DTC (in the United
States) or Cedel Bank, societe anonyme ('CEDEL') of the Euroclear System
('EUROCLEAR') (in Europe) if they are participants of such systems, or
indirectly through organizations which are participants in such systems.
Cede, as nominee for DTC, will hold the global Certificate or Certificates.
Cedel and Euroclear will hold omnibus positions on behalf of their participants
through customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective Depositaries (as defined herein) which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC. Citibank, N.A. will act as depositary for Cedel and Morgan
Guaranty Trust Company of New York will act as depositary for Euroclear (in such
capacities, the 'DEPOSITARIES').
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a 'clearing
corporation' within the meaning of the UCC in effect in the State of New York
and a 'clearing agency' registered pursuant to the provisions of Section 17A of
the Exchange Act. DTC was created to hold securities for its participating
organizations ('PARTICIPANTS') and to facilitate the settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of its Participants, thereby eliminating the need for physical movement
of certificates. Participants include underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system also is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ('INDIRECT PARTICIPANTS').
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants (as defined herein) and Euroclear
Participants (as defined herein) will occur in accordance with their respective
rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing systems by its Depositary. Cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in such system in accordance with its rules and procedures
and within its established deadlines (European time). The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its Depositary to take action to effect
final settlement on its behalf by delivering or receiving securities in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date. Such credits or any transactions in such securities
settled during such processing will be reported to the relevant Euroclear or
Cedel Participants on such business day. Cash received in Cedel or Euroclear as
a result of sales of securities by or through a Cedel Participant or a Euroclear
Participant to a Participant will be received with value on the DTC settlement
date but will be available in the relevant Cedel or Euroclear cash account only
as of the business day following settlement in DTC. For
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information with respect to tax documentation procedures relating to the
Certificates, see 'Tax Matters--Non-U.S. Certificate Owners' in this Prospectus.
Certificateholders that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, Certificates may do so only through Participants and Indirect Participants.
In addition, Certificateholders will receive all distributions of principal and
interest on the Certificates from the Trustee through DTC and its Participants.
Under a book-entry format, Certificateholders will receive payments after the
related Distribution Date, as the case may be, because, while payments are
required to be forwarded to Cede, as nominee for DTC, on each such date, DTC
will forward such payments to its Participants, which thereafter will be
required to forward them to Indirect Participants or holders of beneficial
interests in the Certificates. It is anticipated that the only
'Certificateholder' will be Cede, as nominee of DTC, and that holders of
beneficial interests in the Certificates will not be recognized by the Trustee
as Certificateholders under the Pooling and Servicing Agreement. Holders of
beneficial interests in the Certificates will only be permitted to exercise the
rights of Certificateholders under the Pooling and Servicing Agreement
indirectly through DTC and its Participants who in turn will exercise their
rights through DTC. The Trustee, the Transferors, the Servicer and any paying
agent, transfer agent or registrar may treat the registered holder in whose name
any Certificate is registered (expected to be Cede) as the absolute owner
thereof (whether or not such Certificate shall be overdue and notwithstanding
any notice of ownership or writing thereon or any notice to the contrary) for
the purpose of making payment and for all other purposes.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Certificates and is required to
receive and transmit distributions of principal of and interest on the
Certificates. Participants and Indirect Participants with which holders of
beneficial interests in the Certificates have accounts similarly are required to
make book-entry transfers and receive and transmit such payments on behalf of
these respective holders.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of holders of
beneficial interests in the Certificates to pledge Certificates to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such Certificates, may be limited due to the lack of a Definitive
Certificate for such Certificates.
DTC has advised the Transferor that it will take any action permitted to be
taken by a Certificateholder under the Pooling and Servicing Agreement and the
related Supplement only at the direction of one or more Participants to whose
account with DTC the Certificates are credited. Additionally, DTC has advised
the Transferor that it may take actions with respect to the interest in the
Trust Assets of the Certificateholders, including Credit Enhancers (as defined
herein) holding uncertificated subordinated interests (each, a 'COLLATERAL
INVESTED AMOUNT'), of a particular Series (the 'CERTIFICATEHOLDERS' INTEREST')
that conflict with other of its actions with respect thereto.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ('CEDEL
PARTICIPANTS') and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies, that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ('EUROCLEAR PARTICIPANTS') and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 29 currencies,
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including United States dollars. Euroclear includes various other services,
including securities lending and borrowing and interfaces with domestic markets
in, several countries generally similar to the arrangements for cross-market
transfers with DTC described above. Euroclear is operated by the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York (the 'EUROCLEAR
OPERATOR'), under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation (the 'COOPERATIVE'). All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for Euroclear on behalf of
Euroclear Participants. Euroclear Participants include banks (including central
banks), underwriters, securities brokers and dealers and other professional
financial intermediaries. 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.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the 'EUROCLEAR PROVISIONS'). The Euroclear Provisions 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.
The Euroclear Operator acts under the Euroclear Provisions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Certificates held through Cedel or Euroclear
will be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See 'Tax Matters--Non-U.S. Certificate Owners' in this Prospectus. Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a Certificateholder under the Pooling and Servicing Agreement and
the related Supplement on behalf of a Cedel Participant or Euroclear Participant
only in accordance with its relevant rules and procedures and subject to its
Depositary's ability to effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Certificates among participants of DTC,
Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
DTC YEAR 2000 ISSUES
DTC management is aware that some computer applications, systems, and the
like for processing data ('SYSTEMS') that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000, may encounter 'Year 2000
problems.' DTC has informed its Participants and other members of the financial
community (the 'INDUSTRY') that it has developed and is implementing a program
so that its Systems, as the same relate to the timely payment of distribution
(including principal and income payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC ('DTC SERVICES'), continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the Industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to: (i)
impress upon them the importance of such services being Year 2000 compliant; and
(ii) determine the extent of their
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efforts for Year 2000 remediation (and, as appropriate, testing) of their
services. In addition, DTC is in the process of developing such contingency
plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
DEFINITIVE CERTIFICATES
Unless otherwise specified in the related Prospectus Supplement, the
Certificates of each Series will be issued as definitive certificates in fully
registered certificates form ('DEFINITIVE CERTIFICATES') to the owners of
beneficial interests in the Certificates (the 'CERTIFICATE OWNERS') or their
nominees rather than to DTC or its nominee, only if (i) the Transferors advise
the Trustee in writing that DTC is no longer willing or able to discharge
properly its responsibilities as Depository with respect to such Series of
Certificates, and the Trustee is, or the Transferors are, unable to locate a
qualified successor, (ii) the Transferors, at their option, elect to terminate
the book-entry system through DTC or (iii) after the occurrence of a Servicer
Default, Certificate Owners evidencing not less than 50% of the aggregate unpaid
principal amount of the Certificates, advise the Trustee and DTC through
Participants in writing that the continuation of a book-entry system through DTC
(or a successor thereto) is no longer in the best interests of the Certificate
Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificates representing the Certificates and instructions for
re-registration, the Trustee will issue the Certificates in the form of
Definitive Certificates, and thereafter the Trustee will recognize the holders
of such Definitive Certificates as Certificateholders under the Pooling and
Servicing Agreement and the related Supplement ('HOLDERS').
Distribution of principal and interest on the Certificates will be made by
the Trustee directly to Holders in accordance with the procedures described
herein and in the Prospectus Supplement and set forth in the Pooling and
Servicing Agreement and the related Supplement. Interest payments and principal
payments will be made to Holders in whose names the Definitive Certificates were
registered at the close of business on the related Record Date. Distributions
will be made by check mailed to the address of such Holder as it appears on the
register maintained by the Trustee. The final payment on any Certificate
(whether Definitive Certificates or Certificates registered in the name of
Cede), however, will be made only upon presentation and surrender of such
Certificate on the final payment date at such office or agency as is specified
in the notice of final distribution to Certificateholders. The Trustee will
provide such notice to registered Certificateholders not later than the fifth
day of the month of the final distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the transfer agent and registrar, which will initially be the
Trustee. No service charge will be imposed for any registration of transfer or
exchange, but the transfer agent and registrar may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
INTEREST
Interest will accrue on the Certificates of a Series or class (each, a
'CLASS') offered hereby at the per annum rate either specified in or determined
in the manner specified in the related Prospectus Supplement. Except as
otherwise provided herein, collections of Finance Charge Receivables and certain
other amounts allocable to the Certificateholders' Interest of a Series or Class
offered hereby will generally be used to make interest payments to
Certificateholders of such Series or Class on each Interest Payment Date
specified in the related Prospectus Supplement; provided that after the
commencement of an Early Amortization Period or Early Accumulation Period with
respect to such Series, interest will be distributed to such Certificateholders
monthly on each Special Payment Date. If the Interest Payment Dates for a Series
or Class occur less frequently than monthly, such collections or other amounts
(or the portion thereof allocable to such Class) may be deposited in one or more
trust accounts (each, an 'INTEREST FUNDING ACCOUNT') and used to make interest
payments to Certificateholders of such Series or Class on the following Interest
Payment Date. If a Series has more than one Class of Certificates, each such
Class may have a separate Interest Funding Account. Funds on deposit in an
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Interest Funding Account will be invested in Eligible Investments. Any earnings
(net of losses and investment expenses) on funds in an Interest Funding Account
will be paid to, or at the direction of, the Transferors except as otherwise
specified in any Supplement. Interest with respect to the Certificates of each
Series offered hereby will accrue and be calculated on the basis described in
the related Prospectus Supplement.
PRINCIPAL
The principal of the Certificates of each Series offered hereby will be
scheduled to be paid either (a) in full on an expected date specified in the
related Prospectus Supplement (the 'EXPECTED FINAL PAYMENT DATE'), in which case
such Series will have a Controlled Accumulation Period as described below or (b)
in installments commencing on a date specified in the related Prospectus
Supplement (the 'PRINCIPAL COMMENCEMENT DATE'), in which case such Series
generally will have a Controlled Amortization Period as described below. If a
Series has more than one Class of Certificates, each class may have a different
method of paying principal, Expected Final Payment Date or Principal
Commencement Date. The payment of principal with respect to the Certificates of
a Series or Class may commence earlier than the applicable Expected Final
Payment Date or Principal Commencement Date, and the final principal payment
with respect to the Certificates of a Series or Class may be made later than the
applicable Expected Final Payment Date or other expected date, if a Pay-Out
Event or Reinvestment Event occurs with respect to such Series or Class or under
certain other circumstances described herein. See 'Risk Factors-Payments and
Maturity; Dependency on Account Holder Repayments' in this Prospectus for a
description of factors that may affect the timing of principal payments on
Certificates.
The Certificates of each Series will have a revolving period (the
'REVOLVING PERIOD') that will commence on the date of issuance of the related
Series (the 'SERIES CLOSING DATE') or on a date prior thereto specified in the
related Supplement and, for a Series offered hereby, in the related Prospectus
Supplement (the 'SERIES CUT-OFF DATE') and continue until the earlier of (a) the
commencement of the Early Amortization Period or Early Accumulation Period with
respect to such Series and (b) the date specified in the related Prospectus
Supplement as the end of the Revolving Period with respect to such Series.
During the Revolving Period, collections of Principal Receivables and certain
other amounts otherwise allocable to the Invested Amount of such Series will,
(i) if such Series is a Principal Sharing Series, be treated as Shared Principal
Collections and will be distributed to, or for the benefit of, the
Certificateholders of other Series in such Group or, if not required for such
purpose, the holders of the Transferor Certificates or deposited into the
Special Funding Account or (ii) if such Series is not a Principal Sharing
Series, paid to the holders of the Transferor Certificates or deposited into the
Special Funding Account, as more fully described in the related Prospectus
Supplement.
If the related Prospectus Supplement so specifies, unless an Early
Amortization Period or, if so specified in the related Prospectus Supplement, an
Early Accumulation Period commences with respect to a Series offered hereby, the
Certificates of such Series will have a scheduled accumulation period (the
'CONTROLLED ACCUMULATION PERIOD') that will commence at the close of business on
the date or dates specified or determined as specified in such Prospectus
Supplement and continue until the earliest of (a) the commencement of the Early
Amortization Period or, if so specified in the related Prospectus Supplement, an
Early Accumulation Period with respect to such Series, (b) payment in full of
the Invested Amount, including the Collateral Invested Amount, if any, of the
Certificates of such Series, and (c) the series termination date with respect to
such Series (the 'SERIES TERMINATION DATE'). During the Controlled Accumulation
Period, if any, with respect to a Series, collections of Principal Receivables
and certain other amounts allocable to the Certificateholders' Interest of such
Series (including Shared Principal Collections, if any, allocable to such
Series) will be deposited on each Distribution Date in a trust account
established for the benefit of the Certificateholders of such Series (each, a
'PRINCIPAL FUNDING ACCOUNT') and used to make principal distributions to the
Certificateholders of such Series or any Class thereof when due. If so specified
in the related Prospectus Supplement, the amount to be deposited in a Principal
Funding Account (the 'CONTROLLED DEPOSIT AMOUNT') for any Series offered hereby
on any Distribution Date may, but will not necessarily, be limited to an amount
equal to an amount specified or determined as specified in the related
Prospectus Supplement (the 'CONTROLLED ACCUMULATION AMOUNT') plus any existing
deficit controlled accumulation amount arising from prior Distribution Dates. If
the Prospectus Supplement for a Series so specifies, the amount to be deposited
in the Principal Funding Account on a Distribution Date may be a variable
amount. If a Series has more than one Class of Certificates, each Class may have
a separate Principal Funding Account and Controlled Accumulation Amount. In
addition, the related
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Prospectus Supplement may describe certain priorities among such Classes with
respect to deposits of principal into such Principal Funding Accounts.
If the related Prospectus Supplement so specifies, unless an Early
Amortization Period commences with respect to a Series offered hereby, the
Certificates of such Series will have an amortization period (the 'CONTROLLED
AMORTIZATION PERIOD') that will commence at the close of business on the date
specified in such Supplement and continue until the earliest of (a) the
commencement of the Early Amortization Period, if any, with respect to such
Series, (b) payment in full of the Invested Amount, including the Collateral
Invested Amount, if any, of the Certificates of such Series and (c) the Series
Termination Date with respect to such Series. During the Controlled Amortization
Period, if any, with respect to a Series, collections of Principal Receivables
and certain other amounts allocable to the Certificateholders' Interest of such
Series (including Shared Principal Collections, if any, allocable to such
Series) will be used on each Distribution Date to make principal distributions
to any Class of Certificateholders then scheduled to receive such distributions.
If so specified in the related Prospectus Supplement, the amount to be
distributed to Certificateholders of any Series offered hereby on any
Distribution Date may, but will not necessarily, be limited to an amount (the
'CONTROLLED DISTRIBUTION AMOUNT') equal to an amount (the 'CONTROLLED
AMORTIZATION AMOUNT') specified in such Prospectus Supplement plus any existing
deficit controlled amortization amount arising from prior Distribution Dates. If
a Series has more than one Class of Certificates, each Class may have a separate
Controlled Amortization Amount. In addition, the related Prospectus Supplement
may describe certain priorities among such Classes with respect to such
distributions.
If so specified and under the conditions set forth in the Prospectus
Supplement relating to a Series having a Controlled Accumulation Period, the
Certificates of such Series may have an early accumulation period (the 'EARLY
ACCUMULATION PERIOD') that will commence on the day on which a Reinvestment
Event (as defined herein) has occurred and continue until the earliest of (a)
the commencement of the Early Amortization Period (if any), (b) payment in full
of the Invested Amount of the Certificates of such Series or Class, including
the Collateral Invested Amount, if any, with respect to such Series and (c) the
Series Termination Date with respect to such Series. During the Early
Accumulation Period, if any, with respect to a Series, collections of Principal
Receivables and certain other amounts allocable to the Certificateholders'
Interest of such Series (including Shared Principal Collections, if any,
allocated to such Series) will be deposited on each Distribution Date in a
Principal Funding Account and used to make distributions of principal to the
Certificateholders of such Series or Class on the Expected Final Payment Date.
The amount to be deposited in the Principal Funding Account will not be limited
to any Controlled Deposit Amount. See 'Series Provisions--Pay-Out Events' in the
accompanying Prospectus Supplement for a discussion of the events that might
lead to the commencement of the Early Accumulation Period with respect to a
Series.
If so specified and under the conditions set forth in the Prospectus
Supplement, the Certificates of a Series may have an early amortization period
(the 'EARLY AMORTIZATION PERIOD') that will commence on the day on which a
Pay-Out Event (as defined herein) has occurred with respect to such Series and
continue until the earlier of the date on which the Invested Amount, including
the Collateral Invested Amount, if any, of the Certificates of such Series has
been paid in full or the related Series Termination Date has occurred. During
the Early Amortization Period with respect to a Series, collections of Principal
Receivables and certain other amounts allocable to the Certificateholders'
Interest of such Series (including Shared Principal Collections, if any,
allocable to such Series) will be distributed as principal payments to the
applicable Certificateholders monthly on each Distribution Date beginning with
the first Special Payment Date. During the Early Amortization Period with
respect to a Series, distributions of principal to Certificateholders of such
Series, in general, will not be subject to any Controlled Distribution Amount.
In addition, upon the commencement of the Early Amortization Period, any funds
on deposit in a Principal Funding Account with respect to such Series will be
paid to the Certificateholders of the relevant Class or Series on the first
Special Payment Date. See 'Series Provisions--Pay-Out Events' in the
accompanying Prospectus Supplement for a discussion of the events that might
lead to the commencement of the Early Amortization Period with respect to a
Series.
Funds on deposit in any Principal Funding Account established with respect
to a Class or Series offered hereby will be invested in Eligible Investments and
may be subject to a guarantee or guaranteed investment contract or a deposit
account or other mechanism specified in the related Prospectus Supplement
intended to assure a minimum rate of return on the investment of such funds. In
order to enhance the likelihood of the
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payment in full of the principal amount of a Class of Certificates offered
hereby at the end of a Controlled Accumulation Period or Early Accumulation
Period with respect thereto, such Class may be subject to a maturity liquidity
facility or a deposit account or other similar mechanism specified in the
relevant Prospectus Supplement.
PAY-OUT EVENTS AND REINVESTMENT EVENTS
The Revolving Period with respect to a Series will continue through the
date specified in the applicable Prospectus Supplement and the Controlled
Amortization Period or Controlled Accumulation Period will begin at such time,
unless a Pay-Out Event or Reinvestment Event occurs. The Early Amortization
Period with respect to such Series will commence when a Pay-Out Event occurs or
is deemed to occur and the Early Accumulation Period will occur when a
Reinvestment Event occurs or is deemed to occur. If a Reinvestment Event has
occurred with respect to a Series and a Pay-Out Event occurs or is deemed to
occur then the Early Amortization Period with respect to such Series will
commence. A 'PAY-OUT EVENT' may occur with respect to any specific Series upon
the occurrence of any event specified in the related Prospectus Supplement. Such
events may include, but are not required to include nor are they limited to, (i)
certain events of bankruptcy, insolvency, liquidation, receivership, or
conservatorship relating to a Transferor or holder of the Original Transferor
Certificate, (ii) the Trust becoming subject to regulation as an 'investment
company' within the meaning of the Investment Company Act of 1940, as amended,
(iii) the failure by a Transferor to make any payment or deposit required under
the Pooling and Servicing Agreement within a specified period of the date such
payment or deposit is required to be made, (iv) the breach of certain other
covenants, representations or warranties contained in the Pooling and Servicing
Agreement, after any applicable notice and cure period (and, if so specified in
the related Supplement, only to the extent such breach has a material adverse
effect on the related Certificateholders), (v) the failure by Centurion to make
a required designation of Additional Accounts for the Trust within a specified
time after the date such addition is required to be made, (vi) a reduction in
the series adjusted portfolio yield below the rates, and for the period,
specified in the related Prospectus Supplement and (vii) the occurrence of a
Servicer Default. The Early Amortization Period with respect to a Series will
commence on the day on which a Pay-Out Event occurs or is deemed to occur with
respect thereto. If an Early Amortization Period commences, monthly
distributions of principal to the Certificateholders of such Series will begin
on the Distribution Date in the Monthly Period following the Monthly Period in
which such Pay-Out Event occurs (such Distribution Date and each following
Distribution Date with respect to such Series, a 'SPECIAL PAYMENT DATE'). Any
amounts on deposit in a Principal Funding Account or an Interest Funding Account
with respect to such Series at such time will be distributed on such first
Special Payment Date to the Certificateholders of such Series. If, because of
the occurrence of a Pay-Out Event, the Early Amortization Period begins earlier
than the scheduled commencement of a Controlled Amortization Period or prior to
an Expected Final Payment Date, Certificateholders will begin receiving
distributions of principal earlier than they otherwise would have and such
distributions, in general, will not be subject to the Controlled Deposit Amount
or the Controlled Distribution Amount. As a result, the average life of the
Certificates may be reduced or increased and depending upon the characteristics
and types of alternative investments in which a Certificateholder could then
reinvest the proceeds received with respect to its Certificates, the return to
such Certificateholder on such proceeds could be less than the return such
Certificateholder would have realized on its Certificates had such Pay-Out Event
not occurred. If a Series has more than one Class of Certificates, each Class
may have different Pay-Out Events which, in the case of any Series of
Certificates offered hereby, will be described in the related Prospectus
Supplement.
A particular Series may have no Pay-Out Events or only limited Pay-Out
Events, but may have in lieu thereof specified events ('REINVESTMENT EVENTS')
that end the reinvestment of the Trust in new Receivables and apply available
collections of Principal Receivables to the purchase of Eligible Investments. A
Reinvestment Event may include all or some of the events that constitute Pay-Out
Events for other Series. The Early Accumulation Period with respect to a Series
will commence on the day on which a Reinvestment Event occurs or is deemed to
occur with respect thereto. If a Series has more than one Class of Certificates,
each Class may have different Reinvestment Events (or may have only Pay-Out
Events) which, in the case of any Series of Certificates offered hereby, will be
described in the related Prospectus Supplement.
In addition to the consequences of a Pay-Out Event or Reinvestment Event
discussed above, if an Insolvency Event shall occur, immediately on the day of
such event the Transferors will cease to transfer
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Principal Receivables to the Trust and promptly give notice to the Trustee of
such event. Under the terms of the Pooling and Servicing Agreement, as soon as
possible but in any event within 15 days, the Trustee will publish a notice of
the occurrence of an Insolvency Event with respect to any Transferor or the
holder of the Original Transferor Certificate stating that the Trustee intends
to sell, dispose of, or otherwise liquidate the Receivables in a commercially
reasonable manner unless instructions otherwise are received within a specified
period from Holders of more than 50% of the Invested Amount of each Series of
Certificates issued and outstanding (or, with respect to any Series with two or
more Classes, 50% of the Invested Amount of each Class, which may include a
Collateral Invested Amount), each Transferor (or other holder of the Original
Transferor Certificate) not subject to an Insolvency Event, each holder of a
Supplemental Certificate, and possibly the vote of other persons designated by
the Transferors to the Trustee prior to the Insolvency Event to the effect that
such persons disapprove of the liquidation of Receivables. The Trustee will
sell, dispose of, or otherwise liquidate the Receivables in a commercially
reasonable manner and on commercially reasonable terms. The proceeds from the
sale, disposition or liquidation of the Receivables will be treated as
collections on the Receivables and applied as provided above and in each
Prospectus Supplement.
An 'INSOLVENCY EVENT' shall occur if any Transferor or other holder of the
Original Transferor Certificate shall consent to or fail to object to the
appointment of a conservator or receiver or liquidator or trustee in any
insolvency, bankruptcy, receivership, conservatorship, liquidation, readjustment
of debt, marshaling of assets and liabilities or similar proceedings of or
relating to such Transferor or other holder or of or relating to all or
substantially all of such Transferor's or other holder's property, or a court or
agency or supervisory authority having jurisdiction in the premises shall issue,
or enter against such Transferor or other holder a decree or order for the
appointment of a conservator or receiver or liquidator or trustee in any
insolvency, bankruptcy, receivership, conservatorship, liquidation, readjustment
of debt, marshaling of assets and liabilities or similar proceedings or for the
winding-up or liquidation of such Transferor's or other holder's affairs; or any
such Transferor or other holder shall admit in writing its inability, or shall
be unable, to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency, bankruptcy, reorganization,
liquidation, receivership, or conservatorship statute, make any assignment for
the benefit of its creditors or voluntarily suspend payment of its obligations;
or a proceeding shall have been instituted against such Transferor or other
holder by a court having jurisdiction in the premises seeking a decree or order
for relief in respect of any such person in an involuntary case under any
bankruptcy, insolvency, reorganization or liquidation statute, or for the
appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator, conservator or other similar official, of such Transferor or other
holder or for any substantial part of such Transferor's or other holder's
property, or for the liquidation and winding up of such Transferor's or other
holder's affairs and, if instituted against such Transferor or other holder, any
such proceeding shall continue undismissed or unstayed and in effect for a
period of 60 consecutive days, or any of the actions sought in such proceeding
shall occur.
If the only Pay-Out Event or Reinvestment Event to occur with respect to
any Series is the bankruptcy, insolvency, liquidation receivership or
conservatorship of a Transferor, the Trustee may not be permitted to suspend
transfers of Receivables to the Trust, and the instructions to sell the
Receivables may not be given effect.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and reimbursement
for its expenses is a monthly servicing fee (the 'SERVICING FEE'). The Servicing
Fee will be allocated among the Transferors' Interest (the 'TRANSFEROR SERVICING
FEE'), Certificateholders of each Series and, if any, the holder of the
Collateral Interest of such Series. The portion of the Servicing Fee allocable
to each Series of certificates on any Distribution Date (the 'MONTHLY SERVICING
FEE') will generally be equal to one-twelfth of the product of (a) the
applicable servicing fee percentage with respect to such Series and (b) the
Invested Amount of such Series with respect to the related Monthly Period.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables including, without
limitation, payment of the fees and disbursements of the Trustee, paying agent,
transfer agent and registrar and independent accountants and other fees which
are not expressly stated in the Pooling and Servicing Agreement to be payable by
the Trust or the Transferors other than federal, state and local income and
franchise taxes, if any, of the Trust.
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THE POOLING AND SERVICING AGREEMENT GENERALLY
CONVEYANCE OF RECEIVABLES
On the first Series Closing Date, Credco sold and assigned to RFC II, for
sale and assignment by RFC II to the Trust, Credco's interest in all Receivables
in the Initial Accounts existing at the close of business on April 25, 1996 (the
'INITIAL CUT-OFF DATE'), all Recoveries allocable to the Trust, and the proceeds
of all of the foregoing, and the Transferors sold and assigned to the Trust
their respective interests in the Receivables in the Initial Accounts existing
on the Initial Cut-Off Date, all Receivables thereafter created from time to
time under the Initial Accounts, all Recoveries allocable to the Trust and the
proceeds of all of the foregoing. Centurion, directly or indirectly, may also
sell and assign, from time to time, to the Trust, and Credco, to the extent that
Credco owns any Receivables arising in any designated Additional Accounts, will
sell and assign, to RFC II, for sale and assignment by RFC II to the Trust, the
Receivables in designated Additional Accounts existing at the close of business
on each applicable date of designation thereof, and each may from time to time
sell and assign to the Trust its interest in Participation Interests, all
Recoveries allocable to the Trust and the proceeds of all of the foregoing.
On each Series Closing Date, the Trustee will authenticate and deliver one
or more certificates representing the Series or Class of Certificates, in each
case against payment to the Transferors of the net proceeds of the sale of the
Certificates. In the case of the first Series Closing Date, the Trustee will
also deliver to the Transferors the Transferor Certificate, representing the
Transferors' Interest.
In connection with each transfer of Receivables to the Trust, the computer
records relating to such Receivables will be marked to indicate that such
Receivables have been conveyed to the Trust. In addition, the Trustee will be
provided with a computer file or a microfiche list containing a true and
complete list showing for each Account, as of the applicable date of
designation, (i) its account number and (ii) except in the case of New Accounts,
the aggregate amount of Receivables in such Account. The Transferors and Credco
will retain and will not deliver to the Trustee any other records or agreements
relating to the Accounts or the Receivables. Except as set forth above, the
records and agreements relating to the Accounts and the Receivables will not be
segregated from those relating to other credit accounts and receivables, and the
physical documentation relating to the Accounts or Receivables will not be
stamped or marked to reflect the transfer of Receivables to the Transferor or
the Trust. Each Transferor will file UCC financing statements with respect to
the transfer of the Receivables from such Transferor to the Trust meeting the
requirements of applicable state law. See 'Risk Factors' and 'Certain Legal
Aspects of the Receivables' in this Prospectus.
As described below under '--Additions of Accounts or Participation
Interests,' in some circumstances, Centurion will be obligated to designate from
time to time Additional Accounts to be included as Accounts and, as a result of
such designation, each Transferor, to the extent that such Transferor owns any
Receivables arising in such Accounts, will be obligated to convey to the Trust
all such Receivables, whether such Receivables are then existing or thereafter
created. Each such Additional Account must be an Eligible Account. In respect of
any designation of Additional Accounts, the Transferors will follow the
procedures set forth in the preceding paragraph, except the list will show
information for such Additional Accounts as of the date such Additional Accounts
are identified and selected. Aggregate Addition Accounts will be selected by the
Transferors in a manner which they reasonably believe will not be materially
adverse to the Certificateholders. The Transferors have the right (subject to
certain conditions described below under '--Additions of Accounts or
Participation Interests') to convey Participation Interests to the Trust. In
addition, the Transferors may (under certain circumstances and subject to
certain limitations and conditions) remove the Participation Interests and the
Receivables in certain Accounts as described below under '--Removal of
Accounts.'
REPRESENTATIONS AND WARRANTIES
The Pooling and Servicing Agreement includes representations and warranties
of Centurion to the Trust relating to the Accounts and of Centurion and RFC II
to the Trust relating to the Receivables as of each Series Closing Date (or as
of the related addition date with respect to Additional Accounts) to the effect,
among other things, that (a) as of each applicable selection date, each Account
was an Eligible Account, (b) as of each applicable selection date, each of the
Receivables then existing in the Initial Accounts or in the Additional
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Accounts, as applicable, is an Eligible Receivable and (c) on the date of
creation of any new Receivable, such Receivable is an Eligible Receivable. If a
Transferor breaches any representation and warranty described in this paragraph
in any material respect and such breach remains uncured for 60 days, or such
longer period as may be agreed to by the Trustee and the Servicer, after the
earlier to occur of the discovery of such breach by either Transferor or receipt
of written notice of such breach by either Transferor and such breach has a
material adverse effect on the Certificateholders' Interest in such Receivable,
all Receivables with respect to the Accounts affected ('INELIGIBLE RECEIVABLES')
will be reassigned to the Transferors on the terms and conditions set forth
below and such Account shall no longer be included as an Account.
'ELIGIBLE RECEIVABLE' means each receivable, or interest therein as
contemplated by the Pooling and Servicing Agreement and the RFC II Purchase
Agreement, (a) which has arisen under an Eligible Account, (b) which was created
in compliance with all requirements of law and pursuant to an agreement which
complies with all requirements of law applicable to the Account Owner of such
Eligible Account, in either case, the failure to comply with which would (i)
result in the occurrence of a Pay-Out Event or Reinvestment Event or (ii)
materially adversely affect the timing or amount of payments to
Certificateholders of any Series or Class (any of the conditions referred to in
the preceding clauses (i) and (ii) are referred to herein as an 'ADVERSE
EFFECT'), (c) with respect to which all material consents, licenses, approvals
or authorizations of, or registrations or declarations with, any governmental
authority required to be obtained, effected or given in connection with the
creation of such Receivable or the execution, delivery, creation and performance
by such Account Owner of the related agreement pursuant to which such Receivable
was created have been duly obtained or given and are in full force and effect,
(d) as to which at the time of its transfer to the Trust, a Transferor or the
Trust will have good and marketable title, free and clear of all liens,
encumbrances, charges and security interests other than Permitted Liens (defined
below), (e) which has been the subject of either a valid transfer and assignment
from a Transferor to the Trust of all such Transferor's right, title and
interest therein (and in the proceeds thereof), or the grant of a first-priority
perfected security interest therein (and in the proceeds thereof), effective
until the termination of the Trust, (f) which will at all times be the legal,
valid and binding payment obligation of the related Account holder enforceable
against such Account holder in accordance with its terms, subject to certain
bankruptcy or insolvency related exceptions, (g) which at the time of its
transfer to the Trust, has not been waived or modified except as permitted under
the Pooling and Servicing Agreement, (h) which is not at the time of its
transfer to the Trust subject to any right of rescission, setoff, counterclaim
or defense (including the defense of usury), other than certain bankruptcy and
insolvency related defenses, (i) as to which the Transferor has satisfied all
obligations to be fulfilled at the time it is transferred to the Trust, as to
which, at the time of its transfer to the Trust, neither such Transferor nor
Credco nor its Account Owner has taken any action which would impair or has
failed to take any action, the result of which would impair, the rights of the
Trust or the Certificateholders therein and (k) which constitutes either an
'account' or a 'general intangible' under the applicable UCC as then in effect.
As used in this paragraph, the term 'PERMITTED LIENS' means liens for municipal
or other local taxes of a Transferor or an Account Owner if such taxes are not
then due and payable or if such Transferor or such Account Owner is then
contesting the validity thereof in good faith by appropriate proceedings and has
set aside adequate reserves with respect thereto.
An Ineligible Receivable will be reassigned to the Transferors on or before
the end of the Monthly Period in which such reassignment obligation arises by
the Transferors directing the Servicer to deduct the portion of such Ineligible
Receivable which is a Principal Receivable from the aggregate amount of the
Principal Receivables used to calculate the Transferor Amount. In the event that
the exclusion of the principal portion of an Ineligible Receivable from the
calculation of the Transferor Amount would cause the Transferor Amount to be
less than the Required Transferor Amount, on the Distribution Date following the
Monthly Period in which such reassignment obligation arises the Transferors will
make a deposit into the Special Funding Account in immediately available funds
in an amount equal to the amount by which the Transferor Amount would be reduced
below the Required Transferor Amount. The reassignment of any Ineligible
Receivable to the Transferors, and the obligation of the Transferors to make any
deposits into the Special Funding Account as described in this paragraph, is the
sole remedy respecting any breach of the representations and warranties
described in the preceding paragraph with respect to such Receivable available
to the Certificateholders or the Trustee on behalf of Certificateholders.
Credco, in the RFC II Purchase Agreement, has agreed to repurchase from RFC II
certain Ineligible Receivables reassigned to RFC II and to promptly pay to RFC
II the principal amount thereof plus applicable finance charges. The term
'TRANSFEROR AMOUNT' means, at any time of determination, an amount equal to the
sum of (i) the
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total aggregate amount of Principal Receivables in the Trust and (ii) the amount
on deposit in the Special Funding Account at such time minus the aggregate
'Adjusted Invested Amounts' for all outstanding Series (specified in the
Prospectus Supplements related to the offering of such Series) at such time. The
term 'REQUIRED TRANSFEROR AMOUNT,' means, at any time of determination, an
amount equal to the sum of the Series Required Transferor Amounts for each
outstanding Series. The level of the Required Transferor Amount is intended to
enable the Transferors' Interest to absorb fluctuations in the amount of
Principal Receivables held by the Trust from time to time (due to, among other
things, seasonal purchase and payment habits of Account holders or adjustments
in the amount of Principal Receivables because of rebates, refunds, fraudulent
charges or otherwise). See 'Risk Factors--Payments and Maturity; Dependency on
Account Holder Repayments' and 'The Pooling and Servicing Agreement
Generally--Defaulted Receivables; Rebates and Fraudulent Charges' in this
Prospectus.
Each Transferor will also make representations and warranties to the Trust
to the effect, among other things, that as of each Series Closing Date it is a
state-chartered bank or corporation, as applicable, it has the authority to
consummate the transactions contemplated by the Pooling and Servicing Agreement
and each Supplement and further represents to the Trust on each Series Closing
Date and, with respect to the Additional Accounts, as of each addition date (a)
the Pooling and Servicing Agreement and each Supplement constitutes a valid,
binding and enforceable agreement of such Transferor and (b) the Pooling and
Servicing Agreement and each Supplement constitutes either a valid sale,
transfer and assignment to the Trust of all right, title and interest of such
Transferor in the Receivables, whether then existing or thereafter created and
the proceeds thereof (including proceeds in any of the accounts established for
the benefit of the Certificateholders) and in Recoveries or the grant of a
first-priority perfected security interest under the applicable UCC in such
Receivables and the proceeds thereof (including proceeds in any of the accounts
established for the benefit of the Certificateholders) and in Recoveries, which
is effective as to each Receivable then existing on such date. In the event of a
material breach of any of the representations and warranties described in this
paragraph that has a material adverse effect on the Certificateholders' Interest
in the Receivables or the availability of the proceeds thereof to the Trust
(which determination will be made without regard to whether funds are then
available pursuant to any Series Enhancement), either the Trustee or
Certificateholders holding Certificates evidencing not less than 50% of the
aggregate unpaid principal amount of all outstanding Certificates, by written
notice to the Transferors and the Servicer (and to the Trustee if given by the
Certificateholders), may direct the Transferors to accept the reassignment of
the Receivables in the Trust within 60 days of such notice, or within such
longer period specified in such notice. The Transferors will be obligated to
accept the reassignment of such Receivables on the Distribution Date following
the Monthly Period in which such reassignment obligation arises. Such
reassignment will not be required to be made, however, if at the end of such
applicable period, the representations and warranties shall then be true and
correct in all material respects and any material adverse effect caused by such
breach shall have been cured. The price for such reassignment will be an amount
equal to the sum of the amounts specified therefor with respect to each Series
in the related Supplement. The payment of such reassignment price in immediately
available funds will be considered a payment in full of the Certificateholders'
Interest and such funds will be distributed upon presentation and surrender of
the Certificates. If the Trustee or Certificateholders give a notice as provided
above, the obligation of the Transferors to make any such deposit will
constitute the sole remedy respecting a breach of the representations and
warranties available to Certificateholders or the Trustee on behalf of
Certificateholders. See 'Description of the Purchase Agreements--Representations
and Warranties' in this Prospectus.
It is not required or anticipated that the Trustee will make any initial or
periodic general examination of the Receivables or any records relating to the
Receivables for the purpose of establishing the presence or absence of defects,
the compliance by Credco and the Transferors of their respective representations
and warranties or for any other purpose. In addition, it is not anticipated or
required that the Trustee will make any initial or periodic general examination
of the Servicer for the purpose of establishing the compliance by the Servicer
with its representations or warranties or the performance by the Servicer of its
obligations under the Pooling and Servicing Agreement, any Supplement or for any
other purpose. The Servicer, however, will deliver to the Trustee on or before
March 31 of each calendar year an opinion of counsel with respect to the
perfection of the interest of the Trust in and to the Receivables and certain
other components of the Trust.
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THE TRANSFEROR CERTIFICATES; ADDITIONAL TRANSFERORS
The Pooling and Servicing Agreement provides that the Transferors may
exchange a portion of the Original Transferor Certificate for one or more
additional certificates (each, a 'SUPPLEMENTAL CERTIFICATE') for transfer or
assignment to a person designated by the Transferors upon the execution and
delivery of a supplement to the Pooling and Servicing Agreement (which
supplement shall be subject to the amendment section of the Pooling and
Servicing Agreement to the extent that it amends any of the terms of the Pooling
and Servicing Agreement; see '--Amendments'); provided, that (a) the Rating
Agency Condition is satisfied for such exchange, (b) each Transferor shall have
delivered to the Trustee an officer's certificate to the effect that such
Transferor reasonably believes that such exchange will not, based on the facts
known to such officer at the time of such certification, have an Adverse Effect,
(c) the Transferors shall have delivered to the Trustee a Tax Opinion (as
defined herein) with respect to such exchange, (d) the aggregate amount of
Principal Receivables in the Trust as of the date of such exchange will be
greater than the Required Minimum Principal Balance as of such date and (e) the
Transferors or other holders of the Original Transferor Certificate as of the
date of such exchange shall have a remaining interest in the Trust of not less
than, in the aggregate, 2% of the total amount of Principal Receivables and
funds on deposit in the Special Funding Account, the Principal Funding Account
and any other similar account. The primary purpose for such a transfer would be
to convey an interest in the Original Transferor Certificate to another person.
Any transfer or assignment of a Supplemental Certificate is subject to the
condition set forth in (c) above.
If an affiliate of the Transferors owns Eligible Accounts, the receivables
of which are eligible for transfer to the Trust, the Transferors may wish to
designate such affiliate to be included as a 'Transferor' ('ADDITIONAL
TRANSFERORS') under the Pooling and Servicing Agreement (by means of an
amendment to the Pooling and Servicing Agreement that will not require the
consent of any Certificateholder; see '--Amendments' below). In connection with
the designation of an Additional Transferor, the Transferors will surrender the
Transferor Certificate to the Trustee in exchange for a newly issued Transferor
Certificate modified to reflect such Additional Transferor's interest in the
Transferors' Interest; provided, however, that (i) the conditions set forth in
clauses (a) and (c) in the preceding paragraph with respect to a transfer of a
Supplemental Certificate shall have been satisfied with respect to such
designation and transfer and (ii) any applicable conditions described in '--
Additions of Accounts or Participation Interests' below shall have been
satisfied with respect to the transfer of Receivables or Participation Interests
by any Additional Transferor to the Trust. Following the inclusion of an
Additional Transferor, the Additional Transferor will be treated in the same
manner as a Transferor, and each Additional Transferor generally will have the
same obligations and rights as a Transferor described herein.
ADDITIONS OF ACCOUNTS OR PARTICIPATION INTERESTS
Under the Pooling and Servicing Agreement, the Transferors will be
obligated, in certain circumstances described below, to designate from time to
time Additional Accounts to be included as Accounts. In connection with any such
designation, the Transferors (pursuant to the Pooling and Servicing Agreement)
will convey to the Trust, and, to the extent that Credco owns any Receivables
arising in such Accounts, Credco (pursuant to the RFC II Purchase Agreement)
shall be required to convey to RFC II for conveyance by RFC II to the Trust, all
of their respective interests in all Receivables arising from such Additional
Accounts, subject to the following conditions, among others: (i) each such
Additional Account must be an Eligible Account and (ii) except for the addition
of New Accounts (a) the selection of the Aggregate Addition Accounts is done in
a manner which the relevant Transferor reasonably believes will not result in an
Adverse Effect and (b) except for the addition of New Accounts, the Rating
Agency Condition shall have been satisfied. The Transferors will be obligated to
designate Additional Accounts (to the extent available) if the aggregate amount
of Principal Receivables in the Trust at the end of any Monthly Period is less
than the Required Minimum Principal Balance as of the end of such Monthly
Period. In lieu of adding Additional Accounts, the Transferors may convey
Participation Interests to the Trust. 'REQUIRED MINIMUM PRINCIPAL BALANCE' as of
any date of determination means the sum of the Series Invested Amounts for all
outstanding Series plus the sum of the Series Required Transferor Amounts (as
defined herein) for each such Series minus the amount on deposit in the Special
Funding Account. The 'SERIES INVESTED AMOUNT' for a Series will be the amount
set forth in the related Supplement and, for each Series offered hereby, in the
related Supplement for such Series, but will generally equal the initial
Invested Amount for a Series.
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Each Additional Account must be an Eligible Account at the time of its
designation. However, since Additional Accounts or Participation Interests,
which may be created after the Initial Selection Date, may not have been a part
of the portfolio of accounts of Centurion as of the Initial Selection Date, they
may not be of the same credit quality as the Initial Accounts because such
Additional Accounts or Participation Interests may have been originated at a
later date using credit, origination or underwriting criteria different from
those which were applied to the Initial Accounts or may have been acquired from
another revolving credit issuer or entity that had different credit, origination
or underwriting criteria. Consequently, the performance of such Additional
Accounts or Participation Interests may be better or worse than the performance
of the Initial Accounts.
REMOVAL OF ACCOUNTS
Subject to the conditions set forth in this paragraph, on any day of any
Monthly Period, the Transferors may, but shall not be obligated to, acquire all
Receivables and proceeds thereof with respect to Removed Accounts and
Participation Interests, and Credco may, but shall not be obligated to, acquire
from RFC II the Receivables and proceeds thereof transferred by Credco to RFC II
in the Removed Accounts. The designation of Removed Accounts and Participation
Interests and the acquisition by the Transferors of the Receivables and proceeds
thereof could occur for a number of reasons including, among others, a
determination by the Transferors that the Trust contains more Receivables than
the Transferors are obligated to retain in the Trust under the Pooling and
Servicing Agreement and any applicable Supplements and a determination that the
Transferors do not desire to obtain additional financing through the Trust at
such time. The only limitation on the right of the Transferors to require the
reassignment of the Receivables in designated Removed Accounts are those
described herein and in the related Prospectus Supplement. The Transferors are
permitted to designate and require reassignment of the Receivables from Removed
Accounts and Participation Interests only upon satisfaction of the following
conditions: (i) the Transferors shall have delivered to the Trustee a computer
file or microfiche list containing a true and complete list of all Removed
Accounts, such Accounts to be identified by, among other things, account number
and their aggregate amount of Receivables; (ii) each Transferor shall have
delivered an officer's certificate to the trustee to the effect that in the
reasonable belief of such Transferor (a) no selection procedure believed by such
Transferor to be materially adverse to the interests of the Certificateholders
or such Transferor was utilized in removing the Removed Accounts from among any
pool of Accounts of a similar type, (b) such removal will not have an Adverse
Effect and (c) such removal will not result in the occurrence of a Pay-Out Event
or a Reinvestment Event and (iii) the Transferors shall have delivered 8
business days' prior written notice of the removal to each Rating Agency, the
Trustee and the Servicer and prior to the date on which such Receivables are to
be removed the Rating Agency Condition shall have been satisfied with respect to
such removal.
DISCOUNT OPTION
The Pooling and Servicing Agreement provides that the Transferors may at
any time and from time to time, but without any obligation to do so, designate a
specified fixed or variable percentage (the 'DISCOUNT PERCENTAGE') of the amount
of Receivables existing and arising in all or any specified portion of the
Accounts on and after the date such designation becomes effective that otherwise
would have been treated as Principal Receivables to be treated as Finance Charge
Receivables (the 'DISCOUNT RECEIVABLES'). After any such designation, pursuant
to the Pooling and Servicing Agreement, the Transferors may, without notice to
or consent of the Certificateholders, from time to time increase, reduce or
withdraw the Discount Percentage. The Transferors must provide 30 days prior
written notice to the Servicer, the Trustee, each Rating Agency and any provider
of Series Enhancement of any such designation or increase, reduction or
withdrawal, and such designation or increase, reduction or withdrawal will
become effective on the date specified therein only if (a) each Transferor will
have delivered to the Trustee and certain providers of Series Enhancement a
certificate of an authorized officer of such Transferor to the effect that,
based on the facts known to such Transferor at the time, such designation or
increase, reduction or withdrawal will not at the time of its occurrence cause a
Pay-Out Event or Reinvestment Event or an event that, with notice or the lapse
of time or both, would constitute a Pay-Out Event or Reinvestment Event, to
occur with respect to any Series, (b) the Rating Agency Condition will have been
satisfied with respect to such designation or increase, reduction or withdrawal,
and (c) only in the case of a reduction or withdrawal of the Discount
Percentage, the Transferors will have (i) delivered to the Trustee an opinion of
counsel to the effect that such reduction of the Discount Percentage will not
adversely affect the tax
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characterization as debt of any Certificates of any outstanding Series or Class
that were characterized as debt at the time of their issuance and (ii) in
certain circumstances, obtained the prior written consent of each provider of
Series Enhancement entitled to consent thereto. On the Date of Processing of any
collections on or after the date the exercise of the discount option takes
effect, the product of (i) the Discount Percentage then in effect and (ii)
collections of Receivables with respect to the Accounts on or after the date
such option is exercised that otherwise would be Principal Receivables will be
deemed collections of Finance Charge Receivables and will be applied
accordingly, unless otherwise provided in the related Supplement. Although,
except as described in the next paragraph, there can be no assurance that the
Transferors will do so, any such designation may occur because the Transferors
determine that the exercise of the discount option is needed to provide a
sufficient yield on the Receivables to cover interest and other amounts due and
payable from collections of Finance Charge Receivables or to avoid the
occurrence of a Pay-Out Event or Reinvestment Event relating to the reduction of
the average Portfolio Yield of Accounts in the Trust, if the related Supplement
provides for such a Pay-Out Event or Reinvestment Event. The existence of
Discount Receivables will result in an increase in the amount of collections of
Finance Charge Receivables and a reduction in the balance of Principal
Receivables outstanding and a reduction in the Transferor Amount.
On the first Series Closing Date, the Transferors designated an initial
Discount Percentage equal to 2.0%. Any increase, reduction or withdrawal of such
Discount Percentage will be made in accordance with the conditions described in
the preceding paragraph.
PREMIUM OPTION
The Pooling and Servicing Agreement provides that the Transferors may at
any time and from time to time, but without any obligation to do so, designate a
specified fixed or variable percentage (the 'PREMIUM PERCENTAGE') of the amount
of Receivables existing arising in all or any specified portion of the Accounts
existing on and after the date such designation becomes effective that otherwise
would have been treated as Finance Charge Receivables to be treated as Principal
Receivables (the 'PREMIUM RECEIVABLES'). After any such designation, pursuant to
the Pooling and Servicing Agreement, the Transferors may, without notice to or
consent of the Certificateholders, from time to time increase, reduce or
withdraw the Premium Percentage. The Transferors must provide 30 days prior
written notice to the Servicer, the Trustee, each Rating Agency and any provider
of Series Enhancement of any such designation or increase, reduction or
withdrawal, and such designation or increase, reduction or withdrawal will
become effective on the date specified therein only if (a) each Transferor will
have delivered to the Trustee and certain providers of Series Enhancement a
certificate of an authorized officer of such Transferor to the effect that,
based on the facts known to such Transferor at the time, such designation or
increase, reduction or withdrawal will not at the time of its occurrence cause a
Pay-Out Event or Reinvestment Event or an event that, with notice or the lapse
of time or both, would constitute a Pay-Out Event or Reinvestment Event, to
occur with respect to any Series, (b) the Rating Agency Condition will have been
satisfied with respect to such designation or increase, reduction or withdrawal,
(c) in the case of a designation or increase of the Premium Percentage, the
Transferors will have delivered to the Trustee an opinion of counsel to the
effect that such designation or increase of the Premium Percentage will not
adversely affect the tax characterization as debt of any Certificates of any
outstanding Series or Class that were characterized as debt at their time of
issuance, and (d) in certain circumstances, the Transferors will have obtained
the prior written consent of each provider of Series Enhancement entitled to
consent thereto. On the Date of Processing of any collections on or after the
date the exercise of the premium option takes effect, the product of (i) the
Premium Percentage then in effect and (ii) collections of Receivables with
respect to the Accounts on or after the date such option is exercised that
otherwise would be Finance Charge Receivables will be deemed collections of
Principal Receivables and will be applied accordingly, unless otherwise provided
in the related Supplement. Any such designation would result in an increase in
the amount of collections of Principal Receivables and a lower Portfolio Yield
with respect to collections of Finance Charge Receivables than would otherwise
occur. Although there can be no assurance that the Transferors will exercise the
option to designate Premium Receivables, the Transferors may do so if, among
other things, the Transferors determine that the exercise of such option is
needed to cover shortfalls of the Principal Receivables available to make
scheduled principal payments on the Certificates or scheduled deposits into the
Principal Funding Account, as applicable, or to avoid the occurrence of a
Pay-Out Event or a Reinvestment Event relating to the existence of such
shortfalls.
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INDEMNIFICATION
The Pooling and Servicing Agreement will provide that the Servicer will
indemnify the Trust and the Trustee from and against any loss, liability,
expense, damage or injury suffered or sustained arising out of certain of the
Servicer's actions or omissions with respect to the Trust pursuant to the
Pooling and Servicing Agreement.
Under the Pooling and Servicing Agreement, the Transferors will agree to be
liable directly to an injured party for the entire amount of any liabilities of
the Trust (other than those incurred by a Certificateholder in the capacity of
an investor in the Certificates of any Series) arising out of or based on each
of the arrangements created by the Pooling and Servicing Agreement and the
actions of the Servicer taken pursuant thereto as though the Pooling and
Servicing Agreement created a partnership under the New York Uniform Partnership
Act in which each Transferor was a general partner.
Except as provided in the preceding paragraph, the Pooling and Servicing
Agreement will provide that neither the Transferors nor the Servicer nor any of
their respective directors, officers, employees or agents will be under any
other liability to the Trust, the Trustee, the Certificateholders, any Credit
Enhancer or any other person for any action taken, or for refraining from taking
any action, in good faith pursuant to the Pooling and Servicing Agreement.
However, neither the Transferors nor the Servicer will be protected against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence of a Transferor, the Servicer or any such person in
the performance of their duties or by reason of reckless disregard of their
obligations and duties thereunder.
In addition, the Pooling and Servicing Agreement will provide that the
Servicer is not under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its servicing responsibilities under the
Pooling and Servicing Agreement. The Servicer may, in its sole discretion,
undertake any such legal action which it may deem necessary or desirable for the
benefit of Certificateholders with respect to the Pooling and Servicing
Agreement and the rights and duties of the parties thereto and the interests of
the Certificateholders thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Servicer will be
responsible for servicing, collecting, enforcing and administering the
Receivables in accordance with customary and usual procedures for servicing
similar credit or charge receivables, but in any event at least comparable with
the policies and procedures and the degree of skill and care applied or
exercised with respect to any other credit, charge or similar receivables it, or
its affiliates, service.
Pursuant to the Pooling and Servicing Agreement or the Receivables Purchase
Agreements, except as otherwise required by any requirement of law or as is
deemed by an Account Owner to be necessary in order for it to maintain its
credit or charge business or a program operated in connection with its credit or
charge business on a competitive basis based on a good faith assessment by it of
the nature of the competition in such credit or charge business or such program,
no Account Owner will take any action that will have the effect of reducing the
Portfolio Yield (defined below) to a level that could reasonably be expected to
cause any Series to experience a Pay-Out Event or Reinvestment Event based on
the insufficiency of the Portfolio Yield or take any action that would have the
effect of reducing the Portfolio Yield to less than the then-current highest
Average Rate (defined below) for any Group. Each Account Owner also will
covenant that it may only change the terms relating to the Accounts owned by it
if the change made with respect to a specific program is made applicable to
substantially all of the Accounts owned by it subject to such program.
Centurion is the owner of the Accounts (as such, an 'ACCOUNT OWNER'). In
the future, 'ACCOUNT OWNERS' may also include (i) one or more different
transferors that may transfer receivables pursuant to receivables purchase
agreements, which may include terms different from the RFC II Purchase Agreement
(as defined herein), between each such transferor and RFC II, Centurion or an
Additional Transferor as the transferee of such receivables (each, a
'RECEIVABLES PURCHASE AGREEMENT'), or (ii) one or more Additional Transferors
(as defined herein). See 'The Pooling and Servicing Agreement Generally--The
Transferor Certificates; Additional Transferors' in this Prospectus for a
description of the circumstances under which such Additional Transferors may be
designated.
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'PORTFOLIO YIELD' means, with respect to the Trust as a whole and, with
respect to any Monthly Period, the annualized percentage equivalent of a
fraction (a) the numerator of which is the aggregate of the sum of the Series
Allocable Finance Charge Collections (as defined herein) for all Series during
the. immediately preceding Monthly Period calculated on a cash basis after
subtracting therefrom the Series Allocable Defaulted Amount (as defined herein)
for all Series for such Monthly Period and (b) the denominator of which is the
total amount of Principal Receivables as of the last day of such immediately
preceding Monthly Period. Unless otherwise provided in the Prospectus Supplement
with respect to any Series, 'AVERAGE RATE' means, with respect to any Group, the
percentage equivalent of a decimal equal to the sum of the amounts for each
outstanding Series (or each Class within a Series consisting of more than one
Class) within such Group obtained by multiplying (a) the certificate rate for
such Series or Class (adjusted to take into account any payments received or
payable pursuant to any interest rate agreements) and (b) a fraction, the
numerator of which is the aggregate unpaid principal amount of the Certificates
of such Series or Class and the denominator of which is the aggregate unpaid
principal amount of all Certificates within such Group.
Servicing activities to be performed by the Servicer include collecting and
recording payments, communicating with Account holders, investigating payment
delinquencies, evaluating the increase of credit limits and the issuance of
credit cards and credit accounts, providing billing and tax records to Account
holders and maintaining internal records with respect to each Account.
Managerial and custodial services performed by the Servicer on behalf of the
Trust include providing assistance in any inspections of the documents and
records relating to the Accounts and Receivables by the Trustee pursuant to the
Pooling and Servicing Agreement, maintaining the agreements, documents and files
relating to the Accounts and Receivables as custodian for the Trust and
providing related data processing and reporting services for Certificateholders
and on behalf of the Trustee.
The Pooling and Servicing Agreement provides that the Servicer may delegate
its duties under that agreement to any entity that agrees to conduct such duties
in accordance with the Pooling and Servicing Agreement and the credit account
guidelines set forth therein. Notwithstanding any such delegation the Servicer
will continue to be liable for all of its obligations under the Pooling and
Servicing Agreement.
NEW ISSUANCES
The Pooling and Servicing Agreement provides that, pursuant to any one or
more Supplements, the Transferors may direct the Trustee to authenticate from
time to time new Series subject to the conditions described below (each such
issuance, a 'NEW ISSUANCE'). Each New Issuance will have the effect of
decreasing the Transferor Amount to the extent of the initial Invested Amount of
such new Series. Under the Pooling and Servicing Agreement, the Transferors may
designate, with respect to any newly issued Series: (a) its name or designation;
(b) its initial principal amount (or method for calculating such amount) and its
invested amount in the Trust (the 'INVESTED AMOUNT'), which is generally based
on the aggregate amount of Principal Receivables in the Trust allocated to such
Series, and its Series Invested Amount; (c) its certificate rate (or formula for
the determination thereof); (d) the interest payment date or dates (each, an
'INTEREST PAYMENT DATE') and the date or dates from which interest shall accrue;
(e) the method for allocating collections to Certificateholders of such Series;
(f) any bank accounts to be used by such Series and the terms governing the
operation of any such bank accounts; (g) the percentage used to calculate the
Monthly Servicing Fee; (h) the provider and terms of any form of Series
Enhancement with respect thereto; (i) the terms on which the Certificates of
such Series may be repurchased or remarked to other investors; (j) the Series
Termination Date; (k) the number of Classes of Certificates of such Series, and
if such Series consists of more than one Class, the rights and priorities of
each such Class; (1) the extent to which the Certificates of such Series will be
issuable in temporary or permanent global form (and, in such case, the
depositary for such global certificate or certificates, the terms and
conditions, if any, upon which such global certificate or certificates may be
exchanged, in whole or in part, for definitive certificates, and the manner in
which any interest payable on such global certificate or certificates will be
paid); (m) whether the Certificates of such Series may be issued in bearer form
and any limitations imposed thereon; (n) the priority of such Series with
respect to any other Series; (o) the Group, if any, in which such Series will be
included; and (p) any other relevant terms (all such terms, the 'PRINCIPAL
TERMS' of such Series). None of the Transferors, the Servicer, the Trustee or
the Trust is required or intends to obtain the consent of any Certificateholder
of any outstanding Series to issue any additional Series. The Transferors may
offer any Series to
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the public under a Prospectus Supplement or other disclosure document (a
'DISCLOSURE DOCUMENT'), in transactions either registered under the Securities
Act or exempt from registration thereunder, directly, through one or more
underwriters or placement agents, in fixed-price offerings or in negotiated
transactions or otherwise in the manner discussed under 'Plan of Distribution'
in this Prospectus. Any such Series may be issued in fully registered or
book-entry form in minimum denominations determined by the Transferors. The
Transferors intend to offer, from time to time, additional Series.
The Pooling and Servicing Agreement provides that the Transferors may
designate Principal Terms such that each Series has a Controlled Accumulation
Period or a Controlled Amortization Period that may have a different length and
begin on a different date than such periods for any other Series. Further, one
or more Series may be in their Controlled Accumulation Period or Controlled
Amortization Period while other Series are not. Moreover, each Series may have
the benefits of Series Enhancement issued by enhancement providers different
from the providers of Series Enhancement with respect to any other Series. Under
the Pooling and Servicing Agreement, the Trustee shall hold any such Series
Enhancement only on behalf of the Certificateholders of the Series to which such
Series Enhancement relates. With respect to each such Series Enhancement, the
Transferors may deliver a different form of Series Enhancement agreement. The
Transferors also have the option under the Pooling and Servicing Agreement to
vary among Series the terms upon which a Series may be repurchased by the
Transferors or remarketed to other investors. There is no limit to the number of
New Issuances the Transferors may cause under the Pooling and Servicing
Agreement. The Trust will terminate only as provided in the Pooling and
Servicing Agreement. There can be no assurance that the terms of any Series
might not have an impact on the timing and amount of payments received by a
Certificateholder of another Series.
Under the Pooling and Servicing Agreement and pursuant to a Supplement, a
New Issuance may only occur upon the satisfaction of certain conditions provided
in the Pooling and Servicing Agreement. The obligation of the Trustee to
authenticate the Certificates of such new Series and to execute and deliver the
related Supplement is subject to the satisfaction of the following conditions:
(a) on or before the fifth day immediately preceding the date upon which the New
Issuance is to occur, the Transferors shall have given the Trustee, the Servicer
and each Rating Agency written notice of such New Issuance and the date upon
which the New Issuance is to occur; (b) the Transferors shall have delivered to
the Trustee the related Supplement, in form satisfactory to the Trustee,
executed by each party to the Pooling and Servicing Agreement other than the
Trustee; (c) the Transferors shall have delivered to the Trustee any related
Series Enhancement agreement executed by each of the parties to such agreement;
(d) the Rating Agency Condition shall have been satisfied with respect to such
New Issuance; (e) the Transferors shall have delivered to the Trustee and
certain providers of Series Enhancement a certificate of an authorized
representative, dated the date upon which the New Issuance is to occur, to the
effect that such Transferor reasonably believes that such issuance will not,
based on the facts known to such representative at the time of such
certification, have an Adverse Effect; (f) the Transferors shall have delivered
to the Trustee, each Rating Agency and certain providers of Series Enhancement
an opinion of counsel acceptable to the Trustee that for federal income tax
purposes (i) following such New Issuance the Trust will not be deemed to be an
association (or publicly traded partnership) taxable as a corporation, (ii) such
New Issuance will not adversely affect the tax characterization as debt of
Certificates of any outstanding Series or Class that were characterized as debt
at the time of their issuance, (iii) such New Issuance will not cause or
constitute an event in which gain or loss would be recognized by any
Certificateholders, and (iv) except as is otherwise provided in a Supplement
with respect to any Series, the Certificates of such Series will be properly
characterized as debt (an opinion of counsel to the effect referred to in
clauses (i), (ii) and (iii) with respect to any action is referred to herein as
a 'TAX OPINION'), and the Transferors or other holders of the Original
Transferor Certificate shall have a remaining interest in the Trust of not less
than, in the aggregate, 2% of the total amount of Principal Receivables and
funds on deposit in the Special Funding Account and the Principal Funding
Account; (g) the aggregate amount of Principal Receivables plus the principal
amount of any Participation Interest shall be greater than the Required Minimum
Principal Balance as of the date upon which the New Issuance is to occur after
giving effect to such issuance; and any other conditions specified in any
Supplement. Upon satisfaction of the above conditions, the Trustee shall execute
the Supplement and issue to the Transferors the Certificates of such new Series
for execution and redelivery to the Trustee for authentication.
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COLLECTION ACCOUNT
The Servicer will establish and maintain, or cause to be established and
maintained for the benefit of the Certificateholders in the name of the Trustee,
on behalf of the Trust, an account (the 'COLLECTION ACCOUNT') with an Eligible
Institution. 'ELIGIBLE INSTITUTION' means the Trustee or any other depository
institution organized under the laws of the United States, any one of the states
thereof or the District of Columbia (or any domestic branch of a foreign bank)
which at all times has a long-term unsecured debt rating or certificate of
deposit rating that is acceptable to each Rating Agency and is a member of the
FDIC. Notwithstanding the preceding sentence, any institution the appointment of
which satisfies the Rating Agency Condition will be an Eligible Institution.
Funds in the Collection Account generally will be invested in (i) obligations
fully guaranteed by the United States of America, (ii) demand deposits, time
deposits or certificates of deposit of depository institutions or trust
companies incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal or state
banking or depository institution authorities; provided that, at the time of the
Trust's investment therein, the short-term debt of such depository institution
or trust company shall be rated at least 'A-1+' (or any other rating subject to
receipt by the Transferors, the Servicer and the Trustee of written notification
from S&P that investments of such type at such other minimum rating will not
result in S&P reducing or withdrawing its then existing rating of the
Certificates of any outstanding Series or Class with respect to which it is a
Rating Agency) by S&P and shall be satisfactory to each other Rating Agency,
(iii) commercial paper that, at the time of the Trust's investment or a
contractual commitment to invest therein, shall be rated at least 'A-1+' (or any
other rating subject to receipt by the Transferors, the Servicer and the Trustee
of written notification from S&P that investments of such type at such other
minimum rating will not result in S&P reducing or withdrawing its then existing
rating of the Certificates of any outstanding Series or Class with respect to
which it is a Rating Agency) by S&P and shall be satisfactory to each other
Rating Agency, (iv) demand deposits, time deposits or certificates of deposit
which are fully insured by the Federal Deposit Insurance Corporation ('FDIC')
having, at the time of the Trust's investment therein, a rating satisfactory to
each Rating Agency, (v) bankers' acceptances issued by any depository
institution or trust company described in (ii) above, (vi) time deposits, other
than as referred to in (iv) above (having maturities not later than the business
day preceding the next Distribution Date), with an entity, the commercial paper
of which shall be rated at least 'A-1+' (or any other rating subject to receipt
by the Transferors, the Servicer and the Trustee of written notification from
S&P that investments of such type at such other minimum rating will not result
in S&P reducing or withdrawing its then existing rating of the Certificates of
any outstanding Series or Class with respect to which it is a Rating Agency) by
S&P and shall be satisfactory to each other Rating Agency, and (vii) only to the
extent permitted by Rule 3a-7 under the Investment Company Act of 1940, as
amended, (a) money market funds that, at the time of the Trust's investment
therein, shall be rated at least 'AAA-m' or 'AAAm-G' by S&P (or any other rating
subject to receipt by the Transferors, the Servicer and the Trustee of written
notification from S&P that investments of such type at such other minimum rating
will not result in S&P reducing or withdrawing its then existing rating of the
Certificates of any outstanding Series or Class with respect to which it is a
Rating Agency) and shall be satisfactory to each other Rating Agency, or (b) any
other investment if the Rating Agency Condition has been satisfied
(collectively, 'ELIGIBLE INVESTMENTS'). Any earnings (net of losses and
investment expenses) on funds in the Collection Account will be paid to the
Transferors. The Servicer will have the revocable power to withdraw funds from
the Collection Account and to instruct the Trustee to make withdrawals and
payments from the Collection Account for the purpose of carrying out its duties
under the Pooling and Servicing Agreement and any Supplement.
DEPOSITS IN COLLECTION ACCOUNT
The Servicer, no later than two business days after each Date of
Processing, will deposit all collections received with respect to the
Receivables in each Monthly Period into the Collection Account, and the Servicer
will make the deposits and payments to the accounts and parties shown below on
the date of such deposit. The 'DATE OF PROCESSING' is, with respect to any
transaction or receipt of collections, the business day after such transaction
is first output, in written form pursuant to the Servicer's usual and customary
data processing procedures, from the Servicer's computer file of accounts
comparable to the Accounts (regardless of the effective date of recordation).
Notwithstanding the foregoing, for as long as TRS or an affiliate of TRS remains
the Servicer under the Pooling and Servicing Agreement and (i) the Servicer
maintains a short-term credit rating (which may be an implied rating) of not
less than P-1 from Moody's Investors Service, Inc. ('MOODY'S') and
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A-1 from Standard and Poor's Ratings Services ('S&P') (or such other rating
below P-1 or A-1, as the case may be, which is acceptable to such Rating
Agency), which is currently the case, or (ii) the Servicer obtains a guarantee
with respect to its deposit and payment obligations under the Pooling and
Servicing Agreement (in form and substance satisfactory to the Rating Agencies)
from a guarantor having a short-term credit rating of not less than P-1 from
Moody's and A-1 from S&P (or such other rating below P-1 or A-1, as the case may
be, which is acceptable to such Rating Agency), or (iii) the Rating Agency
Condition will have been satisfied despite Servicer's inability to satisfy the
rating requirement specified in clause (i) above and for five business days
following any such reduction of any such rating or failure to satisfy the
conditions specified in clause (ii) or (iii) above, the Servicer need not
deposit collections into the Collection Account on the day indicated in the
preceding sentence but may use for its own benefit all such collections until
the business day immediately preceding the related Distribution Date (the
'TRANSFER DATE') at which time the Servicer will make such deposits in an amount
equal to the net amount of such deposits and withdrawals which would have been
made had the conditions of this sentence not applied.
'MONTHLY PERIOD' means the period beginning at the opening of business on
the day following the last day of the seventh billing cycle of each month and
ending at the close of business on the last day of the seventh billing cycle of
the immediately following month. The last day of each seventh monthly billing
cycle generally occurs between the twenty-first day and the twenty-fifth day of
each month. Therefore, the number of days in a Monthly Period generally may vary
from a calendar month by up to four days. In certain circumstances, the Pooling
and Servicing Agreement may be amended to change the definition of Monthly
Period. See 'The Pooling and Servicing Agreement Generally--Amendments' in this
Prospectus.
The 'DISTRIBUTION DATE' for a Series will be the 15th day of each month
(or, if such day is not a business day, the next business day) or such other
date specified in the Supplement for a Series and reflected in the Prospectus
Supplement for such Series. For purposes of this Prospectus, a 'BUSINESS DAY'
is, unless otherwise indicated, any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York or any other state in which
the principal executive offices of Centurion or the Trustee are located or are
authorized or obligated by law or executive order to be closed.
The 'DETERMINATION DATE' for a series will be the earlier of the third
business day and the fifth calendar day (but, if the fifth calendar day is not a
business day, the immediately preceding business day) preceding the fifteenth
day of each calendar month or such other date specified in the Supplement for a
Series and reflected in the Prospectus Supplement for such Series. On each
Determination Date, the Servicer will calculate the amounts to be allocated to
the Certificateholders of each Class or Series and the holders of the Transferor
Certificates as described herein in respect of collections of Receivables
received with respect to the preceding Monthly Period.
With respect to the Certificateholder's Interest, if the net amount in
respect of Finance Charge Receivables to be deposited into the Collection
Account on any Transfer Date exceeds the sum of the interest payments due to
Certificateholders for the related Distribution Date, the Defaulted Amount and
the Servicing Fee plus certain amounts payable with respect to any Series
Enhancement, the Servicer may deduct the Servicing Fee and, during the Revolving
Period, the Defaulted Amount (which will be distributed to the Transferors, but
not in an amount exceeding the Transferors' Interest in Principal Receivables on
such day, after giving effect to any new Receivables transferred to the Trust on
such day) from the net amount to be deposited into the Collection Account. In
addition, on each Distribution Date with respect to any Controlled Amortization
Period or Controlled Accumulation Period, the Servicer may deduct the amount of
any Shared Principal Collections not required to cover Principal Shortfalls
(which will be distributed to the Transferors, but not in an amount exceeding
the Transferors' Interest in Principal Receivables on such day, after giving
effect to any new Receivables transferred to the Trust on such day) from the net
amount to be deposited into the Collection Account. The Trustee may not have a
perfected security interest in collections held by the Servicer that are
commingled with other funds of the Servicer or used by the Servicer in the event
of the bankruptcy, insolvency, liquidation, conservatorship or receivership of
the Servicer or, in certain circumstances, the lapse of certain time periods.
On the day any such deposit is made into the Collection Account, the
Servicer will withdraw from the Collection Account and pay to the Transferors to
the extent not deducted from collections as described above, (i) an amount equal
to the excess, if any, of the aggregate amount of such deposits in respect of
Principal Receivables treated as Shared Principal Collections for all Series
over the aggregate amount of Principal
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Shortfalls for all Series and, without duplication, (ii) the aggregate amount of
Series Allocable Principal Collections for all outstanding Series to be paid to
the Transferors with respect to such date. Any amounts in respect of Principal
Receivables not distributed to the Transferors on any day because the Transferor
Amount does not exceed zero on such day (after giving effect to any Principal
Receivables transferred to the Trust on such day) shall be deposited into the
Special Funding Account.
ALLOCATIONS
Pursuant to the Pooling and Servicing Agreement, during each Monthly Period
the Servicer will allocate to each outstanding Series its Series Allocable
Finance Charge Collections, Series Allocable Principal Collections and Series
Allocable Defaulted Amount.
'SERIES ADJUSTED INVESTED AMOUNT' means, with respect to any Series and for
any Monthly Period, the Series Invested Amount for such Series for such Monthly
Period, less the excess, if any, of the cumulative amount (calculated in
accordance with the terms of the related Supplement) of investor charge-offs
allocable to the Invested Amount for such Series as of the last day of the
immediately preceding Monthly Period over the aggregate reimbursement of such
investor charge-offs as of such last day, or such lesser amount as may be
provided in the Prospectus Supplement for such Series.
'SERIES ALLOCABLE FINANCE CHARGE COLLECTIONS,' 'SERIES ALLOCABLE PRINCIPAL
COLLECTIONS' and 'SERIES ALLOCABLE DEFAULTED AMOUNT' mean, with respect to any
Series and for any Monthly Period, the product of (a) the Series Allocation
Percentage 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 Defaulted
Amounts with respect to such Monthly Period, respectively.
'SERIES ALLOCATION PERCENTAGE' means, with respect to any Series and for
any Monthly Period, the percentage equivalent of a fraction, the numerator of
which is the Series Adjusted Invested Amount as of the last day of the
immediately preceding Monthly Period and the denominator of which is the Trust
Adjusted Invested Amount.
'SERIES REQUIRED TRANSFEROR AMOUNT' means for any Series an amount
specified in the Prospectus Supplement for such Series.
'TRUST ADJUSTED INVESTED AMOUNT' means, with respect to any Monthly Period,
the sum of the Series Adjusted Invested Amounts (as adjusted in any Prospectus
Supplement) for all outstanding Series.
The Servicer will then allocate amounts initially allocated to a particular
Series between the Certificateholders' Interest and the Transferors' Interest
for such Monthly Period as follows:
(a) Series Allocable Finance Charge Collections and the Series
Allocable Defaulted Amount will at all times be allocated to the Invested
Amount of a Series based on the Floating Allocation Percentage of such
Series; and
(b) Series Allocable Principal Collections will at all times be
allocated to the Invested Amount of such Series based on the Principal
Allocation Percentage of such Series.
The 'FLOATING ALLOCATION PERCENTAGE' and the 'PRINCIPAL ALLOCATION
PERCENTAGE' with respect to any Series will be determined as set forth in the
related Prospectus Supplement. Amounts not allocated to the Invested Amount of
any Series as described above will be allocated to the Transferors' Interest.
GROUPS OF SERIES
If so specified in the related Prospectus Supplement, the Certificates of a
Series may be included in a Group that will be subject to reallocations of
collections of Receivables and other amounts or obligations among the Series in
such Group (a 'REALLOCATION GROUP') in the manner described below under
'--Reallocations Among Different Series Within a Reallocation Group.'
Collections of Finance Charge Receivables allocable to each Series in a
Reallocation Group will be aggregated and made available for certain required
payments for all Series in such Group. Consequently, the issuance of new Series
in such Group may have the effect of reducing or increasing the amount of
collections of Finance Charge Receivables allocable to the Certificates of other
Series in
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such Group. See 'Risk Factors--Effect of Issuance of New Series' in this
Prospectus. The Prospectus Supplement with respect to a Series offered hereby
will specify whether such Series will be included in a Reallocation Group or
another type of group (each, a 'GROUP'), whether any previously issued Series
have been included in such a Group and whether any such Series or any previously
issued Series may be removed from such a Group.
REALLOCATIONS AMONG DIFFERENT SERIES WITHIN A REALLOCATION GROUP
Group Investor Finance Charge Collections. Any Series offered hereby may,
if so specified in the related Prospectus Supplement, be included in a
Reallocation Group. Other Series issued in the future may also be included in
such Reallocation Group.
For each Monthly Period, the Servicer will calculate the Group Investor
Finance Charge Collections (as defined herein) for a particular Reallocation
Group and, on the following Distribution Date, will allocate such amount among
the Certificateholders' Interest (including any Collateral Invested Amount) for
all Series in such Group in the following priority:
(i) Group Investor Monthly Interest (as defined herein);
(ii) Group Investor Default Amount (as defined herein);
(iii) Group Investor Monthly Fees (as defined herein);
(iv) Group Investor Additional Amounts (as defined herein); and
(v) the balance pro rata among each Series in such Group based on the
current Invested Amount of each such Series.
In the case of clauses (i), (ii), (iii) and (iv) above, if the amount of
Group Investor Finance Charge Collections (as defined herein) is not sufficient
to cover each such amount in full, the amount available will be allocated among
the Series in such Group pro rata based on the claim that each Series has under
the applicable clause, This means, for example, that if the amount of Group
Investor Finance Charge Collections is not sufficient to cover Group Investor
Monthly Interest, each Series in such Group will share such amount pro rata and
any other Series in such Group with a claim with respect to monthly interest,
overdue monthly interest and interest on such overdue monthly interest, if
applicable, which is larger than the claim for such amounts for any other Series
in such Group offered hereby (due to a higher certificate rate) will receive a
proportionately larger allocation.
The amount of Group Investor Finance Charge Collections allocated to the
Certificateholders' Interest (including any Collateral Invested Amount) for a
particular Series offered hereby as described above is referred to herein as
'REALLOCATED INVESTOR FINANCE CHARGE COLLECTIONS.'
'GROUP INVESTOR ADDITIONAL AMOUNTS' means for any Distribution Date the sum
of the amounts determined with respect to each Series in such Group equal to (a)
an amount equal to the amount by which the Invested Amount of any Class of
Certificates or any Collateral Invested Amounts have been reduced as a result of
investor charge-offs, subordination of principal collections and funding the
investor default amount for any other Class of Certificates or Collateral
Invested Amounts of such Series and (b) if the related Prospectus Supplement so
provides, the amount of interest at the applicable certificate rate that has
accrued on the amount described in the preceding clause (a).
'GROUP INVESTOR DEFAULT AMOUNT' means for any Distribution Date the sum of
the amounts determined with respect to each Series in such Group (the 'INVESTOR
DEFAULT AMOUNT') equal to the product of the Series Allocable Defaulted Amount
for such Distribution Date and the applicable Floating Allocation Percentage for
such Distribution Date.
'GROUP INVESTOR FINANCE CHARGE COLLECTIONS' means for any Distribution Date
the aggregate amount of Investor Finance Charge Collections for such
Distribution Date for all Series in such Group.
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'GROUP INVESTOR MONTHLY FEES' means for any Distribution Date the Monthly
Servicing Fee for each Series in such Group, any Series Enhancement fees and any
other similar fees which are paid out of Reallocated Investor Finance Charge
Collections for such Series pursuant to the applicable Prospectus Supplement.
'GROUP INVESTOR MONTHLY INTEREST' means for any Distribution Date the sum
of the aggregate amount of monthly interest, including overdue monthly interest
and interest on such overdue monthly interest, if applicable, for all Series in
such Group for such Distribution Date.
The chart that follows demonstrates the manner in which collections of
Finance Charge Receivables are allocated and reallocated among Series in such a
Group. The chart assumes that the Trust has issued three Series (Series 1, 2 and
3), and that each such Series is in its Revolving Period.
In Step 1, total collections of Finance Charge Receivables are allocated
among the three Series based on the Series Allocation Percentage for each
Series. The amounts allocated to each Series pursuant to Step I are referred to
as 'SERIES ALLOCABLE FINANCE CHARGE COLLECTIONS.' See '--Allocations' above.
In Step 2, the amount of collections of Finance Charge Receivables
allocable to the Invested Amount (including any Collateral Invested Amount) of a
Series (the 'INVESTOR FINANCE CHARGE COLLECTIONS') is determined by multiplying
Series Allocable Finance Charge Collections for each Series by the applicable
Floating Allocation Percentages. See '--Allocations' above.
Investor Finance Charge Collections for all Series in a particular
Reallocation Group (or Group Investor Finance Charge Collections) are pooled as
shown above in Step 3 for reallocation to each such Series as shown in Step 4.
In Step 4 Group Investor Finance Charge Collections are reallocated to each
Series in such Group as described above based on the respective claim of each
Series with respect to interest payable on the Certificates or Collateral
Invested Amount (if any) of such Series, the Defaulted Amount allocable to the
Certificateholders' Interest of such Series and the Monthly Servicing Fee and
certain other amounts in respect to such Series. The excess is allocated pro
rata among the Series in such Group based on each Series' respective Invested
Amounts.
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[Flow Chart Depicting Allocation of
American Express Credit
Account Master Trust
Finance Charge Collections
Omitted]
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SHARING OF EXCESS FINANCE CHARGE COLLECTIONS AMONG EXCESS ALLOCATION SERIES
Any Series offered hereby may be designated as a Series that shares with
other Series similarly designated, subject to certain limitations, certain
Excess Finance Charge Collections (as defined herein) allocable to any such
Series (an 'EXCESS ALLOCATION SERIES') (including a Series in a Reallocation
Group or other type of Group). If the Supplements for the related Excess
Allocation Series so provide, collections of Finance Charge Receivables and
certain other amounts allocable to the Certificateholders' Interest of any such
Series in excess of the amounts necessary to make required payments with respect
to such Series (including payments to the provider of any related Series
Enhancement) that are payable out of collections of Finance Charge Receivables
(any such excess, the 'EXCESS FINANCE CHARGE COLLECTIONS') may be applied to
cover any shortfalls with respect to amounts payable from collections of Finance
Charge Receivables allocable to any other Excess Allocation Series pro rata
based upon the amount of the shortfall, if any, with respect to each other
Excess Allocation Series, provided that the sharing of Excess Finance Charge
Collections among Excess Allocation Series will cease if each Transferor shall
deliver to the Trustee a certificate of an authorized representative to the
effect that, in the reasonable belief of such Transferor, the continued sharing
of Excess Finance Charge Collections among Excess Allocation Series would have
adverse regulatory implications with respect to the Transferors or any Account
Owner. Following the delivery by the Transferors of any such certificates to the
Trustee there will not be any further sharing of Excess Finance Charge
Collections among such Series in any such Group. In all cases, any Excess
Finance Charge Collections remaining after covering shortfalls with respect to
all outstanding Excess Allocation Series will be paid to the holders of the
Transferor Certificates. While any Series offered hereby may be designated as an
Excess Allocation Series, there can be no assurance that (a) any other Series
will be designated as an Excess Allocation Series, (b) there will be any Excess
Finance Charge Collections with respect to any such other Series for any Monthly
Period, (c) any agreement relating to any Series Enhancement will not be amended
in such a manner as to increase payments to the providers of Series Enhancement
and thereby decrease the amount of Excess Finance Charge Collections available
from such Series or (d) a Transferor will not at any time deliver a certificate
as described above. While the Transferors believe that, based upon applicable
rules and regulations as currently in effect, the sharing of Excess Finance
Charge Collections among Excess Allocation Series will not have adverse
regulatory implications for it, or any Account Owner, there can be no assurance
that this will continue to be true in the future.
SHARING OF PRINCIPAL COLLECTIONS AMONG PRINCIPAL SHARING SERIES
If the Prospectus Supplement for a Series so provides, any Series may be
designated as a Series that shares with other Series similarly designated,
subject to certain limitations, certain excess collections of Principal
Receivables and certain other amounts allocable to the Certificateholders'
Interest of such Series (a 'PRINCIPAL SHARING SERIES'). If a Series is a
Principal Sharing Series, collections of Principal Receivables for any Monthly
Period allocated to the Certificateholders' Interest of any such Series will
first be used to cover certain amounts described in the related Prospectus
Supplement (including any required deposits into a Principal Funding Account or
required distributions to Certificateholders of such Series in respect of
principal). The Servicer will determine the amount of collections of Principal
Receivables for any Monthly Period (plus certain other amounts described in the
related Prospectus Supplement) allocated to such Series remaining after covering
such required deposits and distributions and any similar amount remaining for
any other Series (collectively, 'SHARED PRINCIPAL COLLECTIONS'). The Servicer
will allocate the Shared Principal Collections to cover any principal
distributions to Certificateholders and deposits to Principal Funding Accounts
for any Principal Sharing Series that are either scheduled or permitted and that
have not been covered out of collections of Principal Receivables and certain
other amounts allocable to the Certificateholders' Interest of such Series
(collectively, 'PRINCIPAL SHORTFALLS'). If Principal Shortfalls exceed Shared
Principal Collections for any Monthly Period, Shared Principal Collections will
be allocated pro rata among the applicable Series based on the respective
Principal Shortfalls of such Series. To the extent that Shared Principal
Collections exceed Principal Shortfalls, the balance will be allocated to the
holders of the Transferor Certificates, provided that (a) such Shared Principal
Collections will be distributed to the holders of the Transferor Certificates
only to the extent that the Transferor Amount is greater than the Required
Transferor Amount (see '--Special Funding Account' below) and (b) in certain
circumstances described below under '--Special Funding Account,' such Shared
Principal Collections will be deposited in the Special Funding Account. Any such
reallocation of collections of Principal Receivables will not result in a
reduction in the Invested Amount of the Series to which such collections were
initially allocated. There
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can be no assurance that there will be any Shared Principal Collections with
respect to any Monthly Period or that any other Series will be designated as
Principal Sharing Series.
PAIRED SERIES
If so provided in the related Prospectus Supplement, a Series of
Certificates may be issued (a 'PAIRED SERIES') that is paired with one or more
other Series or a portion of one or more other Series previously issued by the
Trust (a 'PRIOR SERIES'). As the Invested Amount of the Prior Series is reduced,
the Invested Amount in the Trust of the Paired Series will increase by an equal
amount. Upon payment in full of the Prior Series, the Invested Amount of such
Paired Series will be equal to the Invested Amount paid to Certificateholders of
such Prior Series. If a Pay-Out Event or Reinvestment Event occurs with respect
to the Prior Series or with respect to the Paired Series when the Prior Series
is in a Controlled Amortization Period or Controlled Accumulation Period, the
Series Allocation Percentage and the Principal Allocation Percentage for the
Prior Series and the Series Allocation Percentage and the Principal Allocation
Percentage for the Paired Series will be reset as provided in the related
Prospectus Supplement and the Early Amortization Period or Early Accumulation
Period for such Series could be lengthened.
SPECIAL FUNDING ACCOUNT
If, on any date, the Transferor Amount is less than or equal to the
Required Transferor Amount, the Servicer shall not distribute to the holders of
the Transferor Certificates any collections of Principal Receivables allocable
to a Series or a Group that otherwise would be distributed to such holders, but
shall deposit such funds in an account established with an Eligible Institution
and maintained by the Servicer for the benefit of the Certificateholders of each
Series, in the name of the Trustee, on behalf of the Trust, and bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Certificateholders of each Series (the 'SPECIAL FUNDING
ACCOUNT'). Funds on deposit in the Special Funding Account will be withdrawn and
paid to the holders of the Transferor Certificates on any Distribution Date to
the extent that, after giving effect to such payment, the Transferor Amount
exceeds the Required Transferor Amount on such date; provided, however, that if
a Controlled Accumulation Period, Early Accumulation Period, Controlled
Amortization Period or Early Amortization Period has commenced and is continuing
with respect to any Series, any funds on deposit in the Special Funding Account
will be released from the Special Funding Account, deposited in the Collection
Account and treated as collections of Principal Receivables to the extent needed
to make principal payments due to or for the benefit of the Certificateholders
of such Series, but only to the extent that doing so would not cause the
Transferor Amount to be less than the Required Transferor Amount. In addition,
if the Transferors determine that, by decreasing the amount on deposit in the
Special Funding Account, one or more Series, for which the Supplements related
thereto permit partial amortization, may be prevented from experiencing a
Pay-Out Event due to the insufficiency of yield, funds on deposit in the Special
Funding Account may be applied to each such Series (on a pro rata basis
according to each Series' Invested Amount) to reduce the Invested Amount thereof
and thereby to avoid such yield insufficiency Pay-Out Event, but only to the
extent that doing so would not cause the Transferor Amount to be less than the
Required Transferor Amount.
The Transferors, at their option, may instruct the Trustee to deposit to
the Special Funding Account Shared Principal Collections that would otherwise be
payable to the holders-of the Transferor Certificates in accordance with the
foregoing.
Funds on deposit in the Special Funding Account will be invested by the
Trustee, at the direction of the Servicer, in Eligible Investments. Any earnings
(net of losses and investment expenses) earned on amounts on deposit in the
Special Funding Account during any Monthly Period will be withdrawn from the
Special Funding Account and treated as collections of Finance Charge Receivables
with respect to such Monthly Period.
FUNDING PERIOD
For any Series of Certificates, the related Prospectus Supplement may
specify that for a period beginning on the Series Closing Date and ending on a
specified date before the commencement of a Controlled Amortization Period or
Controlled Accumulation Period with respect to such Series (the 'FUNDING
PERIOD'), the aggregate amount of Principal Receivables in the Trust allocable
to such Series may be less than the aggregate principal
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amount of the Certificates of such Series and an amount equal to the amount of
such deficiency (the 'PRE-FUNDING AMOUNT') will be held in a trust account
established with the Trustee for the benefit of Certificateholders of such
Series (the 'PRE-FUNDING ACCOUNT') pending the transfer of additional Principal
Receivables to the Trust or pending the reduction of the Invested Amounts of
other Series issued by the Trust. The related Prospectus Supplement will specify
the initial Invested Amount with respect to such Series, the aggregate principal
amount of the Certificates of such Series (the 'FULL INVESTED AMOUNT') and the
date by which the Invested Amount is expected to equal the Full Invested Amount.
The Invested Amount will increase as Receivables are delivered to the Trust or
as the Invested Amounts of other Series of the Trust are reduced. The Invested
Amount may also decrease due to the occurrence of a Pay-Out Event with respect
to such Series as provided in the related Prospectus Supplement.
The Transferors do not have any present intention of permitting the
duration of any Funding Period to be greater than one year.
During the Funding Period, funds on deposit in the Pre-Funding Account for
a Series of Certificates will be withdrawn and paid to the Transferors to the
extent of any increases in the Invested Amount. If the Invested Amount does not
for any reason equal the Full Invested Amount by the end of the Funding Period,
any amount remaining in the Pre-Funding Account and any additional amounts
specified in the related Prospectus Supplement will be payable to the
Certificateholders of such Series in the manner and at such time as set forth in
the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, moneys in the
Pre-Funding Account will be invested by the Trustee in Eligible Investments or
will be subject to a guaranteed rate or investment agreement or other similar
arrangement, and, in connection with each Distribution Date during the Funding
Period, investment earnings on funds in the Pre-Funding Account during the
related Monthly Period will be withdrawn from the Pre-Funding Account and
deposited, together with any applicable payment under a guaranteed rate or
investment agreement or other similar arrangement, into the Collection Account
for distribution in respect of interest on the Certificates of the related
Series in the manner specified in the related Prospectus Supplement.
DEFAULTED RECEIVABLES; REBATES AND FRAUDULENT CHARGES
'DEFAULTED RECEIVABLES' for any Monthly Period are Principal Receivables
that were charged-off as uncollectible in such Monthly Period. The 'DEFAULTED
AMOUNT' for any Monthly Period will be an amount (not less than zero) equal to
(a) the amount of Defaulted Receivables for such Monthly Period minus (b) the
amount of any Defaulted Receivables with respect to which any Transferor or the
Servicer becomes obligated to accept reassignment or assignment during such
Monthly Period (unless an event relating to bankruptcy, receivership,
liquidation, conservatorship or insolvency has occurred with respect to such
Transferor or the Servicer, in which event the amount of such Defaulted
Receivables will not be added to the sum so subtracted). Receivables in any
Account will be charged-off as uncollectible in accordance with the account
guidelines and the Servicer's customary and usual policies and procedures for
servicing charge and other credit account receivables comparable to the
Receivables. The current policy of Centurion is to charge-off the receivables in
an Account when the Account is six contractual payments past due (i.e.,
approximately 180 days from initial billing) or sooner if the death or
bankruptcy of the Account holder has been confirmed, but such policy may change
in the future to conform with regulatory requirements and applicable law.
If the Servicer adjusts downward the amount of any Principal Receivable
(other than Ineligible Receivables that have been, or are to be, reassigned to a
Transferor) because of a rebate, refund, counterclaim, defense, error,
fraudulent charge or counterfeit charge to an Account holder, or such Principal
Receivable was created in respect of merchandise that was refused or returned by
an Account holder, or if the Servicer otherwise adjusts downward the amount of
any Principal Receivable without receiving collections therefor or charges off
such amount as uncollectible, the amount of the Principal Receivables in the
Trust with respect to the Monthly Period in which such adjustment takes place
will be reduced by the amount of the adjustment. Furthermore, in the event that
the exclusion of any such Receivables would cause the Transferor Amount at such
time to be less than the Required Transferor Amount, the Transferors will be
required to pay an amount equal to such deficiency into the Special Funding
Account.
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CREDIT ENHANCEMENT
General. For any Series, Credit Enhancement may be provided with respect
to one or more Classes thereof. The credit enhancement (the 'CREDIT
ENHANCEMENT') with respect to one or more Classes of a Series offered hereby may
include a letter of credit, cash collateral guaranty, cash collateral account,
collateral interest, surety bond, insurance policy, spread account, guaranteed
rate agreement, maturity liquidity facility, tax protection agreement, interest
rate swap agreement, interest rate cap agreement, or any combination of the
foregoing. Credit Enhancement may also be provided to a Class or Classes of a
Series by subordination provisions that require distributions of principal or
interest be made with respect to the Certificates of such Class or Classes
before distributions are made to one or more Classes of such Series. If so
specified in the related Prospectus Supplement, any form of Credit Enhancement
may be available to more than one Class or Series to the extent described
therein.
The presence of Credit Enhancement with respect to a Class is intended to
enhance the likelihood of receipt by Certificateholders of such Class of the
full amount of principal and interest with respect thereto and to decrease the
likelihood that such Certificateholders will experience losses. However, unless
otherwise specified in the related Prospectus Supplement, the Credit
Enhancement, if any, with respect thereto will not provide protection against
all risks of loss and will not guarantee repayment of the entire principal
balance of the Certificates and interest thereon. If losses occur that exceed
the amount covered by the Credit Enhancement or that are not covered by the
Credit Enhancement, Certificateholders will bear their allocable share of such
losses. In addition, if specific Credit Enhancement is provided for the benefit
of more than one Class or Series, Certificateholders of any such Class or Series
will be subject to the risk that such Credit Enhancement will be exhausted by
the claims of Certificateholders of other Classes or Series.
If Credit Enhancement is provided with respect to a Series offered hereby,
the related Prospectus Supplement will include a description of (a) the amount
payable under such Credit Enhancement, (b) any conditions to payment thereunder
not otherwise described herein, (c) the conditions (if any) under which the
amount payable under such Credit Enhancement may be reduced and under which such
Credit Enhancement may be terminated or replaced and (d) any provisions of any
agreement relating to such Credit Enhancement material to the Certificateholders
of such Series. Additionally, in certain cases, the related Prospectus
Supplement may set forth certain information with respect to the provider of any
third-party Credit Enhancement (the 'CREDIT ENHANCER'), including (i) a brief
description of its principal business activities, (ii) its principal place of
business, place of incorporation or the jurisdiction under which it is chartered
or licensed to do business, (iii) if applicable, the identity of regulatory
agencies that exercise primary jurisdiction over the conduct of its business and
(iv) its total assets, and its stockholders' or policyholders' surplus, if
applicable, as of a date specified in the Prospectus Supplement. If so described
in the related Prospectus Supplement, Credit Enhancement with respect to a
Series offered hereby may be available to pay principal of the Certificates of
such Series following the occurrence of certain Pay-Out Events or Reinvestment
Events with respect to such Series. In such event, the Credit Enhancer will have
an interest in certain cash flows in respect of the Receivables to the extent
described in such Prospectus Supplement (a 'COLLATERAL INVESTED AMOUNT') and may
be entitled to the benefit of the Trustee's security interest in the
Receivables, in each case subordinated to the interest of the Certificateholders
of such Series.
Subordination. If so specified in the related Prospectus Supplement, one
or more Classes of Certificates ('SUBORDINATED CERTIFICATES') offered hereby may
be subordinated to one or more other Classes of Certificates ('SENIOR
CERTIFICATES'). If so specified in the related Prospectus Supplement, the rights
of the holders of the subordinated Certificates to receive distributions of
principal or interest on any payment date will be subordinated to such rights of
the holders of the Certificates that are senior to such subordinated
Certificates to the extent set forth in the related Prospectus Supplement. The
related Prospectus Supplement will also set forth information concerning the
amount of subordination of a Class or Classes of subordinated Certificates in a
Series, the circumstances in which such subordination will be applicable, the
manner, if any, in which the amount of subordination will decrease over time,
and the conditions under which amounts available from payments that would
otherwise be made to holders of such subordinated Certificates will be
distributed to holders of Certificates that are senior to such subordinated
Certificates. The amount of subordination will decrease whenever amounts
otherwise payable to the holders of subordinated Certificates are paid to the
holders of the Certificates that are senior to such subordinated Certificates.
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Letter of Credit. If so specified in the related Prospectus Supplement, a
letter of credit with respect to a Series or Class of Certificates offered
hereby may be issued by a bank or financial institution specified in the related
Prospectus Supplement (the 'L/C ISSUER'). Subject to the terms and conditions
specified in the related Prospectus Supplement, the L/C Issuer will be obligated
to honor drawings under a letter of credit in an aggregate dollar amount (which
may be fixed or may be reduced as described in the related Prospectus
Supplement), net of unreimbursed payments thereunder, equal to the amount
described in the related Prospectus Supplement. The amount available under a
letter of credit will be reduced to the extent of the unreimbursed payments
thereunder.
Cash Collateral Guaranty or Account. If so specified in the related
Prospectus Supplement, the Certificates of any Class or Series offered hereby
may have the benefit of a guaranty (the 'CASH COLLATERAL GUARANTY') secured by
the deposit of cash or certain permitted investments in an account (the 'CASH
COLLATERAL ACCOUNT'). A Cash Collateral Guaranty or a Cash Collateral Account
with respect to a Class or Series may be fully or partially funded on the Series
Closing Date with respect thereto and the funds on deposit therein will be
invested in Eligible Investments. The amount available to be withdrawn from a
Cash Collateral Guaranty or a Cash Collateral Account will be the lesser of the
amount on deposit in the Cash Collateral Guaranty or the Cash Collateral Account
and an amount specified in the related Prospectus Supplement. The related
Prospectus Supplement will set forth the circumstances under which such
withdrawals will be made from the Cash Collateral Guaranty or the Cash
Collateral Account.
Collateral Interest. If so specified in the related Prospectus Supplement,
support for a Series of Certificates or one or more Classes thereof may be
provided initially by an uncertificated, subordinated interest in the Trust (the
'COLLATERAL INTEREST') in an amount initially equal to a percentage of the
Certificates of such Series specified in such Prospectus Supplement. References
to Collateral Invested Amounts herein include Collateral Interests, if any.
Insurance Policy or Surety Bond. If so specified in the related Prospectus
Supplement, insurance with respect to a Series or Class of Certificates offered
hereby may be provided by one or more insurance companies. Such insurance will
guarantee, with respect to one or more Classes of the related Series,
distributions of interest or principal in the manner and amount specified in the
related Prospectus Supplement.
If so specified in the related Prospectus Supplement, a surety bond may be
purchased for the benefit of the holders of any Series or Class of Certificates
offered hereby to assure distributions of interest or principal with respect to
such Series or Class of Certificates in the manner and amount specified in such
Prospectus Supplement.
Spread Account. If so specified in the related Prospectus Supplement,
support for a Series or one or more Classes of a Series offered hereby may be
provided by the periodic deposit of certain available excess cash flow from the
Trust Assets into a spread account intended to assure the subsequent
distributions of interest and principal on the Certificates of such Class or
Series in the manner specified in such Prospectus Supplement.
Maturity Liquidity Facility. If so specified in the related Prospectus
Supplement, support for a Series or one or more Classes thereof will be provided
by a maturity liquidity facility, which is a financial contract that generally
provides that sufficient principal will be available to retire the Certificates
of such Class or Series at a certain date.
Tax Protection Agreement. If so specified in the related Prospectus
Supplement, the Trustee, on behalf of the Trust, may enter into one or more tax
protection agreements for the benefit of a Class or Series, pursuant to which,
and as more fully described in the related Prospectus Supplement, the provider
of such agreement will make payments to the Trust in the event any withholding
taxes are imposed on payments of interest or principal to the Certificateholders
of the related Series or Class.
Interest Rate Swap Agreements, Guaranteed Rate Agreements and Interest Rate
Cap Agreements. If so specified in the related Prospectus Supplement, the
Trustee, on behalf of the Trust, may enter into one or more interest rate swap
agreements, guaranteed rate agreements, interest rate floor and/or cap
agreements, currency exchange agreements or other derivatives securities
agreements for the benefit of a Class or Series, the terms of which will be
specified in the related Prospectus Supplement.
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SERVICER COVENANTS
In the Pooling and Servicing Agreement, the Servicer has agreed, as to each
Receivable and related Account, that it will: (a) duly fulfill all obligations
on its part to be fulfilled under or in connection with the Receivables or the
related Accounts, and will maintain in effect all qualifications required and
comply in all material respects with all requirements of law in order to service
the Receivables and Accounts, the failure to maintain or comply with which would
have a material adverse effect on the Certificateholders; (b) not permit any
rescission or cancellation of the Receivables except as ordered by a court of
competent jurisdiction or other governmental authority; (c) do nothing to impair
the rights of the Certificateholders in the Receivables or the related Accounts;
and (d) not reschedule, revise or defer payments due on the Receivables except
in accordance with its guidelines for servicing receivables.
Under the terms of the Pooling and Servicing Agreement, all Receivables in
an Account will be assigned and transferred to the Servicer and such Account
will no longer be included as an Account if the Servicer discovers, or receives
written notice from the Trustee, that any covenant of the Servicer set forth
above has not been complied with in all material respects and such noncompliance
has not been cured within 60 days (or such longer period as may be agreed to by
the Trustee and the Transferors) thereafter and has a material adverse effect on
the Certificateholders' Interest in such Receivables. Such assignment and
transfer will be made when the Servicer deposits an amount equal to the amount
of such Receivables in the Collection Account on the business day preceding the
Distribution Date following the Monthly Period during which such obligation
arises. This transfer and assignment to the Servicer constitutes the sole remedy
available to the Certificateholders if such covenant or warranty of the Servicer
is not satisfied and the Trust's interest in any such assigned Receivables will
be automatically assigned to the Servicer.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement except (i) upon determination that the
performance of such obligations and duties is no longer permissible under
applicable law or (ii) if such obligations and duties are assumed by an entity
that has satisfied the Rating Agency Condition. No such resignation will become
effective until the Trustee or a successor to the Servicer has assumed the
Servicer's obligations and duties under the Pooling and Servicing Agreement.
Notwithstanding the foregoing, the Servicer may assign part or all of its
obligations and duties as Servicer under the Pooling and Servicing Agreement if
such assignment satisfies the Rating Agency Condition. TRS may assign or
delegate all or part of its rights, duties and obligations as Servicer to
Centurion within the next two years.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the Servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the Servicer is a party, or any person
succeeding to the business of the Servicer, will be the successor to the
Servicer under the Pooling and Servicing Agreement.
SERVICER DEFAULT
In the event of any Servicer Default (as defined below), either the Trustee
or Certificateholders holding Certificates evidencing more than 50% of the
aggregate unpaid principal amount of all Certificates, by written notice to the
Servicer (and to the Trustee if given by the Certificateholders) (a 'TERMINATION
NOTICE'), may terminate all of the rights and obligations of the Servicer, as
Servicer, under the Pooling and Servicing Agreement and in and to the
Receivables and the proceeds thereof and the Trustee will appoint a new Servicer
(a 'SERVICE TRANSFER'); provided, however, that if no Servicer Default other
than a bankruptcy-, insolvency-, receivership-, or conservatorship-related
Servicer Default exists, the bankruptcy trustee, the receiver or the conservator
for the Servicer or the Servicer itself as debtor-in-possession may have the
power to prevent the Trustee or Certificateholders from appointing a successor
Servicer. The rights and interest of the Transferors under the Pooling and
Servicing Agreement in the Transferors' Interest will not be affected by any
Termination Notice or Service Transfer. If within 60 days of receipt of a
Termination Notice the Trustee does not receive any bids from eligible Servicers
to act as successor Servicer and receives an officer's certificate from each
Transferor to the effect that the Servicer cannot in good faith cure the
Servicer Default which gave rise to the Termination Notice, the Trustee shall
grant a right of first refusal to the Transferors which would permit the
Transferors at
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their option to purchase the Certificateholders' Interest on the Distribution
Date in the next calendar month. The purchase price for the Certificateholders'
Interest shall be equal to the sum of the amounts specified therefor with
respect to each outstanding Series in the related Prospectus Supplement, and for
any Certificates offered hereby, in such Prospectus Supplement.
The Trustee will as promptly as possible, after the giving of a Termination
Notice, appoint a successor Servicer and if no successor Servicer has been
appointed by the Trustee and has accepted such appointment by the time the
Servicer ceases to act as Servicer, all rights, authority, power and obligations
of the Servicer under the Pooling and Servicing Agreement will be vested in the
Trustee. Prior to any Service Transfer, the Trustee will seek to obtain bids
from potential Servicers meeting certain eligibility requirements set forth in
the Pooling and Servicing Agreement to serve as a successor Servicer for
servicing compensation not in excess of the Servicing Fee plus any amounts
payable to the Transferors pursuant to the Pooling and Servicing Agreement.
A 'SERVICER DEFAULT' refers to any of the following events:
(a) failure by the Servicer to make any payment, transfer or deposit,
or to give instructions to the Trustee to make any payment, transfer or
deposit, on the date the Servicer is required to do so under the Pooling
and Servicing Agreement or any Supplement, which is not cured within a five
business day grace period;
(b) failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer in
the Pooling and Servicing Agreement or any Supplement which has an Adverse
Effect and which continues unremedied for a period of 60 days after written
notice, or the Servicer assigns its duties under the Pooling and Servicing
Agreement, except as specifically permitted thereunder;
(c) any representation, warranty or certification made by the Servicer
in the Pooling and Servicing Agreement, any Supplement or in any
certificate delivered pursuant to the Pooling and Servicing Agreement or
any Supplement proves to have been incorrect in any material respect when
made, which has an Adverse Effect on the rights of the Certificateholders
of any Series, and which material adverse effect continues for a period of
60 days after written notice; or
(d) the occurrence of certain events of bankruptcy, insolvency,
liquidation, receivership or conservatorship with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of 10 business days after the
applicable grace period or referred to under clauses (b) or (c) for a period of
60 business days after the applicable grace period, will not constitute a
Servicer Default if such delay or failure could not have been prevented by the
exercise of reasonable diligence by the Servicer and such delay or failure was
caused by an act of God or other similar occurrence. Upon the occurrence of any
such event the Servicer will not be relieved from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of the
Pooling and Servicing Agreement and the Servicer must provide the Trustee, the
Transferors and any provider of Series Enhancement prompt notice of such failure
or delay by it, together with a description of its efforts to so perform its
obligations.
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before March 31 of
each calendar year, the Servicer will cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferors and any affiliates thereof) to furnish a report to
the effect that such firm has applied certain procedures agreed upon with the
Servicer and examined certain documents and records relating to the servicing of
the Accounts and that, on the basis of such agreed-upon procedures, nothing has
come to the attention of such firm that caused them to believe that such
servicing was not conducted in compliance with the Pooling and Servicing
Agreement and applicable provisions of each Supplement except for such
exceptions or errors as such firm shall believe to be immaterial and such other
exceptions as shall be set forth in such statement. Such report will set forth
the agreed-upon procedures performed.
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The Pooling and Servicing Agreement provides for delivery to the Trustee on
or before March 31 of each calendar year of a statement signed by an officer of
the Servicer to the effect that the Servicer has, or has caused to be, fully
performed its obligations in all material respects under the Pooling and
Servicing Agreement throughout the preceding year or, if there has been a
default in the performance of any such obligation, specifying the nature and
status of the default.
Copies of all statements, certificates and reports furnished to the Trustee
may be obtained by a request in writing delivered to the Trustee.
AMENDMENTS
The Pooling and Servicing Agreement and any Supplement may be amended from
time to time (including, without limitation, in connection with the issuance of
a Supplemental Certificate, addition of a Participation Interest, allocation of
assets in the Trust to a Series or Group, the designation of Additional
Transferors, the addition to the Trust of receivables arising from charge or
credit accounts other than the Revolving Credit Accounts or to change the
definition of Monthly Period, Determination Date or Distribution Date) by the
Servicer, the Transferors and the Trustee, and without the consent of the
Certificateholders of any Series, provided that (x) the Rating Agency Condition
shall have been satisfied and (y) each Transferor shall have delivered to the
Trustee a certificate of an officer of such Transferor to the effect that such
Transferor reasonably believes that such amendment will not have an Adverse
Effect.
The Pooling and Servicing Agreement or any Supplement may be amended by the
Transferors, the Servicer and the Trustee with the consent of the
Certificateholders evidencing not less than 66 2/3% of the aggregate unpaid
principal amount of the Certificates of all affected Series for which the
Transferors have not delivered an officer's certificate stating that there will
be no Adverse Effect, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of the Pooling and Servicing
Agreement or any Supplement or of modifying in any manner the rights of
Certificateholders. No such amendment, however, may (a) reduce in any manner the
amount of, or delay the timing of, deposits or distributions on any Certificate
without the consent of each Certificateholder, (b)(i) change the definition or
the manner of calculating the Certificateholders' Interest or the Invested
Amount or (ii) reduce the aforesaid percentage of the aggregate unpaid principal
amount of the Certificates the holders of which are required to consent to an
such amendment, in each case without the consent of each Certificateholder or
(c) adversely affect the rating of any Series or Class by the Rating Agency
without the consent of the Holders of Certificates of such Series or Class
evidencing not less than 66 2/3% of the aggregate unpaid principal amount of the
Certificates of such Series or Class. Promptly following the execution of any
amendment to the Pooling and Servicing Agreement (other than an amendment
described in the preceding paragraph), the Trustee will furnish written notice
of the substance of such amendment to each Certificateholder. Notwithstanding
the foregoing, any Supplement executed in connection with the issuance of one or
more new Series of Certificates will not be considered an amendment to the
Pooling and Servicing Agreement.
Additionally, the Pooling and Servicing Agreement and any Supplement will
be amended by the Servicer and the Trustee at the direction of the Transferors
without the consent of any of the Certificateholders (i) to add, modify or
eliminate such provisions as may be necessary or advisable in order to enable
all or a portion of the Trust to qualify as, and to permit an election to be
made to cause all or a portion of the Trust to be treated as, a 'financial asset
securitization investment trust' as described in the provisions of the 'Seven
Year Balanced Budget Act of 1995,' H.R. 2491, 104th Cong., 1st Sess. (1995), or
to enable all or a portion of the Trust to qualify and an election to be made
for similar treatment under such comparable subsequent federal income tax
provisions as may ultimately be enacted into law, and (ii) in connection with
any such election, to modify or eliminate existing provisions of the Pooling and
Servicing Agreement and any Supplement relating to the intended federal income
tax treatment of the Certificates and the Trust in the absence of the election.
See 'Tax Matters' in this Prospectus. It is a condition to any such amendment
that each Rating Agency will have notified the Transferors, the Servicer and the
Trustee in writing that the amendment will not result in a reduction or
withdrawal of the rating of any outstanding Series or Class to which it is a
Rating Agency. The amendments which the Transferors may make in connection with
any election described above without the consent of Certificateholders may
include, without limitation, the elimination of any sale of Receivables and
subsequent
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termination of the Trust upon the occurrence of an Insolvency Event. See
'Certain Legal Aspects of the Receivables--Certain Matters Relating to
Insolvency and Receivership' in this Prospectus.
DEFEASANCE
Pursuant to the Pooling and Servicing Agreement, the Transferors may
terminate their substantive obligations in respect of a Series or the Pooling
and Servicing Agreement (the 'DEFEASED SERIES') by depositing with the Trustee,
under the terms of an irrevocable trust agreement satisfactory to the Trustee,
from amounts representing or acquired with collections on the Receivables
(allocable to the Defeased Series and available to purchase additional
Receivables) monies or Eligible Investments sufficient to make all remaining
scheduled interest and principal payments on the Defeased Series on the dates
scheduled for such payments and to pay all amounts owing to any provider of
Series Enhancement. To achieve that end, Transferors have the right to use
collections on Receivables to purchase Eligible Investments rather than
additional Receivables. Prior to the first exercise of their right to substitute
monies or Eligible Investments for Receivables, the Transferors shall deliver
(i) to the Trustee an opinion of counsel with respect to such deposit and
termination of obligations to the effect that, for federal income tax purposes,
such action would not cause the Trust to be deemed to be an association (or
publicly traded partnership) taxable as a corporation; and (ii) to the Servicer
and the Trustee written notice from each Rating Agency that the Rating Agency
Condition shall have been satisfied. In addition, the Transferors must comply
with certain other requirements set forth in the Pooling and Servicing
Agreement, including requirements that the Transferors deliver to the Trustee an
opinion of counsel to the effect that the deposit and termination of obligations
will not require the Trust to register as an 'investment company' within the
meaning of the Investment Company Act of 1940, as amended, and that the
Transferors deliver to the Trustee and certain providers of Series Enhancement a
certificate of an authorized officer stating that, based on the facts known to
such officer at the time, in the reasonable opinion of the Transferors, such
deposit and termination of obligations will not at the time of its occurrence
cause a Pay-Out Event or a Reinvestment Event or an event that, after the giving
of notice or the lapse of time would constitute a Pay-Out Event or a
Reinvestment Event, to occur with respect to any Series. If the Transferors
discharge their substantive obligations in respect of the Defeased Series, any
Series Enhancement for the affected Series might no longer be available to make
payments with respect thereto.
Upon the making of any deposit described in the preceding paragraph, the
holders of the Certificates of the Defeased Series could recognize taxable gain
for federal income tax purposes to the extent that the value of the affected
Certificates exceeds the tax basis therein, but in no event would be allowed to
deduct a taxable loss for such purposes.
LIST OF CERTIFICATEHOLDERS
Upon written request of any Holder or group of Holders of Certificates of
any Series or of all outstanding Series of record holding Certificates
evidencing not less than 10% of the aggregate unpaid principal amount of the
Certificates of such Series or all Series, as applicable, the Trustee will
afford such Holder or Holders of Certificates access during business hours to
the current list of Certificateholders of such Series or of all outstanding
Series, as the case may be, for purposes of communicating with other Holders of
Certificates with respect to their rights under the Pooling and Servicing
Agreement. See 'Description of the Certificates--Book-Entry Registration' and
'--Definitive Certificates' in this Prospectus.
The Pooling and Servicing Agreement will not provide for any annual or
other meetings of Certificateholders.
THE TRUSTEE
The Bank of New York will act as trustee under the Pooling and Servicing
Agreement. The Corporate Trust Department of The Bank of New York is located at
101 Barclay Street, New York, New York 10286. The Transferors and the Servicer
and their respective affiliates may from time to time enter into normal banking
and trustee relationships with the Trustee and its affiliates. The Trustee or
the Transferors may hold Certificates in their own names; however, any
Certificates so held shall not be entitled to participate in any decisions made
or instructions given to the Trustee by the Certificateholders as a group. In
addition, for purposes of meeting the
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legal requirements of certain local jurisdictions, the Trustee shall have the
power to appoint a co-trustee or separate trustees of all or any part of the
Trust. In the event of such appointment, all rights, powers, duties and
obligations shall be conferred or imposed upon the Trustee and such separate
trustee or co-trustee jointly or, in any jurisdiction in which the Trustee shall
be incompetent or unqualified to perform certain acts, singly upon such separate
trustee or co-trustee, who shall exercise and perform such rights, powers,
duties and obligations solely at the direction of the Trustee.
DESCRIPTION OF THE PURCHASE AGREEMENTS
The following summary is qualified in its entirety by reference to the
certain receivables purchase agreements entered into by Centurion and Credco, in
the ordinary course of their respective businesses, (collectively, the 'CREDCO
PURCHASE AGREEMENT') and the receivables purchase agreement entered into by
Credco and RFC II (the 'RFC II PURCHASE AGREEMENT'), forms of which are filed as
exhibits to the Registration Statement of which this Prospectus is a part and
which are incorporated by reference herein.
Sale of Receivables. The Receivables transferred to the Trust by RFC II
were acquired by RFC II from Credco pursuant to the RFC II Purchase Agreement.
The Receivables transferred to RFC II by Credco have been acquired by Credco
from Centurion pursuant to the Credco Purchase Agreement entered into between
Centurion, as seller of certain of the Receivables, and Credco, as purchaser. In
connection with such sale of the Receivables to Credco, Centurion has (i) filed
appropriate UCC financing statements to evidence such sale and perfect Credco's
right, title and interest in such Receivables and (ii) indicated in its computer
files that the Receivables have been sold to Credco by Centurion and that such
Receivables will be sold or transferred by Credco to RFC II.
Pursuant to the RFC II Purchase Agreement, Credco (the 'SELLER' under the
RFC II Purchase Agreement) sold to RFC II all of its right, title and interest
in and to (i) all of the Receivables existing in the Accounts as of the Initial
Cut-Off Date and (ii) Recoveries allocable to such Receivables. In addition,
Credco may also sell the Receivables in Additional Accounts designated from time
to time for inclusion as Accounts as of the date of such designation.
In connection with such sale of Receivables to RFC II, Credco will indicate
in its files that such Receivables have been sold to RFC II by Credco and that
such Receivables will be sold or transferred by RFC II to the Trust. The records
and agreements relating to the Accounts and Receivables may not be segregated by
Credco from other documents and agreements relating to other credit accounts and
receivables. Credco and RFC II will file UCC financing statements meeting the
requirements of applicable state law in each of the jurisdictions necessary to
perfect the ownership or security interest of RFC II in such Receivables. See
'Risk Factors--Potential Priority of Certain Liens' and '--Certain Matters
Relating to the Insolvency or Receivership of a Transferor or Other Holder of
the Original Transferor Certificate' and 'Certain Legal Aspects of the
Receivables' in this Prospectus.
Pursuant to the Pooling and Servicing Agreement, Centurion will, subject to
certain conditions, designate Additional Accounts to be included as Accounts,
the Receivables of which will be conveyed by Centurion to the Trust pursuant to
the Pooling and Servicing Agreement and, if Credco owns any such Receivables, by
Credco to RFC II, for conveyance by RFC II to the Trust, pursuant to the RFC II
Purchase Agreement. See 'The Pooling and Servicing Agreement
Generally--Additions of Accounts or Participation Interests' in this Prospectus.
Representations and Warranties. In the RFC II Purchase Agreement, Credco
represents and warrants to RFC II to the effect that, among other things, as of
the date of the RFC II Purchase Agreement and, if Credco will own any
Receivables in any designated Additional Accounts, as of the date of designation
of such Additional Accounts, it is duly organized and in good standing and has
the authority to consummate the transactions contemplated by such RFC II
Purchase Agreement. In the RFC II Purchase Agreement, Credco additionally
represents and warrants that as of the Initial Cut-Off Date and, if Credco will
own any Receivables in any designated Additional Accounts, as of each date of
designation of such Additional Accounts, each Receivable transferred thereunder
was, or is on such date of designation, an Eligible Receivable. In the event of
a breach of any representation and warranty set forth in the RFC II Purchase
Agreement which results in the requirement that RFC II accept retransfer of an
Ineligible Receivable under the Pooling and Servicing Agreement, then Credco
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shall repurchase such Ineligible Receivable from RFC II on the date of such
retransfer. The purchase price for such Ineligible Receivables shall be the
principal amount thereof plus applicable finance charges.
Credco also represents and warrants to RFC II in the RFC II Purchase
Agreement that, among other things, as of the date of the RFC II Purchase
Agreement and, if Credco will own any Receivables in any designated Additional
Accounts, as of each date of designation of such Additional Accounts (a) the RFC
II Purchase Agreement constitutes a valid and binding obligation of Credco and
(b) the RFC II Purchase Agreement constitutes a valid sale to RFC II of all
right, title and interest of Credco in and to the Receivables existing in the
Accounts as of the Initial Cut-Off Date and, if Credco will own any Receivables
in any designated Additional Accounts, as of each date of designation of such
Additional Accounts and in the proceeds thereof. If the breach of any of the
representations and warranties described in this paragraph results in the
obligation of RFC II under the Pooling and Servicing Agreement to accept
retransfer of the Receivables, Credco will repurchase the Receivables
retransferred to RFC II for an amount of cash at least equal to the amount of
cash RFC II is required to deposit under the Pooling and Servicing Agreement in
connection with such retransfer.
Amendments. The RFC II Purchase Agreement may be amended by RFC II and
Credco without the consent of the Certificateholders. No such amendment,
however, may have an Adverse Effect and no such amendment may change, modify,
delete or add any other obligation of Credco or RFC II unless the Rating Agency
Condition has been satisfied with respect to such amendment.
Termination. The RFC II Purchase Agreement will terminate immediately
after the Trust terminates. In addition, if a bankruptcy trustee, receiver or
conservator is appointed for Centurion or Credco or certain other liquidation,
bankruptcy or insolvency events occur, Credco will immediately cease to sell
Receivables to RFC II and promptly give notice of such event to RFC II and the
Trustee, unless the bankruptcy trustee, receiver or conservator instructs
otherwise.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
Each of Centurion and RFC II in the Pooling and Servicing Agreement, and
Credco in the RFC II Purchase Agreement, will represent and warrant that its
respective transfers of Receivables constitute valid sales and assignments of
all of its respective right, title and interest in and to the Receivables,
except for the interest of each Transferor as a holder of a Transferor
Certificate. Each Transferor will also represent and warrant that, if the
transfer of Receivables by such Transferor to the Trust is deemed to create a
security interest under the UCC, there will exist a valid first-priority
perfected security interest in such Transferor's rights in the Receivables in
existence at the time of the formation of the Trust or at the date of
designation of any Additional Accounts that include Receivables owned by it, as
the case may be, in favor of the Trust and a valid first-priority perfected
security interest in such Transferor's rights in the Receivables created
thereafter in favor of the Trust on and after their creation, in each case until
termination of the Trust. For a discussion of the Trust's rights arising from
these representations and warranties not being satisfied, see 'The Pooling and
Servicing Agreement Generally--Representations and Warranties' in this
Prospectus.
Each of Centurion and RFC II in the Pooling and Servicing Agreement, and
Credco in the RFC II Purchase Agreement, will represent that the Receivables are
'accounts' or 'general intangibles' for purposes of the UCC. Both the sale of
accounts and the transfer of accounts as security for an obligation are treated
under the UCC as creating a security interest therein and are subject to its
provisions and the filing of an appropriate financing statement or statements is
required to perfect the interest of the Trust in the Receivables. If a transfer
of general intangibles is deemed to create a security interest, the UCC applies
and filing an appropriate financing statement or statements is also required in
order to perfect the Trust's security interest. Financing statements covering
the Receivables will be filed under the UCC to protect the Transferors and the
Trust if any of the transfers of Receivables is deemed to be subject to the UCC.
If a transfer of general intangibles is deemed to be a sale, then the UCC is not
applicable and no further action under the UCC is required although action may
be required under other applicable law to protect the Trust's interest from
third parties.
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There are certain limited circumstances under the UCC in which prior or
subsequent transferees of Receivables coming into existence after a Series
Closing Date could have an interest in such Receivables with priority over the
Trust's interest. A tax, governmental lien or other nonconsensual lien on
property of a Transferor or Credco arising prior to the time a Receivable comes
into existence may also have priority over the interest of the Trust in such
Receivable. Furthermore, if the FDIC were appointed as a receiver or conservator
of Centurion, certain administrative expenses of the receiver or conservator may
also have priority over the interest of the Trust in such related Receivables.
Under the RFC II Purchase Agreement, however, Credco will warrant that it has
transferred the Receivables to RFC II free and clear of the lien of any third
party. In addition, Credco will covenant that it will not sell, pledge, assign,
transfer or grant any lien on any Receivable (or any interest therein) other
than to RFC II. Similarly, under the Pooling and Servicing Agreement, each
Transferor will warrant that it has transferred the Receivables to the Trust
free and clear of the lien of any third party, and each Transferor will covenant
that it will not sell, pledge, assign, transfer, or grant any lien on any
Receivables (or any interest therein) other than to the Trust. While TRS or an
affiliate of TRS is the Servicer, cash collections on the Receivables may be
held by TRS or an affiliate of TRS and commingled with its funds for brief
periods and, in the event of the bankruptcy, insolvency, receivership or
conservatorship of TRS or an affiliate of TRS, the Trust may not have a
perfected interest in such commingled collections.
CERTAIN MATTERS RELATING TO INSOLVENCY AND RECEIVERSHIP
Centurion has represented and warranted that the transfer of Receivables to
Credco pursuant to the Credco Purchase Agreement is a valid sale and assignment
of such Receivables from Centurion to Credco. Centurion also represents and
warrants in the Pooling and Servicing Agreement that the transfer of the
Receivables by it to the Trust pursuant to the Pooling and Servicing Agreement
is either a valid sale and assignment of such Receivables to the Trust or the
grant to the Trust of a security interest in the Receivables. The Federal
Deposit Insurance Act, as amended ('FDIA') sets forth certain powers that the
FDIC could exercise if it were appointed conservator or receiver of Centurion.
Subject to clarification by regulations or interpretations, positions taken by
the staff of the FDIC prior to the passage of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended ('FIRREA') do not suggest that
the FDIC, as receiver Or conservator for Centurion, would interfere with the
timely transfer to the Trust of payments collected on the Receivables. If,
however, the FDIC were to assert a contrary position, such as requiring Credco
or the Trustee to establish its right to payments by submitting to and
completing the administrative claims procedures under the FDIA, or the
conservator or receiver were to request a stay of proceedings with respect to
Centurion as provided under the FDIA, delays in payment on outstanding Series of
Certificates and possible reductions in the amount of those payments could
occur. In the event Centurion's transfer of Receivables to the Trust or
Centurion's sale of the Receivables to Credco, as applicable, is deemed to
constitute the creation of a security interest, such a security interest, to the
extent it was validly perfected before the insolvency of Centurion and was not
taken or granted in contemplation of insolvency, or with the intent to hinder,
delay or defraud Centurion, the FDIA provides that such security interest should
not be subject to avoidance by the FDIC, as receiver or conservator. If,
however, the FDIC were to assert a contrary position, such as requiring Credco,
RFC II or the Trustee to establish its right to those payments by submitting to
and completing the administrative claims procedure under the FDIA, or the
conservator or receiver were to request a stay of proceedings with respect to
Centurion as provided under the FDIA, delays in payments on the Certificates and
possible reductions in the amount of those payments could occur. Upon the
occurrence of an Insolvency Event with respect to Centurion, if no Pay-Out Event
other than such Insolvency Event exists, the FDIC may have the power to continue
to require Centurion to transfer new Principal Receivables to the Trust and to
prevent the early sale, liquidation, foreclosure or disposition of the
Receivables and the commencement of an Early Amortization Period or Reinvestment
Period. A conservator or receiver of Centurion may also have the power to cause
the early sale of the Receivables and the early retirement of the Certificates
of each Series. A receiver or conservator also may disaffirm or repudiate
Centurion's obligations under the Pooling and Servicing Agreement to accept
reassignment of Receivables from the Trust under certain conditions.
In addition, if Credco were to become a debtor in a bankruptcy case and a
creditor or bankruptcy trustee of Credco or Credco as a debtor-in-possession
were to take the position that the sale of Receivables from Credco to RFC II
should be recharacterized as a pledge of such Receivables to secure a borrowing
by Credco, then delays in
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payments of collections of Receivables to RFC II (and therefore to the Trust and
the Certificateholders) could occur and possible reductions in the amount of
such payments could result.
In a case decided by the U.S. Court of Appeals for the Tenth Circuit,
Octagon Gas System, Inc. v. Rimmer, the court determined that accounts, as
defined under the UCC, and which could include the Receivables, may properly be
included in the bankruptcy estate of a transferor regardless of whether the
transfer of such Receivables is treated as a sale or a secured loan. The
circumstances under which the Octagon ruling would apply are not fully known and
the extent to which the Octagon decision will be followed in other courts or
outside of the Tenth Circuit is not certain. Substantially all of Credco's
business is conducted outside the geographic area subject to the jurisdiction of
the Tenth Circuit. However, TRS has an operation center in, and Centurion is
based in Utah, which is inside the geographic area subject to the jurisdiction
of the Tenth Circuit. If the findings in the Octagon case were applied in a
Credco bankruptcy, the Receivables would be part of its bankruptcy estate, would
be subject to claims of creditors of Credco and would be subject to the
potential delays and reductions in payments to RFC II and the Certificateholders
described in the preceding paragraph even if the transfer is treated as a sale.
While TRS or an affiliate of TRS is the Servicer, for as long as the
Servicer's short-term credit rating (which may be an implied rating) is at least
A-1 by S&P and P-1 by Moody's cash collections held by the Servicer may be
commingled and used for the benefit of the Servicer prior to each Distribution
Date and, in the event of the bankruptcy, insolvency, receivership or
conservatorship of the Servicer or, in certain circumstances, the lapse of
certain time periods, the Trust may not have a perfected security interest in
such collections. However, if, while TRS or an affiliate of TRS is the Servicer,
the short-term credit rating of the Servicer (which may be an implied rating) is
reduced below A-1 by S&P and P-1 by Moody's (or such other rating below A-1 or
P-1, as the case may be, which is acceptable to such Rating Agency), within five
business days of such reduction, the Servicer will begin to deposit collections
directly into the Collection Account within two business days of each Date of
Processing unless (i) the Servicer has obtained a guarantee with respect to its
deposit and payment obligations under the Pooling and Servicing Agreement
pursuant to a guaranty (in form and substance satisfactory to the Rating
Agencies) from a guarantor that has a short-term credit rating of at least A-1
or P-1 from each applicable Rating Agency (or such other rating below A-1 or
P-1, as the case may be, which is acceptable to such Rating Agency) or (ii) the
Rating Agency Condition shall be satisfied with respect to the Servicer's
inability to satisfy the rating requirement described above. In the event of a
Servicer Default relating to the bankruptcy or insolvency of the Servicer, if no
Servicer Default other than such bankruptcy-, insolvency-, receivership- or
conservatorship-related Servicer Default exists, the bankruptcy trustee,
receiver or conservator for the Servicer or the Servicer itself as
debtor-in-possession may have the power to prevent either the Trustee or the
Certificateholders from appointing a successor Servicer. In addition, if the
Servicer becomes a debtor-in-possession in a bankruptcy case, the Servicer's
rights under the Pooling and Servicing Agreement (including the right to service
the Receivables) would be property of the estate of the Servicer and, therefore,
under the Bankruptcy Code, subject to the Servicer's right to assume or reject
such agreement. See 'The Pooling and Servicing Agreement Generally--Servicer
Default' in this Prospectus.
RFC II has been structured such that (i) the voluntary or involuntary
petition for relief by or against RFC II under the Bankruptcy Code and (ii) the
substantive consolidation of the assets and liabilities of RFC II with those of
TRS are unlikely. RFC II is a separate, limited purpose subsidiary, the
certificate of incorporation of which contains limitations on the nature of RFC
II's business and restrictions on the ability of RFC II to commence a voluntary
case or proceeding under such laws without the prior unanimous consent of all
directors. See 'RFC II, Credco, Centurion and TRS--RFC II' in this Prospectus.
Each Transferor will take all actions that are required under the UCC to
perfect the Trust's interest in the Receivables and each Transferor has
warranted to the Trust that the Trust will have a first-priority security
interest therein and, with certain exceptions, in the proceeds thereof.
Nevertheless, a tax or government lien or other non-consensual lien on property
of a Transferor arising prior to the time a Receivable is conveyed to the Trust
may have priority over the interest of the Trust in such Receivable. Pursuant to
the Pooling and Servicing Agreement, the Trustee will covenant that it will not
at any time institute against a Transferor any bankruptcy, reorganization,
liquidation, receivership, conservatorship or other proceedings under any
federal or state bankruptcy or similar law. Notwithstanding such steps, if a
Transferor were to become a debtor in a bankruptcy case, and a bankruptcy
trustee, receiver or conservator for such Transferor or a creditor of such
Transferor or the
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costs and liabilities such Transferor as a debtor-in-possession were to take the
position that the transfer of the Receivables from such Transferor to the Trust
should be recharacterized as a pledge of such Receivables, then delays in
payments on the Certificates and possible reductions in the amount of such
payments could result.
If an Insolvency Event occurs, the Transferors will promptly give notice
thereof to the Trustee and a Pay-Out Event or Reinvestment Event will occur with
respect to each Series. Pursuant to the Pooling and Servicing Agreement, newly
created Receivables will not be transferred to the Trust on and after any such
Insolvency Event unless the bankruptcy trustee, receiver or conservator
instructs otherwise. Following the occurrence of an Insolvency Event with
respect to any Transferor or holder of the Original Transferor Certificate, the
Trustee will proceed to sell, dispose of or otherwise liquidate the Receivables
in a commercially reasonable manner and on commercially reasonable terms, unless
within a specified period of time Certificateholders representing undivided
interests aggregating more than 50% of the Invested Amount of each Series of
Certificates issued and outstanding (or, with respect to any Series with two or
more Classes, 50% of the Invested Amount of each Class), each Transferor (or
other holder of the Original Transferor Certificate) not then subject to an
Insolvency Event, each holder of a Supplemental Certificate, and possibly
certain other persons designated by the Transferors to the Trustee prior to the
Insolvency Event instruct otherwise (assuming that the bankruptcy trustee,
conservator or receiver does not order such a sale despite such instructions).
The proceeds from the sale of the Receivables would be treated as collections of
the Receivables and deposited into the Collection Account and after distribution
of such amounts the Trust will terminate. This procedure could be delayed and
proceeds may be insufficient to pay Certificateholders in full, as described
above. In addition, upon the occurrence of an Insolvency Event with respect to
any Transferor or holder of the Original Transferor Certificate, if no Pay-Out
Event or Reinvestment Event other than such Insolvency Event exists, the
bankruptcy trustee, receiver or conservator for such Transferor or holder, or
such Transferor or holder as a debtor-in-possession, may have the power to
prevent the early sale, liquidation or disposition of the Receivables and the
commencement of the Early Amortization Period or Early Accumulation Period. See
'Description of the Certificates--Pay-Out Events and Reinvestment Events' in
this Prospectus.
CONSUMER PROTECTION LAWS
The relationship of the consumer and the provider of consumer credit is
extensively regulated by federal and state consumer protection laws. With
respect to credit accounts issued by Centurion, the most significant federal
laws include the Federal Truthin-Lending, Equal Credit Opportunity, Fair Credit
Reporting and Fair Debt Collection Practices Acts. These statutes impose various
disclosure requirements either before or when an Account is opened, or both, and
at the end of monthly billing cycles, and, in addition, limit account holder
liability for unauthorized use, prohibit certain discriminatory practices in
extending credit, and regulate practices followed in collections. In addition,
account holders are entitled under these laws to have payments and credits
applied to the revolving credit account promptly and to request prompt
resolution of billing errors. Congress and the states may enact new laws and
amendments to existing laws to regulate further the consumer revolving credit
industry. The Trust may be liable for certain violations of consumer protection
laws that apply to the Receivables, either as assignee from the Transferors with
respect to obligations arising before transfer of the Receivables to the Trust
or as the party directly responsible for obligations arising after the transfer.
In addition, an Account holder may be entitled to assert such violations by way
of set-off against the obligation to pay the amount of Receivables owing. All
Receivables that were not created in compliance in all material respects with
the requirements of such laws (if such noncompliance has a material adverse
effect on the Certificateholders' interest therein) will be reassigned to the
Transferors. The Servicer has also agreed in the Pooling and Servicing Agreement
to indemnify the Trust, among other things, for any liability arising from such
violations. For a discussion of the Trust's fights if the Receivables were not
created in compliance in all material respects with applicable laws, see 'The
Pooling and Servicing Agreement Generally--Representations and Warranties' in
this Prospectus.
Application of federal and state bankruptcy and debtor relief laws would
affect the interests of the Certificateholders if such laws result in any
Receivables being charged-off as uncollectible. See 'The Pooling and Servicing
Agreement Generally--Defaulted Receivables; Rebates and Fraudulent Charges' in
this Prospectus.
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TAX MATTERS
FEDERAL INCOME TAX CONSEQUENCES--GENERAL
The following is a discussion of material federal income tax consequences
relating to the investment in a Certificate offered hereunder. Additional
federal income tax considerations relevant to a particular Series may be set
forth in the related Prospectus Supplement. This discussion is based on current
law, which is subject to changes that could prospectively or retroactively
modify or adversely affect the tax consequences summarized below. The discussion
does not address all of the tax consequences relevant to a particular
Certificate Owner in light of that Certificate Owner's circumstances, and some
Certificate Owners may be subject to special tax rules and limitations not
discussed below. Each prospective Certificate Owner is urged to consult its own
tax adviser in determining the federal, state, local and foreign income and any
other tax consequences of the purchase, ownership and disposition of a
Certificate.
For purposes of this discussion, 'U.S. PERSON' means a citizen or resident
of the United States, a corporation or partnership organized in or under the
laws of the United States, any state thereof, or any political subdivision of
either (including the District of Columbia), or an estate or trust the income of
which is includible in gross income for U.S. federal income tax purposes
regardless of its source. The term 'U.S. CERTIFICATE OWNER' means any U.S.
Person and any other person to the extent that the income attributable to its
interest in a Certificate is effectively connected with that person's conduct of
a U.S. trade or business.
TREATMENT OF THE CERTIFICATES AS DEBT
The Transferors express in the Pooling and Servicing Agreement the intent
that for federal, state and local income and franchise tax purposes, the
Certificates will be debt secured by the Receivables. The Transferors, by
entering into the Pooling and Servicing Agreement, and each investor, by the
acceptance of a beneficial interest in a Certificate, will agree to treat the
Certificates as debt for federal, state and local income and franchise tax
purposes. However, the Pooling and Servicing Agreement generally refers to the
transfer of Receivables as a 'sale,' and because different criteria are used in
determining the non-tax accounting treatment of the transaction, the Transferors
will treat the Pooling and Servicing Agreement for certain non-tax accounting
purposes as causing a transfer of an ownership interest in the Receivables and
not as creating a debt obligation.
A basic premise of federal income tax law is that the economic substance of
a transaction generally determines its tax consequences. The form of a
transaction, while a relevant factor, is not conclusive evidence of its economic
substance. In appropriate circumstances, the courts have allowed taxpayers as
well as the Internal Revenue Service (the 'IRS') to treat a transaction in
accordance with its economic substance, as determined under federal income tax
law, even though the participants in the transaction have characterized it
differently for non-tax purposes.
The determination of whether the economic substance of a purchase of an
interest in property is instead a loan secured by the transferred property has
been made by the IRS and the courts on the basis of numerous factors designed to
determine whether the transferor has relinquished (and the purchaser has
obtained) substantial incidents of ownership in the property. Among those
factors, the primary ones examined are whether the purchaser has the opportunity
to gain if the property increases in value, and has the risk of loss if the
property decreases in value. Except to the extent otherwise specified in the
related Prospectus Supplement, Orrick, Herrington & Sutcliffe LLP, special
federal income tax counsel to the Transferors ('TAX COUNSEL'), is of the opinion
that, under current law as in effect on the Series Closing Date, although no
transaction closely comparable to that contemplated herein has been the subject
of any Treasury regulation, revenue ruling or judicial decision, for federal
income tax purposes the Certificates offered hereunder will not constitute an
ownership interest in the Receivables but will properly be characterized as
debt. Except where indicated to the contrary, the following discussion assumes
that the Certificates offered hereunder are debt for federal income tax
purposes.
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TREATMENT OF THE TRUST
General. The Pooling and Servicing Agreement permits the issuance of
Certificates and certain other interests (including any Collateral Interest) in
the Trust, each of which may be treated for federal income tax purposes either
as debt or as equity interests in the Trust. If all of the Certificates and
other interests (other than the Original Transferor Certificate) in the Trust
were characterized as debt, the Trust might be characterized as a security
arrangement for debt collateralized by the Receivables and issued directly by
the Transferors (or other holders of the Original Transferor Certificate). Under
such a view, the Trust would be disregarded for federal income tax purposes.
Alternatively, if some of the Transferor Certificate, the Certificates and other
interests in the Trust were characterized as equity therein, the Trust might be
characterized as a separate entity owning the Receivables, issuing its own debt,
and jointly owned by the Transferors (or other holders of the Original
Transferor Certificate) and any other holders of equity interests in the Trust.
However, Tax Counsel is of the opinion that, under current law as in effect on
the Series Closing Date, any such entity constituted by the Trust will not be an
association or publicly traded partnership taxable as a corporation.
Possible Treatment of the Trust as a Partnership or a Publicly Traded
Partnership. Although, as described above, Tax Counsel is of the opinion that
the Certificates will properly be treated as debt for federal income tax
purposes and that the Trust will not be treated as an association or publicly
traded partnership taxable as a corporation, such opinion does not bind the IRS
and thus no assurance can be given that such treatment will prevail. Further,
such opinion is made with respect to current law, which is subject to change. If
the IRS were to contend successfully that some or all of the Transferor
Certificates, the Certificates or any other interests in the Trust (including
any Collateral Interest) were equity in the Trust for federal income tax
purposes, all or a portion of the Trust could be classified as a partnership or
as a publicly traded partnership taxable as a corporation for such purposes.
Because Tax Counsel is of the opinion that the Certificates will be
characterized as debt for federal income tax purposes and because any holder of
an interest in a Collateral Interest will agree to treat that interest as debt
for such purposes, no attempt will be made to comply with any tax reporting
requirements that would apply as a result of such alternative characterizations.
If the Trust were treated in whole or in part as a partnership in which
some or all holders of interests in the publicly offered Certificates were
partners, that partnership could be classified as a publicly traded partnership,
and so could be taxable as a corporation. Further, applicable Treasury
regulations (the 'REGULATIONS') could cause the Trust to constitute a publicly
traded partnership even if all holders of interests in publicly offered
Certificates are treated as holding debt. The Regulations generally apply to
taxable years beginning after December 31, 1995, and thus could affect the
classification of presently existing entities and the ongoing tax treatment of
already completed transactions. Although the Regulations provide for a 10-year
grandfather period for a partnership actively engaged in an activity before
December 4, 1995, the Trust would not qualify for this grandfather period. If
the Trust were classified as a publicly traded partnership, whether by reason of
the treatment of publicly offered Certificates as equity or by reason of the
Regulations, it would avoid taxation as a corporation if its income was not
derived in the conduct of a 'financial business'; however, whether the income of
the Trust would be so classified is unclear.
Under the Code and the Regulations, a partnership will be classified as a
publicly traded partnership if equity interests therein are traded on an
'established securities market,' or are 'readily tradable' on a 'secondary
market' or its 'substantial equivalent.' The Transferors intend to take measures
designed to reduce the risk that the Trust could be classified as a publicly
traded partnership by reason of interests in the Trust other than the publicly
traded Certificates. Although the Transferor expects such measures will
ultimately be successful, certain of the actions that may be necessary for
avoiding the treatment of such interests as 'readily tradable' on a 'secondary
market' or its 'substantial equivalent' are not fully within the control of the
Transferors. As a result, there can be no assurance that the measures the
Transferors intend to take will in all circumstances be sufficient to prevent
the Trust from being classified as a publicly traded partnership under the
Regulations.
If the Trust were treated as a partnership other than a publicly traded
partnership taxable as a corporation, that partnership would not be subject to
federal income tax. Rather, each item of income, gain, loss and deduction of the
partnership generated through the ownership of the related Receivables would be
taken into account directly in computing taxable income of the Transferors (or
the holders of the Original Transferor Certificate) and
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any Certificate Owners treated as partners in accordance with their respective
partnership interests therein. The amounts and timing of income reportable by
any Certificate Owners treated as partners would likely differ from that
reportable by such Certificate Owners had they been treated as owning debt. In
addition, if the Trust were treated in whole or in part as a partnership other
than a publicly traded partnership, income derived from the partnership by any
Certificate Owner that is a pension fund or other tax-exempt entity may be
treated as unrelated business taxable income. Partnership characterization also
may have adverse state and local income or franchise tax consequences for a
Certificate Owner. If the Trust were treated in whole or in part as a
partnership and the number of holders of interests in the publicly offered
Certificates and other interests in the Trust treated as partners equaled or
exceeded 100, the Transferors may cause the Trust to elect to be an electing
large partnership. The consequence of such election to investors could include
the determination of certain tax items at the partnership level and the
disallowance of otherwise allowable deductions. No representation is made as to
whether such election will be made.
If the arrangement created by the Pooling and Servicing Agreement were
treated in whole or in part as a publicly traded partnership taxable as a
corporation, that entity would be subject to federal income tax at corporate tax
rates on its taxable income generated by ownership of the Receivables. That tax
could result in reduced distributions to Certificate Owners. No distributions
from the Trust would be deductible in computing the taxable income of the
corporation, except to the extent that any Certificates were treated as debt of
the corporation and distributions to the related Certificate Owners were treated
as payments of interest thereon. In addition, distributions to Certificate
Owners not treated as holding debt would be dividend income to the extent of the
current and accumulated earnings and profits of the corporation (and Certificate
Owners may not be entitled to any dividends received deduction in respect of
such income).
TREATMENT OF THE TRUST AS A FASIT
The Small Business Job Protection Act of 1996 (the 'BILL'), enacted on
August 20, 1996, created a new type of entity for federal income tax purposes
called a 'financial asset securitization investment trust' or 'FASIT.' The Bill
generally provides that certain arrangements similar to the Trust may elect to
be treated as a FASIT. Under the FASIT provisions of the Bill, a FASIT will
generally avoid federal income taxation and could issue securities substantially
similar to the Certificates, and those securities would be treated as debt for
federal income tax purposes. Upon satisfying certain conditions set forth in the
Pooling and Servicing Agreement, the Transferors will be permitted to amend the
Pooling and Servicing Agreement and any Supplement in order to enable all or a
portion of the Trust to qualify as a FASIT and to permit a FASIT election to be
made with respect thereto, and to make such modifications to the Pooling and
Servicing Agreement and any Supplement as may be permitted by reason of the
making of such election. See 'The Pooling and Servicing Agreement Generally--
Amendments' in this Prospectus. However, there can be no assurance that the
Transferors will or will not cause any permissible FASIT election to be made
with respect to the Trust or amend the Pooling and Servicing Agreement or any
Supplement in connection with any election. If such election is made, it may
cause a holder to recognize gain (but not loss) with respect to its Certificate,
even though Special Counsel is of the opinion that a Certificate will be treated
as debt for federal income tax purposes without regard to the election and the
Certificate would be treated as debt following the election. Additionally, any
such election and any related amendments to the Pooling and Servicing Agreement
and any Supplement may have other tax and non-tax consequences to Certificate
Owners. Accordingly, prospective Certificate Owners should consult their tax
advisors with regard to the effects of any such election and permitted related
amendments on them in their particular circumstances.
TAXATION OF INTEREST INCOME OF U.S. CERTIFICATE OWNERS
General. Stated interest on a beneficial interest in a Certificate will be
includible in gross income in accordance with a U.S. Certificate Owner's method
of accounting.
Original Issue Discount. If the Certificates are issued with original
issue discount ('OID'), the provisions of sections 1271 through 1273 and 1275 of
the Internal Revenue Code of 1986 (the 'CODE') will apply to the Certificates.
Under those provisions, a U.S. Certificate Owner (including a cash basis holder)
generally would be required to accrue the OID on its interest in a Certificate
in income for federal income tax purposes on a constant yield basis, resulting
in the inclusion of OID in income somewhat in advance of the
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receipt of cash attributable to that income. In general, a Certificate will be
treated as having OID to the extent that its 'stated redemption price' exceeds
its 'issue price,' if such excess is more than 0.25 percent multiplied by the
weighted average life of the Certificate (determined by taking into account only
the number of complete years following issuance until payment is made for any
partial principal payments). Under section 1272(a)(6) of the Code, special
provisions apply to debt instruments on which payments may be accelerated due to
prepayments of other obligations securing those debt instruments. However, no
regulations have been issued interpreting those provisions, and the manner in
which those provisions would apply to the Certificates is unclear. Additionally,
the IRS could take the position based on Treasury regulations that none of the
interest payable on a Certificate is 'unconditionally payable' and hence that
all of such interest should be included in the Certificate's stated redemption
price at maturity. If sustained, such treatment should not significantly affect
the tax liability of most Certificate Owners, but prospective U.S. Certificate
Owners should consult their own tax advisers concerning the impact to them in
their particular circumstances.
Market Discount. A U.S. Certificate Owner who purchases an interest in a
Certificate at a discount that exceeds any unamortized OID may be subject to the
'market discount' rules of sections 1276 through 1278 of the Code. These rules
provide, in part, that gain on the sale or other disposition of a Certificate
and partial principal payments on a Certificate are treated as ordinary income
to the extent of accrued market discount. The market discount rules also provide
for deferral of interest deductions with respect to debt incurred to purchase or
carry a Certificate that has market discount.
Market Premium. A U.S. Certificate Owner who purchases an interest in a
Certificate at a premium may elect to offset the premium against interest income
over the remaining term of the Certificate in accordance with the provisions of
section 171 of the Code.
SALE OR EXCHANGE OF CERTIFICATES
Upon a disposition of an interest in a Certificate, a U.S. Certificate
Owner generally will recognize gain or loss equal to the difference between the
amount realized on the disposition and the U.S. Certificate Owner's adjusted
basis in its interest in the Certificate. A taxable exchange of a Certificate
could also occur as a result of the Transferors' substitution of money or
investments for Receivables. See 'The Pooling and Servicing Agreement
Generally--Defeasance' in this Prospectus. The adjusted basis in the interest in
the Certificate will equal its cost, increased by any OID or market discount
includible in income with respect to the interest in the Certificate prior to
its sale and reduced by any principal payments previously received with respect
to the interest in the Certificate and any amortized premium. Subject to the
market discount rules, gain or loss will be capital gain or loss if the interest
in the Certificate was held as a capital asset. Capital losses generally may be
used only to offset capital gains.
NON-U.S. CERTIFICATE OWNERS
In general, a non-U.S. Certificate Owner will not be subject to U.S.
federal income tax on interest (including OID) on a beneficial interest in a
Certificate unless (i) the non-U.S. Certificate Owner actually or constructively
owns 10 percent or more of the total combined voting power of all classes of
stock of either Transferor entitled to vote (or of a profits or capital interest
of the Trust if characterized as a partnership), (ii) the non-U.S. Certificate
Owner is a controlled foreign corporation that is related to the Transferors (or
the Trust if treated as a partnership) through stock ownership, (iii) the
non-U.S. Certificate Owner is a bank receiving interest described in Code
Section 881(c)(3)(A), (iv) such interest is contingent interest described in
Code Section 871(h)(4), or (v) the non-U.S. Certificate Owner bears certain
relationships to any holder of either the Original Transferor Certificate other
than the Transferors or any other interest in the Trust not properly
characterized as debt. To qualify for the exemption from taxation, under
currently applicable procedures, the last U.S. Person in the chain of payment
prior to payment to a non-U.S. Certificate Owner (the 'WITHHOLDING AGENT') must
have received (in the year in which a payment of interest or principal occurs or
in either of the two preceding years) a statement that (i) is signed by the
non-U.S. Certificate Owner under penalties of perjury, (ii) certifies that the
non-U.S. Certificate Owner is not a U.S. Person and (iii) provides the name and
address of the non-U.S. Certificate Owner. The statement may be made on a Form
W-8 or substantially similar substitute form, and the non-U.S. Certificate Owner
must inform the Withholding Agent of any change in the information on the
statement within 30 days of the change. If a Certificate is held through a
securities clearing organization or certain other financial institutions,
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the organization or institution may provide a signed statement to the
Withholding Agent. However, in that case, the signed statement must be
accompanied by a Form W-8 or substitute form provided by the non-U.S.
Certificate Owner to the organization or institution holding the Certificate on
behalf of the non-U.S. Certificate Owner. The U.S. Treasury Department recently
issued final Treasury regulations which will revise some of the foregoing
procedures whereby a non-U.S. Certificate Owner may establish an exemption from
withholding generally beginning January 1, 2000; non-U.S. Certificate Owners
should consult their tax advisors concerning the impact to them, if any, of such
revised procedures.
Generally, any gain or income realized by a non-U.S. Certificate Owner upon
retirement or disposition of an interest in a Certificate will not be subject to
U.S. federal income tax, provided that (i) in the case of a Certificate Owner
that is an individual, such Certificate Owner is not present in the United
States for 183 days or more during the taxable year in which such retirement or
disposition occurs and (ii) in the case of gain representing accrued interest,
the conditions described in the preceding paragraph for exemption from
withholding are satisfied. Certain exceptions may be applicable, and an
individual non-U.S. Certificate Owner should consult a tax adviser.
If the Certificates were treated as an interest in a partnership, the
recharacterization could cause a non-U.S. Certificate Owner to be treated as
engaged in a trade or business in the United States. In that event, the non-U.S.
Certificate Owner would be required to file a federal income tax return and, in
general, would be subject to U.S. federal income tax (including the branch
profits tax) on its net income from the partnership. Further, certain
withholding obligations apply with respect to income allocable or distributions
made to a foreign partner. That withholding may be at a rate as high as 39.6
percent. If some or all of the Certificates were treated as stock in a
corporation, any related dividend distributions to a non-U.S. Certificate Owner
generally would be subject to withholding of tax at the rate of 30 percent,
unless that rate were reduced by an applicable tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Backup withholding of U.S. federal income tax at a rate of 31 percent may
apply to payments made in respect of a Certificate to a registered owner who is
not an 'exempt recipient' and who fails to provide certain identifying
information (such as the registered owner's taxpayer identification number) in
the manner required. Generally, individuals are not exempt recipients whereas
corporations and certain other entities are exempt recipients. Payments made in
respect of a U.S. Certificate Owner must be reported to the IRS, unless the U.S.
Certificate Owner is an exempt recipient or otherwise establishes an exemption.
Compliance with the identification procedures (described in the preceding
section) would establish an exemption from backup withholding for a non-U.S.
Certificate Owner who is not an exempt recipient.
In addition, upon the sale of a Certificate to (or through) a 'broker,' the
broker must withhold 31 percent of the entire purchase price, unless either (i)
the broker determines that the seller is a corporation or other exempt recipient
or (ii) the seller provides certain identifying information in the required
manner, and in the case of a non-U.S. Certificate Owner certifies that the
seller is a non-U.S. Certificate Owner (and certain other conditions are met).
Such a sale must also be reported by the broker to the IRS, unless either (i)
the broker determines that the seller is an exempt recipient or (ii) the seller
certifies its non-U.S. status (and certain other conditions are met).
Certification of the registered owner's non-U.S. status normally would be made
on Form W-8 under penalties of perjury, although in certain cases it may be
possible to submit other documentary evidence. As defined by Treasury
regulations, the term 'broker' includes all persons who stand ready to effect
sales made by others in the ordinary course of a trade or business, as well as
brokers and dealers registered as such under the laws of the United States or a
state. These requirements generally will apply to a U.S. office of a broker, and
the information reporting requirements generally will apply to a foreign office
of a U.S. broker as well as to a foreign office of a foreign broker (i) that is
a controlled foreign corporation within the meaning of section 957(a) of the
Code or (ii) 50 percent or more of whose gross income from all sources for the
three year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the foreign broker has been in
existence) was effectively connected with the conduct of a trade or business
within the United States.
Any amounts withheld under the backup withholding rules from a payment to a
Certificate Owner would be allowed as a refund or a credit against such
Certificate Owner's U.S. federal income tax, provided that the required
information is furnished to the IRS.
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Recently issued final Treasury regulations will revise some of the
foregoing information reporting and backup withholding procedures generally
beginning January 1, 2000; Certificate Owners should consult their tax advisors
concerning the impact to them, if any, of such revised procedures.
STATE AND LOCAL TAXATION
The discussion above does not address the taxation of the Trust or the tax
consequences of the purchase, ownership or disposition of an interest in the
Certificates under any state or local tax law. Each investor should consult its
own tax adviser regarding state and local tax consequences.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ('ERISA'), and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan or an individual retirement account (a
'PLAN') from engaging in certain transactions involving 'plan assets' with
persons that are 'parties in interest' under ERISA or 'disqualified persons'
under the Code (collectively, 'PARTIES IN INTEREST') with respect to the Plan. A
violation of these 'prohibited transaction' rules may generate excise tax and
other liabilities under ERISA and the Code for such persons. For example, a
prohibited transaction would arise, unless an exemption is applicable, if a
Certificate were viewed as debt of either Transferor and such Transferor were a
Party in Interest with respect to a Plan that acquired the Certificate. Plans
that are government plans (as defined in Section 3(32) of ERISA) and certain
church plans (as defined in Section 3(33) of ERISA) are not subject to ERISA
requirements.
Moreover, additional prohibited transactions could arise if the Trust
Assets were deemed to constitute 'plan assets' of any Plan that owned
Certificates. The Department of Labor ('DOL') has issued a final regulation (the
'PLAN ASSET REGULATION') concerning the definition of what constitutes 'plan
assets' of a Plan subject to ERISA or Section 4975 of the Code. Under the Plan
Asset Regulation, the assets and properties of corporations, partnerships and
certain other entities in which a Plan makes an investment in an 'equity
interest' could be deemed to be 'plan assets' of the Plan in certain
circumstances. Accordingly, if Plans (or other entities whose assets include
'plan assets') purchase Certificates, the Trust could be deemed to hold 'plan
assets' unless one of the exceptions under the Plan Asset Regulation is
applicable to the Trust.
The Plan Asset Regulation only applies to the purchase by a Plan of an
'equity interest' in an entity. Assuming that a Certificate is an equity
interest, the Plan Asset Regulation contains an exception which provides that,
if a Plan (or an entity whose assets include 'plan assets') acquires a
'publicly-offered security,' the issuer of the security is not deemed to hold
'plan assets.' A publicly-offered security is a security which is (i) freely
transferable, (ii) part of a class of securities that is owned by 100 or more
investors independent of the issuer and of one another at the conclusion of the
initial offering and (iii) either is (A) part of a class of securities
registered under Section 12(b) or 12(g) of the Exchange Act, or (B) sold to the
Benefit Plan as part of an offering of securities to the public pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the 'SECURITIES ACT') and the class of securities of which such security is a
part is registered under the Exchange Act within 120 days (or such later time as
may be allowed by the Securities and Exchange Commission (the 'COMMISSION') )
after the end of the fiscal year of the issuer during which the offering of such
securities to the public occurred. Each Class of a Series must be tested
separately for this purpose.
There are no restrictions imposed on the transfer of the Certificates
offered hereby, and the Certificates offered hereby will be sold as part of an
offering pursuant to an effective registration statement under the Securities
Act and then will be timely registered under the Securities Exchange Act of
1934, as amended (the 'EXCHANGE ACT'). Based on information provided by any
underwriter, agent or dealer involved in the distribution of the Certificates
offered hereby, the Transferors will notify the Trustee as to whether or not the
Certificates of any Series (or, if there is more than one Class in a Series,
each Class) will be expected to be held by at least 100 separately named persons
at the conclusion of the offering. The Transferor will not, however, determine
whether there will, in fact, be at least 100 separately named persons or whether
the 100 investor requirement of the exception for publicly-offered securities is
satisfied as to the Certificates of such Series (or Class). Prospective
purchasers may obtain a copy of the notification described in the second
preceding sentence from the Trustee at its Corporate Trust Department.
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If the Certificates of a Series (or Class) fail to meet the criteria of
publicly-offered securities and the Trust Assets are deemed to include 'plan
assets' of Certificateholders that are plans, transactions involving the Trust
and parties in interest or disqualified persons with respect to Plans holding
such Certificates might be prohibited under Section 406 of ERISA and Section
4975 of the Code unless an exemption is applicable. Thus, for example, if a
participant in any Plan holding Certificates of such Series (or Class) is an
Accountholder of one of the Accounts, under a DOL interpretation the purchase of
such Certificates by such Plan could constitute a prohibited transaction. The
following five class exemptions issued by the DOL could apply in such event: DOL
Prohibited Transaction Class Exemption ('PTCE') 96-23 (Class Exemption for Plan
Asset Transactions Determined by In-House Asset Managers), 95-60 (Class
Exemption for Certain Transactions Involving Insurance Company General
Accounts), PTCE 91-38 (Class Exemption for Certain Transactions Involving Bank
Collective Investment Funds), PTCE 90-1 (Class Exemption for Certain
Transactions Involving Insurance Company Pooled Separate Accounts) and PTCE
84-14 (Class Exemption for Plan Asset Transactions Determined by Independent
Qualified Professional Asset Managers). There is no assurance that these
exemptions, even if all of the conditions specified therein are satisfied, will
apply to all transactions involving the Trust Assets.
Moreover, as discussed above, while (unless provided otherwise in the
applicable Prospectus Supplement) Tax Counsel has given its opinion that the
Certificates will properly be treated as debt for federal income tax purposes,
if any Certificates are treated as equity interests in a partnership in which
other Certificates are debt, all or part of a tax-exempt investor's share of
income from the Certificates that are treated as equity could be treated as
unrelated debt-financed income under the Code taxable to the investor.
In light of the foregoing, fiduciaries of Plans (or other entities whose
assets include 'plan assets') considering the purchase of Certificates should
consult their own counsel as to whether the acquisition of such Certificates
would constitute or result in a prohibited transaction, whether Trust Assets
which are represented by such Certificates would be considered 'plan assets,'
the consequences that would apply if the Trust Assets were considered 'plan
assets,' the applicability of exemptive relief from the prohibited transaction
rules and the applicability of the tax on unrelated business income and
unrelated debt-financed income.
Unless otherwise provided in the applicable Prospectus Supplement, if the
Transferors do not notify the Trustee, as described above, that the Certificates
of any particular Series (or Class) will be expected to be held by at least 100
separately named persons, the Certificates of such Series (or Class) may not be
acquired by any Plan or by any entity investing assets that are treated as 'plan
assets' of any Plan. Furthermore, in that case, the Pooling and Servicing
Agreement, the Supplement and each such Certificate will provide that each
holder of such Certificate shall be deemed to have represented and warranted
that it is not a Plan and is not purchasing such Certificate on behalf of a Plan
or with assets that are treated as 'plan assets' of a Plan.
PLAN OF DISTRIBUTION
The Transferors may sell Certificates (a) through underwriters or dealers,
(b) directly to one or more purchasers, or (c) through agents. The related
Prospectus Supplement will set forth the terms of the offering of any
Certificates offered hereby, including, without limitation, the names of any
underwriters, the purchase price of such Certificates and the proceeds to the
Transferors from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers.
If underwriters are used in a sale of any Certificates of a Series offered
hereby, such Certificates will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices to be determined at the time of sale or at the time of commitment
therefor. Such Certificates may be offered to the public either through
underwriting syndicates represented by managing underwriters or by underwriters
without a syndicate, including by an underwriter directly to a trust or other
special purpose funding vehicle. Unless otherwise set forth in the related
Prospectus Supplement, the obligations of the underwriters to purchase such
Certificates will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all of such Certificates if any of
such Certificates are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
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Certificates of a Series offered hereby may also be offered and sold, if so
indicated in the related Prospectus Supplement, in connection with a remarketing
upon their purchase, in accordance with a redemption or repayment pursuant to
their terms, by one or more firms ('REMARKETING FIRMS') acting as principals for
their own accounts or as agents for the Transferors. Any Remarketing Firm will
be identified and the terms of its agreement, if any, with the Transferors and
its compensation will be described in the related Prospectus Supplement.
Remarketing Firms may be deemed to be underwriters in connection with the
Certificates remarketed thereby.
Certificates may also be sold directly by the Transferors or through agents
designated by the Transferors from time to time. Any agent involved in the offer
or sale of Certificates will be named, and any commissions payable by the
Transferors to such agent will be set forth, in the related Prospectus
Supplement. Unless otherwise indicated in the related Prospectus Supplement, any
such agent will act on a best efforts basis for the period of its appointment.
Any underwriters, agents or dealers participating in the distribution of
Certificates may be deemed to be underwriters, and any discounts or commissions
received by them on the sale or resale of Certificates may be deemed to be
underwriting discounts and commissions, under the Securities Act. Agents and
underwriters may be entitled under agreements entered into with the Transferors
to indemnification by the Transferors against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments that the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be affiliates or customers of, engage in
transactions with, or perform services for, the Transferors or their affiliates
in the ordinary course of business.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
Centurion and the Trust by Robert D. Kraus, Group Counsel to Centurion, and
certain legal matters relating to the Certificates will be passed upon for RFC
II and the Trust by Carol V. Schwartz, Group Counsel to American Express. Mr.
Kraus and Ms. Schwartz each own or have the right to acquire a number of shares
of common stock of American Express which in the aggregate is equal to less than
.05% of the outstanding common stock of American Express. Certain other legal
matters will be passed upon for the Transferors and the Trust by Orrick,
Herrington & Sutcliffe LLP. Certain legal matters will be passed upon for the
Underwriters by Orrick, Herrington & Sutcliffe LLP. Certain legal matters
relating to the federal tax consequences of the issuance of the Certificates and
certain other matters relating thereto will be passed upon for the Transferors
by Orrick, Herrington & Sutcliffe LLP.
REPORTS TO CERTIFICATEHOLDERS
The Servicer will prepare monthly and annual reports that will contain
information about the Trust. The financial information contained in the reports
will not be prepared in accordance with generally accepted accounting
principles. Unless and until Definitive Certificates are issued, the reports
will be sent to Cede & Co. which is the nominee of the Depository Trust Company
and the registered holder of the Certificates. No financial reports will be sent
to you. See 'Description of the Certificates--Book-Entry Registration' and 'The
Pooling and Servicing Agreement Generally--Evidence as to Compliance' in this
Prospectus and 'Series Provisions--Reports' in the accompanying Prospectus
Supplement.
WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement relating to the Certificates with the
Commission. This Prospectus is part of the registration statement, but the
registration statement includes additional information.
The Servicer will file with the Commission all required annual, monthly and
special Commission reports and other information about the Trust.
You may read and copy any reports, statements or other information we file
at the Commission's public reference room in Washington, D.C. You can request
copies of these documents, upon payment of a duplicating fee, by writing to the
Commission. Please call the Commission at (800) SEC-0330 for further information
on the
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operation of the public reference rooms. Our Commission filings are also
available to the public on the Commission Internet site (http://www.sec.gov.).
The Commission allows us to 'incorporate by reference' information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus. Information that we file later with
the Commission will automatically update the information in this Prospectus. In
all cases, you should rely on the later information over different information
included in this Prospectus or the accompanying Prospectus Supplement. We
incorporate by reference any future annual, monthly and special Commission
reports and proxy materials filed by or on behalf of the Trust until we
terminate our offering of the Certificates.
As a recipient of this Prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing or
calling us at: American Express Travel Related Services Company, Inc., American
Express Tower, World Financial Center, 200 Vesey Street, New York, New York
10048, Attention: Secretary; (212) 640-5583.
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERMS PAGE(S)
- ----- -------
<S> <C>
Account Owner................................ 41
Account Owners............................... 41
Accounts..................................... 25
Additional Accounts.......................... 17
Additional Transferors....................... 38
Adverse Effect............................... 36
AET.......................................... 21
Aggregate Addition........................... 17
Aggregate Addition Accounts.................. 16
American Express............................. 23
APR.......................................... 20
Assigned Assets.............................. 24
Assumed Obligations.......................... 24
Assuming Entity.............................. 24
Average Rate................................. 42
Bankruptcy Code.............................. 24
Bill......................................... 66
business day................................. 45
Cardmember................................... 17
Cash Collateral Account...................... 54
Cash Collateral Guaranty..................... 54
CEBA......................................... 10
Cede......................................... 26
Cedel........................................ 27
Cedel Participants........................... 28
Centurion.................................... 8, 16
Certificate Owners........................... 30
Certificateholders' Interest................. 28
Certificates................................. 16
Charge Card Account.......................... 17
Class........................................ 30
Code......................................... 66
Collateral Interest.......................... 54
Collateral Invested Amount................... 28, 53
Collection Account........................... 44
Commission................................... 69
Controlled Accumulation Amount............... 31
Controlled Accumulation Period............... 31
Controlled Amortization Amount............... 32
Controlled Amortization Period............... 32
Controlled Deposit Amount.................... 31
Controlled Distribution Amount............... 32
Cooperative.................................. 29
Credco....................................... 23
Credco Purchase Agreement.................... 59
Credit Enhancement........................... 53
Credit Enhancer.............................. 53
Date of Processing........................... 44
Defaulted Amount............................. 52
Defaulted Receivables........................ 52
Defeased Series.............................. 58
Definitive Certificates...................... 30
Depositaries................................. 27
<PAGE>
<CAPTION>
TERMS PAGE(S)
- ----- -------
<S> <C>
Depository................................... 26
Determination Date........................... 45
Disclosure Document.......................... 43
Discount Percentage.......................... 39
Discount Receivables......................... 39
Distribution Date............................ 45
DOL.......................................... 69
DTC.......................................... 26
DTC Services................................. 29
Early Accumulation Period.................... 32
Early Amortization Period.................... 32
Eligible Account............................. 25
Eligible Institution......................... 44
Eligible Investments......................... 44
Eligible Receivable.......................... 36
ERISA........................................ 69
Euroclear.................................... 27
Euroclear Operator........................... 29
Euroclear Participants....................... 28
Euroclear Provisions......................... 29
Excess Allocation Series..................... 50
Excess Finance Charge Collections............ 50
Exchange Act................................. 69
Expected Final Payment Date.................. 31
FASIT........................................ 66
FDIA......................................... 61
FDIC......................................... 44
Finance Charge Receivables................... 26
FIRREA....................................... 61
Floating Allocation Percentage............... 46
Full Invested Amount......................... 52
Funding Period............................... 51
Group........................................ 47
Group Investor Additional Amounts............ 47
Group Investor Default Amount................ 47
Group Investor Finance Charge Collections.... 47
Group Investor Monthly Fees.................. 48
Group Investor Monthly Interest.............. 48
Holders...................................... 30
Indirect Participants........................ 27
Industry..................................... 29
Ineligible Receivables....................... 36
Initial Accounts............................. 16
Initial Cut-Off Date......................... 16, 35
Initial Selection Date....................... 16
Insolvency Event............................. 34
Interest Funding Account..................... 30
Interest Payment Date........................ 42
Invested Amount.............................. 42
Investor Default Amount...................... 47
Investor Finance Charge Collections.......... 48
IRS.......................................... 64
</TABLE>
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<TABLE>
<CAPTION>
TERMS PAGE(S)
- ----- -------
<S> <C>
IT........................................... 21
L/C Issuer................................... 54
Monthly Period............................... 45
Monthly Servicing Fee........................ 34
Moody's...................................... 44
New Accounts................................. 16
New Issuance................................. 42
OID.......................................... 66
Optima Accounts.............................. 17
Optima Card Account.......................... 17
Optima Line of Credit Account................ 17
Original Transferor Certificate.............. 16
Paired Series................................ 51
Participants................................. 27
Participation Interests...................... 17
Parties in Interest.......................... 69
Pay-Out Event................................ 33
Permitted Liens.............................. 36
Plan......................................... 69
Plan Asset Regulation........................ 69
Pooling and Servicing Agreement.............. 16
Portfolio Yield.............................. 42
Pre-Funding Account.......................... 52
Pre-Funding Amount........................... 52
Premium Percentage........................... 40
Premium Receivables.......................... 40
Prime Rate................................... 20
Principal Allocation Percentage.............. 46
Principal Commencement Date.................. 31
Principal Funding Account.................... 31
Principal Receivables........................ 26
Principal Sharing Series..................... 50
Principal Shortfalls......................... 50
Principal Terms.............................. 42
Prior Series................................. 51
Prospectus Supplement........................ 16
PTCE......................................... 70
Rating Agency................................ 23
Rating Agency Condition...................... 24
Reallocated Investor Finance Charge
Collections................................ 47
Reallocation Group........................... 46
Receivables.................................. 17
Receivables Purchase Agreement............... 41
Record Date.................................. 27
Recoveries................................... 17
Regulations.................................. 65
Reinvestment Events.......................... 33
Remarketing Firms............................ 71
Removed Accounts............................. 26
Required Minimum Principal Balance........... 38
Required Transferor Amount................... 37
Revolving Credit Accounts.................... 18
Revolving Period............................. 31
<PAGE>
<CAPTION>
TERMS PAGE(S)
- ----- -------
<S> <C>
RFC II....................................... 9, 16
RFC II Purchase Agreement.................... 59
S&P.......................................... 45
Securities Act............................... 69
Seller....................................... 59
Senior Certificates.......................... 53
Series....................................... 16
Series Adjusted Invested Amount.............. 46
Series Allocable Defaulted Amount............ 46
Series Allocable Finance Charge
Collections................................ 46, 48
Series Allocable Principal Collections....... 46
Series Allocation Percentage................. 46
Series Closing Date.......................... 31
Series Cut-Off Date.......................... 31
Series Enhancement........................... 16
Series Invested Amount....................... 38
Series Required Transferor Amount............ 46
Series Termination Date...................... 31
Service Transfer............................. 55
Servicer..................................... 16
Servicer Default............................. 56
Servicing Fee................................ 34
Shared Principal Collections................. 50
Sign & Travel Account........................ 17
Special Funding Account...................... 51
Special Payment Date......................... 33
Subordinated Certificates.................... 53
Supplement................................... 26
Supplemental Certificate..................... 16, 38
Surviving Servicer Company................... 24
Surviving Transferor Company................. 23
Systems...................................... 29
Tax Counsel.................................. 64
Tax Opinion.................................. 43
Termination Notice........................... 55
Total Portfolio.............................. 25
Transfer Date................................ 45
Transferor................................... 16
Transferor Amount............................ 36
Transferor Certificates...................... 16
Transferor Servicing Fee..................... 34
Transferors' Interest........................ 16
TRS.......................................... 9, 16
Trust........................................ 16
Trust Adjusted Invested Amount............... 46
Trust Assets................................. 17
Trust Portfolio.............................. 25
Trustee...................................... 16
U.S. Certificate Owner....................... 64
U.S. Person.................................. 64
UCC.......................................... 23
Withholding Agent............................ 67
Y2K.......................................... 21
</TABLE>
74
<PAGE>
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Fee............................................................. $ 278*
Printing and Engraving....................................................... **
Trustee's Fees............................................................... **
Legal Fees and Expenses...................................................... **
Blue Sky Fees and Expenses................................................... **
Accountants' Fees and Expenses............................................... **
Rating Agency Fees........................................................... **
Miscellaneous Fees........................................................... **
-----------
Total...................................................................... $ **
-----------
-----------
</TABLE>
- ------------------
* Actual
** To be filed by Amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
American Express Centurion Bank
American Express Centurion Bank ('Centurion') may indemnify, in accordance
with and to the full extent permitted by the laws of the State of Utah and
regulations promulgated by the Federal Deposit Insurance Corporation as in
effect at the time of the adoption of Article VIII of Centurion's Bylaws or as
such laws may be amended from time to time, and shall so indemnify to the full
extent permitted by such laws, any person (and the heirs and legal
representatives of any such person) made or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer, employee, agent or fiduciary of Centurion
or of any constituent corporation absorbed in any consolidation or merger, or
serves as such with another corporation, or with a partnership, joint venture,
trust, employee benefit plan, or other enterprise at the request of Centurion or
any such constituent corporation provided, however, such indemnification shall
not cover any such indemnified party for actions undertaken by such party in bad
faith or involving their deliberate dishonesty or personal gain.
American Express Receivables Financing Corporation II
The American Express Receivables Financing Corporation II ('RFC II')
Certificate of Incorporation provides for indemnification of directors and
officers of RFC II to the fullest extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law provides, in substance,
that Delaware corporations shall have the power, under specified circumstances,
to indemnify their directors, officers, employees and agents in connection with
actions, suits or proceedings brought against them by a third party or in the
right of the corporation, by reason of the fact that they are or were such
directors, officers, employees or agents, against expenses incurred in any such
action, suit or proceeding. The Delaware General Corporation Law also provides
that RFC II may purchase insurance on behalf of any such director, officer,
employee or agent.
Article Eleventh of RFC II's Certificate of Incorporation provides that, to
the extent that a director, officer, employee or agent of RFC II has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to above, or in defense of any claim, issue or matter
therein, he or she shall be indemnified by RFC II against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in
II-1
<PAGE>
connection therewith, without the necessity of any action being taken by RFC II
other than the determination, in good faith, that such defense has been
successful. In all other cases wherein indemnification is provided by Article
Eleventh, unless ordered by a court, indemnification shall be made by RFC II
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he or she has met the applicable standard of conduct
specified in Article Eleventh. Such determination shall be made (i) by the Board
of Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion or (iii) by the
holders of a majority of the shares of capital stock of RFC II entitled to vote
thereon.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person seeking
indemnification did not act in good faith and in a manner which he or she
reasonably believed to be in or not opposed to the best interests of RFC II,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful. Entry of a judgment by consent as
part of a settlement shall not be deemed a final adjudication of liability for
negligence or misconduct in the performance of duty, nor of any other issue or
matter.
Expenses (including attorneys' fees) incurred by an officer or director in
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by RFC II in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount unless it shall ultimately be determined that he or
she is entitled to be indemnified by RFC II. Expenses (including attorneys'
fees) incurred by other employees or agents of RFC II in defending any civil,
criminal, administrative or investigative action, suit or proceeding may be paid
by RFC II upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
No director shall be personally liable to RFC II or its stockholders for
monetary damages for any breach of fiduciary duty by such director as a
director. Notwithstanding the foregoing sentence, a director shall be liable to
the extent provided by applicable law (i) for breach of the director's duty of
loyalty to RFC II or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv)
for any transaction from which the director derived an improper personal
benefit. No amendment to or repeal of subparagraph (e) to Article Eleventh of
the Certificate of Incorporation shall apply to or have any effect on the
liability or alleged liability of any director of RFC II for or with respect to
any acts or omissions of such director occurring prior to such amendment.
The indemnification and advancement of expenses provided by Article
Eleventh of the Certificate of Incorporation shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement may be
entitled under any By-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such person.
ITEM 16. EXHIBITS.
(a) Exhibits
<TABLE>
<C> <C> <S>
1.1 -- Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 to the Registrants'
Registration Statement on Form S-3, No. 33-95784).
4.1 -- Pooling and Servicing Agreement dated May 16, 1996 (incorporated by reference to Exhibit 4.1 to
the Registrants' Registration Statement on Form 8-A filed with the Securities and Exchange
Commission on May 30, 1996).
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <C> <S>
4.2 -- Form of Series Supplement, including form of Asset Backed Certificate (incorporated by reference
to Exhibit 4.2 to the Registrants' Registration Statement on Form S-3, No. 33-95784).
5.1 -- Opinion of American Express Centurion Bank with respect to legality.
5.2 -- Opinion of American Express Receivables Financing Corporation II with respect to legality.
8.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect to tax matters.
10.1 -- RFC II Purchase Agreement dated May 16, 1996.
23.1 -- Consent of American Express Centurion Bank (included in its opinion filed as Exhibit 5.1).
23.2 -- Consent of American Express Receivables Financing Corporation II (included in its opinion filed as
Exhibit 5.2).
23.3 -- Consent of Orrick, Herrington & Sutcliffe LLP (included in its opinion filed as Exhibit 8.1).
24.1 -- Power of Attorney of American Express Centurion Bank (including Resolution of the Board of
Directors authorizing such Power of Attorney).
24.2 -- Power of Attorney of American Express Receivables Financing Corporation II (including Resolution
of the Board of Directors authorizing such Power of Attorney).
</TABLE>
(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 American Express Credit Account
Master Trust (the 'Trust') hereby undertake as follows:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement; (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement; provided, however, that (a)(i) and (a)(ii) will not
apply if the information required to be included in a post-effective
amendment 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.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering hereof.
(c) 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.
(d) 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.
(e) 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 Registrants have 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,
II-3
<PAGE>
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by each Registrant of
expenses incurred or paid by a director, officer or controlling person of
such 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 Registrants 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.
(f) 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) under the Securities Act of 1933 shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(g) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-4
<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 the City of New York, State of New
York, on November 19, 1998.
AMERICAN EXPRESS CENTURION BANK
as originator of the Trust and
Registrant
By: /s/ Maureen Ryan
-----------------------------
Name: Maureen Ryan
Title: Assistant Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on November 19, 1998 by the
following persons in the capacities indicated.
SIGNATURE
/s/ Frank L. Skillern*
- --------------------------------------
Name: Frank L. Skillern
Title: Director and Chief Executive
Officer (Principal Executive Officer)
/s/ David E. Poulsen*
- --------------------------------------
Name: David E. Poulsen
Title: Director, President and Chief
Credit Officer
/s/ Gilbert E. Ahye*
- --------------------------------------
Name: Gilbert E. Ahye
Title: Director
- --------------------------------------
Name: Marcia J. Garciaz
Title: Director
/s/ Ash Gupta*
- --------------------------------------
Name: Ash Gupta
Title: Director
/s/ Peter A. Lefferts*
- --------------------------------------
Name: Peter A. Lefferts
Title: Director
- --------------------------------------
Name: Raymond F. Pettit
Title: Director
II-5
<PAGE>
- --------------------------------------
Name: Roslyn M. Watson
Title: Director
- --------------------------------------
Name: Jim F. Welch
Title: Director
/s/ Rhonda M. Halpern*
- --------------------------------------
Name: Rhonda M. Halpern
Title: Chief Financial Officer and
Principal Accounting Officer
- ---------------
*By /s/ Maureen Ryan Maureen Ryan -- Attorney-in-Fact
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each Co-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 the City of New York, State of
New York, on November 19, 1998.
AMERICAN EXPRESS RECEIVABLES FINANCING
CORPORATION II
as originator of the Trust and
Co-Registrant and on behalf of the
Trust as Co-Registrant
By: /s/ Leslie R. Scharfstein
--------------------------------
Name: Leslie F. Scharfstein
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on November 19, 1998 by the
following persons in the capacities indicated.
SIGNATURE
/s/ John D. Koslow
- ----------------------------------
Name: John D. Koslow
Title: Director
/s/ Donald J. Puglisi
- ----------------------------------
Name: Donald J. Puglisi
Title: Director
/s/ Jay B. Stevelman
- ----------------------------------
Name: Jay B. Stevelman
Title: Director
/s/ Leslie R. Scharfstein
- ----------------------------------
Name: Leslie R. Scharfstein
Title: President (Principal Executive
Officer)
/s/ Ellen J. Casey
- ----------------------------------
Name: Ellen J. Casey
Title: Vice President and Treasurer
(Principal Financial Officer
and Principal Accounting Officer)
- ---------------
*By /s/ Leslie R. Scharfstein Leslie R. Scharfstein -- Attorney-in-Fact
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 to the Registrants'
Registration Statement on Form S-3, No. 33-95784).
4.1 -- Pooling and Servicing Agreement dated May 16, 1996 (incorporated by reference to Exhibit 4.1 to the
Registrants' Registration Statement on Form 8-A filed with the Securities and Exchange Commission on
May 30, 1996).
4.2 -- Form of Series Supplement, including form of Asset Backed Certificate (incorporated by reference to
Exhibit 4.2 to the Registrants' Registration Statement on Form S-3, No. 33-95784).
5.1 -- Opinion of American Express Centurion Bank with respect to legality.
5.2 -- Opinion of American Express Receivables Financing Corporation II with respect to legality.
8.1 -- Opinion of Orrick, Herrington & Sutcliffe LLP with respect to tax matters.
10.1 -- RFC II Purchase Agreement dated May 16, 1996.
23.1 -- Consent of American Express Centurion Bank (included in its opinion filed as Exhibit 5.1).
23.2 -- Consent of American Express Receivables Financing Corporation II (included in its opinion filed as
Exhibit 5.2).
23.3 -- Consent of Orrick, Herrington & Sutcliffe LLP (included in its opinion filed as Exhibit 8.1).
24.1 -- Power of Attorney of American Express Centurion Bank (including Resolution of the Board of Directors
authorizing such Power of Attorney).
24.2 -- Power of Attorney of American Express Receivables Financing Corporation II (including Resolution of
the Board of Directors authorizing such Power of Attorney).
</TABLE>
EXHIBIT 5.1
[American Express Company Letterhead]
November 19, 1998
American Express Centurion Bank
6985 Union Park Center
Midvale, Utah 84047
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
I have acted as counsel to American Express Centurion Bank ("Centurion
Bank") in connection with the above-referenced Registration Statement on Form
S-3 being filed concurrently herewith with the Securities and Exchange
Commission (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), relating to the proposed issuance and sale of Asset Backed
Certificates (the "Certificates") of the American Express Credit Account Master
Trust to which Centurion Bank and American Express Receivables Financing
Corporation II ("RFC II") will transfer receivables (the "Receivables")
generated from time to time in a portfolio of designated card accounts. The
American Express Credit Account Master Trust was formed pursuant to the Pooling
and Servicing Agreement, dated as of May 16, 1996, among Centurion Bank, RFC II,
American Express Travel Related Services Company, Inc., as Servicer (the
"Servicer"), and The Bank of New York, as trustee (the "Trustee") (the "Pooling
Agreement"). The Certificates will be issued and delivered in accordance with
the terms of a specified Series Supplement to the Pooling Agreement.
I or members of my staff have examined the Pooling Agreement, form of
Series Supplement and form of Underwriting Agreement included as exhibits to the
Registration Statement. In addition, we have examined and considered executed
originals or counterparts, or certified or other copies, identified to my
satisfaction as being true copies, of such certificates, instruments, documents
and other corporate records of Centurion Bank and matters of fact and law as I
deem necessary for the purposes of the opinion expressed below. Capitalized
terms not otherwise defined herein have the respective meanings assigned to such
terms in the Pooling Agreement.
In my examination I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity to
original documents of all documents submitted to me as certified or photostatic
copies and the authenticity of the original of such latter documents.
<PAGE>
Based upon the foregoing, and subject to the qualification that I am
admitted to the practice of law in the State of New York and do not purport to
be expert in the laws of any jurisdiction other than the State of New York, I am
of the opinion that, assuming the due execution and delivery of the Pooling
Agreement and applicable Series Supplement thereto substantially in the form
filed as an exhibit to the Registration Statement, upon the issuance,
authentication and delivery of the Certificates in accordance with the
provisions of such Pooling Agreement and such Supplement, against payment
therefor, the Certificates will be legally issued, fully paid and
non-assessable.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the Prospectus included in the Registration Statement.
Very truly yours,
/s/ Robert D. Kraus
------------------------
Robert D. Kraus
Group Counsel
2
EXHIBIT 5.2
[American Express Company Letterhead]
November 19, 1998
American Express Receivables
Financing Corporation II
World Financial Center
200 Vesey Street
New York, New York 10285
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
I have acted as counsel to American Express Receivables Financing
Corporation II ("RFC II") in connection with the above-referenced Registration
Statement on Form S-3 being filed concurrently herewith with the Securities and
Exchange Commission (the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"), relating to the proposed issuance and sale of
Asset Backed Certificates (the "Certificates") of the American Express Credit
Account Master Trust to which RFC II and American Express Centurion Bank
("Centurion Bank") will transfer receivables (the "Receivables") generated from
time to time in a portfolio of designated card accounts. The American Express
Credit Account Master Trust was formed pursuant to the Pooling and Servicing
Agreement, dated as of May 16, 1996, among RFC II, Centurion Bank, American
Express Travel Related Services Company, Inc., as Servicer (the "Servicer"), and
The Bank of New York, as trustee (the "Trustee") (the "Pooling Agreement"). The
Certificates will be issued and delivered in accordance with the terms of a
specified Series Supplement to the Pooling Agreement.
I or members of my staff have examined the Pooling Agreement, form of
Series Supplement and form of Underwriting Agreement included as exhibits to the
Registration Statement. In addition, we have examined and considered executed
originals or counterparts, or certified or other copies, identified to my
satisfaction as being true copies, of such certificates, instruments, documents
and other corporate records of RFC II and matters of fact and law as I deem
necessary for the purposes of the opinion expressed below. Capitalized terms not
otherwise defined herein have the respective meanings assigned to such terms in
the Pooling Agreement.
In my examination I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, the conformity to
original documents of all documents submitted to me as certified or photostatic
copies and the authenticity of the original of such latter documents.
<PAGE>
Based upon the foregoing, and subject to the qualification that I am
admitted to the practice of law in the State of New York and do not purport to
be expert in the laws of any jurisdiction other than the State of New York, I am
of the opinion that, assuming the due execution and delivery of the Pooling
Agreement and applicable Series Supplement thereto substantially in the form
filed as an exhibit to the Registration Statement, upon the issuance,
authentication and delivery of the Certificates in accordance with the
provisions of such Pooling Agreement and such Supplement, against payment
therefor, the Certificates will be legally issued, fully paid and
non-assessable.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the Prospectus included in the Registration Statement.
Very truly yours,
/s/ Carol V. Schwartz
------------------------
Carol V. Schwartz
Group Counsel
2
EXHIBIT 8.1
[ORRICK, HERRINGTON & SUTCLIFFE LLP LETTERHEAD]
November 19, 1998
American Express Receivables Financing Corporation II
World Financial Center
200 Vesey Street
New York, NY 10285
American Express Centurion Bank
World Financial Center
200 Vesey Street
New York, NY 10285
Re: American Express Credit Account Master Trust
Ladies and Gentlemen:
We have acted as special counsel for American Express Receivables
Financing Corporation II ("RFC II") and American Express Centurion Bank
("Centurion Bank") in connection with the preparation of the Registration
Statement on Form S-3 (the "Registration Statement"), which has been filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), for the registration under the Act of Asset Backed
Certificates (the "Certificates") representing an undivided interest in the
American Express Credit Account Master Trust (the "Trust"). The Certificates are
to be issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of May 16, 1996 among RFC II, Centurion Bank,
American Express Travel Related Services Company, Inc., as servicer, and the
Bank of New York, as trustee, substantially in the form filed as exhibit 4.1 to
the Registration Statement.
We hereby confirm that the statements set forth in the prospectus
relating to the Certificates (the "Prospectus") forming a part of the
Registration Statement under the headings "Prospectus Summary--Tax Status" and
"Tax Matters," accurately describe the material federal income tax consequences
to holders of the Certificates issued pursuant to the Prospectus.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the reference to Orrick, Herrington &
Sutcliffe LLP under the captions "Legal Matters" and "Tax Matters" in the
Prospectus. In giving such consent, we do not admit that we are "experts,"
within the meaning of the term used in the Act or the rules and
<PAGE>
November 19, 1998
Page Two
regulations of the Securities and Exchange Commission issued thereunder, with
respect to any part of the Registration Statement, including this opinion as an
exhibit or otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
----------------------------------------
ORRICK, HERRINGTON & SUTCLIFFE LLP
EXHIBIT 10.1
AMERICAN EXPRESS CREDIT CORPORATION
Seller of the Receivables
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
Purchaser of the Receivables
RECEIVABLES PURCHASE AGREEMENT
Dated as of May 16, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
Section 1.1. Certain Definitions...................................................................1
Section 1.2. Other Definitional Provisions.........................................................2
ARTICLE II
PURCHASE AND CONVEYANCE OF CREDCO RECEIVABLES
Section 2.1. Purchase..............................................................................3
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1. Purchase Price........................................................................4
Section 3.2. Adjustments to Purchase Price.........................................................4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Seller Relating to the Seller...................5
Section 4.2. Representations and Warranties of the Seller Relating to the Agreement and the
Credco Receivables................................................................6
Section 4.3. Representations and Warranties of RFC II..............................................8
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Seller...............................................................9
Section 5.2. Covenants of the Seller with Respect to Credco Purchase Agreements...................10
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1. Reassignment of Ineligible Credco Receivables........................................10
Section 6.2. Reassignment of Certificateholders' Interest in Trust Portfolio......................11
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1. Conditions to RFC II's Obligations Regarding the Credco Receivables..................11
Section 7.2. Conditions Precedent to the Seller's Obligations.....................................12
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment............................................................................13
Section 8.2. Protection of Right, Title and Interest to Credco Receivables........................14
Section 8.3. Governing Law........................................................................14
Section 8.4. Notices..............................................................................14
Section 8.5. Severability of Provisions...........................................................15
Section 8.6. Assignment...........................................................................15
Section 8.7. Acknowledgement and Agreement of the Seller..........................................15
Section 8.8. Further Assurances...................................................................16
Section 8.9. No Waiver; Cumulative Remedies.......................................................16
Section 8.10. Counterparts.........................................................................16
Section 8.11. Binding; Third Party Beneficiaries...................................................16
Section 8.12. Merger and Integration...............................................................16
Section 8.13. Headings.............................................................................16
Section 8.14. Schedules and Exhibits...............................................................16
Section 8.15. Survival of Representations and Warranties...........................................16
Section 8.16. Nonpetition Covenant.................................................................17
</TABLE>
-ii-
<PAGE>
This Receivables Purchase Agreement (the "Agreement") is
entered into as of May 16, 1996 by and between American Express Receivables
Financing Corporation II, a corporation organized and existing under the laws of
the State of Delaware ("RFC II"), and American Express Credit Corporation, a
corporation organized and existing under the laws of the State of Delaware (the
"Seller").
WHEREAS, the Seller owns certain receivables purchased
pursuant to (i) a Receivables Sale and Purchase Agreement, dated as of October
1, 1987, as amended as of the date hereof, relating to the purchase and sale of
receivables generated in Line of Credit Accounts, as such term is defined in
such Receivables Sale and Purchase Agreement, (ii) a Receivables Sale and
Purchase Agreement, dated as of October 1, 1987, as amended as of the date
hereof, relating to the purchase and sale of receivables generated in Optima
Card accounts, and (iii) a Receivables Sale and Purchase Agreement, dated as of
October 1, 1987, as amended as of the date hereof, relating to the purchase and
sale of receivables generated in Sign and Travel Accounts (each, as amended, a
"Credco Purchase Agreement," and collectively, the "Credco Purchase
Agreements"), each by and between the Seller and American Express Centurion Bank
("Centurion Bank"), a Delaware banking institution.
WHEREAS, the Seller wishes to sell such receivables to RFC II,
who will in turn transfer its right, title and interest in and to such
receivables pursuant to a Pooling and Servicing Agreement, dated as of May 16,
1996 (the "Pooling and Servicing Agreement"), by and among RFC II, as a
Transferor, Centurion Bank, as a Transferor, American Express Travel Related
Services Company, Inc., as Servicer, and The Bank of New York, as Trustee, to
the American Express Credit Account Master Trust (the "Trust").
NOW, THEREFORE, the parties, each in consideration of the
promises of the other and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Definitions. Capitalized terms not
specifically defined in this Agreement that are defined in the Pooling and
Servicing Agreement shall have the same meaning when used herein as when used in
the Pooling and Servicing Agreement; in addition, the following words and
phrases shall have the following meanings:
"Addition Notice Date" shall have the meaning specified in
Section 2.1(b) of this Agreement.
"Addition Notice" shall have the meaning specified in Section
2.1(b) of this Agreement.
"Closing Date" shall mean May 16, 1996.
<PAGE>
"Conveyance" shall have the meaning specified in Section
2.1(a).
"Conveyance Papers" shall have the meaning specified in
Section 4.1(c).
"Credco Principal Receivables" shall mean all Principal
Receivables as defined in the Pooling and Servicing Agreement that are Credco
Receivables.
"Credco Receivables" shall mean all Receivables as defined in
the Pooling and Servicing Agreement that have been sold to the Seller pursuant
to the Credco Purchase Agreements.
"Ineligible Credco Receivable" shall have the meaning
specified in Section 6.1(a).
"Purchase Price" shall have the meaning set forth in Section
3.1.
"Purchased Assets" shall mean (i) all Credco Receivables that
have been assigned by the Seller to RFC II pursuant to the Conveyance and all
Supplemental Conveyances, all monies due and or to become due and all amounts
received with respect thereto and all proceeds (including, without limitation,
"proceeds" as defined in the UCC) thereof and (ii) the right to receive all
Recoveries with respect to all such Credco Receivables.
"Supplemental Assignment" shall have the meaning set forth in
Section 2.1(b).
"Supplemental Conveyance" shall have the meaning set forth in
Section 2.1(b).
"Trustee" shall mean The Bank of New York, a New York banking
corporation, the institution executing the Pooling and Servicing Agreement as,
and acting in the capacity of Trustee thereunder, or its successor in interest,
or any successor trustee appointed as provided in the Pooling and Servicing
Agreement.
Section 1.2. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificate, other document, or made or delivered
pursuant hereto unless otherwise defined therein.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement or any Conveyance Paper shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Section, Subsection, Schedule and Exhibit references contained in
this Agreement are references to Sections, Subsections, Schedules and Exhibits
in or to this Agreement unless otherwise specified.
(c) All determinations of the principal or finance charge
balance of Credco Receivables, and of any collections thereof, shall be made in
accordance with the Pooling and Servicing Agreement and all applicable
Supplements.
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<PAGE>
ARTICLE II
PURCHASE AND CONVEYANCE OF CREDCO RECEIVABLES
Section 2.1. Purchase.
(a) By execution of this Agreement, the Seller does hereby
sell, transfer, assign, set over and otherwise convey to RFC II (collectively,
the "Conveyance"), without recourse except as provided herein, all of its right,
title and interest in, to and under (i) the Credco Receivables existing at the
close of business on the Initial Cut-Off Date, all monies due and or to become
due and all amounts received with respect thereto and all proceeds (including,
without limitation, "proceeds" as defined in the UCC) thereof and (ii) the right
to receive Recoveries with respect to such Credco Receivables.
(b) If, from time to time, Additional Accounts are designated
pursuant to Section 2.09 of the Pooling and Servicing Agreement, then RFC II
shall give the Seller written notice thereof (the "Addition Notice") on or
before the eighth Business Day (the "Addition Notice Date") prior to the
Addition Date therefor (unless such notice requirement is waived). The Seller
shall on the Addition Date, sell, transfer, assign, set over and otherwise
convey to RFC II (collectively, a "Supplemental Conveyance"), without recourse
except as provided herein, all of its right, title and interest in, to and under
(i) the Credco Receivables existing in the Additional Accounts described in the
appropriate computer files in accordance with Section 2.01 of the Pooling and
Servicing Agreement, all monies due and or to become due and all amounts
received with respect thereto and all proceeds (including, without limitation,
"proceeds" as defined in the UCC) thereof and (ii) the right to receive
Recoveries with respect to such Credco Receivables. In connection with each such
Supplemental Conveyance, the Seller shall on the Addition Date therefor execute
and deliver to RFC II a written assignment from RFC II to the Seller in
substantially the form of Exhibit A hereto (a "Supplemental Assignment").
(c) In connection with the Conveyance and each Supplemental
Conveyance, the Seller agrees (i) to record and file, at its own expense,
financing statements (and continuation statements with respect to such financing
statements when applicable) with respect to the Purchased Assets, meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect, and maintain perfection of, the assignment of the
Purchased Assets from the Seller to RFC II, (ii) that such financing statements
shall name the Seller, as seller, and RFC II, as purchaser, and the Trustee, as
assignee, and (iii) to deliver a file-stamped copy of each such financing
statement or other evidence of such filing to RFC II as soon as is practicable
after filing.
(d) In connection with the Conveyance and each Supplemental
Conveyance, the Seller further agrees that it will, at its own expense, on or
prior to the Closing Date or the Addition Date, as applicable, indicate in
appropriate files and records that the Purchased Assets have been conveyed to
RFC II in accordance with this Agreement and have been conveyed by RFC II to the
Trustee pursuant to the Pooling and Servicing Agreement for the benefit of the
Certificateholders.
3
<PAGE>
(e) The parties hereto intend that the Conveyance and each
Supplemental Conveyance of the Seller's right, title and interest in and to the
Purchased Assets shall constitute an absolute sale, conveying good title free
and clear of any liens, claims, encumbrances or rights of others from the Seller
to RFC II and that the Purchased Assets shall not be a part of the Seller's
estate in the event of the insolvency or bankruptcy of the Seller. It is the
intention of the parties hereto that the arrangements with respect to the
Purchased Assets shall constitute a purchase and sale of such Purchased Assets
and not a loan. In the event, however, that a court of competent jurisdiction
were to hold that the transactions evidenced hereby constitute a loan and not a
contribution to capital or a purchase and sale, it is the intention of the
parties hereto that this Agreement shall constitute a security agreement under
applicable law, and that the Seller shall be deemed to have granted and does
hereby grant to RFC II a first-priority perfected security interest in all of
the Seller's right, title and interest in, to and under the Purchased Assets,
whether now owned or hereafter acquired, in order to secure the rights of RFC II
hereunder and the obligations of the Seller hereunder.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.1. Purchase Price.
The "Purchase Price" for the Credco Receivables conveyed to
RFC II under this Agreement shall be an amount equal to 100 percent of the
aggregate balance of Credco Principal Receivables as of the Initial Cut-Off Date
or the Addition Cut-off Date, as applicable, adjusted to reflect such factors as
RFC II and the Seller mutually agree will result in a Purchase Price determined
to be the fair market value of such Credco Receivables. The Purchase Price with
respect to the Conveyance shall be payable on the Closing Date and the Purchase
Price with respect to each Supplemental Conveyance shall be payable on the
Distribution Date following the Monthly Period during which the related Addition
Date occurs or on any applicable closing date with respect to such Addition.
Section 3.2. Adjustments to Purchase Price.
The Purchase Price shall be adjusted on each Distribution Date
with respect to any Credco Receivable previously conveyed to RFC II by the
Seller which has since been reversed by the Seller or the Servicer because of a
rebate, refund, unauthorized charge or billing error to an Obligor or because
such Credco Receivable was created in respect of merchandise which was refused
or returned by an Obligor. The amount of such adjustment shall equal (a) the
reduction in the principal balance of such Credco Receivable resulting from the
occurrence of such event multiplied by (b) the quotient (expressed as a
percentage) of (i) the purchase price for all Principal Receivables payable on
such Distribution Date computed in accordance with the Pooling and Servicing
Agreement divided by (ii) the aggregate face amount of Principal Receivables
paid for on such date pursuant to the Pooling and Servicing Agreement. In the
event that there is an adjustment pursuant to this Section 3.2 to the Purchase
Price, the Seller agrees that, not later than 1:00 p.m. New York City time on
such Distribution Date, the Seller shall pay to RFC II an amount equal to the
amount of such adjustment.
4
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Seller
Relating to the Seller. The Seller hereby represents and warrants to RFC II as
of the Closing Date and on each Addition Date on which a Supplemental Conveyance
occurs that:
(a) Organization and Good Standing. The Seller is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Delaware and has, in all material respects, full corporate
power, authority and legal right to own its properties and conduct its business
as such properties are presently owned and such business is presently conducted,
and to execute, deliver and perform its obligations under this Agreement and
each Supplemental Assignment and the transactions contemplated under this
Agreement and each Supplemental Assignment.
(b) Due Qualification. The Seller is duly qualified to do
business and is in good standing as a foreign corporation and has obtained all
necessary licenses and approvals, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals would (i) render any Account
Agreement relating to an Account in which a Credco Receivable arises or any
Credco Receivable conveyed to RFC II by the Seller unenforceable by the Seller,
RFC II or the Trust and (ii) have a material adverse effect on the Investor
Certificateholders; provided, however, that no representation or warranty is
made with respect to any qualification, license or approval which RFC II would
have to obtain to do business in any state in which RFC II seeks to enforce any
Credco Receivable.
(c) Due Authorization. The execution, delivery and performance
of this Agreement, each Supplemental Assignment and each Credco Purchase
Agreement and any other document or instrument delivered pursuant hereto (such
other documents or instruments, collectively, the "Conveyance Papers") and the
consummation by the Seller of the transactions provided for in this Agreement,
each Supplemental Assignment, the Credco Purchase Agreements and the Conveyance
Papers have been duly authorized by the Seller by all necessary corporate action
on the part of the Seller.
(d) No Conflict. The execution and delivery of this Agreement,
each Supplemental Assignment, the Credco Purchase Agreements and the Conveyance
Papers by the Seller, the performance of the transactions contemplated by this
Agreement, each Supplemental Assignment, the Credco Purchase Agreements and the
Conveyance Papers and the fulfillment of the terms of this Agreement, each
Supplemental Assignment, the Credco Purchase Agreements and the Conveyance
Papers do not conflict with, violate or result in any breach of any of the
material terms and provisions of, or constitute (with or without notice or lapse
of time or both) a material default under, any indenture, contract, agreement,
mortgage, deed of trust, or other instrument to which the Seller is a party or
by which it or any of its properties are bound.
5
<PAGE>
(e) No Violation. The execution, delivery and performance of
this Agreement, each Supplemental Assignment and the Conveyance Papers by the
Seller and the fulfillment of the terms contemplated herein and therein
applicable to the Seller does not conflict with or violate any Requirements of
Law applicable to the Seller.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Seller, threatened against the Seller
before any Governmental Authority (i) asserting the invalidity of this
Agreement, any Supplemental Assignment, any Credco Purchase Agreement or any
Conveyance Paper, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, any Supplemental Assignment, any
Credco Purchase Agreement or any Conveyance Paper, (iii) seeking any
determination or ruling that, in the reasonable judgment of the Seller, would
materially and adversely affect the performance by the Seller of its obligations
under this Agreement, any Supplemental Assignment, any Credco Purchase Agreement
or any Conveyance Paper, (iv) seeking any determination or ruling that, in the
Seller's reasonable judgment, would materially and adversely affect the validity
or enforceability of this Agreement, any Supplemental Assignment, any Credco
Purchase Agreement or any Conveyance Paper, or (v) seeking to affect adversely
the income or franchise tax attributes of the Trust under the United States
Federal or State of New York income or franchise tax systems.
(g) All Consents. All approvals, authorizations, consents,
orders or other actions of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given by the Seller
in connection with the execution and delivery by the Seller of this Agreement,
any Supplemental Assignment, any Credco Purchase Agreement or any Conveyance
Paper, the performance by the Seller of the transactions contemplated by this
Agreement, any Supplemental Assignment, any Credco Purchase Agreement or any
Conveyance Paper and the fulfillment by the Seller of the terms hereof and
thereof have been obtained, effected or given and are in full force and effect.
The representations and warranties set forth in this Section
4.1 shall survive the transfer and assignment of the Credco Receivables and the
proceeds thereof to RFC II. Upon discovery by the Seller or RFC II of a breach
of any of the foregoing representations and warranties, the party discovering
such breach shall give prompt written notice to the other party and to the
Trustee within three Business Days following such discovery; provided that the
failure to give notice within three Business Days does not preclude subsequent
notice.
Section 4.2. Representations and Warranties of the Seller
Relating to the Agreement and the Credco Receivables.
(a) Representations and Warranties. The Seller hereby
represents and warrants to RFC II, as of the date of this Agreement and as of
the Closing Date, and with respect to Credco Receivables in Additional Accounts,
as of the related Addition Date that:
(i) this Agreement and each Supplemental Assignment
constitutes a legal, valid and binding obligation of the Seller
enforceable against the Seller in accordance
6
<PAGE>
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally from time to time in
effect or general principles of equity;
(ii) each Credco Receivable conveyed to RFC II by the Seller
has been conveyed to RFC II free and clear of any Lien;
(iii) all authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required
to be obtained, effected or given by the Seller in connection with the
conveyance of Credco Receivables to RFC II have been duly obtained,
effected or given and are in full force and effect;
(iv) either this Agreement or, in the case of Additional
Accounts, the related Supplemental Assignment constitutes a valid sale,
transfer and assignment to RFC II of all right, title and interest of
the Seller in the Credco Receivables conveyed to RFC II by the Seller
and the proceeds thereof and Recoveries identified as relating to the
Credco Receivables conveyed to RFC II by the Seller which have become
Defaulted Receivables, or, if this Agreement or, in the case of
Additional Accounts, the related Supplemental Assignment does not
constitute a sale of such property, it constitutes a grant of a
first-priority perfected "security interest" (as defined in the UCC) in
such property to RFC II, which, in the case of existing Credco
Receivables and the proceeds thereof and such Recoveries, is
enforceable upon execution and delivery of this Agreement, or, with
respect to then existing Credco Receivables in Additional Accounts, as
of the applicable Addition Date. Upon the filing of the financing
statements, RFC II shall have a first-priority perfected security or
ownership interest in such property and proceeds (including "proceeds"
as defined in the UCC);
(v) on the Initial Cut-Off Date, each Credco Receivable then
existing is an Eligible Receivable (without reference to clauses (d)
and (e) of the definition thereof), and, on the applicable Addition
Cut-Off Date, each Credco Receivable contained in any related
Additional Account is an Eligible Receivable (without reference to
clauses (d) and (e) of the definition thereof); and
(vi) the Purchase Price payable pursuant to Section 3.1 for
the Purchased Assets (I) constitutes fair consideration and reasonably
equivalent value for such assets and (II) is comparable to the sale
price for such Purchased Assets that could generally be obtained by the
Seller in the marketplace from unaffiliated entities in comparable
transactions.
(b) Notice of Breach. The representations and warranties set
forth in Section 4.2 shall survive the transfer and assignment of the Credco
Receivables and the proceeds thereof to RFC II. Upon discovery by either the
Seller or RFC II of a breach of any of the representations and warranties set
forth in Section 4.2, the party discovering such breach shall give written
notice to the other party and to the Trustee within three Business Days
following such discovery; provided that the failure to give notice within three
Business Days does not preclude subsequent notice. The Seller hereby
acknowledges that RFC II intends to rely on the representations of the Seller
hereunder in connection with representations made by
7
<PAGE>
RFC II to secured parties, assignees or subsequent transferees including but not
limited to transfers made by RFC II to the Trust pursuant to the Pooling and
Servicing Agreement and that the Trustee may enforce the representations of the
Seller hereunder directly against the Seller.
Section 4.3. Representations and Warranties of RFC II. RFC II
hereby represents and warrants to the Seller as of the Closing Date and on each
Addition Date on which a Supplemental Conveyance occurs that:
(a) Organization and Good Standing. RFC II is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Delaware and has, in all material respects, full corporate power,
authority and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted and to
execute, deliver and perform its obligations under this Agreement and each
Supplemental Assignment and the transactions contemplated under this Agreement
and each Supplemental Assignment.
(b) Due Authorization. The execution and delivery of this
Agreement, each Supplemental Assignment and the Conveyance Papers and the
consummation of the transactions provided for in this Agreement, each
Supplemental Assignment and the Conveyance Papers have been duly authorized by
RFC II by all necessary corporate action on the part of RFC II.
(c) No Conflict. The execution and delivery of this Agreement,
each Supplemental Assignment and the Conveyance Papers by RFC II, the
performance of the transactions contemplated by this Agreement, each
Supplemental Assignment and the Conveyance Papers, and the fulfillment of the
terms of this Agreement, each Supplemental Assignment and the Conveyance Papers
applicable to RFC II, do not conflict with, violate or result in any breach of
any of the material terms and provisions of, or constitute (with or without
notice or lapse of time or both) a material default under, any indenture,
contract, agreement, mortgage, deed of trust or other instrument to which RFC II
is a party or by which it or any of its properties are bound.
(d) No Violation. The execution, delivery and performance of
this Agreement, each Supplemental Assignment and the Conveyance Papers by RFC II
and the fulfillment of the terms contemplated herein and therein applicable to
RFC II do not conflict with or violate any Requirements of Law applicable to RFC
II.
(e) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of RFC II, threatened against RFC II, before
any Governmental Authority (i) asserting the invalidity of this Agreement, any
Supplemental Assignment or any Conveyance Paper, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, any
Supplemental Assignment or any Conveyance Paper, (iii) seeking any determination
or ruling that, in the reasonable judgment of RFC II, would materially and
adversely affect the performance by RFC II of its obligations under this
Agreement, any Supplemental Assignment or any Conveyance Paper or (iv) seeking
any determination or ruling that, in RFC II's reasonable judgment, would
materially and adversely
8
<PAGE>
affect the validity or enforceability of this Agreement, any Supplemental
Assignment or any Conveyance Paper.
(f) All Consents. All approvals, authorizations, consents,
orders or other actions of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given by RFC II in
connection with the execution and delivery by RFC II of this Agreement, each
Supplemental Assignment and the Conveyance Papers and the performance by RFC II
of the transactions contemplated by this Agreement, each Supplemental Assignment
and the Conveyance Papers and the fulfillment by RFC II of the terms hereof and
thereof have been obtained, effected or given and are in full force and effect.
The representations and warranties set forth in this Section
4.3 shall survive the transfer and assignment of the Credco Receivables and the
proceeds thereof to RFC II. Upon discovery by RFC II or the Seller of a breach
of any of the foregoing representations and warranties, the party discovering
such breach shall give prompt written notice to the other party.
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Seller. The Seller hereby
covenants and agrees with RFC II as follows:
(a) Receivables Not To Be Evidenced by Instruments or Chattel
Paper. Except in connection with its enforcement or collection of a Credco
Receivable, the Seller will take no action to cause any Credco Receivable to be
evidenced by any instrument or chattel paper (as defined in the UCC) and if any
Credco Receivable is so evidenced as a result of any action taken by the Seller
it shall be deemed to be an Ineligible Credco Receivable in accordance with
Section 6.1(a) and shall be reassigned to the Seller in accordance with Section
6.1(b).
(b) Security Interests. Except for the conveyances hereunder,
the Seller will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on, any Credco
Receivable, whether now existing or hereafter created, or any interest therein,
and the Seller shall defend the right, title and interest of RFC II in, to and
under the Credco Receivables, whether now existing or hereafter created, against
all claims of third parties claiming through or under the Seller.
(c) Delivery of Collections or Recoveries. In the event that
the Seller receives Collections or Recoveries with respect to Credco
Receivables, the Seller agrees to pay to RFC II (or to the Servicer if RFC II so
directs) all such Collections and Recoveries to RFC II as soon as practicable
after receipt thereof.
(d) Notice of Liens. The Seller shall notify RFC II promptly
after becoming aware of any Lien on any Credco Receivable other than the
conveyances hereunder, under the Credco Purchase Agreements and under the
Pooling and Servicing Agreement.
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<PAGE>
(e) Documentation of Transfer. The Seller shall file the
documents which would be necessary to perfect and maintain the transfer of the
Purchased Assets to RFC II.
(f) Repurchase of Credco Receivables. The Seller shall not
repurchase from RFC II any Credco Receivables in any Removed Accounts if such
repurchased Credco Receivables include a disproportionately greater amount of
Defaulted Receivables than exist in the Accounts generally. The Seller shall not
repurchase from RFC II any Credco Receivables in any Removed Accounts for the
purpose of mitigating losses that would otherwise be borne by the Trust.
Section 5.2. Covenants of the Seller with Respect to Credco
Purchase Agreements. The Seller, in its capacity as purchaser of Receivables
from Centurion Bank pursuant to the Credco Purchase Agreements, hereby covenants
that, with respect to the Credco Receivables, the Seller will at all times
enforce the covenants and agreements of Centurion Bank in such Credco Purchase
Agreements, including covenants substantially to the effect set forth below:
(a) Periodic Rate Finance Charges. (i) Except (I) as otherwise
required by any Requirements of Law or (II) as is deemed by Centurion Bank to be
necessary in order for it to maintain its credit or charge business, as
applicable, or a program operated by such credit or charge business, as
applicable, on a competitive basis based on a good faith assessment by it of the
nature of the competition with respect to such credit or charge business or such
program, as applicable, Centurion Bank shall not at any time take any action
affecting any Credco Receivable that would have the effect of reducing the
Portfolio Yield to a level that could be reasonably expected to cause any Series
to experience any Pay-Out Event or Reinvestment Event based on the insufficiency
of the Portfolio Yield or any similar test and (ii) except as otherwise required
by any Requirements of Law, Centurion Bank shall not take any action which would
have the effect of reducing the Portfolio Yield to be less than the then-current
highest Average Rate for any Group.
(b) Account Agreements and Guidelines. Subject to compliance
with all Requirements of Law and Section 5.2(a), Centurion Bank may change the
terms and provisions of the applicable Account Agreements or the applicable
Credit Guidelines in any respect (including the calculation of the amount or the
timing of charge-offs and the Periodic Rate Finance Charges to be assessed
thereon). Notwithstanding the above, unless required by Requirements of Law or
as permitted by Section 5.2(a), Centurion Bank will not take any action with
respect to the applicable Account Agreements or the applicable Credit
Guidelines, which, at the time of such action, Centurion Bank reasonably
believes will have a material adverse effect on the rights of the Trust, RFC II
or the Investor Certificateholders with respect to the Credco Receivables.
The Seller further covenants that it will not enter into any
amendment to any Credco Purchase Agreement or terminate any Credco Purchase
Agreement unless the Rating Agency Condition shall have been satisfied. As used
in this Section 5.2, "Centurion Bank" includes any successor or assign of
Centurion Bank under the Credco Purchase Agreements.
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ARTICLE VI
REPURCHASE OBLIGATION
Section 6.1. Reassignment of Ineligible Credco Receivables.
(a) In the event any representation or warranty under Section
4.2(a)(ii), (iii), or (v), is not true and correct in any material respect as of
the date specified therein with respect to any Credco Receivable and as a result
of such breach RFC II is required to accept reassignment of such Credco
Receivable previously sold by the Seller to RFC II pursuant to Section 2.05(a)
of the Pooling and Servicing Agreement, the Seller shall accept reassignment of
RFC II's interest in such Credco Receivables (the "Ineligible Credco
Receivables") on the terms and conditions set forth in Section 6.1(b).
(b) The Seller shall accept reassignment of any Ineligible
Credco Receivables previously sold by the Seller to RFC II on the date on which
such reassignment obligation arises, and shall pay for such reassigned
Ineligible Credco Receivables by paying to RFC II, not later than 3:00 p.m., New
York City time on such date, an amount equal to the unpaid principal balance of
such Ineligible Credco Receivables plus accrued and unpaid finance charges at
the annual percentage rate applicable to such Ineligible Credco Receivables from
the last date billed through the end of the Monthly Period in which such
reassignment obligation arises. Upon reassignment of such Ineligible Credco
Receivables, RFC II shall automatically and without further action be deemed to
sell, transfer, assign, set-over and otherwise convey to the Seller, without
recourse, representation or warranty, all the right, title and interest of RFC
II in and to such Ineligible Credco Receivables, all monies due or to become due
with respect thereto and all proceeds thereof; and such reassigned Ineligible
Credco Receivables shall be treated by RFC II as collected in full as of the
date on which they were transferred. RFC II shall execute such documents and
instruments of transfer or assignment and take such other actions as shall
reasonably be requested by the Seller to effect the conveyance of such
Ineligible Credco Receivables pursuant to this Section 6.1(b).
Section 6.2. Reassignment of Certificateholders' Interest in
Trust Portfolio.
In the event any representation or warranty set forth in
Section 4.1(a) or (c) or Section 4.2(a)(i) or (iv) is not true and correct in
any material respect and as a result of such breach RFC II is required to accept
a reassignment of the Certificateholders' Interest in the Credco Receivables
previously sold by the Seller to RFC II pursuant to Section 2.06 of the Pooling
and Servicing Agreement, the Seller shall be obligated to accept a reassignment
of RFC II's interest in such Credco Receivables on the terms set forth below.
The Seller shall pay to RFC II by depositing in the Collection
Account in immediately available funds, not later than 1:00 p.m., New York City
time, on the first Transfer Date following the Monthly Period in which such
reassignment obligation arises, in payment for such reassignment, an amount
equal to the amount specified in Section 2.06 of the Pooling and Servicing
Agreement that relates to the Credco Receivables reassigned to the Seller.
11
<PAGE>
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1. Conditions to RFC II's Obligations Regarding the
Credco Receivables. The obligations of RFC II to purchase the Credco Receivables
on the Closing Date shall be subject to the satisfaction of the following
conditions:
(a) All representations and warranties of the Seller contained
in this Agreement shall be true and correct on the Closing Date with the same
effect as though such representations and warranties had been made on such date
(other than representations and warranties that are made as of the Initial
Cut-off Date or as of an Addition Cut-off Date);
(b) All information concerning the Credco Receivables provided
to RFC II shall be true and correct as of the Initial Cut-Off Date in all
material respects;
(c) The Seller shall have substantially performed all
obligations required to be performed by the provisions of this Agreement;
(d) The Seller shall have recorded and filed, at its expense,
any financing statement with respect to the Credco Receivables meeting the
requirements of applicable state law in such manner and in such jurisdictions as
would be necessary to perfect the sale of and security interest in the Credco
Receivables from the Seller to RFC II, and shall deliver a file-stamped copy of
such financing statements or other evidence of such filings to RFC II;
(e) On or before the Closing Date, RFC II, Centurion Bank, TRS
and the Trustee shall have entered into the Pooling and Servicing Agreement and
the closing under the Pooling and Servicing Agreement shall take place
simultaneously with the initial closing hereunder; and
(f) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to RFC II and RFC II shall have received from
the Seller copies of all documents (including, without limitation, records of
corporate proceedings) relevant to the transactions herein contemplated and as
RFC II may reasonably have requested.
Section 7.2. Conditions Precedent to the Seller's Obligations.
The obligations of the Seller to sell the Credco Receivables on the Closing Date
shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of RFC II contained in
this Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on such date;
(b) Payment or provision for payment of the Purchase Price in
accordance with the provisions of Section 3.1 hereof shall have been made; and
12
<PAGE>
(c) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Seller and the Seller shall have
received from RFC II copies of all documents (including, without limitation,
records of corporate proceedings) relevant to the transactions herein
contemplated and as the Seller may reasonably have requested.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment.
(a) This Agreement may be amended from time to time by the
Seller and RFC II, without the consent of the Trustee or any of the Investor
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein or
in the Pooling and Servicing Agreement or to add any other provisions with
respect to matters or questions raised under this Agreement which are not
inconsistent with the provisions of this Agreement. This Agreement may also be
amended from time to time by the Seller and RFC II without the consent of the
Trustee or the Investor Certificateholders for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or modifying in any manner the rights of the Investor
Certificateholders; provided, however, that (i) the Servicer shall have provided
to the Trustee an Officer's Certificate to the effect that such action will not
materially and adversely affect the interests of such Investor
Certificateholders (or 100 percent of the Class of Investor Certificateholders
so affected shall have consented), (ii) each Rating Agency rating the Investor
Certificates confirms that such action will not result in the reduction or
withdrawal of its then-current rating of the Investor Certificates and (iii)
such action will not, as evidenced by an opinion of counsel satisfactory to the
Trustee, cause the Trust to be characterized for Federal income tax purposes as
an association taxable as a corporation or adversely affect the treatment of the
Investor Certificates as debt for Federal income tax purposes.
(b) This Agreement may also be amended from time to time by
the Seller and RFC II with the consent of the Holders of Investor Certificates
evidencing Undivided Interests aggregating not less than 66-2/3 percent of the
Invested Amount of each and every Series adversely affected, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or modifying in any manner the rights of the
Investor Certificateholders of any Series previously issued and then
outstanding; provided, however, that no such amendment under this Section 8.1(b)
shall (i) reduce in any manner the amount of, or delay the timing of,
Collections on the Credco Receivables or payments or distributions which are
required to be made on any Investor Certificate of such Series without the
consent of the related Investor Certificateholder, or (ii) reduce the aforesaid
percentage required to consent to any such amendment, in each case without the
consent of all such Investor Certificateholders.
(c) Prior to the execution of any such amendment or consent
the Trustee shall furnish written notification of the substance of such
amendment to the Rating Agencies.
13
<PAGE>
(d) Promptly after the execution of any such amendment or
consent the Trustee shall furnish written notification (or in the case of Bearer
Certificates, publish notice in the manner described in Section 13.5 of the
Pooling and Servicing Agreement) of the substance of such amendment to each
Investor Certificateholder, and the Servicer shall furnish written notification
of the substance of such amendment to any related Series Enhancer and each
Rating Agency.
(e) It shall not be necessary for the consent of Investor
Certificateholders under this Section 8.1 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Section 8.2. Protection of Right, Title and Interest to Credco
Receivables.
(a) The Seller shall cause this Agreement, all amendments
hereto and/or all financing statements and continuation statements and any other
necessary documents covering the Seller's and RFC II's right, title and interest
to the Purchased Assets to be promptly recorded, registered and filed, and at
all times to be kept recorded, registered and filed, all in such manner and in
such places as may be required by law fully to preserve and protect the right,
title and interest of RFC II hereunder. The Seller shall deliver to RFC II
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. RFC II shall cooperate fully with the Seller
in connection with the obligations set forth above and will execute any and all
documents reasonably required to fulfill the intent of this Section 8.2(a).
(b) Within 30 days after the Seller makes any change in its
name, identity or corporate structure which would make any financing statement
or continuation statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of Section 9-402(7) of the UCC as in effect in the
relevant jurisdiction, the Seller shall give RFC II and the Trustee notice of
any such change and shall file such financing statements or amendments as may be
necessary to continue the perfection of RFC II's security interest in the
Purchased Assets.
(c) The Seller will give RFC II and the Trustee prompt written
notice of any relocation of any office from which it keeps records concerning
the Credco Receivables or of its principal executive office, and whether, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall file such financing
statements or amendments as may be necessary to perfect or to continue the
perfection of RFC II's security interest in the Purchased Assets. The Seller
will at all times maintain each office, if any, from which it services Credco
Receivables and its principal executive office within United States of America.
Section 8.3. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
14
<PAGE>
YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 8.4. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, return receipt requested
to, (a) in the case of RFC II to American Express Receivables Financing
Corporation II, American Express Tower, World Financial Center, 200 Vesey
Street, New York, New York 10285, Attention: Leslie Scharfstein, with copies to
American Express Travel Related Services Company, Inc., American Express Tower,
World Financial Center, 200 Vesey Street, New York, New York 10285, Attention:
Treasurer, and (b) in the case of the Seller to American Express Credit
Corporation Inc., One Christina Center, 301 N. Walnut Street, Suite 1002,
Wilmington, Delaware 19801-2915 Attention: President; or, as to each party, at
such other address as shall be designated by such party in a written notice to
each other party. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the party receives such notice.
Section 8.5. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 8.6. Assignment. Notwithstanding anything to the
contrary contained herein, this Agreement may not be assigned by RFC II or the
Seller except as contemplated by this Section 8.6 and the Pooling and Servicing
Agreement; provided, however, that simultaneously with the execution and
delivery of this Agreement, RFC II shall assign all of its right, title and
interest herein to the Trustee as provided in Section 2.01 of the Pooling and
Servicing Agreement, to which the Seller hereby expressly consents; provided,
further, that except for the foregoing assignment, no such assignment shall
occur unless the Trustee shall have received confirmation from the Rating Agency
that such assignment shall not cause a reduction or withdrawal of the
then-current rating of any Series of Certificates. The Seller agrees to perform
its obligations hereunder for the benefit of the Trust and that the Trustee may
enforce the provisions of this Agreement, exercise the rights of RFC II and
enforce the obligations of the Seller hereunder without the consent of RFC II.
Section 8.7. Acknowledgement and Agreement of the Seller. By
execution below, the Seller expressly acknowledges and agrees that all of RFC
II's right, title, and interest in, to, and under this Agreement, including,
without limitation, all of RFC II's right, title, and interest in and to the
Purchased Assets purchased pursuant to this Agreement, shall be assigned by RFC
II to the Trustee for the benefit of the beneficiaries of the Trust, including
the Certificateholders, and the Seller consents to such assignment. The Seller
further agrees that notwithstanding any claim, counterclaim, right or setoff or
defense which it may have against RFC II, due to a breach by RFC II of this
Agreement or for any other reason, and notwithstanding the bankruptcy of RFC II
or any other event whatsoever, the Seller's sole remedy shall be a claim against
RFC II for money damages, and in no event shall the Seller
15
<PAGE>
assert any claim on or any interest in the Credco Receivables or any proceeds
thereof or take any action which would reduce or delay receipt by
Certificateholders of collections with respect to the Receivables. Additionally,
the Seller agrees for the benefit of the Trustee that any amounts payable by the
Seller to RFC II hereunder which are to be paid by RFC II to the Trustee for the
benefit of the Certificateholders shall be paid by the Seller, on behalf of RFC
II, directly to the Trustee.
Section 8.8. Further Assurances. The Seller and RFC II agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the Trustee more
fully to effect the purposes of this Agreement, including, without limitation,
the execution of any financing statements or continuation statement relating to
the Receivables for filing under the provisions of the relevant UCC or other law
of any applicable jurisdiction.
Section 8.9. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Seller or RFC II any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.
Section 8.10. Counterparts. This Agreement 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 together shall constitute
one and the same instrument.
Section 8.11. Binding; Third Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon the parties hereto,
and, in addition, shall inure to the benefit of the Trustee and the
Certificateholders and their respective successors and permitted assigns. The
Trustee shall be considered a third-party beneficiary of this Agreement.
Section 8.12. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 8.13. Headings. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or interpretation
of any provision hereof.
Section 8.14. Schedules and Exhibits. The schedules and
exhibits attached hereto and referred to herein shall constitute a part of this
Agreement and are incorporated into this Agreement for all purposes.
Section 8.15. Survival of Representations and Warranties. All
representations, warranties and agreements contained in this Agreement, shall
remain operative and in full
16
<PAGE>
force and effect and shall survive conveyance of the Credco Receivables by RFC
II to the Trustee pursuant to the Pooling and Servicing Agreement.
Section 8.16. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, the Seller shall not, prior to the date which is
one year and one day after the termination of this Agreement, acquiesce,
petition or otherwise invoke or cause RFC II to invoke the process of any
Governmental Authority for the purpose of commencing or sustaining a case
against RFC II under any Federal or state bankruptcy, insolvency or similar law
or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of RFC II or any substantial part of its property or
ordering the winding-up or liquidation or the affairs of RFC II.
(Signature page follows.)
17
<PAGE>
IN WITNESS WHEREOF, the Seller and RFC II have caused this
Receivables Purchase Agreement to be duly executed by their respective officers
as of the day and year first above written.
AMERICAN EXPRESS CREDIT CORPORATION,
as Seller
By: /s/ Jay B. Stevelman
-------------------------------
Name: Jay B. Stevelman
Title: Treasurer
AMERICAN EXPRESS RECEIVABLES FINANCING
CORPORATION II, as Purchaser
By: /s/ Leslie R. Scharfstein
--------------------------------
Name: Leslie R. Scharfstein
Title: President
18
<PAGE>
EXHIBIT A
FORM OF SUPPLEMENTAL CONVEYANCE
(As required by Section 2.1(b) of
the Receivables Purchase Agreement)
SUPPLEMENTAL CONVEYANCE NO. ____ dated as of ______________, by and
between AMERICAN EXPRESS CREDIT CORPORATION, as seller (the "Seller"), and
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II, as purchaser ("RFC II"),
pursuant to the Receivables Purchase Agreement referred to below.
WHEREAS, the Seller and RFC II are parties to a Receivables Purchase
Agreement, dated as of April 1, 1996 (as such agreement may have been, or may
from time to time be, amended, supplemented or otherwise modified, the
"Receivables Purchase Agreement");
WHEREAS, Additional Accounts have been designated pursuant to the
Pooling and Servicing Agreement; pursuant to the Receivables Purchase Agreement,
RFC II wishes to purchase the Credco Receivables of such Additional Accounts
from the Seller pursuant to the Receivables Purchase Agreement; and RFC II has
delivered an Addition Notice to the Seller pursuant to Section 2.1(b) of the
Receivables Purchase Agreement; and
WHEREAS, the Seller is willing to sell Credco Receivables subject to
the terms and conditions hereof.
NOW, THEREFORE, the Seller and RFC II hereby agree as follows:
1. Defined Terms. Each capitalized term used herein shall have the
meaning specified in the Receivables Purchase Agreement unless otherwise defined
herein.
2. Conveyance of Receivables. The Seller does hereby sell, transfer,
assign, set over and otherwise convey to RFC II (collectively, a "Supplemental
Conveyance"), without recourse except as provided in the Receivables Purchase
Agreement, all of its right, title and interest in, to and under (i) the Credco
Receivables existing in the Additional Accounts described in the Addition Notice
at the close of business on the related Addition Cut-Off Date, all monies due
and or to become due and all amounts received with respect thereto and all
proceeds (including, without limitation, "proceeds" as defined in the UCC)
thereof and (ii) the right to receive Recoveries with respect to such Credco
Receivables.
3. Acceptance by RFC II and Payment of Purchase Price. RFC II hereby
acknowledges its acceptance of all right, title and interest to the property,
now existing and hereafter created, conveyed to RFC II pursuant to Section 2 of
this Supplemental Assignment, and declares that it shall maintain such right,
title and interest. RFC shall pay to the Seller the Purchase Price, calculated
pursuant to Section 3.1 of the Receivables Purchase Agreement, for such property
no later than Distribution Date following the Monthly Period during which the
related Addition
<PAGE>
Date occurs.
4. Representations and Warranties of the Parties. Each of the Seller
and RFC II hereby makes the representations and warranties required by the
Receivables Purchase Agreement to be made as of the related Addition Date.
5. Ratification of the Receivables Purchase Agreement. The Receivables
Purchase Agreement is hereby ratified, and all references to the "Receivables
Purchase Agreement", to "this Agreement" and "herein" shall be deemed from and
after the Addition Date to be a reference to the Receivables Purchase Agreement
as supplemented by this Supplemental Conveyance. Except as expressly amended
hereby, all the representations, warranties, terms, covenants and conditions of
the Receivables Purchase Agreement shall remain unamended and shall continue to
be, and shall, remain, in full force and effect in accordance with its terms and
except as expressly provided herein shall not constitute or be deemed to
constitute a waiver of compliance with or consent to non-compliance with any
term or provision of the Receivables Purchase Agreement.
6. Counterparts. This Supplemental Assignment may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Supplemental
Assignment to be duly executed and delivered by their respective duly authorized
officers on the day and the year first above written.
AMERICAN EXPRESS CREDIT CORPORATION,
By: _______________________________
Name:
Title:
AMERICAN EXPRESS RECEIVABLES FINANCING
CORPORATION II
By: _______________________________
Name:
Title:
21
EXHIBIT 24.1
AMERICAN EXPRESS CENTURION BANK
POWER OF ATTORNEY
American Express Centurion Bank, a Utah corporation (the "Company"),
and each of the undersigned officers and directors of the Company, hereby
constitute and appoint Gilbert E. Ahye, Robert D. Kraus and Maureen Ryan,
jointly and severally, with full power of substitution and revocation, their
true and lawful attorneys-in-fact and agents, for them and on their behalf and
in their respective names, places and steads, in any and all capacities, to
sign, execute and affix their respective seals thereto and file any of the
documents referred to below relating to the registration of up to $5,000,000,000
aggregate amount of Accounts Receivable Trust Certificates to be issued by the
American Express Credit Account Master Trust: a registration statement under the
Securities Act of 1933, including any amendments thereto, on behalf of the
Company, with all exhibits and any and all documents required to be filed with
respect thereto with any regulatory authority or stock exchange, granting unto
said attorneys, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes as
they might or could do if personally present, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
This Power of Attorney may be executed in counterparts.
IN WITNESS WHEREOF, American Express Centurion Bank has caused this
Power of Attorney to be executed in its name by its Chief Executive Officer and
attested by its Secretary, and the undersigned officers and directors have
hereunto set their hand as of the 5th day of November 1998.
AMERICAN EXPRESS CENTURION BANK
By: /s/ Frank L. Skillern
------------------------------
Frank L. Skillern
Chief Executive Officer
ATTEST:
/s/ Robert D. Kraus
- ------------------------
Robert D. Kraus
Assistant Secretary
<PAGE>
/s/ Frank L. Skillern
- ----------------------------------
Frank L. Skillern
Director and Chief Executive Officer
(Principal Executive Officer)
/s/ David E. Poulsen
- ----------------------------------
David E. Poulsen
Director, President and Chief Credit Officer
/s/ Gilbert E. Ahye
- ----------------------------------
Gilbert E. Ahye
Director
- ----------------------------------
Maria J. Garciaz
Director
/s/ Ash Gupta
- ----------------------------------
Ash Gupta
Director
/s/ Peter A. Lefferts
- ----------------------------------
Peter A. Lefferts
Director
- ----------------------------------
Raymond F. Pettit
Director
- ----------------------------------
Roslyn M. Watson
Director
2
<PAGE>
- ----------------------------------
Jim F. Welch
Director
/s/ Rhonda M. Halpern
- ----------------------------------
Rhonda M. Halpern
Chief Financial Officer and
Principal Accounting Officer
3
<PAGE>
AMERICAN EXPRESS CENTURION BANK
SECRETARY'S CERTIFICATE
I, Robert D. Kraus, Assistant Secretary of American Express Centurion
Bank (the "Bank"), an industrial loan corporation organized and existing under
the laws of the State of Utah, hereby certify that attached hereto is a true,
complete and correct copy of the resolutions authorizing the Bank to register
and issue for sale up to $5,000,000,000 of accounts receivable trust
certificates on behalf of the American Express Credit Account Master Trust. The
resolutions were duly adopted at a meeting of the Board of Directors of the Bank
held on November 19, 1998 and have not been modified or rescinded and remain in
full force and effect on the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand on and as of the 19th
day of November, 1998.
/s/ Robert D. Kraus
---------------------------
Robert D. Kraus
Assistant Secretary
<PAGE>
AMERICAN EXPRESS CENTURION BANK
RESOLVED, that the Board of Directors hereby authorizes and approves
(i) the registration on Form S-3, under the Securities Act of 1933, as
amended (the "Securities Act"), by the Bank of securities (the
"Securities") evidencing indebtedness of or undivided ownership
interests in each trust formed pursuant to authorization of the Board
of Directors in an aggregate principal amount of up to $5,000,000,000,
(ii) the form of Registration Statement on Form S-3 approved by the
proper officers of the Bank (the "Registration Statement") and (iii)
the offer and sale of the Securities; and that the Board of Directors
authorizes the proper officers of the Bank to execute on behalf of the
Bank and the American Express Credit Account Master Trust (the
"Trust"), and, when executed by such officers and by at least a
majority of the Directors of the Bank, to file with the Securities and
Exchange Commission the Registration Statement (including exhibits
thereto) in such form or with such changes thereto as such officers, in
their discretion, shall approve, and any amendment or amendments to the
Registration Statement, including any pre-effective amendments to the
Registration Statement, that they, in their discretion, shall deem
necessary or desirable, and to do all such other acts and things,
including the preparation and filing with the Securities and Exchange
Commission of prospectuses and prospectus supplements relating to the
Securities registered and any other filing with the Commission or any
state securities commission, as they, in their discretion, shall deem
necessary or desirable in connection with such registration, including
expending the funds of the Bank; and
RESOLVED, FURTHER, that the Chief Executive Officer, President,
Treasurer, Chief Financial Officer, Secretary and any Assistant
Treasurer of the Bank be, and each of them hereby is, authorized, in
the name and on behalf of the Bank and the Trust, to make application
to the Securities and Exchange Commission for registration of any of
the Securities under Section 12 of the Securities and Exchange Act of
1934, as amended, and to prepare, or cause to be prepared, and to
execute and cause to be filed with the Securities and Exchange
Commission and any securities exchange an application or applications
for such registration and any and all amendments thereto and any
additional certificates, documents, letters and other instruments which
any said officer may deem necessary or desirable, and to pay such
filing, and other fees, if any, required in connection with such
filing; and
RESOLVED, FURTHER, that the forms of each of the agreements or
instruments which are included as exhibits to the Registration
Statement be, and hereby are, approved in all respects, in each case in
such form as the proper officers of the Bank shall approve, and any
officer of the Bank is hereby authorized to make any changes necessary
thereto as they may in their discretion see fit; and
RESOLVED, FURTHER, that the Board of Directors hereby designates The
Corporation Trust Company as agent of the Bank and the Trust for
service of process in connection with the Registration Statement, as in
effect from time to time, with authority to receive notices and
communications for this Bank and the Trust with respect to the
registration
<PAGE>
under the Securities Act effected thereunder, and with all the powers
consequent upon such designation under the rules and regulations of the
Securities and Exchange Commission; and
RESOLVED, FURTHER, that it is desirable and in the best interests of
the Bank that the Securities be qualified or registered for sale in
various states or other jurisdictions and that the Board of Directors
hereby authorizes the proper officers of the Bank, in the name and on
behalf of the Bank and the Trust, to take any and all action which they
deem necessary or advisable in order to effect the registration or
qualification (or exemption therefrom) of the Securities for issue,
offer, sale or trade under the Blue Sky or securities laws of any of
the states of the United States of America or other jurisdictions and
in connection therewith to execute, acknowledge, verify, deliver, file
or cause to be published any applications, reports, consents to service
of process, issuer's covenants, appointments of attorneys to receive
service of process, undertakings and other papers and instruments which
may be required under such laws, and to take any and all further action
which they may deem necessary or advisable in order to maintain any
registration or qualification for as long as required by law or by the
underwriters of such securities; and if any state securities
administrator shall require certain resolutions to be adopted by the
Board of Directors to evidence the authority conferred upon any such
state securities administrator by these resolutions, then the Secretary
or Assistant Secretary of the Bank is instructed to prepare and certify
the appropriate form of resolutions so required, and such resolutions
shall thereupon be incorporated and adopted by reference, to the same
extent as if presented to and adopted by the Board of Directors,
provided that a copy of any such resolutions shall be affixed to the
minutes by the Secretary or Assistant Secretary; and
RESOLVED, FURTHER, that the Board of Directors hereby authorizes each
of the Chief Executive Officer, Chief Financial Officer and Chief
Accounting Officer of the Bank to sign on behalf of the Bank and the
Trust, as registrants, the Registration Statement and any amendment or
amendments, which he or she, in his or her discretion, deems to be
necessary or desirable; and
RESOLVED, FURTHER, that each officer and director who may be required
or entitled to execute the Registration Statement or any amendment
thereto, including any post-effective amendment thereto (whether on
behalf of the Bank or the Trust or as an officer or director thereof or
by attesting the seal of the Bank or otherwise) be, and hereby is,
authorized to execute a power of attorney appointing Gilbert E. Ahye,
Robert D. Kraus and Maureen Ryan, and each of them severally, their
true and lawful attorney(s) to execute in their name, place and stead
in any such capacity the Registration Statement and any and all
amendments thereto, including post-effective amendments, and to file
the same with the Securities and Exchange Commission, each of said
attorneys to have power to act with or without the others and to have
full power and authority to do and perform in the name and on behalf of
each of the said officers and directors every act whatsoever necessary
or advisable to be done as fully as, and to the same extent that, such
officer or director might or could do in person; and
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<PAGE>
RESOLVED, FURTHER, that the Board of Directors hereby authorizes and
directs the proper officers of the Bank, in its name and on its behalf
to prepare and file from time to time with the Securities and Exchange
Commission all prospectuses and prospectus supplements relating to the
offering of the Securities as may be necessary or desirable under the
Securities Act, and to execute, verify and file with the Securities and
Exchange Commission such other documents and such instruments and
reports as may be necessary or desirable under the Securities Exchange
Act of 1934, as amended, in each case in such form, and containing such
terms and provisions, and with such changes, as such officers may
determine, such determination to be conclusively evidenced by the
filing thereof; and
RESOLVED, FURTHER, that the Board of Directors hereby authorizes and
directs the proper officers of the Bank, acting in the name and on
behalf of the Bank and under its corporate seal or otherwise, to
prepare, execute and deliver, file and record all instruments,
documents, agreements and other papers, and to do all such other acts
and things as they, in their discretion and with advice of counsel, may
deem necessary or desirable to carry into effect the foregoing
resolutions; and
RESOLVED, FURTHER, that each of the actions of the officers of the Bank
taken in connection with the matters contemplated by the foregoing
resolutions taken prior to this meeting be, and hereby is, approved,
ratified and adopted in all respects as fully as if such actions had
been presented to the Board of Directors for its approval prior to such
actions being taken.
3
EXHIBIT 24.2
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
POWER OF ATTORNEY
American Express Receivables Financing Corporation II, a Delaware
corporation (the "Company"), and each of the undersigned officers and directors
of the Company, hereby constitute and appoint Jay B. Stevelman, John D. Koslow,
Leslie R. Scharfstein and Stephen P. Norman, jointly and severally, with full
power of substitution and revocation, their true and lawful attorney-in-fact and
agents, for them and on their behalf and in their respective names, places and
steads, in any and all capacities, to sign, execute and affix their respective
seals thereto and file any of the documents referred to below relating to the
registration of up to $5,000,000,000 aggregate amount of Accounts Receivable
Trust Certificates to be issued by the American Express Credit Account Master
Trust: a registration statement under the Securities Act of 1933, including all
amendments thereto, with all exhibits and any and all documents required to be
filed with respect thereto with any regulatory authority or stock exchange,
granting unto said attorneys, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as they might or could do if personally present, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in counterparts.
IN WITNESS WHEREOF, American Express Receivables Financing Corporation
II has caused this Power of Attorney to be executed in its name by its President
and its corporate seal to be affixed and attested by its Secretary, and the
undersigned officers and directors have hereunto set their hand as of the 18th
day of November 1998.
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II
By: /s/ Leslie R. Scharfstein
------------------------------
Leslie R. Scharfstein
President
ATTEST:
/s/ Michael Kuchs
-----------------------------
Michael Kuchs
Secretary
<PAGE>
/s/ John D. Koslow
-----------------------------
John D. Koslow
Director
/s/ Donald J. Puglisi
-----------------------------
Donald J. Puglisi
Director
/s/ Jay B. Stevelman
-----------------------------
Jay B. Stevelman
Director
/s/ Leslie R. Scharfstein
-----------------------------
Leslie R. Scharfstein
President and
(Principal Executive Officer)
/s/ Ellen J. Casey
-----------------------------
Ellen J. Casey
Vice President and Treasurer
(Principal Executive Officer and
Principal Accounting Officer)
<PAGE>
AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II
SECRETARY'S CERTIFICATE
I, Michael Kuchs, Secretary of American Express Receivables Financing
Corporation II (the "Company"), a corporation organized and existing under the
laws of the State of Delaware, hereby certify that attached hereto is a true,
complete and correct copy of the resolutions authorizing the Company to register
and issue for sale up to $5,000,000,000 of accounts receivable trust
certificates on behalf of the American Express Credit Account Master Trust. The
resolutions were adopted by Unanimous Written Consent of the Board of Directors,
dated November 18, 1998 and have not been modified or rescinded and remain in
full force and effect on the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand on and as of the 18th
day of November, 1998.
/s/ Michael Kuchs
-----------------------------
Michael Kuchs
Secretary
<PAGE>
ACTION BY WRITTEN CONSENT
OF
THE BOARD OF DIRECTORS
OF
AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION II
The undersigned, being all of the members of the Board of
Directors of American Express Receivables Financing Corporation II, a Delaware
corporation (the "Company" or "this Corporation"), hereby adopt, by this written
consent, in accordance with Section 141(f) of the General Corporation Law of the
State of Delaware, the following resolutions with the same force and effect as
if they had been adopted by a duly authorized vote of the Board of Directors of
the Company at a meeting of such Board of Directors duly called and held:
Registration and Issuance of Accounts Receivable Trust Certificates
RESOLVED, that the Board of Directors authorizes and approves (i) the
registration on Form S-3, under the Securities Act of 1933, as amended
(the "Securities Act"), by this Corporation of securities (the
"Securities") evidencing indebtedness of or undivided ownership
interests in each trust formed pursuant to authorization of the Board
of Directors in an aggregate principal amount of up to $5,000,000,000,
(ii) the form of Registration Statement on Form S-3 attached hereto
(the "Registration Statement") and (iii) the offer and sale of the
Securities; and that this Board of Directors authorizes the proper
officers of this Corporation to execute on behalf of this Corporation
and the American Express Credit Account Master Trust (the "Trust"),
and, when executed by such officers and by at least a majority of the
Directors of this Corporation, to file with the Securities and Exchange
Commission the Registration Statement (including exhibits thereto) in
such form or with such changes thereto as such officers, in their
discretion, shall approve, and any amendment or amendments to the
Registration Statement, including any pre-effective amendments to the
Registration Statement, that they, in their discretion, shall deem
necessary or desirable, and to do all such other acts and things,
including the preparation and filing with the Securities and Exchange
Commission of prospectuses and prospectus supplements relating to the
Securities registered and any other filing with the Securities and
Exchange Commission or any state securities commission, as they, in
their discretion, shall deem necessary or desirable in connection with
such registration, including expending the funds of this Corporation.
RESOLVED, that the President and any Vice President of this Corporation
be, and each of them hereby is, authorized, in the name and on behalf
of this Corporation and the Trust, to make application to the
Securities and Exchange Commission for registration of any of the
Securities under Section 12 of the Securities and Exchange Act of 1934,
as amended, and to prepare, or cause to be prepared, and to execute and
cause to be filed with the Securities and Exchange Commission and any
securities exchange an application or applications for such
registration and any and all amendments thereto and any
<PAGE>
additional certificates, documents, letters and other instruments which
any said officer may deem necessary or desirable, and to pay such
filing, and other fees, if any, required in connection with such
filing.
RESOLVED, that the forms of each of the agreements or instruments which
are included as exhibits to the Registration Statement be, and hereby
are, approved in all respects, in each case in such form as the proper
officers of this Corporation shall approve, and any officer of this
Corporation is hereby authorized to make any changes necessary thereto
as they may in their discretion see fit.
RESOLVED, that this Board of Directors hereby designates The
Corporation Trust Company as agent of this Corporation and the Trust
for service of process in connection with the Registration Statement,
as in effect from time to time, with authority to receive notices and
communications for this Corporation and the Trust with respect to the
registration under the Securities Act effected thereunder, and with all
the powers consequent upon such designation under the rules and
regulations of the Securities and Exchange Commission.
RESOLVED, that it is desirable and in the best interests of this
Corporation that the Securities be qualified or registered for sale in
various states or other jurisdictions and that the Board of Directors
hereby authorizes the proper officers of this Corporation, in the name
and on behalf of this Corporation and the Trust, to take any and all
action which they deem necessary or advisable in order to effect the
registration or qualification (or exemption therefrom) of the
Securities for issue, offer, sale or trade under the Blue Sky or
securities laws of any of the states of the United States of America or
other jurisdictions and in connection therewith to execute,
acknowledge, verify, deliver, file or cause to be published any
applications, reports, consents to service of process, issuer's
covenants, appointments of attorneys to receive service of process,
undertakings, and other papers and instruments which may be required
under such laws, and to take any and all further action which they may
deem necessary or advisable in order to maintain any registration or
qualification for as long as required by law or by the underwriters of
such securities; and if any state securities administrator shall
require certain resolutions to be adopted by the Board of Directors to
evidence the authority conferred upon any such state securities
administrator by these resolutions, then the Secretary or Assistant
Secretary of this Corporation is instructed to prepare and certify the
appropriate form of resolutions so required, and such resolutions shall
thereupon be incorporated and adopted by reference, to the same extent
as if presented to and adopted by the Board of Directors, provided that
a copy of any such resolutions shall be affixed to these minutes by the
Secretary or Assistant Secretary.
RESOLVED, that this Board of Directors hereby authorizes each of the
President and the Treasurer of this Corporation to sign on behalf of
this Corporation and the Trust, as registrants, the Registration
Statement and any amendment or amendments, which he or she, in his or
her discretion, deems to be necessary or desirable.
RESOLVED, that each officer and director who may be required or
entitled to execute the Registration Statement or any amendment
thereto, including any post-effective
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amendment thereto (whether on behalf of this Corporation or the Trust
or as an officer or director thereof or by attesting the seal of this
Corporation or otherwise) be, and hereby is, authorized to execute a
power of attorney appointing Leslie R. Scharfstein, Stephen P. Norman,
Robert Kraus and Carol V. Schwartz, and each of them severally, their
true and lawful attorney(s) to execute in their name, place and stead
in any such capacity the Registration Statement and any and all
amendments thereto, including post-effective amendments, and to file
the same with the Securities and Exchange Commission, each of said
attorneys to have power to act with or without the others and to have
full power and authority to do and perform in the name and on behalf of
each of the said officers and directors every act whatsoever necessary
or advisable to be done as fully as, and to the same extent, such
officer or director might or could do in person.
RESOLVED, that this Board of Directors hereby authorizes and directs
the proper officers of this Corporation, in its name and on its behalf
to prepare and file from time to time with the Securities and Exchange
Commission all prospectuses and prospectus supplements relating to the
offering of the Securities as may be necessary or desirable under the
Securities Act, and to execute, verify and file with the Securities and
Exchange Commission such other documents and such instruments and
reports as may be necessary or desirable under the Securities Exchange
Act of 1934, as amended, in each case in such form, and containing such
terms and provisions, and with such changes, as such officers may
determine, such determination to be conclusively evidenced by the
filing thereof.
RESOLVED, that the Company is hereby authorized to issue and sell (i)
in one or more public offerings required to be registered with the
Securities and Exchange Commission pursuant to applicable provisions of
the Securities Act, or (ii) in one or more private placements exempt
from registration under the Securities Act, certificates or securities
("Receivables Securities") relating to or representing an interest in
receivables and assets relating thereto ("Receivables") acquired by the
Company, in an aggregate principal amount not to exceed $5,000,000,000,
upon such terms and conditions as may be fixed by a committee of this
Board consisting of any two directors (the "Issuing Committee"), and
such Committee hereby is authorized to determine the terms and
conditions of all such Receivables Securities and the price, terms and
conditions of the sale of such Receivables Securities to one or more
purchasers, agents or underwriters.
RESOLVED, that the Company is authorized to enter into one or more
letter of credit agreements, cash collateral account or guarantee
agreements, cash collateral loan agreements, cash collateral trust
agreements, maturity guaranty agreements or other forms of credit
enhancement agreements and supplements and amendments thereto with such
counterparties as the President or any Vice President may approve, and
the President or any Vice President is authorized to execute,
acknowledge and deliver each such agreement containing such terms and
provisions as the officer executing the same may deem necessary,
appropriate or desirable, as conclusively evidenced by his execution
thereof.
RESOLVED, that the President and any Vice President is hereby
authorized to take all actions and execute, acknowledge and deliver all
agreements, instruments, certificates and documents (including without
limitation one or more underwriting agreements, sales
3
<PAGE>
agency agreements or like agreements with any firm, institution or
partnership providing for the sale of Receivables Securities and the
compensation to be received by any underwriters or agents in accordance
with the price, terms and conditions approved by the aforementioned
Committee, one or more clearing agreements, one or more agreements
providing for the listing of the Receivables Securities on any exchange
which the President or any Vice President may deem desirable, one or
more indemnification agreements, one or more loan agreements and
promissory notes, one or more sale or participation agreements relating
to the participation or sale of interests in the Exchangeable
Transferor Certificate, one or more letters of representations relating
to the registration of Receivables Securities, one or more paying
agency agreements or other agreements relating to the appointment of
registrars, transfer agents and other agents and functionaries with
respect to the Receivables Securities) as such officer may deem
necessary, appropriate or desirable in connection with the offer and
sale of any Receivables Securities.
RESOLVED, that the President or any Vice President are hereby
authorized to execute Receivables Securities by manual or facsimile
signature, including to replace any securities which are lost, stolen,
mutilated or destroyed and any securities required for exchange,
substitution or transfer, all as provided in the applicable Indenture,
Pooling and Servicing Agreement or other agreement.
RESOLVED, that the proper officers of the Company, and each of them, be
and hereby are authorized and empowered, in the name and on behalf of
the Company, to take any action (including, with limitation, the
payment of expenses), and to execute (by manual or facsimile
signature), acknowledge and deliver any and all agreements,
instruments, certificates, documents, financing statements or other
writings, that such officer of officers may deem necessary, appropriate
or desirable in order to carry out the purposes and intent of the
foregoing resolutions.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all the directors
of American Express Receivables Financing Corporation II have executed this
written consent as of the 18th day of November, 1998.
/s/ Jay B. Stevelman
---------------------------
Jay B. Stevelman
/s/ Donald J. Puglisi
---------------------------
Donald J. Puglisi
/s/ John D. Koslow
---------------------------
John D. Koslow
